Reports indicate France is mulling a 12% reduction in its feed-in tariffs. Analysts break down the reasons (not unexpected) and possible impact to regional solar efforts and individual vendors.

August 31, 2010 - Reports indicate France is mulling a 12% reduction in its feed-in tariffs. Analysts break down the reasons (not unexpected) and possible impact to regional solar efforts and individual vendors.

Reports citing Le Figaro surfaced early last week that France would trim the price paid by utility Electricite de France SA for solar-generated electricity by 12%. The reason for the feed-in tariff (FiT) reduction, later specified to be for ground-mount systems only, was cited as a response to falling prices for solar panels. Speculation suggested governments in the UK, Canada, and Czech Republic are eyeing similar FiT reductions.

Analyst's Take

Reducing incentives to solar users won't be a positive thing, of course. But broadly speaking, for suppliers this was neither unexpected (eventually) nor severe. Solar users still get financial help, moderated depending on their region's irradiance. (And in the grand scheme of things, FiT maneuvers in other regions, e.g. Germany, represent much larger markets and have garnered a lot more attention.)

France's feed-in tariff. (Source: Deutsche Bank)



The reduced French FiT applies only to ground-mount systems, not residential home rooftop installs, points out Steve O'Rourke from Deutsche Bank. France has roughly >60,000 applications totaling more than 2GW in its pipeline since the last FiT revision, which took effect at the start of 2010. "We did anticipate a reset of some sort," he notes. Considering this essentially resets the FiT back to ~2009 levels, and with expectation of further declines in component prices, "we view such a reduction as appropriate and not an undue negative for demand in France."

Who does the FiT impact and why? Some suppliers have more exposure to the French market than others. Module suppliers First Solar and Canadian Solar, for example, could be impacted, O'Rourke notes. Energy Conversion Devices has a big exposure to the French market as well, notes one analyst, but O'Rourke adds this is mainly in roof-mounted building-integrated projects (BIPV) and won't be as hurt.