Key Benefits:
Attended the session: Philippe de LADOUCETTE, Chairman, Olivier CHALLAN BELVAL, Catherine EDWIGE and Jean-Pierre SOTURA, Commissioners.
The Conseil d' Etat, by a decision of 28 May 2014, has just set aside the order of 17 November 2008 fixing the conditions for the purchase of The electricity produced by the installations using the mechanical energy of the wind on earth, on the ground that this order establishes a State aid which should have been notified to the European Commission.
The Energy Regulatory Commission (CRE) was seized on May 20, 2014 by the Minister of Ecology, Development And the energy of a draft decree laying down the conditions for the purchase of electricity produced by installations using the mechanical energy of the wind on land.
This draft decree includes the conditions of the order Tariff on November 17, 2008, and contains retroactive provisions that have the effect of restoring the application for contracts that were previously covered by the provisions of the cancelled order.
1. Background
In application of the 3 ° of Article L. 314-1 of the Energy Code, power generation installations using mechanical wind energy can benefit from the device of the obligation to purchase.
The order of the 15 December 2009 on the multiannual programming of electricity production investments provides for a land wind development objective of 10.5 GW as at 31 December 2012, and 19 GW as of 31 December 2020. As of December 31, 2013, the awarded land wind power is 8163 MW, of which 535 MW is connected in the year 2013, corresponding to 70 new installations.
The conditions for the purchase of electricity produced by the installations Using mechanical wind energy are fixed by the decree of 17 November 2008, supplemented by the decree of 23 December 2008.
The Conseil d' Etat, by a decision of 28 May 2014, has just annulled that order, on the ground that it establishes a State aid which Should have been notified to the European Commission.
The Council of State had been Seized an action for excess of power in that sense on 6 February 2009 by the association Vent de Colère. Its decision comes at the end of a procedure, in which the Council of State, on 15 May 2012, had referred a question to the Court of Justice of the European Union (CJEU) on the question of whether the system should be Considered to be an intervention financed by state resources, which is one of the criteria for qualification of state aid.
In its judgment of 19 December 2013, the CJEU concluded that the wind-support system put in place By the Order of 17 November 2008 constituted intervention with State resources.
France has also initiated the notification procedure to the European Commission of the relevant purchase price at the end of 2013. The European Commission validated the support mechanism on 27 March 2014, and thus concluded " [that the] French scheme granting support for the production of electricity from onshore wind turbines was compatible with the EU rules on state aid. "
The draft order submitted for opinion to the ERC is intended to ensure the Continuity of the support system for land-based wind production facilities through the definition of tariff conditions, applying retroactively.
2. Description of the Draft Order
The terms and conditions of the proposed Order are the same as those set out in the Order of November 17, 2008, with respect to land wind, including the conditions for indexing. The duration of the purchase contracts remains fixed at 15 years. Wind at sea, supported by a tender system, is not covered by the draft decree.
Table 1 details the level of the tariff applicable to facilities located in metropolitan France over the life of the contract. The base rate is fixed for the first ten years of the purchase contract, and it is decreasing for the next five years as a function of the annual reference period (DAFR). The DAFR of an installation is calculated as the average of the eight annual operating periods in the median equivalent of the first ten years of the purchase contract.
Table 1. -Proposed rates for facilities located in metropolis
| 2 400 hours and less | 8.2 (1) | 8.2 |
| 2 400 hours and 2,800 hours | 8.2 | Linear Interpolation |
| 2 800 hours | 8.2 | 6.8 |
| Between 2 800 hours and 3 600 hours | 8.2 | Linear Interpolation |
| 3 600 hours and more | 8.2 | 2.8 |
| (1) The value of 8.43 c€/kWh in the draft order Submitted for notice to the CRE corresponds to a shell, the remuneration envisaged for the first ten years being 8.2 c€/kWh. | ||
The remuneration envisaged for installations located in the departments Overseas, in the territorial community of Saint-Pierre-et-Miquelon and Mayotte are constant over the life of the contract and set at 11 €/kWh.
