UPDATE 3-French court annuls wind power decree, ending legal saga

Wed May 28, 2014 12:25pm EDT

* New wind decree to replace old one in a "few days" -minister

* Legal saga had stifled onshore wind sector since 2011

* Pick-up in French wind installations expected from Q3 2014 (Adds government reaction)

By Michel Rose

PARIS, May 28 (Reuters) - France's highest administrative court on Wednesday annulled the decree setting wind power feed-in tariffs, marking the end of a complex legal procedure that has stifled investment in the French onshore wind sector.

The French government has already prepared a new decree, which was cleared by the European Commission in March and will replace the one that has now been annulled.

"The new decree will come into force in a few days," Energy Minister Segolene Royal said in a statement. "With this very swift decision (I) expect to end a long period of uncertainty that had destabilised the sector."

Pressure group Vent de Colere (Wind of Anger) had seized on the previous government's failure to notify the EU that the original decree subsidising onshore wind power production was state aid.

Europe's highest court, from which the French court sought advice, judged last December that the feed-in tariffs were indeed state aid and should have been flagged as such to the EU.

Legal uncertainty over the tariffs, which force utility EDF to buy wind-generated power at above-market costs, had paralysed investment in the French wind sector since 2011.

Wind power capacity reached a total of 8,140 MW at the end of 2013, with growth in the sector slowing for the fourth year in a row, with only 630 MW of new capacity added last year, from a high of 1,247 MW in 2009.

In neighbouring Germany, by contrast, new wind power installations accelerated last year, rising 10 percent to 33,730 MW - more than four times French capacity.

French renewable energy lobby SER welcomed the decision.

"After six years of procedure, this new economic framework, which is highly anticipated by all players in the wind sector, will finally give them a secure legal footing necessary to carry on their projects," Jean-Louis Bal, the head of the SER, said.

The French court's decision is retroactive, but existing wind farm owners will not have to reimburse the aid received under the now illegal decree, SER wind specialist Marion Lettry told Reuters.

"We can now expect a pick-up in new French onshore wind installations from the third quarter of this year," Lettry said, adding that new regulation to cut red tape in the sector should also provide a boost to the industry from 2015.

The court, called the Conseil d'Etat, also ruled that the French government should pay 3,000 euros ($4,100) in damages to Vent de Colere. ($1 = 0.7345 Euros) (Editing by Erica Billingham and David Goodman)