Renewable energy in France

The year 2022 was characterised by an energy crisis that threatened the country’s security and resulted in an increase of the electricity prices on the wholesale market. This crisis highlighted the key role of renewable energy in achieving the objectives of fighting climate change, ensuring the security of supply and energy independence.

On the other hand, 2023 has seen a peak in the production figures for both wind power (50.8 TWh, i.e. 10.3% of the electricity mix) and solar power (21.6 TWh, i.e. 4.4% of the electricity mix). As a result of the development of renewable energy in 2023, wind and solar installations represented 14.6% of the French electricity mix. Wind power became the third-largest generator, behind nuclear and hydro power but ahead of gas. Wind and solar power thus contribute to balancing electricity supply and demand, including at times of peak consumption.

In November 2023, the government launched a public consultation on a document outlining the key directions of France's energy policy: the French Strategy for Energy and Climate (SFEC). The programmatic section of the Law on energy production, which will be presented to the Council of Ministers in 2024, and the decree concerning the Multiannual Energy Programme (PPE 3), which will follow the promulgation of the law, will specify the objectives for the development of the energy mix in France for the period 2024-2033.

Due to the overall cost for the electricity consumer and the discrepancy between the steady purchase price and declining cost of equipment, from 1 July 2014 the EU Commission revised its State aid guidelines aimed at monitoring the support for energy generation sources.

Consequently, the current support scheme for renewable energy sources in France is based on Law No. 2015-992 of 17 August 2015 on energy transition for green growth. The new rules are based on the sale on the market of electricity from renewable sources, with a possible uplift if the market price is below the reference tariff. As of today, the power purchase obligation scheme has been gradually replaced by the contract for difference scheme.

Gradual replacement of feed-in tariffs with premium fees (“open window” system)

The power purchase obligation scheme was governed by Article L.314-1 of the French Energy Code. Purchasing agents designated by the law (EDF or, in some cases, local distribution companies) were compelled to enter into a regulated power purchase agreement to buy the entire production of each renewable producer willing to do so. Every renewable producer agreed to this arrangement, as the feed-in tariff has remained above the market price. This covered onshore wind farms, geothermal installations, solar, photovoltaic and thermal facilities, whose characteristics are determined by decrees.

The feed-in tariff regime is maintained for small-capacity renewable plants.

The Law of 17 August 2015 profoundly reformed this support system, turning it into a mechanism of contracts for difference, in accordance with the new Guidelines.

Producers must now sell their energy on the market, and they receive, through an ex-post mechanism, an additional variable remuneration (complément de rémunération) from EDF in the form of a monthly premium. The premium is based on a formula which includes a reference tariff set by a ministerial order for each type of energy. This remuneration aims to ensure a reasonable return on invested capital. However, if the market price exceeds the reference tariff, the generators must reimburse the difference to EDF, which acts as a State agency. Until 20 December 2021, the sums to be reimbursed by the producer in the event of a negative premium were capped at the total sums already paid by EDF OA since the start of these contracts.

In the recent context of energy crisis and rising prices, the French State decided to de-cap the reimbursements due by renewable energy producers when the market price exceeds the reference tariff.

The application of this de-cap was progressive:

• Decree of 17 December 2021 removed the cap on the premium that must be repaid for new contracts. Then, the French Ministry of Ecological Transition has informed that contracts will be temporarily uncapped for the period from 1 April to 31 December 2022.
• Article 38 of Law No. 2022-1157 of 16 August 2022 decided to retroactively end, in certain cases, the capping repayments principle to existing remuneration contracts, applicable from 1st January 2022, through the introduction of a “threshold” price defined by a ministerial order.

However, on 26 October 2023, the Constitutional Court declared Article 38 unconstitutional, for formal grounds. French Parliament is currently discussing new legislative provisions to replace the unconstitutional mechanism by a broadly similar mechanism.

Public tenders (tender procedure and competitive dialogue procedure)

Facilities which cannot benefit from the power purchase obligation mechanism or from premium fees through the “open window” (e.g. offshore wind farms and photovoltaic installations with a power above 500kWp) may benefit from the power purchase obligation or from premium fees through a competitive process. The competitive process may be used by the State in order to achieve the targets of the French energy multi-annual programme.

Corporate Power Purchase Agreements (CPPAs) have developed rapidly and significantly in France in recent years.

If they were initially part of a market practice, they are now expressly covered by French law in several aspects.

Mandatory electricity supply authorisation

The law No. 2023-175 of 10 March 2023 on accelerating the production of renewable energies (APER Law) substantially changed article L. 333-1 of the French Energy Code.

Since 12 March 2023, it now stipulates that "from 1^st July 2023, electricity producers concluding a contract for the direct sale of electricity to end consumers or to network operators for their losses” must hold an electricity supply authorization.

Article R. 333-1 of the French Energy Code lists information that the applicant must provide the administration with, including demonstration of its technical, financial and economic capacity to supply electricity. The French government has however published a notice specifying that such capacities can be the ones of the company controlling the producer, in the meaning of article L. 233-3 of the French Commercial Code, in the context of a CPPA (where the producer is indeed an SPV).

