Of these, the Renewable Energy Syndicate (SER) estimates over 1000 MW will be installed this year. Not that it will all be smooth sailing. The main hurdles facing the industry in 2006 concern a review of the preferential pricing mechanism governing projects under 12 MW and uncertainties surrounding the application of the new energy law, which sets out energy policy to 2035. Developers still also complain of administrative delays and inconsistencies in the permitting process.
The wind industry's immediate concern is the tariff review due for completion by the end of this month. At present, France operates a hybrid structure for wind energy: fixed premium purchase prices for projects under 12 MW, introduced in 2001, and a competitive tender system for larger projects, introduced in 2003. Developments under 12 MW earn EUR 0.0838/kWh for the first five years of operation. Over the following ten years, the rate varies according to the productivity of the site, between a low of EUR 0.0305/kWh to a high of EUR 0.0838/kWh. Applied to new plant, however, these rates fall by 3.3% a year and by an additional 10% (a one-off drop) when total installed wind power from projects in the program reaches 1500 MW. It seems likely this threshold will be crossed late this year or early 2007.
The industry has long argued that the rate of decrease of the tariff is too harsh -- and is becoming increasingly so with a recent rise in the cost of turbines. Many fear projects coming on line after the 1500 MW threshold has been crossed will not be viable. Jean-Yves Grandidier, the new president of the French Wind Energy Association (FEE), argues that if the tariff stays as it is, the industry could face a "hard landing" in 2007 or 2008. There is, however, cautious optimism that the threshold will be removed in the current review. What happens to the tariff remains to be seen. FEE is calling for an increase of 20-25% to encourage development on less windy sites -- a must if France is to meet its EU commitments, says Grandidier.
New energy law
After a long, difficult birth, France's new energy law finally reached the statute book last July. It received a mixed reception from the wind industry. On the positive side, this was the first time French legislation mentioned the EU target of 21% of electricity from renewable sources by 2010. Industry members also welcomed the lifting of the 12 MW ceiling on wind plant. They were less sure, however, about how to react to the new wind power development zones introduced instead.
These ZDEs will be proposed by the communes, the local district authorities, which will decide what size limit, if any, is appropriate for any specific site. The proposal then goes to the state-appointed prefects heading up the départements, the next highest level of local authority, for approval. As well as consulting other stakeholders, prefects must consider the potential generating capacity, grid connection, other ZDEs in the area and the "preservation of the countryside, historic monuments and other outstanding or protected sites" when reaching a decision, which must be delivered within six months.
Only wind plant built within a ZDE will be eligible for the preferential tariff. The law allows a two year transition period during which time the 12 MW ceiling still applies, although developers can opt to build bigger projects within a ZDE.
While a few pioneering communes and developers are in the early stages of setting up ZDEs, no one is sure how the mechanism will work in practice. To some they represent yet another administrative hurdle in a country where one third of siting permits are already refused. Others are more optimistic, arguing that in theory it should be easier to obtain permits once a ZDE has been established. As there is now no set size limit, a ZDE could even speed up the permitting process for larger projects.
Lo•c Espagnet of developer Eolec, which is helping develop a ZDE, believes zoning should lead to better projects as developers will have more freedom, at least in larger zones, to install turbines in the optimum position from both the technical and environmental point of view.
Part of the problem is that the legal and regulatory framework surrounding ZDEs has not yet been established. The government is due to issue a circular to governing prefects and local administrative bodies outlining the purpose of ZDEs and how applications should be handled. Meantime, the mechanism is open to different interpretations.
"It is very important to issue the circular soon or else everyone will be using different processes", says André Antolini of SER. According to Grandidier, the procedure for establishing a ZDE must be short and simple and not require more costly and time-consuming impact studies.
Even under the old system, administrative delays and inconsistencies in granting siting permits continues to be a problem. Some developers have been waiting for more than two years to hear the outcome of their applications, whereas the legal limit is five months. There are also wide disparities between départements. In the north easterly Meuse, for example, where wind speeds are relatively low, Antolini says 350 MW was permitted in 2005, a success rate of nearly 100%. In the much windier Somme, no permits were issued last year, despite the fact that public enquiries came out in favour of projects totalling over 300 MW. "Some prefects are not in the same world," laments Antolini.
