France's new "ecological patriotism"
France is actually poised to overshoot its target for PV and should instead focus on ramping up onshore wind. And although the bonus provided for domestic content applies for content made in Europe, not just in France, the focus on "ecological patriotism" is disconcerting.
As Renewables International reported yesterday, the new French proposal to provide a bonus for PV content "made in Europe" is certain to lead to a case at the WTO – which France can only lose. But as our colleagues over at SolarServer wrote yesterday, French Energy Minister Batho is apparently willing to take the risk because "it will take years to challenge the policy through the WTO."
The 13-page dossier entitled "Mesures d’urgence pour la relance de la filière photovoltaïque française" (PDF) makes it clear that the focus is on job creation within France, and the document even speaks of "ecological patriotism." But unlike the press release quoted yesterday, the longer dossier makes it clear that the French photovoltaic sector is to be protected with a bonus that applies to solar panels "made in Europe" – a contradiction that the government does not seem to have addressed anywhere (how will a bonus that benefits German firms help French firms?). But the French government had no choice; any attempt by an EU member state (or, for that matter, non-EU members with free trade agreements, such as Switzerland and Norway) to protect its own domestic firms would lead to immediate action in Brussels. It would not take years for such a policy to be challenged.
But despite the general favoritism, French firms are not happy about all of the changes. In particular, the 20 percent reduction in feed-in tariffs for utility-scale PV applies retroactively as of October 1, 2012, a decision that has met with criticism from the Syndicat des Energies Renouvelables (SER). But proponents of solar are happy that the target for newly installed PV has been increased from 500 megawatts to 1,000 for 2013. Strangely, France does not need that increase to reach its Action Plan target for PV, which is set quite low at only 5.4 gigawatts (the country already had nearly 4 gigawatts at the end of Q3 2012). Instead, France should be focusing on ramping up onshore wind; the country needs to more than double its current annual volume to reach its target of 19 gigawatts by 2020.
Proponents of feed-in tariffs, on the other hand, are not as pleased that there are still requests for proposals (RFPs) for utility-scale PV – yet another way to shut out foreign firms. It is worth keeping in mind that protectionism is not a part of feed-in tariffs. Governments from Italy to Ontario and, now, France have chosen to add such requirements to the legislation, but the German-style feed-in tariffs have always been completely blind to the origin of products and services.
In contrast, as Renewables International has previously pointed out, bidding systems (such as RFPs) are inherently a good way of protecting domestic industry, so it is perhaps not surprising that the SER and other general supporters of the new French policy are not calling for origin-blind feed-in tariffs. Indeed, the bidding process itself will allow governmental officials to steer project towards French firms, as experience from offshore wind shows.
When a government adds protectionism to feed-in tariffs, we often find similar attempts to protect domestic industry in other legislation. For instance, German mechanical engineering association VDMA has expressed its concern about how France awards contracts for offshore wind; Windpower Monthly also founded the terms to be protectionist. Specifically, the requests for proposals seem to indicate that bidders would be preferred if they set up shop locally. And in fact, Areva Wind and Alstom pledge that they would set up a production plant in France, while Germany's Siemens also bid with a pledge to at least have some manufacturing, assembly, and other tasks performed in France.
Likewise, Germany not only lacks protectionism in its feed-in tariffs, but also in general. As Renewables International has pointed out previously, one of the country's four grid operators (Tennet) is wholly owned by the government of the Netherlands, and in fact a second one (50Hertz) is also owned by foreigners – in this case, a Belgian grid operator and an Australian fund manager. The country's first offshore wind farm, Alpha Ventus, was also constructed with turbines from Germany's REpower and France's Areva.
Despite this openness, Germany remains a strong exporter. Since the euro was rolled out, the value of Germany's exports has doubled, as the editor of German economics daily Handelsblatt pointed out in this morning's email briefing – and he told his German readers, "If you want to see who is benefiting from the monetary union, just look in the mirror." (Craig Morris)