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SBTi opens consultation on the Corporate Net-Zero Standard V2
On 18 March 2025, the Science-Based Targets initiative (SBTi) published an initial draft of its long-awaited “Corporate Net-Zero Standard V2” (Draft Standard).
Strengthened objectives, integration on the market, in the context of increased competitiveness
Global | Publication | November 2015
The Energy Transition Law n°2015-992 in respect of green growth, enacted on 17 August 2015 (the LTE) sets ambitious targets with regard to consumption and production of renewable energy. The portion of energy consumption supplied by renewable energy should rise to 32 % of gross energy consumption in 2030 and should represent 40 % of electricity production in 2030 instead of 16 % currently.
Photovoltaic electricity should play a key role to attain (or to approach) those targets in view of the cost of solar electricity, which is now similar, if not lower, than that of wind and of new nuclear energy for certain ground-mounted plants. In this respect, close attention should be paid to the trajectories of each source of renewable energy in the energy multiannual programming (the PPE) to be presented at the end of October according to the Minister of Environment, Ségolène Royal.
As at 30 June 2015, a photovoltaic capacity of 5,696 MW was installed in mainland France, i.e. more than the initial target of 5,400 MW set by decision dated 15 December 2009 concerning the multiannual programming of energy production investments. By decision dated 28 August 2015, the Minister of Environment resolved to raise the targets of total installed capacity from 5,400 MW to 8,000 MW as at 31 December 2020. At the same time, calls for tenders launched in November 2014 in relation to ground-mounted or rooftop photovoltaic plants with a capacity above 250 kW and in March 2015 for photovoltaic plants on buildings, parking shade structures with a capacity from 100 to 250 kW, were doubled, to reach respectively 800 MW and 240 MW.
Moreover, in accordance with the guidelines adopted by the European Commission on 28 June 2014 on State aid for environmental protection and energy 2014-2020, the LTE introduces a new compensation mechanism (le complément de rémunération) to support the integration into the market of energy produced from renewable resources. This new compensation mechanism will be in force as from 1 January 2016.
Existing solar plants which benefit from the power purchase obligation (obligation d’achat) upon the entry into force of the new compensation mechanism will continue to benefit from such power purchase obligation until its term. According to the LTE, such benefit will remain in force in the event a producer requests to benefit from the power purchase obligation prior to the entry into force of the new mechanism, provided the plant construction is completed within 18 months.
Order dated 4 March 2011, as amended by decision dated 30 October 2015 (the 2011 Tariff Order) specifies the conditions of purchase of electricity produced by solar plants and sets the following tariffs1 :
The building-integration Tariff (T1) | 25.78 c€/kWh for any solar plant benefiting from the regime of building integration, with a total installed capacity up to 9 kWc. |
The simplified building-integration Tariff (T4) | 14.70 c€/kWh for any solar plant benefiting from the regime of simplified building integration, with a total installed capacity up to 36 kWc. |
13.96 c€/kWh for any solar plant benefiting from the regime of simplified building integration, with a total installed capacity between 36 kWc to 100 kWc. | |
Other plants (T5) | 6.28 c€/kWh for any other solar plant the total installed capacity of which does not exceed 12 MWc. |
Quarterly adjustment of tariffs
Tariffs determined in accordance with the foregoing are adjusted on a quarterly basis, depending on the volume of the projects added to the waiting list during the previous quarter and regardless of the type of the plants. Such adjustment mechanism permits the control over the long term of the number of projects filed.
Therefore:
Such adjustment creates uncertainty for developers who do not know the applicable purchase tariff over time2.
The applicable tariff is subject to an annual indexation as from the entry into force of the purchase agreement, depending on the hourly cost of work in the mechanic and energy industries and variations in the price index of the industry production and of business services for the industry.
Notes to avoid segmentation of projects
The terms of « capacity » and « project » were clarified in a decision dated 26 June 2015 modifying the 2011 Tariff Order applicable to any grid request filed as from 1 July 2015. This clarification is intended to avoid artificial segmentation of projects tending to benefit from the most advantageous purchase tariffs.
In addition, cumulative technical criteria help distinguish the plants that are likely to benefit from the regime of building integration from those that are likely to benefit from the regime of simplified building integration.
Solar projects also benefit from a support scheme of either « simplified » or « regular » calls for tenders depending on the capacity and the type of projects. The complexity of « regular » calls for tenders and their unevenness constitute disincentives against solar development in France.
« Simplified » calls for tenders
Three « simplified » calls for tenders have been launched since 2011 in relation to building plants with a capacity from 100 to 250 kW (similar to a rooftop area from 1 000 sq.m. to 2 500 sq.m.). Capacities of 155 MW and of 120 MW were set out by contract on the first two calls for tenders that are now closed. The last call for tenders was launched in March 2015 in relation to an initial capacity of 120 MW, divided into 3 phases of 40 MW each and for a period of 4 months. The overall volume of this call for tenders was raised to 240 MW, each phase increasing from 40 to 80 MW. The second and the third phases, respectively from 22 September 2015 until 21 January 2016, and from 22 January 2016 until 20 May 2016, must also consist of lots specifically intended to livestock buildings, thus offering additional opportunities to agricultural projects.