The tariff applicable to an installation depends on the year of the full application for a contract of purchase: The rates described in Table 1 and in the preceding paragraph are indexed by the application of a coefficient 0.98n * K, where n is the number of years between the full application date of the contract of purchase and 2007 and K a coefficient taking into account the Changes in the cost of labour and production prices between 2006 and the date of full application for a purchase agreement.
Table 2 details the level of the base rate for which the wind farms are based on the year of their application Complete purchase contract.
Table 2. -Proposed rates for facilities located in mainland France
| 2008 | 8.36 | 11.21 |
| 2009 | 8.62 | 11.56 |
| 2010 | 8,13 | 10,90 |
| 2011 | 8.21 | 11.02 |
| 2012 | 8.50 | 11.40 |
| 2013 | 8.55 | 11.46 |
| 2014 | 8.45 | 11.34 |
This Indexing formula has an overall effect Positive on the base rate for producers, insofar as the progress of the reference indices used in the calculation of the coefficient K exceeds the annual decrease of 2 % which is intended to take account of the learning effect and The reduction in production costs for the industry.
The draft decree provides that producers who have applied for a contract of purchase under the terms of the tariff order of 17 November 2008 and who have not entered into their contract of purchase Date of publication of the draft decree may benefit from a purchase agreement on the Basis of the draft decree. It is not for the CRE to comment on the terms of this retroactive application.
3. Economic analysis of the rates envisaged
Article L. 314-7 of the Energy Code provides that the tariff levels " [i] t ensure that the remuneration of capital assets in installations benefiting from these conditions of purchase exceeds the normal remuneration of capital, taking into account the risks inherent in such activities and the guarantee of which Benefit these facilities to sell their entire production at a specified rate ".
For each tariff order on which it is entered for notice, the CRE verifies compliance with this criterion through an analysis of the rate of return Internal capital invested after taxes (TRI project after taxes) induced by the Level of the proposed tariff. This profitability is compared to a weighted average cost of capital (CMPC) nominal after benchmark taxes estimated at about 5 % on the basis of a sample of companies in the renewable energy sector.
3.1. Installations located in the
metropolis 3.1.1. Contracts entered into pursuant to the Order of 17 November 2008
Reminder of the conclusions and recommendations of the CRE's opinion on the November 17, 2008 Tariff Order
In its opinion on the order of 17 November 2008 (2), the CRE had The risk of undue remuneration resulting from the proposed tariff for land wind farms located in mainland France. She concluded that " Although degraded in comparison to the situation seen in 2006, the profitability of the projects remains, in most cases, very satisfactory. It is even found to be manifestly excessive for installations in continental France operating 2,400 h/year or more ". As such, the CRE had issued an unfavourable opinion on the order.
Analysis of the Cost and Cost-Effectiveness of Renewable Energy
CRE published an analysis on April 17, 2014 The costs and profitability of renewable energies in metropolitan France (3), which in particular takes stock of the wind energy sector. This analysis establishes, on a representative panel of installations and, for the first time, on the basis of proven and verified data, the costs of production of these sectors and the profitability of the production facilities
the case of the onshore wind industry, the CRE analyzed the cost data of a panel of 39 parks commissioned between 2007 and 2012. It reviewed all the technical, economic and financial data to determine the cost-effectiveness of the tariff of the Order of November 17, 2008. It appears that the profitability of producers depends in the first place on the wind conditions they enjoy. The degressivity of the tariff for the last five years of the procurement contract, which is intended to take into account this effect, is insufficient, which leads to returns that are very much higher than the reference CMPC or even excessive.
In addition, the Almost all producers contacted as part of this analysis plan to operate their parks over a longer period than the requirement to purchase, up to 25 years. Finally, the cost of land wind has evolved due to the learning effect and the costs of raw materials, which is insufficiently taken into account by the indexation of the tariff.
3.1.2. New contracts to be concluded pursuant to the draft order
The tariff envisaged in the draft order is identical to the current tariff. Therefore, the conclusions of the CRE presented in her report and summarized above are applicable.
