* French court will have to deliver final decision
* Investments on hold over funding legality
* European Commission says making progress with France
* Case fuels EU-wide debate on energy subsidies
(Adds European Commission reaction)
By Barbara Lewis and Michel Rose
BRUSSELS/PARIS, Dec 19 Europe's highest court
said on Thursday subsidies to encourage wind power in France had
not been properly flagged to the European Union as state
funding, prompting calls from the French wind industry for a
new, more legally-sound funding system.
The case also has implications for an EU-wide debate on
renewable energy subsidies, a fiercely contested political issue
as governments and consumers blame them for pushing up fuel
Under EU rules, government help known as state aid should be
notified to the European Commission, the EU executive, which is
responsible for ensuring there is no market distortion.
France's failure to follow this procedure provided a basis
for a pressure group opposing onshore wind power, Vent de Colere
(Wind of Anger), to challenge France's preferential tariffs for
wind energy in 2011 in a French court.
The French court turned to Europe's top court for advice.
The Court of Justice of the European Union (ECJ), based in
Luxembourg, found on Thursday that "the obligation to purchase
the electricity generated by wind turbines falls within the
concept of an intervention by the State through State
It is now up to the French court, the Conseil d'Etat, to
make the final judgment. It is widely expected to annul the 2008
"The court's decision started a race against the clock,"
said Frederic Lanoe, head of French wind power lobby France
Lanoe said the Conseil d'Etat's decision was not expected
before two or three months and urged the French government and
the European Commission to set-up a sustainable system in the
"The 11,000 workers of the French wind sector are holding
their breath," he said.
The European Commission said later on Thursday it was in
contact with French authorities over a new tariff decree
notified by the government last October, which would pave the
way for a new funding regime compatible with EU regulations.
"Good progress is being made in the contacts with the French
authorities, which are very constructive," Commission spokesman
Antoine Colombani said in a statement.
"On this basis and given the uncertainties that the ruling
might create, the Commission is working towards a decision soon,
probably in the first quarter of 2014."
Legal uncertainty over the tariffs, which forced EDF
to buy wind-generated power at costs higher than the
general market, has paralysed investment in the French wind
sector since 2011.
Only 348 MW of new wind power capacity has been added in the
first nine months of the year in France, 39 percent less than
during the same period last year, according to official data.
France now has a total wind power capacity of about 8 GW,
compared to more than 30 GW in Germany.
"The goal now is that the European Commission's approval of
the new regime arrives before the Conseil d'Etat's decision to
annul the old one, to give legal continuity to the sector," said
Marion Lettry, wind energy specialist at the SER renewables
No one was immediately available for comment at the Conseil
Supporters of renewable energy are concerned about wider
uncertainty over the future of green subsidies.
The European Commission on Wednesday said it was
investigating Germany's management of renewable subsidies. It
also began consultation on new guidelines aimed at ironing out
any market distortions caused by government funding of green
Lawyers said the French case could have implications for the
"The Commission will likely take this, the French case, as
additional support for its action against Germany and put
pressure on our government to conform with notification and
reporting obligations," Frankfurt-based lawyer Jochen Terpitz of
international law practice Simmons & Simmons said.
(Additional reporting by Vera Eckert in Frankfurt; Editing by
Dale Hudson, William Hardy and David Evans)