In 2019, France is the only country that has decided to prioritize projects with solar modules produced with low-carbon manufacturing processes in its public tenders for utility-scale rooftop and ground-mounted PV plants. The carbon footprint requirements embedded in the so-called CRE4 tenders held by the French Energy Regulatory Commission (CRE), have often been described as one of the main obstacles to the development of a gigawatt-scale utility-scale PV market.
Others see the low-carbon regulations, which apply as an evaluation premium on projects utilizing such modules, as a different and smarter way of applying domestic content rules. Thus far, such critics argue, the rules have favored French and European manufacturers without having to result in troubles with the WTO or other international entities regulating global commerce.
How the rules work
France’s low-carbon module regulations set out that solar projects selected in the CRE4 tenders must have a carbon assessment of less than a certain limit of kg CO2/kW. This can be calculated through a ‘simplified’ procedure which has been designed by France’s Environment & Energy Management Agency (ADEME).
At first glance, however, the proceedings do not seem that simple. The first step of the procedure consists of inventorying and quantifying the carbon share per kW for the eight components required to manufacture a photovoltaic module per kWp. For polysilicon and ingots, developers (or manufacturers that carry out this task for them) must indicate how many kilograms of carbon are necessary for
one kilowatt of module. For wafer and cell producers, it is the total number of pieces per carbon kilogram that is counted. For these four kinds of products, losses and cracks are also accounted for.
As for the modules, diodes, junction boxes, and aluminum frames are not included, while carbon footprint must be calculated on how many square meters are necessary to host 1 kWp of capacity, regardless of whether it is crystalline silicon or thin film PV.
For both solar glass and tempered solar glass, the CRE requires an accounting of how much glass mass is required for 1 kW, with this value having to be extracted by the surface and the thickness of the glass. For backsheets, instead, the mass of EVA, PET, or PVF required must be calculated.
In their project bids, developers must also specify the manufacturing location of each module component. Two different methodologies are used to establish the quantity of greenhouse gases in CO2 equivalent emitted directly or indirectly during the manufacturing process, one for standard production processes, and one for innovative and non-energy intensive production processes.
Once this is done, module manufacturers are then required to send the information, alongside life cycle assessments (LCAs), to ADEME three months before the final bidding deadline of the tenders – with the agency reporting back to the manufacturer one month before the submission of offers.
After ADEME has completed its assessment of the specific values of the single components, it delivers its certification to the manufacturer. The next step is for the module company to bring all of the documentation to Certisolis, which is to date the only French solar testing and certification body allowed to publish carbon footprint certificates, after which the modules are certified. Simple, right?
“The procedure is less complicated than it may seem,” says Xavier Daval, VP of French renewables association SER and CEO of kiloWattsol. “All solar panel manufacturers regularly make LCA assessments of their production and can fill in the form for the French tenders in less than an hour,” he continues.
According to Daval, however, a more challenging part of these rules relies on the timing of the project, which can be spread over three years. Given the competitive process, developers must base their CRE4 tender bid on the potential evolution of future vales for both specific technical solutions and price. If price can be “easier” to forecast, technical evolution like the origin of silicon ingots are impossible to control or anticipate at developer level, he adds. That low-carbon rules also prevent module prices, and overall project LCOE, to decline in line with the global market is a fact Daval acknowledges, but discounts. “Current prices are those of a sustainable market, and volumes are not growing lower than expected, as all of the tenders for large-scale solar were largely oversubscribed,” says Daval. He does, however, acknowledge that the rules do favor French and European module manufacturers, which have achieved so far a 40% market share in all of the tenders for utility-scale projects.
“If we take into account the global solar manufacturing capacity, the method seems quite effective as it privileges high technology, carbon excellence, and product values corresponding to our European standard. In other markets this percentage is close to zero,” concedes Daval.
The current list of module providers certified by Certisolis includes 24 companies, of which only 11 are European, reports Laurent Prier, Certisolis President. The certification body would not reveal which companies are certified, citing confidentiality agreements. Prier also stresses that Certisolis is now addressing another controversial aspect of the tender rules, the origin of the polysilicon used for manufacturing a module, and how much of it is recycled of the total volume used.
