The French Government is to halt all plans for new solar projects, except residential systems less than 3kW, in a bid to end a “veritable speculative bubble” that has emerged in the industry, said Prime Minister, Francois Fillon. For bigger ventures, the Government plans to pass a decree “to temporarily suspend the registration of new projects.” This move goes against recent speculation that the feed-in tariff rate would be reduced yet again, reports Bloomberg.
“The flourishing of solar in France, which is faster than expected, comes at a cost to local Government and consumers,” explained Fillon. “Development relies on a feed-in tariff for electricity that is very favourable to producers.”
The Prime Minister announced that a new regulatory framework would be put in place by March 2011, a framework which will be aimed at keeping the ever-increasing installation figures at a reasonable level. Long-term targets for solar development have already been surpassed “justifying” the new rules, continued Fillon.
According to Fillon, if things continued at the current rate, solar development targets for 2012 will be reached “within weeks.” The new rules aim to balance a target of 500MW of new solar projects a year, protecting consumers by keeping power prices down. These prices are at risk of rising at an unmanageable rate as the cost of the feed-in tariff is passed on by the electricity companies to the consumer. EDF currently pays more for solar power than for the nuclear power it produces at 58 reactors, as well as what it can buy on European spot electricity markets. The electricity provider is anticipated to pay an average of €546 (US$722) a megawatt-hour for solar power in 2011. This compares with estimated spot market power prices of €55.
Update
According to international law firm, Eversheds, the newly proposed ‘Decree,’ excludes from the moratorium freeze not only installations with a scheduled installed power production capacity below or equivalent to 3kW but also those projects that have made payment of the first installment to ERDF for the work required for grid connection.
Eversheds also noted that this applies to installations for which the first installment had already been paid more than 15 months prior to the date of the Decree coming into force. The commissioning of this installation must happen within three months following this date.
However, the law firm warned that it is not 100% clear whether this last date shall be read as the date of payment of the first installment or the date of the Decree coming into force. Clarification of this matter would be raised in discussions taking place.
Apparently, at the end of the four month freeze, Eversheds noted that projects not excluded would then fall under the new regulatory framework. New applications for the benefit of the power purchase obligations would have to be made.
Additional reporting by Mark Osborne
