How Will France Support a Skyrocketing Solar Market?

Since 2007, the French photovoltaic market has been booming, with close to 500 megawatts of installed capacity expected this year, up from a mere 40 megawatts three years ago.

Most of this growth first stemmed from residential installations that benefited from high feed-in-tariffs for producers and substantial tax rebates for households. Since last year larger installations have also been skyrocketing.

On September 14, the French government released a draft regulation detailing the upcoming changes regarding photovoltaic electricity feed-in-tariffs in France. This draft is pending approval from the Conseil Supérieur de l’Energie (Energy Supreme Council) until late September.

France already has among the highest tariffs in the world (building-integrated photovoltaic electricity is collected by the main French utility, EDF, at 60 Euro cents/kWh). These tariffs have not only been maintained to 2012,  but in some cases even raised. The icing on the cake is that administrative procedures that have constrained the growth of the sector in France have also been simplified.

Essentially the draft regulation defines three photovoltaic electricity feed-in-tariffs depending on the system:

• For building integrated photovoltaic systems, i.e. roof-integrated modules over a closed building that ensures waterproofing and physical isolation instead of traditional roof tiles: 60 c€/kWh
• For roof-mounted systems with over 3 kWc production capacity and on buildings ensuring the protection of humans, animals, goods and activities: 45 c€/kWh
• For ground-based plants: 32 to 39.4 c€/kWh, depending on the geographic area in France

While this suggests ongoing support by the French government in stimulating demand for photovoltaic systems, a number of new additions to existing regulations that have surprisingly attracted little media attention could potentially change the shape of the French industry, if enforced.

First, the new access conditions to the maximum feed-in-tariff of 60 c€/kWh are more restrictive. Only “closed” buildings will be eligible to receive a roof-integrated photovoltaic system. In addition, “rigid” modules (made of silicon) require that the “waterproof quality of the system will have to be fulfilled principally by the module.”

The term “principally” is quite vague in this context and subject to many interpretations. The current government position is that a commission will be established involving players in the construction and photovoltaic business to choose which systems can be considered as fully integrated.

All systems installed after June 2010 will have to be compliant with the new rules, which raises issues for the photovoltaic manufacturing companies that must wait for their roof integration and waterproofing products and services to be declared eligible by the commission.

The regulation may also reflect the government’s agenda to aid French companies in the upstream segments of the value chain (such as modules manufacturing) where France lags behind the more innovative or cheaper Japanese, German, U.S. and Chinese players. But today most of these modules do not provide the required waterproofing function, raising the issue of product availability by June 2010.

Second, a new tariff at 45 c€/kWh was created to discourage a number of of projects aiming to take advantage of the previously vague integration definition, which could allow modules to be placed on metallic structures presented as “hangars” and collect the 60 c€/kWh maximum rate.

Indeed, looking at the 45 c€/kWh feed-in-tariff eligibility criteria, it includes what French players call “surimposé,” a situation where roof tiles are not replaced but rather the module is installed on a frame which in turn is placed upon the roof.

While the surimposé structure dominates the market in Germany, it seemed contrary to what the French government seemed to be advocating until now–a more aesthetic integrated solution. Cheaper to install, as frames are inexpensive and require negligible heavy roof reconstruction, and also less restrictive in terms of eligibility conditions, it could capture a substantial share of larger roofs.

Third, the regionalization of feed-in-tariffs–done to compensate for discrepancies in sunlight exposure across the country–has only been adopted for ground photovoltaic installations, thereby favoring larger utility-scale installations over the country rather than smaller, urban-area integrated systems.

Through the draft regulation, the French government aims to demonstrate its support for the development of the industry by maintaining a high level of feed-in-tariffs in a country where sunlight is not a scarce resource. In particular, the creation of an intermediate tariff at 45 c€/kWh shows the desire to support the development of the larger roofing projects.

However, the implementation of several of these measures could arguably be difficult and will likely require further clarification. The impact of a new feed-in-tariff at 45 c€/kWh could result in over-development of roof-mounted larger installations. That essentially goes against France’s position to encourage the emergence of its own photovoltaic industry, now at the crossroads of the photovoltaic and construction technologies.

[Flickr photo credit: gcattiaux, nikonvscanon]