France: the global dark horse


February 24, 2017

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Guilty! In recent years we have not given France the recognition it deserves. With small projects, it seemed solid but little more.

But the latest annual statistics from the Global Wind Energy Council show that is dead wrong. In 2016, wind farms with total headline capacity of over 1.5GW were completed in France, which put the country second only to Germany in terms of Europe’s most active wind markets. It was also the sixth most active globally.

There are three main reasons it has avoided our gaze.

First, the projects tend to be quite small. For example, this month Innergex paid €35m for the 44MW Yonne wind farm in northern France. That is not a huge headline-hogging deal, but it is still notable: Yonne is three times bigger than the average wind farm completed in France. There were 102 wind farms completed in the country in 2016, with an average size of 15MW.

A 15MW project will rarely attract major headlines, but when you have enough happening together it equals a sizeable market.

The benefit of smaller projects like that is that they enable an active asset manager to build a portfolio of projects across the country. It may take more work that managing one big project of 100MW, but it also allows an investor to spread their risk.

The second reason that France has missed out on wider attention is that its leaders have been quietly putting in place laws to improve investor confidence. Grenelle 2, introduced in 2010, set a goal that 23% of France’s energy should come from clean energy sources by 2020. Meanwhile, the Brottes Act of 2013 simplified the planning process to give local authorities more freedom on where wind farms can be located.

In addition, France has had a stable support mechanism in place since 2014. These three sets of regulations have played a key role in supporting investor confidence.

And the third reason France’s wind market has failed to gain the recognition it deserves is that so much discussion about French energy policy is dominated by nuclear, which makes up 75% of its energy mix. That is now changing, and we expect more wind firms to find opportunities in France over the next few years.

This month, energy minister Segolene Royal announced that the government would support 3GW of new onshore wind farms over the next three years, with auctions for 1GW of capacity annually.

We could even see up to 2GW of onshore wind capacity completed each year as France seeks to achieve its long-term targets; and we also expect final investment decisions on large projects that will kickstart the offshore market in the next two years.

If that level of activity materialises then it will mean opportunities for all of the usual suspects: developers, investors, manufacturers and those across the supply chain. That has been enough to attract entrants such as Envision, which bought Velocita’s French arm in December, including a 500MW development portfolio.

It should also mean growth in number of workers in the country’s wind industry, which currently employs 14,500 people according to the wind association France Energie Eolienne.

The big risk for all of this is, of course, the country’s looming presidential election in May, and the parliamentary elections one month later. The country could lurch to the right if the Republican candidate Francois Fillon or Front National’s Marine Le Pen wins, with the rise in anti-renewables policies that could bring.

But neither is guaranteed to win with Emmanuel Macron, Jean-Luc Melenchon and Benoit Hamon in the frame too. We will get a better idea of this when the race gets to its final two.

And, for whoever wins, energy will be a big challenge as the country has to reduce its reliance on an ageing stock of nuclear power plants. The economics of wind and the variety it brings to the energy mix should help wind even with a right-leaning leader.

Until then, the country has stable rules, big ambitions and a growing wind industry. If smaller projects interest you then it could be a good time to get involved.

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