French FiT fiasco continues with further cuts

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Photovoltaic systems with a capacity of over 100kW in France will now receive a reduced feed-in tariff rate according to the country’s environment minister. Nathalie Kosciuso-Morizet has revealed the new rate of €0.12 per kWh, which will come into effect today and apply to all systems regardless of whether they are installed on a roof or open-space.

According to latest reports, open-space systems are faced with cutbacks as high as 57% compared to remuneration in September 2010, while roof-top systems will face reductions of up to 70%. Feed-in tariffs for small PV systems are, momentarily, to be reduced by 20%. Over the course of the year, quarterly declines of 10 percentage points will come into force.

“This step will see the comparably high PV tariffs in France adjusted in line with those of neighbouring countries,” said Markus Monssen-Wackerbeck, head of energy and utilities at EuPD Research. “Such adjustments are ambitious but nonetheless necessary for the long term remedy of PV price divergences in various national markets.”

As a result of these changes in French solar funding, market experts estimate that parts of solar projects currently in the planning phase may not now go ahead. According to sources, there were projects in the pipeline of 5.3GW at the start of the halt in construction ordered by the Government in December 2010. Some had already received building as well as net connection approval. Others believe that the figure for projects in the planning phase is over 3GW.

“There are difficult times ahead for these projects,” said Markus A.W. Hoehner, CEO of the EuPD Research. “These systems were planned using a completely different calculation model and some of them will partly be recalculated.”

“The industry should use this pressure to bring high systems prices in the country down to a competitive, European level,” continued Hoehner. Figures from the current European PriceMonitor published by EuPD Research show that, on average, the costs for a French PV system under 10kW are about €4,400 and peak at €6,000. Systems between 10 and 100kW cost approximately €3,860.

However, market experts at EuPD Research see a downward trend in installed capacity as likely. “The market will consolidate in the next months, yet France still has considerable untapped potential in the private roof-top sector. Manufacturers that respond to this increased price pressure and, by highlighting their first rate quality and strong brand name, position themselves in the right segment will survive these tough changes,” concludes Monssen-Wackerbeck.

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