France

France

French market taking shape -- New tariffs and siting guidance

The first elements of a new tariff structure fixing the price at which French national utility EDF guarantees to buy wind generated electricity were announced last month by industry minister François Loos. Most importantly rates will no longer fall by 10% once installed wind capacity in France has reached 1500 MW "because it no longer reflects the reality of the market in which turbine prices are not decreasing," said Loos.

Instead, the new tariffs will be based on the "simple criteria that the return on investment ensures a normal level of profitability" as stipulated in the 2005 energy law. The structure is designed to encourage operators to maximise production by investing in more powerful machines and to favour sites with medium wind speeds, said the minister. "There is no longer any question of supporting plant which operate for less than 2000 hours," he added.

Offshore

For offshore development, competitive tenders will be replaced with a fixed purchase price of EUR 0.13/kWh. For plant on land, no price details have been announced, but it is widely rumoured the new tariff will be set at EUR 0.082/kWh for the first ten years of operation, as opposed to five years at present. It is further expected that the same rate will continue to apply for another five years to plant operating at 2400 hours or less, but will decrease for those over 2400 hours.

The rates will apply to plant built before January 1, 2008, after which rates will fall by 2.2% a year, as opposed to 3.3% under the present structure. Industry insiders also believe the price for offshore generation will be guaranteed for 20 years for plant operating up to 2800 hours a year.

While the wind industry is happy to see the back of the 1500 MW threshold and competitive tenders, there is concern that onshore sites with not enough wind for machines to operate at full load for at least 2000 hours a year will no longer be viable. Some developers also consider the offshore tariffs too tight to permit real growth.

REASSESSMENT

If the rumoured rates and conditions are correct, it seems there will be some reassessment of sites both on and offshore. "The industry is not jumping with joy, but it is the optimum outcome we could achieve after a very tough battle," says André Antolini of the Renewable Energy Syndicate. The final details will not be known until the comments of regulatory authority CRE have been taken on board and Loos has signed the decree.

Meanwhile, a long awaited circular clarifying how local authorities should handle applications to establish the wind power development zones (ZDEs), introduced in the 2005 energy law, has been issued to prefects, the state-appointed officials responsible for the process. According to the law, from July 15, 2007, only wind plant built within a ZDE will be eligible for the fixed premium purchase price.

Development zones

Zones are proposed by the communes, the local district authorities, who specify what size limits, if any, apply. The prefects are then required to consider the potential generating capacity, grid connection and the "protection of the countryside, historic monuments and other outstanding and protected sites" when reaching their decision, which must be delivered within six months.

The 27-page circular, which was drawn up by the environment and industry ministries after a wide-ranging consultation program, is intended to flesh out these provisions, outline the methods prefects should use and identify the information readily available to them. While generally satisfied with the tone and content of the circular, the wind industry is anxious to see how it will be applied on the ground. Its main fear is that prefects opposed to wind power will seize on "countryside protection" to block development without real justification.

Others are concerned that prefects will demand so much additional information that the ZDE application will effectively duplicate the impact study required during the permitting process for individual projects. Jean-Marc Armitano of developer Eole-RES is more optimistic, however. "We now have it in black and white that ZDE approval does not require an impact study." Establishing a ZDE simply acts as a "first filter to ensure there are no sensitive points," he argues.

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