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Flexible French FITs: Higher Biogas, Lower PV Tariffs Coming

In late February, the French government proposed to substantially raise feed-in tariffs for biogas, while dropping tariffs for solar photovoltaics (PV) by an equivalent amount.

Nathalie Kosciusko-Morizet, France's Minister for Ecology, Sustainability, and Transport, made the announcement in a release dated February 24, 2011.

The proposal raises biogas tariffs 20% to be more inline with those in neighboring Germany, by including incentive payments for the use of wastes from livestock operations. The Ministry's proposal also includes a new tariff for biogas injected into the natural gas distribution system.

More controversial are the Ministry's revision of solar PV tariffs and a new target for the French solar industry of 500 MW per year. The Ministry is proposing cuts of 20% across the board and new regulations to rein in the growth of solar in France.

The new policy will go into effect after formal publication on March 9th, following a consultation with the Council for Energy.

2010 French Solar Rivals USA

The Ministry also reports the installation of 720 MW of solar PV in continental France (France Metropolitaine) and its overseas territories in 2010, bringing total installed capacity to more than 1,000 MW for the first time.

There are now 152,000 solar PV installations in France and its territories.

French 2010 installations were more than double those of 2009 and rival the approximately 800 MW of solar PV installed in the USA during the same period.

France now has the seventh-largest installed solar PV capacity in the world, after Germany, Spain, Japan, Italy, the USA, and the Czech Republic.

The Ministry expects from 1,000 MW to 1,500 MW of new solar PV will be installed in 2011 and 2012. If development proceeds as expected, France's total installed capacity will rival that of the USA. France has one-fifth the population of the USA.

Though the government didn't release the number of central-station, ground-mounted projects, the vast majority of French solar installations are in distributed applications. There were 13,000 projects greater than 3 kW, representing 70% of total capacity installed in 2010. Only 92 projects installed in 2010 were greater than 250 kW, for a total of 128 MW.

Several ground-mounted projects in the pipeline will be installed in the next several months, and some of the projects that were under development before the government's moratorium will proceed under the previous policy.

Wind Nears 2% of Supply

French installations of new wind-generating capacity in 2010 remained steady at 1,100 MW, bringing total installed wind capacity in France to 5,700 MW.

In 2010, French wind turbines generated 9.4 TWh or 1.8% of supply, up from 1.5% in 2009. The current fleet is capable of generating more than 11 TWh in 2011. This will push French wind penetration above 2% for the first time.

There are 3,700 MW of wind capacity and 4,100 MW of solar PV capacity in the transmission queue waiting for connection.

New PV Target, New Tariffs, New Regulations

Ostensibly as a means to limit costs to ratepayers, the Ministry has set a new target, 500 MW per year, for the installation of solar PV, and adopted the regulations to limit growth to that desired.

For comparison, Germany, one of France's main trading partners, has recently reaffirmed its target of 3,500 MW per year.

The French Ministry's proposal cuts solar PV tariffs 20% and will severely limit new applications for any rooftop project greater than 100 kW and all ground-mounted projects.

To restrict the type and number of installations, all rooftop projects greater than 100 kW but less than 250 kW will have to respond to a "simplified" Request for Proposal (RFP) or "call for tender" as it is known in Europe. Winners of the RFP will be chosen on several non-price factors and will receive the fixed tariffs.

However, all rooftop projects greater than 250 kW, and ground-mounted projects of any size will have to respond to a more conventional RFP. Winners will be based on price, environmental impact, innovation, and other factors. Thus, solar PV projects greater than 250 kW will be effectively removed from the French feed-in tariff program.

The use RFPs reflect the famed French penchant for centralized control and administration, preferred by French governments since Louis XIV (the "Sun King") concentrated power in the hands of the Versailles nobility.

The new proposal gives the Ministry all decision-making authority regarding who will and will not install solar PV greater than 250 kW. Critics suggest that this is not only a way to rein in the rapid growth of solar but also a recipe for favoring preferred contractors.

As recently as early 2010, the Ministry raised tariffs for solar PV, as well as for geothermal, and biomass. At the time, solar advocates warned the French government--to no avail--that they were in danger of overheating the French solar PV market at the expense of the entire renewable energy program. See 2010 French Tariffs Raise Price for Solar, Geothermal, and Biomass.

Overcost Due to Fossil Fuels, Not Renewables

With the rapid growth of solar PV in France have come charges that renewables have created a huge debt in un-funded utility charges.

France collects a public goods charge, the Contribution au Service Public de l'Électricité (CSPE), from electricity consumers in order to pay for renewable energy, fossil-fired combined heat and power, and for the bills of consumers who can't pay them themselves.

In an unusual twist on the concept of public goods charge, the CSPE also pays the overcost that can't be recovered in rates of generating electricity from fossil fuels in French overseas territories. Consumers in French overseas territories pay the same electricity rates as Parisians, even though the cost of generating electricity is far higher than in continental France.

Electricité de France (EDF), the partially privatized utility serving France and its territories, has for several years not been collecting sufficient funds to cover the cost of the CSPE.

From 2007 through 2010, EDF had run up a debt of 2.8 billion euros. The cost of renewables represents only 10%-15% of the total unfunded debt. The cost of fossil fuels accounted for 70% to nearly 90% of the debt, says the Comité de Liaison Energie Renouvelables (CLER). This is the same time period when oil prices reached their zenith, before crashing along with the global economy.

The situation with the CSPE in France is not dissimilar to that in Spain, where the overcosts of fossil-fuel fired generation during the run-up in oil prices in 2007 and 2008 were attributed to the costs of renewable energy.

Critics note that despite wind energy's steady growth of 1,000 MW per year, it is insufficient to meet France's renewable energy targets. The new limits on solar PV, one-seventh the annual target of Germany, will only exacerbate the problem.

Nevertheless, the French government's action illustrates the flexibility of feed-in tariffs as a policy tool by raising the tariffs for the technologies they want, while lowering those of the technologies they fear.

This feed-in tariff news update is partially supported by An Environmental Trust and David Blittersdorf in cooperation with the Institute for Local Self-Reliance. The views expressed are those of Paul Gipe and are not necessarily those of the sponsors.

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