On June 22, renewable energy professionals sounded the alarm. Sector players fear that many solar, wind, hydro and biogas projects will not see the light of day due to rising commodity prices and rising interest rates. They asked the government for emergency measures, without waiting for the end of summer. Good news: they’ve been heard. On Thursday, the Ministry of Energy Transition unveiled a battery of measures, to be published in the Official Journal in the coming days, to help this important sector for the country’s energy transition and security.
Renewable energy producers can thus sell their electricity on the markets for 18 months, before the public support contract is activated. This step aims to give them the opportunity to take advantage of the current very high electricity market prices (currently around 500 euros per megawatt hour for 2023, i.e. an amount above the price negotiated during the call for tenders) to absorb their additional costs. . However, the 18-month period provided by the government remains lower than the 24 months expected by the Renewable Energy Union (SER).
Reducing rising construction costs
For future smaller projects that will benefit from a tariff for the purchase of electricity (known as an open window), the executive will allow the price of energy resold to be indexed, so that it reflects more which increases investment costs. Another expected move for professionals in the sector. The government also plans to freeze the previously planned reduction in tariffs for photovoltaic installations in buildings for the year 2022 and allow all renewable projects that have already won calls for of tenders to increase their power up to +40% before it ends. Finally, biomethane production facilities will benefit from more time for their commissioning.
Renewable energy professionals are particularly affected by the rise in the price of steel, which is used mainly in hydraulic turbines, in tanks installed to accommodate solar panels or in the masts of wind turbines . The sector has also been affected by the rise in the price of concrete and silicon, whose production process requires a lot of energy. Added to this increase in commodity prices is the rise in transportation costs, but also the rise in interest rates, which puts a strain on the borrowing capacity of project sponsors and forces them to mobilize more equity.
“All these, combined, lead to an increase in Capex [les dépenses d’investissements, Ndlr] between 25% and 30%”, estimated, at the end of June, Alexandre Roesch, general delegate of the SER.
Important projects for the coming winter…
According to government calculations, this inflationary context linked to the war in Ukraine threatens 6 to 7 gigawatts (GW) of solar projects and 5 to 6 GW of wind projects.
“These projects are important to strengthen our energy independence as soon as possible and […] make a decisive contribution […] to protect our security of supply for the coming winter”, emphasized the Ministry of Energy Transition, as Europeans prepare to spend the winter without Russian gas.
The war in Ukraine has indeed caused serious energy tensions between the West and Moscow, which is using gas as a geopolitical weapon and making its natural gas supplies weaker and more insecure, when they are not fully to be cut off like Poland. , Bulgaria or Latvia since last Saturday.
…and the climate
In this race against time to find alternatives to Russian gas, renewables have a big advantage. They develop very quickly, especially photovoltaics, unlike other carbon-free solutions such as nuclear power plants, which need at least ten years to see the light of day.
Moreover, in addition to contributing to the security of energy supply, these renewable energy projects make it possible to accelerate the transition to a low-carbon economy, unlike other emergency solutions, such as to use coal-fired power plants, which most of them are. should play more time in the Old Continent.
Soon an emergency law
These emergency regulatory measures come in addition to an emergency law currently being prepared and expected for the next school year to structurally facilitate the deployment of renewable energies in France.
France, which is clearly lagging behind national targets, is also the only one of the 27 Member States to fail the target set by a European directive. In 2020, the share of renewable energy in the country’s gross final energy consumption only reached 19%, against the 23% expected.
It is necessary “have the honesty to admit that we have fallen behind”, himself recognized President Emmanuel Macron, during his trip to Belfort in February. Also, the Head of State has given himself the ambitious goal of multiplying the ten installed photovoltaic solar power by 2050 (which is about 100 GW) and to achieve 40 GW of offshore energy in wind (ie the equivalent of more or less 50 wind farms).
Full throttle in offshore wind… not on land
With this in mind, the government has chosen two areas on the island of Oléron, for the construction of two new parks, while the initial project announced by Jean Castex, in January 2021, only mentions one park . The two parks can represent a total capacity of approximately 2 GW, ie the equivalent “in a plant with 2 reactors like Fessenheim”, welcomed the Ministry of Energy Transition. For the first park, whose public debate ended in February, the commission is planned for the early 2030s.
Read our dossier on the future wind farms in Oléron
Meanwhile, the President decided to put the brakes on onshore wind power. It provides a doubling of the capacity of onshore wind turbines in 2050, while the initial goal is to double the capacity in 2030. These wind turbines, which are often the target of strong criticism, especially during the campaigns of election, should bring about 8 billion euros to the State according to the calculations of the energy regulator.