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France Does 'Volte-Face' on Solar

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January 09, 2013

France Does 'Volte-Face' on Solar

By Cheryl Kaften
TMCnet Contributor


President François Hollande of France, who has been in office a little over six months since defeating his predecessor, Nicolas Sarkozy, seems to be making good on his campaign promises. During pre-election debates last spring, Sarkozy said France needed to do more to cut spending and high-state debt, while Hollande backed government-funded stimulus programs. 

Now, in his latest move to support France’s shaky economy – and, specifically, to buttress up the nation’s slumping solar sector – President Hollande has approved several measures, which are slated to take effect later this year.

He has:

  • Pledged to double the nation’s solar production capacity target for 2013 to 1 gigawatt (or 1,000 megawatts)
  •  Issued ground rules for the next tender, applicable to mid-size installations (with capacity between 100 kilowatts [kW] and 250kW)
  • Added a bonus of up to 10 percent to the feed-in tariffs paid to small solar plants that use panels made in the 30 countries of the European Economic Area (EEA)

According to a report from the news agency, Reuters (News - Alert), Energy Minister Delphine Batho announced the measures, which are expected to spur investments worth more than $2.6 billion. The new Socialist government is seeking to rescue an industry that has lost about 15,000 jobs since 2010, after the previous Conservative government tried to dampen a speculative bubble in new solar power installations.

In 2012, the industry employed 18,000 people, down from 32,500 two years ago.

"Many jobs were lost because of the [former] government's yo-yo policies. But we will fight ... to develop the ecological competitiveness of France," Batho told reporters at an informal press conference held during a visit to the solar panel manufacturer, MPO Energy, based in Averton, in northwestern France.

A fly in the ointment

While the intent is commendable, there already may be one flaw in the plan: The domestic content (EEA) mandate on the feed-in tariff may not pass muster with the World Trade Organization (WTO) which just two weeks ago ruled that Ontario’s domestic-content requirements – a key condition of the Canadian province's feed-in-tariff (FIT) program – violate sections of the General Agreement on Tariffs and Trade 1994.

The case was brought to the WTO by the European Union, along with third parties – including the United States, Japan, Australia, China, Chinese Taipei, India, the Kingdom of Saudi Arabia, Brazil, the Republic of Korea, Mexico, Norway, Turkey and El Salvador.

The WTO upheld claims that Ontario's FIT program unfairly pressures producers of renewable energy to buy goods and services from Ontario-based supply-chain providers.

What’s more, Jean-Louis Bal, the head of France's main renewable energy sector lobby, the Society for Ecological Restoration (SER), said the measures would enable the sector to survive in the short term, but did not offer long-term viability to the industry.

"However it's the first positive message from the government in over three years," Bal told reporters.

Under Sarkozy, France’s feed-in tariffs were reduced by about 10 percent every year to match falling production costs. The French energy regulator, Commission de Régulation de L’Énergie (CRE) adjusted the cut every quarter, to either attract or deter more investments, depending on the volume of installed solar plants compared with the government's target.

Across the Rhine in Germany, the installed capacity for wind and solar electricity production is already equivalent in output to France's 58 nuclear reactors.

Along with Germany – which had installed 6.8 gigawatts (GW) as of October and was well on pace to install 8 GW by year-end – some of the markets that have seen the most activity, according to the Texas-based Mercom Capital Group and New York City-based Bloomberg (News - Alert), are:

  • China, which installed about 4 gigawatts (GW) of solar capacity during 2012, and raised its national solar power capacity target for 2015 by 40 percent, to about 21 GW
  • Italy, which was expected to end 2012 with installations in the 3.5 GW range, after experiencing a “mini rush” before Conto Energia V became effective
  • The United States, which installed about 3 GW in 2012, partly driven by the expiration of the 30 percent U.S. Treasury grant program at year-end 2011
  • India, which has achieved momentum from its Jawaharlal Nehru National Solar Mission (JNNSM)— with a goal to install 20 GW of solar power by 2022—and hit its stride, installing slightly over 1 GW in 2012
  • Japan, which arguably had the best feed-in tariff worldwide, effective July 1, 2012, with PV systems below 10 kilowatts (kW) receiving ¥42/kWh ($0.53) and systems above 10 kW receiving ¥40 (~$0.51). —and was estimated to hit 0.9 GW of utility-scale solar projects  last year.

According to the online publication, Recharge, of the 1GW capacity to be added in France this year, 400MW will come from systems larger than 250kW – including ground-mounted installations, a segment the French government has been keen to downplay in recent years.

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Edited by Braden Becker

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