In late May 2016, the French Environment Ministry adopted
several new Decrees implementing a new regime to transition the
support for renewable energy from feed-in tariffs to a compensatory
fee scheme. Such transition was required by the European
Commission, which considers feed-in tariffs as State aids and
requests a more stringent review of such aids.
The Decrees have been adopted in accordance with Article 104 of Law
of August 17, 2015, on the Energy Transition, which required the
energy produced by renewable energies (e.g., solar, biomass,
hydropower) to replace feed-in tariffs with a compensatory fee. The
compensatory fee replaces the feed-in tariff regime for some
renewable installations. This new mechanism aims at improving the
integration of renewable energies to the electricity market, as
required by the European Commission. The principle of this new
scheme is to allow a producer to sell its electricity directly on
the market, while limiting the risks associated with the volatility
of the market prices.
Decree n° 2016-691 specifies which installations will be
eligible for the compensatory fee and which remain under the
feed-in tariff regime. It should be noted that the feed-in tariff
regime is maintained for small-sized installations and for wind
energy producers that do not elect to benefit from the compensatory
Decree n° 2016-682 sets out the conditions under which the
installations are eligible for the compensatory fee and establishes
the calculation methods and payments: the compensatory fee will be
proportional to the energy produced by the installation and
calculated out of a reference fare, based in particular on an
estimate of the investment and operational costs of a
"sample" installation and a reference market price. It
should be noticed that, in practice, the implementation of such
scheme may allow installations that will perform better than the
"sample" installation used for the determination of the
compensatory fee to actually earn more than they currently do based
on the feed-in tariffs.
The French Environment Ministry stated that "this new regime
provides visibility for the renewable energy sector and allows to
accelerate the development of renewable energies in accordance with
the objective of the transition to other sources of
To date, the sector of renewable energy is awaiting the publication
of the ministerial orders that will determine the details of the
compensatory fee as well as the terms and conditions for each
concerned sector (e.g., wind, solar, biomass, hydropower), which
should define the level of support granted to each concerned
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In general terms, a "corporate" power purchase agreement refers to a contractual arrangement whereby independent generators (typically renewable) and corporates that are large energy consumers, contract for the sale of power to that consumer.
This short note is to introduce two detailed papers that discuss the justification for the development of an Asian LNG reference price that is not benchmarked against the current ‘Japanese Crude Cocktail' and suggests an approach to how that might be achieved. A short summary of the two papers is provided below.
Hydrocarbon resources are typically owned by the state.
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