“We are now conducting a review of all of the global polysilicon production capacities to verify if all applicants provide correct data,” Prier says. He acknowledges that the overall rules for the CRE4 tenders were changed at least six times over the past year, thus further complicating the business.
One of the non-European manufacturers that is currently complying with the rules is Chinese panel manufacturer Talesun. “It would be good to stabilize a bit of the calculation methodology as it is quite a challenge to catch up [on] the rule on each tender,” Talesun’s Overseas Sales VP, Sonia Benard observes. Another Chinese producer, Trina Solar, announced in late February that it is providing carbon compliant bifacial modules for two CRE4 projects in France, with fellow tier-1 Longi recently telling pv magazine that it is currently in the process of low-carbon certification. “The most important thing is where you produce your ingots and wafers, and the electricity we use for our factory is provided by hydropower,” says Longi’s Sales Director for the EMEA region, Nick Wang.
Higher project costs
The impact of the low-carbon regulations is clearly evident. Pietro Radoia, Solar Analyst at Bloomberg NEF, explains that if they were not in place, the average strike price of winning projects in the French utility-scale projects would decrease to those seen in the German market. “In the latest round of the CRE4 auctions they [prices] averaged €52.10/MWh, while in Germany prices averaged
€43.30-52.70/MWh in the last five PV and PV/wind rounds,” he comments. “That gives an idea of the impact on the LCOEs considering that financing costs are similar in the two markets.”
Radoia is also convinced, however, that these rules are not preventing more growth in the market, and that they are quite compatible with ‘quality and performance’ of utility-scale projects given that modules are pretty much a commodity. “These are essentially quite smart protectionist measures, a sort of local content requirement disguised as environmental rules,” he says.
Project timelines could also be impacted by the low-carbon conditions, notes Tom Heggarty, a senior analyst covering global PV markets at Wood Mackenzie. Securing the delivery of modules at the right time to meet commercial operation date (COD) deadlines may be complicated, with some eligible manufacturers possibly not being able to meet demand at the right time for developers.
“With tight margins for developers bidding into auctions, any delays beyond the 24 month COD deadline and the tariff penalties that come with them could significantly impact project economics,” Heggarty says.
Limited protectionist effects
French module makers are particularly advantaged by the low-carbon regime, as most source their electricity from nuclear generators – which continue to enjoy a dominant position in the country’s electricity mix. However, to some eyes they remain attractive.
“Though it requires additional work for module manufacturers, the carbon footprint certification methodology in the French PV tenders is helping French and European manufacturers while it does not lead to significant project overcosts,” ADEME photovoltaics engineer, Tristan Carrère says. “Rules could be improved, and we are investigating different pathways, but particular care must be taken regarding rule stability over time,” he explains.
The South Korean government has recently announced a plan to introduce similar rules for carbon footprint certification, minimum efficiency levels, and industrial standards for solar. The South Korean Minister of trade, industry and energy, Sung Yun-mo has made it no secret that one of the ideas behind these rules is helping the domestic PV industry. “The renewable energy industry is expanding globally in quantitative terms and we should not miss opportunities to grow our industry and secure sustainable competitiveness,” he stated publicly.
In a recent report, the CRE even recommended a review of the carbon footprint methodology to include aspects such as transport right along the module supply chain – a change which would make life substantially more difficult for non-European solar PV manufacturers across the entire supply chain.
“More broadly, a reflection to include in particular the carbon footprint of transport should be launched, in a context where supply chains are increasingly segmented and globalized,” the CRE wrote in a recent report. “Beyond the single carbon footprint, the reflection should be extended to the other environmental aspects by assessing the relevance of taking into account in this notation the differentiated impact of the extraction conditions of the different materials entering, even in small proportions, in the composition of modules.”
Although it seems quite unlikely that France’s carbon-emission rules may be tightened further, it also seems highly doubtful that they will be made more flexible, at least in the short term.