Article L. 333-1 also provides for the possibility for producers to designate "a producer or a third-party supplier, already the holder of such an authorisation, so that it assumes, by delegation, in respect of end consumers, the obligations incumbent on electricity suppliers under the [Energy Code]".

It is likely that third-party electricity suppliers delivering to the buyer (i) the electricity produced by the producer’s assets (in the context of an off-site CPPA) and (ii) top-up electricity, are to be partners of choice for assuming, instead of the producer, the obligations incumbent on electricity suppliers.

Use of CPPAs by public purchasers

Since 12 March 2023, article L. 333-1 of the Energy Code now stipulates that the contracting authorities mentioned in articles L. 1211-1 and L. 1212-1 of the French Public Procurement Code may enter into a CPPA to meet their needs for electricity produced from renewable sources.

Subject to compliance with a competitive tendering procedure, it is therefore a new market for producers, and an opportunity for public bodies which may use CPPAs to control their energy costs.

Combining a CPPA with a support scheme following a competitive tendering procedure

As per article L. 311-10 of the French Energy Code, the administrative authority may proceed to a competitive tendering procedure when production capacity does not meet the objectives of the French multi-annual energy programme. In practice, calls for tender are organised by the Energy Regulation Commission for electricity production projects using onshore / offshore wind turbines and photovoltaic panels.

Successful bidders were awarded a feed-in tariff contract, or a contract for difference, for all the electricity the awarded project produced. Article L. 311-12 of the French Energy Code has been amended by the APER Law and now stipulates that these purchase contracts or remuneration supplement contracts may cover only part of the electricity produced.

Project owners may now choose to benefit from a feed-in tariff contract or a contract for difference only for a part of the electricity they produce, while the rest of the electricity produced may be sold via a CPPA.

CPPA Renewable Electricity Guarantee

Announced on 10 November 2022 by the French government, and now proposed by Bpifrance, the Renewable Electricity Guarantee covers up to 80% of the producer's loss of income in the event of buyer default.

Eligible CPPAs are those relating to greenfield solar or wind turbine plants, with a minimum volume of 10 GWh per year, for a term of between 10 and 25 years. 

The law No. 2023-175 of 10 March 2023 on accelerating the production of renewable energies (APER Law) brought more clarity in the legal provisions governing electricity grid connection, and now allows for better planning of grid connection works and greater flexibility in their construction.

Revamping of the Energy Code provisions relating to electricity grid connection

Article 26 of the APER Law authorised the Government to amend the legislative provisions of the French Energy Code relating to grid connection by means of ordinance, in particular in order to eliminate inconsistencies, improve readability, clarify the way in which grid connection costs are borne, and lay down the conditions under which connection agreements may allow the connection capacity to be increased in relation to the capacity actually made available.

Ordinance No. 2023-816 of 23 August 2023 on connection and access to public electricity networks indeed reorganised and clarified a lot of the provisions of the Energy Code relating to electricity grid connection.

It also modified article L. 342-11 of the Energy Code, which no longer requires local authorities in charge of urban planning to pay for the grid connection costs not covered by the tariffs for use of the public electricity transmission and distribution networks, such costs now to be paid by the grid connection petitioner. In the past, the question of the allocation of those costs between the local authorities in charge of urban planning, the grid operator and the petitioner was a source of slowdown in the financing of grid connection work

It has also amended article L. 342-24 of the Energy Code, which now states that connection agreements in force or signed after 10 November 2023 must specify the terms and conditions under which the connection capacity may be modified by the system operator, when the maximum power drawn is less than the planned capacity, for the purposes of optimum system sizing.

Ranking of grid connection requests

Article 28 of the APER Law establishes a special procedure to clear the grid connection request queue. When, in a defined area, the grid connection deadline is more than five years for a renewable hydrogen production project or a project to modify an industrial installation aimed essentially at reducing its CO2 emissions, the administrative authority may set a ranking order for grid connection requests made in this area. A decree still to be adopted shall set the ranking criteria, which will take into account the projected commissioning dates, the characteristics and CO2 reductions of these projects, and the dates on which connection requests were received.

This will enable projects to be prioritised for grid connection on the basis of criteria other than "first come, first served".

Speeding up the grid connection of offshore wind farms

Article 31 of the APER Law amended article L. 342-7 of the Energy Code, which now states that "after publication of the mapping of maritime and terrestrial zones referred to in article L. 219-5-1 of the Environment Code, the Minister responsible for energy may ask the TSO to initiate studies and work in advance for the grid connection of offshore electricity production facilities".

Article L. 219-5-1 of the Environment Code has indeed been amended by article 56 of the APER Law, as it now states that "the strategic coastal document establishes, for each maritime coastline, a map of priority maritime and land areas for the installation, over a period of ten years from its publication, of offshore wind-based renewable energy production facilities and their grid connection works to the electricity transmission network".

Lastly, Article 61 amended Article L. 181-2 of the Environment Code, which now states that the environmental authorisation is to be considered as a single authorisation for grid connection works located in French maritime areas.