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France

Overview

Following the extensive "Grenelle Environment Forum" consultation between July and November 2007, France has established a renewable energy target of sourcing 23% of the country's consumed energy from renewable sources by 2020. By the end of 2009, France reported that it was already sourcing 12.7% of its consumed energy from renewable sources.

Legal Framework

The Electricity Act 2000 (the "Act") established the obligation for electricity suppliers to purchase electricity from renewable sources. Further orders made pursuant to the Act have then introduced the framework to incentivize private renewable energy generation through a scheme known as Feed in Tariffs ("FITs").

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FIT Incentive Mechanism

The main element of France's renewable energy policy has been delivered by the introduction of FITs, pursuant to the Act. FITs are designed to encourage the production of low-carbon energy by private generators. The FITs scheme requires Electricité de France, and other "non-nationalised" electricity suppliers, to source certain levels of their energy from renewable sources. Any private generator of renewable energy that feeds electricity into the grid can apply to receive a payment per kWh of electricity produced, with the precise amounts of the payment being dependent on the type of technology utilised in the installation. An eligible installation will be entitled to receive FIT payments for a defined period of time, known as a "guarantee period".

Any private energy generator wishing to benefit from the FIT scheme must receive an authorisation to operate their generating installation, and a Power Purchase Agreement which enables the producer to enter into a supply agreement with an electricity supplier.

Below is a summary of the current FIT entitlements granted to different forms of renewable energy, which are subject to change.

Wind

FIT payments for wind installations were established under an Order dated 17 November 2008.

Onshore wind projects attract a guaranteed FIT payment for 15 years, with the level of the tariff being 8.2 c€/kWh for the first ten years of the installation's guarantee period. For the remaining five years of the guarantee period, this tariff is reduced to between 2.8 c€/kWh and 8.2 c€/kWh dependent on the location of the installation.

Offshore wind projects benefit from a 20 year guarantee period for the purposes of receiving FIT payments. The level of the tariff is set to 13 c€/kWh for the first ten years of the installation's guarantee period, and thereafter the tariff will be set between 3 and 13 c€/kWh depending on the site location.

Photovoltaic

The level of tariff received for Photovoltaic ("PV") installations was established pursuant to an Order dated 4 March 2011. The guarantee period for all PV installations will be 20 years.

For all PV installations integrated into residential, hospital or school buildings, the basic tariff is set between 46 c€/kWh and 30.35 c€/kWh depending on the peak power and the use of the installation as well as the fulfilment of the simplified integration criteria. The final tariff is established by subjecting this basic tariff to a coefficient, which is more or less depending on the peak power of the installation.

From 30 June 2011, a decreasing coefficient will apply on a quarterly basis to the final tariff, depending on the date of application for incorporation into the network and will be calculated according to the cumulated peak power of the applications. With time, the tariff will constantly decrease or at least remain stable.

For all other integrated installations the uniform basic tariff will be 12 c€/kWh, subject to an quarterly automatic decrease from 30 June 2011.

In addition, more stringent controls will be performed on installations with a peak performance superior to 9kW. Indeed, by the time of its application for incorporation into the network, the producer will have to provide one of the following documents, in order to justify the financial feasibility of the project:

Hydraulic

FIT payments for Hydraulic installations were granted by an Order dated 1 March 2007, which guarantees payments for 20 years.

Installations will receive a tariff of 6.07 c€/kWh, but are eligible to receive a premium of between 0.5 c€/kWh and 2.5 c€/kWh for small installations (which are installations with a generating peak of less than 3 kW). A further premium of up to 1.68 c€/kWh is also available during the winter, depending on the regularity of production.

For tidal, wave and hydrokinetic installations, the tariff is set at 15 c€/kWh.

Geothermal

The law establishing FITs for Geothermal installations was enacted under an Order dated 10 July 2006 and amended under an Order dated 23 July 2010, guaranteeing FIT payments for these installations for a period of 15 years.

For onshore geothermal installations the tariff is 20 c€/kWh with the tariff being set at 13 c€/kWh for French overseas territories installations. Both onshore and French overseas territories installations can benefit from a premium of up to respectively 8 c€/kWh and 3 c€/kWh depending on the deemed efficiency of the technology utilised by the installation.

Bio-energy

Bio-energy is further sub-categorised into four different types of technology, as set out below:

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Other Incentives

All of the energies above are also eligible for tax credits and accelerated financial amortization under certain conditions. The eligibility for each type of installation is below:

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