June 20, 2018 / 12:31 PM / 5 months ago

France cuts tariffs on controversial offshore wind projects

PARIS (Reuters) - The French government on Wednesday approved six long-delayed offshore wind projects but sharply cut their subsidies.

In 2012-14, France had awarded tenders for the six projects to French and foreign utilities with contracts to sell electricity at feed-in tariffs guaranteed by the government of around 200 euros per megawatt (MW) for 20 years.

But public opposition to wind farms has long delayed the projects, and since then prices for international offshore wind power have more than halved. French energy regulator CRE has said the projects were too costly, with planned subsidies adding up to nearly 41 billion euros ($47.5 billion).

“We will bring about renewable energy more quickly and less expensively: the projects are confirmed, their public subsidy is reduced by 40 percent,” French President Emmanuel Macron said on Twitter, confirming earlier tweets by two utility executives.

Environment Minister Nicolas Hulot also said in a Twitter statement that the projects’ tariffs would be cut to about 150 euros per MW from 200 MW.

In March, the government had proposed renegotiating and possibly canceling the projects, which are for a combined 3,000 megawatts of offshore wind on six sites on France’s west coast.

In 2012, two consortia, one led by French state-owned utility EDF and one by Spanish utility Iberdrola, won tenders for combined offshore capacity of 2,000 MW, representing investment of about 7 billion euros. In 2014, a consortium led by Engie won a tender for 1,000 MW, worth some 4 billion euros.

The renewable energy industry has been sharply critical of the government for reneging on its contract, saying that they are not to blame for the delays.

When France awarded the tenders at what even then were relatively high prices, it wanted state-owned firms Areva and Alstom to deliver French-design wind turbines for the projects and thus launch a French offshore wind industry to compete with Denmark’s Vestas and Germany’s Siemens.

But since then the two French firms’ wind turbine activities have been bought by foreign companies - Areva’s by Siemens and Gamesa and Alstom’s by GE - and France has had to drop its dream of developing a French offshore wind industry.

GE said in a statement it welcomed the government’s decision to go ahead with the projects, which it said would create jobs and economic growth.

Reporting by Brian Love; Writing by Geert De Clercq; Editing by Sarah White and Alexandra Hudson

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