On June 22, renewable energy professionals sounded the alarm. Sector players feared that many solar, wind, hydro and biogas projects would not see the light of day due to soaring commodity prices and rising interest rates. They asked the government for emergency measures, without waiting for the end of the summer. Good news: they have been heard. Last Thursday, the Ministry of Energy Transition unveiled a battery of measures, which will be published in the Official Journal in the coming days, to help this crucial sector for the country’s energy transition and security.
Electric renewable energy producers will thus be able to sell their electricity on the markets for 18 months, before the public support contract is activated. This measure aims to give them the opportunity to take advantage of the currently very high prices on the electricity market (currently nearly 500 euros per megawatt hour for 2023, i.e. an amount well above the price negotiated during calls for tenders) to absorb their additional costs. However, the 18-month period granted by the government remains lower than the 24 months hoped for by the Renewable Energy Union (SER).
Cushioning soaring construction costs
For future smaller projects that benefit from an electricity purchase tariff (known as the open window), the executive will allow the price of the energy resold to be indexed, so that it this reflects more the increase in investment costs. Another highly anticipated measure for professionals in the sector. The government also plans to freeze the initially planned reduction in tariffs for photovoltaic installations on buildings for the year 2022 and to allow all the renewable projects that have already won calls for tenders to increase their power up to +40% before their completion. Finally, biomethane production facilities will be able to benefit from additional time for their commissioning.
Renewable energy professionals are especially affected by the surge in the price of steel, used in particular in hydraulic turbines, in the tanks installed to accommodate solar panels or in the masts of wind turbines. The sector is also impacted by the rise in the price of concrete and that of silicon, the manufacturing process of which requires a lot of energy. Added to this rise in commodity prices is the rise in the cost of transport, but also the rise in interest rates, which put a strain on the borrowing capacity of project promoters and force them to mobilize more equity.
“All of this, put together, leads to an increase in Capex [les dépenses d’investissements, Ndlr] between 25% and 30%”, estimated, at the end of June, Alexandre Roesch, general delegate of the SER.
Essential projects for the coming winters…
According to government calculations, this inflationary context linked to the war in Ukraine threatens 6 to 7 gigawatts (GW) of solar projects and 5 to 6 GW of wind projects.
“These projects are essential to strengthen our energy independence as quickly as possible and […] make a decisive contribution […] to the protection of our security of supply for the coming winters”, underlines the Ministry of Energy Transition, as Europeans prepare to spend the winter without Russian gas.
The war in Ukraine is indeed causing serious energy tensions between Westerners and Moscow, which uses gas as a geopolitical weapon and makes its natural gas deliveries weaker and more uncertain, when they are not completely cut off as to Poland. , Bulgaria or Latvia since last Saturday.
…and the climate
In this race against time to find alternatives to Russian gas, renewables have a major advantage. They are very quick to develop, especially photovoltaics, unlike other carbon-free solutions such as nuclear power plants, which require at least ten years to see the light of day.
Moreover, in addition to contributing to the security of energy supply, these renewable energy projects make it possible to accelerate the transition to a low-carbon economy, unlike other emergency solutions, such as the use of coal-fired power plants, many of whom should play extra time on the Old Continent.
Soon an emergency law
These regulatory emergency measures come in addition to an emergency law currently being prepared and expected for the next school year in order to structurally accelerate the deployment of renewable energies in France.
France, which is clearly lagging behind on its national targets, is also the only one of the 27 Member States to have missed its target set by a European directive. In 2020, the share of renewable energies in the country’s gross final energy consumption thus only reached 19%, against the 23% expected.
It’s necessary “have the honesty to admit that we have fallen behind”, himself recognized President Emmanuel Macron, during his trip to Belfort last February. Also, the Head of State has given himself the ambitious objective of multiplying by ten the installed photovoltaic solar power by 2050 (that is to say about 100 GW) and to reach 40 GW in the offshore wind power (i.e. the equivalent more or less of 50 wind farms).
Full throttle on offshore wind… not on land
With this in mind, the government has just selected two areas off the island of Oléron, for the establishment of two new parks, while the initial project announced by Jean Castex, in January 2021, only mentioned one single park. The two parks could thus represent a total capacity of approximately 2 GW, i.e. the equivalent “of a plant with 2 reactors like Fessenheim”, welcomed the Ministry of Energy Transition. For the first park, whose public debate ended last February, commissioning is planned for the early 2030s.
Read our dossier on future wind farms off Oléron
On the other hand, the President has decided to put the brakes on onshore wind power. It provides for a doubling of the capacity of onshore wind turbines by 2050, whereas the initial objective was to double the capacity by 2030. These wind turbines, which are regularly the subject of strong criticism, particularly during periods of electoral campaigns, should however bring in nearly 8 billion euros to the State according to the calculations of the energy regulator.
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