France: French Solar Projects

Last Updated: 6 December 2011
Article by Jacques Buhart and Nicolas Lafont

On 15 September 2011, the French Energy Regulation Committee (CRE) issued a set of rules covering the applicable conditions for the new tender process for photovoltaic (PV) projects in France with a capacity exceeding 250kw. This tender process is designed to help France meet its target of obtaining 5400 MW of its power from solar energy by 2020.

The publication of these rules, which form part of a larger regime designed to encourage increased energy production through use of solar facilities, follows the publication on 1 August 2011 of the rules for Roof-Mounted PV Panels with a capacity ranging from 100kw and 250kw.

Practicalities of the Tender Process

Three main types of projects are covered by this tender process: (i) PV cells mounted onto buildings; (ii) ground-mounted PV cells using innovative technology; and (iii) ground-mounted PV cells using existing, recognised technology. Within these three categories, there are several sub-categories for different sized projects, each setting out certain conditions that the tenders must satisfy.

Category 1: PV cells mounted onto buildings

  • Sub-category 1a captures roof-mounted projects with capacity of up to 4.5 MW each. In total, projects under category 1 shall not exceed 50 MW.

Category 2: Ground-mounted PV cells using innovative technology

  • Sub-category 2a captures thermodynamic solar plants with capacity of up to 37.5 MW each. In total, projects under sub-category 2a shall not exceed 37.5 MW.
  • Sub-category 2b captures solar plants using concentrated solar power (accounting for at least 30 per cent of the total energy produced by the plant) with capacity of up to 12 MW each. In total, projects under sub-category 2b shall not exceed 50 MW.
  • Sub-category 2c captures solar plants fitted with devices following the path of the sun. The projects must have a maximum total capacity of 100 MW, with no single project exceeding a 12 MW capacity.
  • Sub-category 2d captures solar plants located in Corsica and overseas French territories and using energy storage devices. The projects must have a maximum total capacity of 50 MW with no single project exceeding a 12 MW capacity. Solar projects located in parking areas are permitted under this sub-category.

Category 3: Ground-mounted PV cells using existing, recognised technology

  • Sub-category 3a captures solar panels covering parking areas. In total, these projects must have a total maximum capacity of 125 MW, with no single project having a capacity of less than 4.5 MW or more than 40 MW.
  • Sub-category 3b captures ground-mounted solar plants or solar plants covering parking areas. These projects must have a total maximum capacity of 37. 5 MW, with each project having a capacity of less than 4.5 MW.

Each applicant must make its bid within the ambit of these sub-categories, conforming to the specific applicable requirements. A separate application has to be made for each project that a bidder tenders for. All bids made must be unconditional and bidders must obtain the requisite administrative approvals for their project.

The CRE must receive all applications by 8 February 2012. The documentation must include, inter alia, a dossier on the environmental impact and the associated industrial risks of the project, certificates confirming that planning permission for the project has been obtained, a simplified carbon assessment of the PV cells, and confirmation that the project will contribute both to research into, and the development of, the solar industry.

In the two weeks following the deadline, the CRE will consider all applications received, rejecting those applications that fail to conform to the prescribed format. In the following four months, the CRE will draw up a short-list of suitable applications that it will then pass on to the Minister of Ecology, Sustainable Development, Transport and Housing and the Minister for the Economy, Finance and Industry (competent Ministers), who in turn will decide which of the applications are successful.

The rules state that the supplier of the panels and the companies employed by the bidder to install the panels must be certified by the International Organization for Standardization.

Corporate Structure and Financial Strength of the Bidder

Those bidding for a project will be required to detail the structure of their project, the role of the bidder and the identity of its controlling shareholders. Furthermore, bidders will be required to set out the financial risks associated with the project. This financial risk analysis should constitute: an assessment of the estimated amount of investment into the project; an explanation of the investment, namely whether it will be undertaken by way of equity, debt or loans; the costs involved in the project; and the expected profitability of the project. The bidders will also be expected to provide a letter of intent from the financing banks involved.
Bidders with insufficient technical capabilities and financial resources, which thereby fail to meet the requisite criteria, will be eliminated from the tender process immediately.

