Dec. 3 (Bloomberg) -- France will freeze new solar projects for four months and set a limit on how long they can take to be installed, according to a draft decree detailing the plan that has sparked criticism from the industry.
The halt would apply to projects with a capacity greater than 3 kilowatts, according to the draft circulated by the government today. The rules would give producers 18 months to start output once a first payment is made to the network operator locking in feed-in-tariff subsidies.
Prime Minister Francois Fillon yesterday announced the freeze, saying it would quell what the government has called a “veritable speculative bubble” in the photovoltaic energy industry. Solar companies have said the rules will lead to lost jobs and canceled projects.
“The measures are wretched,” said Arnaud Mine, head of the solar division of the French renewable industries organization Syndicat des Energies Renouvelables. “It’s a sad joke to change regulations every three months.”
France’s solar industry has come under scrutiny in recent months as capacity expanded quickly amid decreasing costs while subsidized tariffs remained relatively high. The government cut the feed-in tariff twice this year while the regulator has said a tax to compensate state-controlled Electricite de France SA for higher costs related to solar power will fall short.
The freeze is too long and the time limit put on installing capacity is too short, Mine of the solar lobby said. A possible cap of 500 megawatts of new capacity a year is too little by half, he added.
The new rules aim to balance a target of 500 megawatts of new solar projects a year and protecting consumers by keeping power prices in check, Fillon said yesterday. Solar development targets for 2012 will be reached “within weeks,” he said.
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.
EDF will pay an average of 546 euros ($724) a megawatt-hour for solar power in 2011, the regulator estimates. This compares with estimated spot market power prices of 55 euros.
“France needs a mechanism to adjust tariffs to the volume of capacity installed,” Eric Vincent, corporate vice president of renewable energies strategy at GDF Suez SA, said in an interview today. “When the development slows, tariffs should remain steady.”
The proposed halt would apply to projects for which no payment has been made before yesterday to the network operator to connect solar panels to the grid.
Projects under way by EDF Energies Nouvelles SA, the renewable energy arm of EDF, account for as much as 15 percent of those affected by the freeze, according to Yvon Andre, head of French operations.
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