« Regular » calls for tenders: a historic competitiveness
Two « regular » calls for tenders in relation to very large-sized rooftop plants with a capacity up to 250 kW (installed panels on more than 2 500 sq.m.) and to ground-mounted plants were launched in 2011 and 2013. Capacities of 443 MW and of 380 MW were set out by contract. A third call for tenders (CRE 3) was launched in November 2014 in relation to a capacity of 400 MW, divided into three mature technology families (150 MW for building plants, 200 MW for ground-mounted plants, 50 MW for shade structures), with a perspective of cost reduction and with increased requirements in terms of integration to the electrical grid, of enhanced value of innovation and of promotion of low-carbon use projects and that are also virtuous in respect of soil use.
The overall volume of the last call for tenders was doubled in August 2015 and thus increased to 800 MW in order to take into consideration the strong underwriting for lots of ground-mounted plants and the low price as proposed by bidders: an 87,1 €/MWh average for ground-mounted plants with a capacity from 5 MW to 12 MW, a 70 €/MWh average for others and a weighted price of 99,26 €/MWh for the three technology families. With such prices, solar energy has really become competitive against wind energy and new nuclear, which is historic. The additional 400 MW are distributed as follows: 105 MW will be selected for ground-mounted plants with a capacity up to 5 MW and 295 MW will be selected for ground-mounted plants with a capacity from 5 to 12 MW. The closing date for the submission was set on 1 June 2015. The designation of winners is expected for the end of year 2015.
Overseas departments and Corsica
A call for tenders was also launched in May 2015 for large-sized solar plants (capacity up to 100 kW) concerning the overseas departments and Corsica, so as to implement innovative projects that combine storage technology with self-consumption and therefore limit the use of energy during high-demand periods. The overall volume of the call for tenders, equal to 50 MW, is also distributed between building plants (25 MW) and parking shade-structure or ground-mounted plants (25 MW). The closing date for the submission is set on 20 November 2015.
The new compensation mechanism was introduced by the LTE as laid down in Articles L314-18 et seq. of the French Energy Code. The purpose of such mechanism is the payment of a bonus to the producer that will complement incomes earned from sale of produced energy on the market. Such bonus aims at enabling the producer to receive a total income level that would cover the cost of its plant while ensuring regular profitability of the invested capital. The practical modalities of the additional compensation will be specified in a further implementing decree and the entry into force of which is planned on 1 January 2016 (the Decree).
The compensation mechanism can take two forms, i.e. either an « open register »: the eligible plants can enter into an additional compensation agreement directly with EDF for a period of 20 years maximum, or on « call for tenders ».
The additional compensation is equal to the difference between the base tariff and the base market price, which is calculated differently depending on the method of allocation.
In the event of an « open register » allocation, the base tariff is akin to the current purchase tariff. The difference with the base market price will then be increased with a management bonus which aims at compensating costs caused by placing the energy production on the market. The producer’s incomes earned from the capacity market should be deducted as well as the guarantees of origin in relation to Article L314-20 3° of the French Energy Code.
In the event of a « call for tenders » allocation, the base tariff, subject to the call for tenders and as proposed by the producer, should internalize incomes earned from the capacity market and the management bonus.
The new solar plants at the date of entry into force of the Decree, i.e. operated for the first time and which fundamental structures or grid works have yet not been used for energy production purposes or for any other purpose as at the date of the submission of the request for a power purchase agreement under the compensation mechanism, can benefit from the new compensation mechanism in the form of a call for tenders (« simplified » or « regular » depending of the installed capacity of the power plant). As previously described, a producer may be able to profit from the power purchase obligation, if it has filed a power purchase agreement request, before the entry into force of the Decree, provided the completion of the plant occurs within 18 months.
Only new plants using solar energy with an installed capacity up to 100 kW would benefit from the power purchase obligation mechanism.
The frequent regulatory changes (the 2010 moratorium deeply affected the sector), the new compensation mechanism being the most recent one, and the resulting need for flexibility by the various actors (including bank and credit institutions) to the successive changes and the importance of the connection waiting list (1,800 MW) constitute major disincentives against the smooth development of the photovoltaic sector in France.
However, the increase of set targets in terms of total installed capacity up to 8,000 MW (even though this remains way below Germany which already has an installed capacity of 38,000 MW) is a strong sign sent to the market in the wider context of the LTE, the merit of which is to introduce the foundations of what is announced as the evolution of our energy model to a model more in line with sustainable development criteria.
The organization of COP 21 by France will be a new opportunity to reaffirm its commitment in respect of renewable energy and the PPE should bring the long-awaited visibility for actors in the solar industry.
Tariffs for the period from 1 July 2015 to 30 September 2015 following the decision dated 30 October 2015 and published on 1 November 2015 ; tariffs are adjusted each quarter by administrative order.
Pursuant to a deliberation from the CRE (French Regulatory Commission of Energy) dated 22 October 2015, T1 was reduced by 1.5 % and T4 by 2 % for the last quarter of 2015. Hence for the last quarter of 2015, the tariffs would be 25.40 c€/kWh for the building integration tariff, 14.40 c€/kWh and 13.60 c€/kWh for the simplified building integration tariff, 6.12 c€/kWh for other plants.
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