The Winning Bids

The competent Ministers will consider all short-listed applications, scoring each of them out of 30, with over a third of the mark being awarded on the basis of the price proposed by the bidder. Price scoring is determined on the basis of a prescribed formula for each of the seven sub-categories by reference to a maximum and a minimum price that is set by the competent authorities. This price will be indexed annually in each year of the power purchase agreement entered into with EDF, the state-owned electricity company. The factors taken into account when revising the price include changes to the hourly cost of labour and construction over the previous year. The cost of connection to the electricity grid must also be factored-in when determining the bidding price.

The other criteria considered when awarding the marks for the project are the environmental impact of the project, the feasibility and time frame in which the project will be completed and the contribution the project will make to research and development in the requisite field.

The electricity that will be bought pursuant to the power purchase agreement will be capped at a price depending on the type of solar panels employed by the project and the location of the project. For panels without a device tracking the course of the sun, the price cap equates to the peak power created, multiplied by 1,500 hours, if the project is located in mainland France, or 1,800 hours if located in Corsica and overseas French territories. For panels that do have a device tracking the course of the sun, the price cap equates to the peak power created, multiplied by 2,200 hours for projects located in mainland France, or 2,800 hours if the project is located in Corsica and overseas French territories. All electricity produced beyond these caps will be purchased at a price of €0.05 per kWh.

Operating the New Facilities

Following their selection, the winning projects are expected to be installed within 18 months of the competent Ministers' decision. If the connection to the grid cannot be established due to a delay by the grid operator in the grid connection work, the projects are expected to be installed within two months of the completion of the grid connection work. Each project is expected to have a 20 year life span.

In the case of new plants, the power purchase agreement will be effective from the date the facility is commissioned, for a period of 20 years. For plants already benefiting from the Government Order of 4 March 2011, the duration of the power purchase agreement will be reduced by the number of months between the plant going into operation and the signing of the power purchase agreement.

Pursuant to the French Energy Code, if successful, the bidder will be expected to operate the facilities itself. The bidder may not assign the obligations to a third party, except in certain limited circumstances, principally upon the authorisation of the competent Ministers.

Financial Guarantees

All applicants will be required to give two financial guarantees if their bid is successful: one guaranteeing performance, i.e., construction of the project; and the other guaranteeing the decommissioning of the project. The guarantee for construction of the project is made in favour of the French State and must be given by a financial institution approved by the Minister for the Economy, having a credit rating of at least A, A2, or an equivalent, as determined by a ratings agency. The value of the guarantee is €50,000 multiplied by the power of the solar project (as expressed in megawatts). The form of the guarantee is prescribed in the application pack. Throughout the tenure of the project, the guarantee is gradually released over the course of six stages, once certain conditions have been satisfied, including the successful ordering of the equipment for the project, the installation of the project and finally, putting the plant into operation within a prescribed time-frame.

The guarantee given for the decommissioning of the project is also given in favour of the State and, again, must be given by a financial institution with a credit rating of at least A, A2 or the equivalent, as determined by a ratings agency. The value of the guarantee is €30,000, multiplied by the power of the solar project, as expressed in megawatts. It is given before the 17th year following the installation of the project. As with the guarantee given for the construction of the project, this second guarantee is released in stages, upon the successful completion of the following: (i) dismantling the solar plant at the end of the project, (ii) restoring the site to its pre-project state, and (iii) recycling the PV cells used in the project.

Conclusion

The rules, along with those previously issued for smaller projects, demonstrate the ongoing commitment of the French government to encourage investment in solar projects, and renewable energy as a whole. Together with the New Regime for Offshore Wind Energy, the new rules demonstrate the ever increasing diversification of energy sources in France.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions