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France Wants Tighter Rules For Solar Energy, Besson Says

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Nov. 30 (Bloomberg) -- France’s solar industry needs to be more tightly regulated, Industry Minister Eric Besson said ahead of a meeting that may decide policy on the expanding sector.

Targets for increasing output need to be balanced against the “uncontrolled rise in electricity bills,” Besson said today at a press conference in Paris. He confirmed a solar policy meeting will take place tomorrow with Prime Minister Francois Fillon.

France’s solar industry has come under scrutiny in recent months as capacity expanded while subsidized tariffs remained relatively high. The government cut the so-called feed-in tariff for solar power twice this year to counter what it called a speculative bubble. A policy overhaul may include an annual capacity growth cap of 500 megawatts, the government has said.

“The industry is under pressure,” Jean-Philippe Roudil, head of the Syndicat des Energies Renouvelables, an industry group, said by telephone. Reports of further rate cuts for solar power are “rumors” and the government tomorrow will likely announce more consultations with industry, he said.

The cost of solar power for state-controlled utilities is projected to rise to 915 million euros next year from 128 million euros in 2010, according to figures published yesterday by the country’s energy regulator. A tax that is supposed to compensate mostly EDF for the higher costs of renewable energy has been insufficient since 2009, resulting in a shortfall for EDF of 1.4 billion euros last year and an estimate of more than 1 billion euros this year, the regulator said.

Cost to Consumers

Feed-in tariffs require utilities to buy electricity from renewable sources at more than the standard rate. EDF, France’s former power monopoly, pays more for solar power than for the nuclear power it produces at 58 reactors and what it can buy on European spot electricity markets. The added cost is passed on to consumers through the tax.

The government is preparing to cut the price EDF pays for solar energy about 10 percent and cap the annual volume of installations, Les Echos reported yesterday, citing people it didn’t identify. Besson today declined to comment on the report.

The regulator estimates that EDF will pay an average of 546 euros a megawatt-hour for solar power in 2011. This compares with estimated spot market power prices of 55 euros.

France will have 860 megawatts of photovoltaic capacity installed and connected to the grid at the end of 2010 and a total of 2,150 megawatts by the end of next year, according to the regulator.

“We think projects in the pipeline amount to less,” Roudil said. His group is recommending modifying solar power rates according to installed capacity.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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