A proposed state-run national wind power committee, which it was hoped would act as a co-ordination and advisory body monitoring such disparities, has yet to materialise. Two preliminary meetings took place last year under the auspices of the national energy and gas council. The council's make-up is to be revised under the new energy law, however, and until that takes place there will be no further movement on the wind power committee.
Apart from the energy law, the other big news of 2005 was the long-awaited outcome of the two government tenders for 500 MW each of offshore and onshore wind development. First to be announced was the result of the offshore tender, generally considered disappointing (page 76). By comparison, the onshore tender was deemed reasonable, if nothing to shout about. Of 14 bids representing some 480 MW, the industry minister selected seven with a combined capacity of 278.35 MW.
The projects were selected on the criteria of price, environmental impact, project size and the sponsor's technical and financial competence. Although the industry feared the competitive tender would be used to drive prices down, French utility EDF will contract to buy the electricity to December 31, 2021 at an average price of EUR 0.075/kWh. Though well over the EUR 0.045/kWh paid on the main French electricity market, this is only slightly above the EUR 0.069/kWh paid under the current fixed purchase price system for a moderately windy site averaged out over 15 years. "By accepting projects with an average price above the median, the government has sent a strong signal that only an increase in tariffs will enable France to reach its objectives for 2010," comments FEE.
Everyone agrees that strong government support is a necessary requirement, particularly as new nuclear development is again on the agenda. If all goes to plan, a European Pressurised Reactor will be built at Flamanville in northern France by 2012. In January, President Chirac also announced that France, in co-operation with its international partners, would start work on a "fourth generation" reactor for 2020.
Grid operator RTE estimates France will require around 1000 MW extra capacity each year to meet rising demand. Rather than building more thermal plant, FEE says the renewables industry -- and particularly wind -- can fill the gap, but only if the government puts in place a sufficiently robust and non-discriminatory regulatory framework.
There are some indications the government is moving more strongly behind wind. According to the financial newspaper La Tribune, in the draft report on the Pluriannual Investment Program, which presents government objectives for electricity generation for 2006-2015 and which is due to be presented to parliament in the coming weeks, the government recognises for the first time that France can only meet its EU commitment by installing more wind power. Even so, the report indicates the target will not be achieved in 2010, but more likely 2013 at the earliest. This is based on a "realistic scenario" of 4000 MW installed wind capacity by 2010 and 12,500 MW by 2016. Since most of this will be built on shore, solving the ever-present problem of local opposition is vitally important.
The trend towards bigger projects in France continues despite the 12 MW ceiling. To get round the limit the turbines are divided into smaller groups. The largest installation so far is the 39 MW Ally-Mercoeur plant in the Haute-Loire département in south central France, which came on line in November. In September, 32 MW started turning at Haut des Ailes in northerly Lorraine. These two projects, large in French eyes, will be dwarfed, however, by Ostwind's 140 MW development recently permitted at Fruges on the English Channel coast. The first 70 MW phase should start building in the summer for completion mid 2007. EDF Energies Nouvelles has also been given the go-ahead for 87 MW at Salles-Curan in the Aveyron, also due for 2007.
The removal of the 12 MW ceiling should mean more projects on this sort of scale, which are likely to attract larger investors to the scene, including more foreign entities. In the last few months, Spain's Iberdrola and Endesa, Germany's Energieteam and Renergys and Australia's Macquaire Bank all took a stake, or significantly increased their share, in the French market.
As far as turbine manufacturers are concerned, Germany's Repower burst on to the scene by installing an impressive 140 MW, or 35% of new capacity in 2005 (table). Vestas came second with 25% of the year's total, closely followed by GE Energy. These three companies between them accounted for 80% of the new power added in 2005. No new German Nordex turbines came on line last year, though it still remains one of the leading players -- and has plenty in the pipeline for 2006.