In view of the effect of indexing on the basic pay shown in Table 2, the CRE conducted a complementary analysis of the Cost-induced profitability of facilities applying for a full purchase contract in 2014.
The cost data used for the average scenario is derived from the analysis of the CRE on existing parks. The high and low scenarios correspond to changes in these costs by 10 % around the average value. The economic analysis is carried out over 20 years by considering that the electricity produced over the last five years is valued at wholesale market prices, with an assumption of constant market prices in constant euros fixed at 45.8 €/MWh (4) for 2014.
The after-tax returns calculated for these three scenarios are shown in Figure 1. For a given scenario, the sensitivity to the wind conditions of the facilities has been studied.
Analysis shows that even a significant increase in costs of 10 % always results in excessive profitability for the parks. Better winded. The TRI project after taxes calculated for parks operating more than 2,200 hours a year are higher, if not very high, to the reference CMPC.
Figure 1. -TRI Project after taxes of a wind farm implemented in metropolis based on investment cost and wind conditions
You can view the image in the facsimile of the
JOnº 0150 from 01/07/2014, text #74
3.2. Analysis of the rates envisaged in the overseas departments, in the territorial community of Saint-Pierre-et-Miquelon and in Mayotte
The analysis of the CRE of the costs and profitability of renewable energies has exclusively increased On metropolitan land facilities. Therefore, the CRE does not have any recent cost data on land wind in non-interconnected areas (ZNI), for which the analysis requires special treatment given their specificities.
In addition, The decree of 8 March 2013 laying down the conditions for the purchase of electricity produced by installations using mechanical wind energy located in areas particularly exposed to cyclonic risk and having a forecasting device and Production smoothing introduces a framework for supporting land wind In
, there is a threshold for the maximum penetration of intermittent energies in these areas, which is set at 30 % by the decree of 23 April 2008, as amended by the order of 24 November 2010. To the extent that this threshold is already exceeded in some areas and is in the process of being exceeded in others, the further development of intermittent renewable energy requires the use of installations incorporating a storage solution Of electricity, which is provided for by the decree of 8 March 2013. In any case, there is currently only one land wind farm installed in these territories and benefiting from the conditions of the November 17, 2008, order.
As a result, it can be expected that the development of Wind power in non-interconnected areas occurs primarily under the order of March 8, 2013.
3.3. Miscellaneous Remarks
The rate indexing formulas set out in the draft order refer to the ICHTTS1 (5) Labour Cost Index (5) and the ISEE Production Price Index (6), both published by INSEE
Are no longer published by INSEE and have been replaced by the revised ICHTrev-TS index and the index FM0ABE0000 respectively. The corresponding references should therefore be updated in the tariff order.
4. Notice
The CRE noted in its notice of October 30, 2008 and in its April 2014 report on the costs and profitability of renewable energy in metropolitan France, that the tariff resulting from the Order of November 17, 2008, produced a Excessive profitability, especially for parks with the best wind conditions.
With respect to new facilities
CRE renews its recommendations in its report on Costs and profitability of renewable energies and to ensure that the system Of the support provided for in the decree of 17 November 2008, and taken up by the order now before it for opinion, be amended to:
-review the price structure to avoid the excessive profitability of installations with the best wind conditions;
-adjust the duration of the purchase obligation contracts to the lifetime of the installations;
- Amend the tariff on a regular basis in order to take account of the changes in the cost of the industry.
In the absence of this tariff, the CRE gives an unfavourable opinion to the draft order submitted to it as it relates to New installations.
As regards contracts already concluded in Application of the order of 17 November 2008
In view of the need to ensure the continuity of the system of support for the production of electricity by land-based wind installations following the cancellation of this order by the The CRE takes note of the provisions that retroactively restore similar conditions for contracts concluded pursuant to this Order.
Done at Paris, May 28, 2014.
For the Energy Regulatory Commission:
The President,
P. Ladoucette
