The mechanism of the power purchase obligation
Order dated 4 March 2011, as amended by decision dated 30 October 2015 (the 2011 Tariff Order) specifies the conditions of purchase of electricity produced by solar plants and sets the following tariffs1 :
|The building-integration Tariff (T1)||25.78 c€/kWh for any solar plant benefiting from the regime of building integration, with a total installed capacity up to 9 kWc.|
|The simplified building-integration Tariff (T4)||14.70 c€/kWh for any solar plant benefiting from the regime of simplified building integration, with a total installed capacity up to 36 kWc.|
|13.96 c€/kWh for any solar plant benefiting from the regime of simplified building integration, with a total installed capacity between 36 kWc to 100 kWc.|
|Other plants (T5)||6.28 c€/kWh for any other solar plant the total installed capacity of which does not exceed 12 MWc.|
Quarterly adjustment of tariffs
Tariffs determined in accordance with the foregoing are adjusted on a quarterly basis, depending on the volume of the projects added to the waiting list during the previous quarter and regardless of the type of the plants. Such adjustment mechanism permits the control over the long term of the number of projects filed.
- If the number of filed projects (building integration and simplified building integration) complies with the reviewed trajectory of 50 MW per quarter, the purchase tariff will be lowered in order to maintain a profitability level sufficient enough to encourage investments in the light of the anticipated reduction of the costs of production of solar panels (reduction of the purchase tariff of 2.6 %);
- On the contrary, if the number of filed projects does not comply with such trajectory, the reduction of the purchase tariff will either be increased or diminished in order to bring the pace of investments for new projects to 50 MW for the following quarter.
Such adjustment creates uncertainty for developers who do not know the applicable purchase tariff over time2.
The applicable tariff is subject to an annual indexation as from the entry into force of the purchase agreement, depending on the hourly cost of work in the mechanic and energy industries and variations in the price index of the industry production and of business services for the industry.
Notes to avoid segmentation of projects
The terms of « capacity » and « project » were clarified in a decision dated 26 June 2015 modifying the 2011 Tariff Order applicable to any grid request filed as from 1 July 2015. This clarification is intended to avoid artificial segmentation of projects tending to benefit from the most advantageous purchase tariffs.
In addition, cumulative technical criteria help distinguish the plants that are likely to benefit from the regime of building integration from those that are likely to benefit from the regime of simplified building integration.
Calls for tenders
Solar projects also benefit from a support scheme of either « simplified » or « regular » calls for tenders depending on the capacity and the type of projects. The complexity of « regular » calls for tenders and their unevenness constitute disincentives against solar development in France.
« Simplified » calls for tenders
Three « simplified » calls for tenders have been launched since 2011 in relation to building plants with a capacity from 100 to 250 kW (similar to a rooftop area from 1 000 sq.m. to 2 500 sq.m.). Capacities of 155 MW and of 120 MW were set out by contract on the first two calls for tenders that are now closed. The last call for tenders was launched in March 2015 in relation to an initial capacity of 120 MW, divided into 3 phases of 40 MW each and for a period of 4 months. The overall volume of this call for tenders was raised to 240 MW, each phase increasing from 40 to 80 MW. The second and the third phases, respectively from 22 September 2015 until 21 January 2016, and from 22 January 2016 until 20 May 2016, must also consist of lots specifically intended to livestock buildings, thus offering additional opportunities to agricultural projects.
« Regular » calls for tenders: a historic competitiveness
Two « regular » calls for tenders in relation to very large-sized rooftop plants with a capacity up to 250 kW (installed panels on more than 2 500 sq.m.) and to ground-mounted plants were launched in 2011 and 2013. Capacities of 443 MW and of 380 MW were set out by contract. A third call for tenders (CRE 3) was launched in November 2014 in relation to a capacity of 400 MW, divided into three mature technology families (150 MW for building plants, 200 MW for ground-mounted plants, 50 MW for shade structures), with a perspective of cost reduction and with increased requirements in terms of integration to the electrical grid, of enhanced value of innovation and of promotion of low-carbon use projects and that are also virtuous in respect of soil use.
The overall volume of the last call for tenders was doubled in August 2015 and thus increased to 800 MW in order to take into consideration the strong underwriting for lots of ground-mounted plants and the low price as proposed by bidders: an 87,1 €/MWh average for ground-mounted plants with a capacity from 5 MW to 12 MW, a 70 €/MWh average for others and a weighted price of 99,26 €/MWh for the three technology families. With such prices, solar energy has really become competitive against wind energy and new nuclear, which is historic. The additional 400 MW are distributed as follows: 105 MW will be selected for ground-mounted plants with a capacity up to 5 MW and 295 MW will be selected for ground-mounted plants with a capacity from 5 to 12 MW. The closing date for the submission was set on 1 June 2015. The designation of winners is expected for the end of year 2015.
Overseas departments and Corsica
A call for tenders was also launched in May 2015 for large-sized solar plants (capacity up to 100 kW) concerning the overseas departments and Corsica, so as to implement innovative projects that combine storage technology with self-consumption and therefore limit the use of energy during high-demand periods. The overall volume of the call for tenders, equal to 50 MW, is also distributed between building plants (25 MW) and parking shade-structure or ground-mounted plants (25 MW). The closing date for the submission is set on 20 November 2015.