Tuesday, January 8, 2013

France launches rescue plan for solar power industry

France has doubled its capacity target for photovoltaic power generation and offered more financial support to small solar power farms that use European-made panels in a bid to rescue the country's ailing solar industry.

Energy Minister Delphine Batho announced the measures, which are expected to spur investments worth more than 2 billion euros ($2.6 billion), during a visit to a solar panel factory in Western France.

The Socialist government is seeking to rescue an industry which has lost about 15,000 jobs in the last two years, after the previous conservative government tried to dampen a speculative bubble in new solar power installations. In 2012 the industry employed 18,000 people, down from 32,500 in 2010.

The production capacity growth target will double to 1,000 megawatts (MW) per year, the equivalent of a small nuclear power reactor, Batho said.

France will also add a bonus of up to 10 percent on the subsidy for feed-in-tariffs paid to generators of solar power through consumers' power bills for small solar farms using panels made in the 30 countries of the European Economic Area (EEA).

"Many jobs were lost because of the (former) government's yo-yo policies. But we will fight ... to develop the ecological competitiveness of France," Batho told reporters on the sidelines of the visit to MPO Energy, a CD and DVD maker that diversified into solar panel production.

"We finally feel supported," said MPO Energy's managing director Jean-Francois Perrin.

These emergency measures, which are due to take effect when a decree is published later this year, are being sought to support the solar industry until a wider energy law is drawn up after the government's so-called "energy transition debate".

The government estimated the annual cost at between 90 and 170 million euros, to be levied on consumers through the existing CSPE tax on power bills.

Jean-Louis Bal, the head of France's main renewable energy sector lobby SER, said the measures would allow the sector to survive in the short term but did not offer long-term visibility for the industry.

"However it's the first positive message from the government in over three years," Bal told reporters.


France is slowly embracing heavily-subsidized renewable energy, such as wind and sun power, which accounts for 13 percent of energy consumption, well below the 23 percent target set by former President Nicolas Sarkozy for 2020.

French feed-in tariffs are reduced by about 10 percent every year to match falling production costs.

The French energy regulator CRE adjusts the cut every quarter, to either attract or deter more investments, depending on the volume of installed plants compared with the government's target.

Across the Rhine in Germany, the installed capacity for wind and solar electricity production is already equivalent in output to France's 58 nuclear reactors, even though the output is highly variable.

France is also trying to reduce its reliance on foreign-made solar panels, after cheap Chinese modules flooded the French market, prompting cries of unfair competition and creating a 1.35 billion euro trade deficit for the sector in 2011.

However, Batho acknowledged the government was taking the risk of having its "Made in Europe" bonus challenged by foreign competitors in international trade courts.

"In terms of legal risk, I don't think there is one at the European level. But at the World Trade Organisation (WTO) level, it would take years (to challenge it), so the government did well," Bal said.

China announced last month it had added a further $1.1 billion in subsidies to its solar power industry, more than doubling its support in 2012.

In September China raised its 2015 target for solar power capacity by 40 percent to about 21 GW, the third rise in just over a year.

(Writing by Muriel Boselli; Editing by Mike Nesbit and Greg Mahlich)

Source: Reuters

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