French solar sector warns of ‘economic catastrophe’ if proposed subsidy cuts go ahead

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Image: Akuo Energy.

French solar developers, financiers and utilities have said government plans to cut subsidies for PV project owners would lead to an “economic catastrophe” that could threaten the country’s energy transition.

A joint statement signed by executives from industry players including Voltalia, First Solar and Enphase Energy said the early termination of contracts would result in defaulted payments, job losses and the tightening of financial conditions that would slow the development of future PV projects.   

The announcement was made after France’s National Assembly endorsed a government amendment to revise subsidies on the largest PV contracts signed between 2006 and 2010, as it aims to save billions of euros by 2030.

According to the country’s Ministry of Ecological Transition, the adjustments concern a few hundred contracts that generate “excessive” profits. All small and medium-sized PV installations of less than 250kWp are excluded from the proposed changes.

The ministry plans to examine contracts on a case-by-case basis to cover situations in which a subsidy reduction would compromise a site’s ability to continue operations. It said that savings made through the initiative will support the accelerated deployment of future renewable energy projects across France.

However, the joint industry statement – which was also signed by trade bodies SolarPower Europe and Enerplan – said the measure “would constitute an unprecedented impact”, adding that a large number of operations and maintenance contractors would not be able to recover.

The signatories said subsidies have helped create 17,000 jobs and enabled France’s PV sector to take off, making it possible to reduce costs. They warn that trimming the subsidies retroactively would lead to a deterioration of financing conditions, erosion in investor confidence and the loss of thousands of jobs.

French renewables association Syndicat des Energies Renouvelables (SER) said it regrets the proposals and has now called on the country’s senate to block the measure it describes as a “threat to the energy transition and climate objectives of our country”.

The French government has called for as much as 44.5GW of installed PV by 2028 as the country targets 33% renewables in its energy mix by the end of the decade. According to SER figures, installed PV reached 9.43GW at the end of last year.

France’s new coronavirus recovery package includes €30 billion to be spent on an “ecological transition” that will also spearhead low-carbon hydrogen production. When the stimulus was announced in September, French Prime Minister Jean Castex it is “first and foremost a plan intended to serve the climate and biodiversity”.

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