Excessive profitability in photovoltaics: the state puts the huff

The government is determined to put an end to the profitability presented as excessive by certain photovoltaic production facilities. It has just sent professionals in the sector the implementing texts for an amendment to the 2021 finance bill (voted at the end of 2020) aimed at reducing its support for various photovoltaic parks.

This could result, on average, in a 50% reduction in state aid for the installations concerned. Applied over ten years, this reduction would result for the State in hundreds of millions of euros in savings per year.

Between 4 and 6 billion in savings over ten years

Initially, the government was counting on savings of 400 million euros per year over ten years, or 4 billion in total. But, according to "figures from the CRE, this amount could be higher. We could go up to 1 or 2 billion more than the 4 billion envisaged", we recognize at Bercy.

In detail, this revision, which provokes the anger of the photovoltaic sector, aims to modify certain contracts signed between 2006 and 2010, ensuring producers a fixed electricity buy-back price for 20 years. These had been set up to encourage the development of photovoltaic projects and launch the sector.

Of the 235,000 contracts signed during this period, between 800 and 1,000 should be subject to the downward revision of tariffs. The objective is to set up a so-called "reasonable" remuneration, calculated on the basis of the investment costs, the operating costs and the energy production of each installation. Technical elements provided by CRE, the energy regulator.

Average drop of 55%

Is considered reasonable, "an internal rate of return before tax between 10 and 15% depending on the year of signature of the contract", specify the ministries. While some photovoltaic projects, thanks to the purchase price set between 2006 and 2010, could achieve internal yields above 20%. Very concretely, this should result in an average reduction in the buyback tariff of 55% for the contracts concerned.

According to him, the methods adopted mechanically led the CRE to recognize over-remuneration, and therefore to propose a substantial reduction in tariffs.

Of the thousand facilities concerned, none will be left without state aid, assure the ministries. On the other hand, according to information provided by CRE, around 200 should be subject to a minimum feed-in tariff, which must cover operating costs plus 10%. “This minimum tariff does not guarantee the economic viability of the installation”, points out Alexandre Roesch.

"Many companies in danger"

For its part, the government recalls that companies whose economic viability could be harmed will be able to activate a safeguard clause.

These application texts must be the subject of consultation with the players in the sector over a period of two weeks. Period during which the professionals hope to find an agreement on the figures and the methodology to arrive at an acceptable price reduction. The ministries then aim for a publication of the texts at the beginning of July, then an entry into force on October 1st.

Anticipating criticism of state support for renewables, the two ministries point out that 120 billion euros in public aid are planned for renewable energies (photovoltaic, wind, biomethane, etc.) over the past 20 coming years. "And, the State plans to finance 10 GW of photovoltaic installations in the next five years", we add.

4 mins

Share: