Green lobby up in arms as France plans to tear up solar subsidy contracts

  • Date: 13/11/20
  • GWPF & Financial Times

As the perverse opulence of multi-billion renewable energy subsidies become ever more costly, the French government has decided to stop the rot.

The French government plans retroactive cuts to generous solar subsidies it granted between 2006 and 2010. The green energy industry should expect more retroactive subsidy cuts in coming years. This is the price the green lobby is paying for claiming that renewable energy is now dirt cheap.

The retroactive cuts proposed by the government are currently debated in the French parliament. The government’s budget law would cut subsidies granted to solar projects between 2006 and 2010. These cuts could save consumers €400m-€600m a year of the annual €2bn solar handouts.

The €2bn handed out to solar investors annually produce less than 1 per cent of France’s electricity, but consumes a third of public spending on renewables.

“If approved by the members of parliament, this measure would mean the immediate termination of contracts for the majority of the 800 impacted PV plants,” Xavier Daval, CEO of French solar technical advisory KilowattSol, told pv magazine. “This decision would force them to file for bankruptcy, as these plants were built with non-recourse financing.”

French solar investors up in arms over threat to renege on contracts

Paris plans to cut tariffs for early photovoltaic power projects it says generate ‘excessive profits’

A French government plan to save hundreds of millions of euros a year by reneging on early solar power contracts it says generate “excessive” profits has caused outrage among investors, who say the move could cripple their businesses, undermine the credibility of the state’s promises and threaten future renewable energy projects.

France is the latest European country to find that the rapid development of solar technology and the collapse in the price of photovoltaic cells has left its government liable for payments over decades far in excess of the cost of new contracts. Spain, Italy and the Czech Republic have faced similar legal tussles in the past.

“Who’s going to have confidence in the state for an offtake agreement on hydrogen production?” asked Xavier Barbaro, founder of renewable energy company Neoen and one of the signatories of a business petition demanding the government abandon its solar energy proposal. 

“If you know that in 10 years the tariffs of 2020 will be judged by the costs of 2030, you’ll say, that’s not acceptable . . . it means the state is devaluing its credibility.” Neoen said it owned a modest 19 megawatts of photovoltaic power capacity that could be affected by the resetting of the tariffs. 

President Emmanuel Macron’s government, which said it was committed to the “greening” of the French and European economies, launched its attack on the terms of about 800 large photovoltaic power contracts signed between 2006 and 2010 in an amendment to the 2021 draft budget law being debated at the National Assembly this week. 

The amendment mentions “excessive profitability” — officials say some investments generate margins of more than 20 per cent — and says tariffs will be cut in such a way that “the return on fixed capital . . . does not exceed a reasonable level given the inherent risks of the investment”.

Full story (£)

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