From an installed total of just 367 MW at the end of 2004, the progress is remarkable, given the many hurdles the wind industry faces in France. Some were removed last year, or at least diminished, but others popped up to take their place. Nevertheless, development has progressed and investors have flooded in. "France is one of the most attractive markets for international strategic and financial investors looking to diversify their portfolios," asserts James Knight of London-based advisory investment bank Augusta & Co. The availability of attractive sites combined with a favourable wind resource and regulatory regime are the reasons why, he adds.
One of the major wind market events of 2006 in France was the introduction of a new tariff structure. Most importantly, the 1500 MW threshold which would have triggered a 10% drop in the guaranteed premium purchase price at which French national utility EDF guarantees to buy output was removed just before it brought development to a grinding halt. Also on the positive side, the price is now fixed for the first ten years of operation rather than just five and the rate at which the tariff falls each year has been reduced from 3.3% to 2% for plant built after January 1, 2008.
The industry is less happy about the level of the tariff. The rate is set at EUR 0.082/kWh for onshore plant for the first ten years. After that, it varies according to the productivity of the site, between a low of EUR 0.028/kWh for plant blessed by good winds and operating for an average of 3600 hours a year or more and a high of EUR 0.082/kWh for 2400 hours or less. The rates are reviewed annually to take account of inflation. The same basic structure applies to offshore wind (page 84).
While the industry agrees that the new rates are good for high or average wind speed sites, the fear is that where wind speeds are under 6.7 m/s, development is no longer viable. Since many of the best sites in France have already been developed, it is likely that there will be fierce competition for remaining sites, while some projects at the lower end may be abandoned.
On the other hand, the industry welcomes the more ambitious targets for wind power announced in the government's latest Pluriannual Investment Program (PPI), which identifies investments required to secure the energy supply. According to the PPI, France expects to install an additional 13,500 MW of wind power capacity by the end of 2010 and 17,000 MW by the end of 2015. Of this, 1000 MW and 4000 MW, respectively, will be generated offshore. The previous target slated 8-10,000 MW by 2010. Not even the government expects to hit its 2010 target at the present rate of growth, but it is generally accepted that 10,000 MW by 2013 is possible.
If France is to get even close to meeting its targets, urgent action is required on a number of fronts. First and foremost is the alleged interference of turbines on radar systems. In 2005 the defence forces, civil aviation authorities and meteorological service recommended a ban on turbines within 30 kilometres of radar as a precautionary measure pending further investigations. Since then the threshold has been reduced to 20 kilometres, or less in some instances, but projects between five and 20 kilometres from radar are being dealt with on a case by case basis. SER, which estimates that projects totalling over 2000 MW are being blocked, will make the issue a priority in the coming months. Another uncertainty is new regulations governing neighbourhood noise, which may and may not hit planned projects (Windpower Monthly, January 2007).
Another battle in store for the industry will see it lined up on the side of the industry minister for a change. Together, they will be defending the new wind power purchase rates at the supreme court against an attack by France's leading opposition groups, Vent de Colère and Vent du Bocage. In September the two associations submitted petitions calling for the government's decree outlining the wind market's new framework to be suspended or annulled on the grounds that the fixed purchase prices are unnecessarily generous and allow owners to make too much profit at the expense of consumers. The attack is based on an advisory report by electricity regulator CRE, which argues that the pricing structure will cost an additional EUR 1-2.5 million a year by 2015 and give investors after-tax profits of 20-40% a year, guaranteed for 15 years, for plant located in medium wind speed sites (Windpower Monthly, October 2006). Both SER and the ministry argue that CRE's calculations are based on unrealistic criteria regarding project finance. Instead, they consider average earnings will be closer to 8%, and SER believes they could fall below 4% on low wind sites.
The ZDE effect
The government readily acknowledges that "it is essential to overcome the problem of the local acceptability of wind power plant" if France is to reach its targets. The introduction of wind power development zones (ZDEs) is expected to help. From July 14, only wind plant built within a ZDE will be eligible for the fixed purchase price. Zones are proposed by communes, the local district authorities, which specify what size limits on wind projects, if any, apply. The prefects, the state-appointed officials heading up the départements, decide whether to approve the ZDE or not, taking into account its generating capacity, grid capacity and the "protection of the countryside, historic monuments and other outstanding and protected sites." Once the ZDE is approved, developers have to apply for siting permits in the normal way.
The industry believes ZDEs could prove a positive force. The system ensures full consultation and "allows local officials to play a central role in the decision," says Jean-Yves Grandidier of the French Wind Energy Association (FEE). That said, no one knows how ZDEs will operate in practice, despite a 27-page circular issued by the government to local authorities last June supposedly clarifying the procedure for applications. The main fears are that prefects opposed to wind power will cite countryside protection to block development without real justification, or demand so much additional information that the ZDE application will effectively duplicate the impact study required during the permitting process for individual projects. Others worry that the rate of development will fall while the new mechanism beds down. If so, it will not happen immediately. Developers are rushing to get as many projects approved as possible before the old, familiar regime ends on July 13. This should mean the current surge continues at least through 2007 as permitted projects gradually come on line.
"With the legislative framework and the tariffs, the tools are now in place for wind power to develop," asserts Jean-Michel Zarza of Ecotècnia France. This is reflected in the amount of foreign interest in the market and in the number of investors competing for projects and pipelines. Major players such as Spain's Iberdrola and Endesa, Portugal's EDP, Italy's ENEL and the American power company AES all bought stakes in the French wind market in the last year. The successful partial flotation of EDF Energies Nouvelles, the dedicated renewables arm of state-run utility EDF, in November is another indication of the intense level of interest and also sent a clear signal to policy makers.
"France is booming," agrees Dominique Darne of Eurowatt, a Luxembourg-based investment company with a portfolio of assets in the renewable energy sector. Despite a number of set backs and local problems, he feels things are moving forward. There is a better understanding of wind power and a more positive attitude among the general public and the mayors as turbines become a more familiar sight. Taxes accruing to the local communes help, and the courts have also been giving some "good decisions," forcing civil servants to act within the law. André Antolini of SER is equally optimistic. "While it is important not to underestimate the risks, France will be a prominent market over the next few years, " he believes.
As far as turbine manufacturers are concerned, Germany's Nordex stormed into the lead by installing an impressive 242.30 MW, or 35% of new capacity in 2006, making up for a lacklustre year in 2005. Nordex even overtook Vestas as the company which has delivered most megawatts of wind capacity to France (table). The two companies between them accounted for 56% of the year's total. Repower and Enercon made a good showing, while GE fell back. The new kid on the block is Spain's Ecotècnia, which installed a creditable 33.96 MW during the year.