With our Corporate Energy @TW series, we aim to highlight current developments and issues in the renewable energy sector across different jurisdictions. Taylor Wessing’s international Energy & Infrastructure industry group has more than 50 experts across 16 offices. We have been active in corporate/M&A and financing in relation to renewable energy for more than 15 years and have extensive legal and commercial expertise and market knowledge. In 2022, Taylor Wessing is again among the global leaders in Clean Energy, as the Clean Energy League Tables 2022 indicate. By number of deals completed in 2021, the Taylor Wessing team ranked fourth globally in the category "Top 20 Legal Advisers by Number of M&A Deals". We were thus able to maintain our excellent result of the previous year. In 2021, Taylor Wessing advised on almost 80 renewable energy and cleantech deals and projects, totaling more than 5.5 gigawatts.
Question: What are the most important current developments in the field of renewable energy transactions and financing?
Answer: The renewable energy sector is increasing exponentially in France. This can be explained in three ways: firstly, the government's announced willingness to massively develop renewable energies, secondly, the need to decarbonize energy production in the face of global warming and France's engagement at this level, and thirdly, because of the energy crisis and the inherent price increase, caused by an increased demand along with lower gas imports, leading to the need to produce more French energy.
President Emmanuel Macron has announced a plan for a massive expansion of renewable energies. The focus is on solar energy, with the aim of increasing production capacity tenfold, on offshore wind power, with the creation of around 50 offshore wind farms, but also on onshore wind power, with the aim of doubling available capacity by 2050. In general, the share of renewable energy in electricity generation was over 25% in 2021, and France's goal is to increase this share to over 40% by 2030.
French Prime Minister Jean Castex also announced in August 2021 that more than €25 billion will be invested in renewable energy over the next five years to support more than 25 GW of new solar, onshore wind and hydroelectric generation capacity.
Further evidence of the upswing the sector is experiencing is a total turnover of €17.8 billion, an increase of more than 13% compared to the year 2020.
All of these elements point to a very strong growth in renewable energy transactions for 2022 and beyond.
Question: What market developments can be expected in 2022 and beyond?
Answer: Based on the French government's desire to significantly develop offshore wind energy, the first two floating offshore wind farms in the Mediterranean are to be installed by 2030, whereas the first calls for tenders were held in early 2022. Each wind farm will be awarded to developers in 2023 and will include about twenty wind turbines for a production capacity of 250 MW, which may be expanded to 750 MW.
If France is behind in the development of offshore wind energy, it will catch up quickly. In fact, the first offshore wind farms, under construction since 2010, should be operational by the end of 2022.
The French government has set a target of building 50 offshore wind farms by 2050, i.e. a total capacity of 40 GW, which should account for 20% of France's electricity consumption. To achieve this goal, the government also announced the allocation of 2 GW of projects each year from 2024. This would make offshore wind power France`s second largest source of electricity after nuclear power.
Question: What was your personal “game changer” or “highlight” in the field of renewable energies in 2021?
Answer: Legal activity in the field of renewable energies was particularly rich in 2021, but two elements are particularly noteworthy:
Firstly, the implementation of the legal framework relating to hydrogen, which was incorporated into the French Energy Code by the ordinance of 17 February 2021. The first main contribution of the ordinance is the effort to legally define the different types of hydrogen.
The ordinance defines three types of hydrogen, each distinguished by a greenhouse gas emission threshold and by the origin of the primary source used to produce the hydrogen.
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Renewable hydrogen produced from renewable energy sources, the production of which complies with a threshold of carbon dioxide equivalent emissions per kilogram of hydrogen produced.
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Low-carbon hydrogen that meets the same threshold of carbon dioxide equivalent emissions per kilogram of hydrogen produced and comes from non-renewable energy sources.
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And carbonaceous hydrogen that does not meet the definition of renewable hydrogen or low-carbon hydrogen.
This ordinance introduced a support mechanism aimed at the production of renewable or low-carbon hydrogen by water electrolysis, which is only available to those established on the territory of a Member State of the European Union or the European Economic Area, operating or wishing to build and operate a hydrogen production unit in France.
The implementation of such a system is likely to have a strong positive impact on investments made in renewable and low-carbon hydrogen.
The second highlight of the year was the groundbreaking decision by the Paris Administrative Court in the "Case of the Century", which was supported by a petition signed by over 2 million citizens. The judges condemned the government to repair the ecological damage caused by the breach of its climate commitments - a first at the global level.
The government now has until 31 December 2022 to catch up and reduce its CO2 emissions. On 31 December 2022, judges can impose a fine if the State has still not met its obligations.
Such a decision could only lead to an exponential growth in the use of renewable energies, which are necessary for the French government to fulfil its commitments in the fight against CO2 emissions.
