French government considers cutting pre-2011 FITs

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From pv magazine France.

French financial newspaper Les Echos today claimed the Ministry of Economy and Finance is considering retroactively renegotiating feed-in tariffs (FITs) awarded by the government to solar energy projects before 2011.

Provisions to enact cuts which could save around €600 million could be included in the budget bill for next year which is expected this month, according to the report.

The French Court of Auditors in 2018 ruled the historic FITs too generous. “The tariffs granted before 2011 will represent €2 billion per year until 2030 (i.e. €38.4 billion, cumulatively) for a production volume equivalent to 0.7% of the electricity mix”, said a report from the authority at the time. “This represents a support cost of around €480/MWh.”

The Les Echos report quoted environmental law specialist Arnaud Gossement as saying: “We are faced with contracts signed several years ago. Their questioning by the public authorities would be unprecedented and would risk generating mass disputes with the state, but also between solar players who could claim the impossibility of fulfilling certain clauses of their contracts because of the decision of the state.”

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Aurélie Beauvais, policy director of trade body SolarPower Europe, told pv magazine: “If the reports of the retroactive review prove to be correct, this would be a step in the wrong direction for reaching the European Green Deal’s climate goals. Retroactive changes have historically undermined the confidence of investors and consumers to invest in solar and are now banned in the EU’s Clean Energy Package directive.

“Any retroactive changes that can undermine certainty and stability for our sector are counter-productive to [the European] Commission’s objective for climate neutrality by 2050. While the details of the proposed retroactive review are yet to be confirmed, it is essential that such a review does not hamper solar projects at a time when the EU needs a much faster rate of solar deployment.

Xavier Daval, CEO of French solar technical advisory KilowattSol, told pv magazine the historic FITs were high because of the uncertainties associated with a new technology at the time. Retroactively, these first tariffs may seem disproportionate today but at the time, the pioneers of solar took risks that only the prospect of a significant gain could balance the capital intensity required 10 years ago, when the panels cost more than €3 per Watt. When, in 2020 Elon Musk sends a rocket into space for $2 million while the Apollo 11 mission cost $2 billion, should we retroactively consider that the investment of the sixties was a mistake and that as a good father to family, it would have been necessary to wait for the 21st century to begin the conquest of space?

The French government retroactively cut offshore wind incentives two years ago, after a long battle with the nascent industry.

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