French’s wind future under Macron


May 12, 2017

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We may be on the other side of the English Channel, but we can still hear the sigh of relief from France’s wind sector.

After months of campaigning that has kept Europe in suspense, centrist candidate Emmanuel Macron is France’s new president, having defeated far-right opponent Marine Le Pen, who supported nuclear power and wanted to halt construction of new wind farms.

Wind’s supporters should be happy – and not just because of Le Pen’s defeat. Macron has big plans to boost France’s economy, which should cheer investors in the renewables sector, including wind. But Macron’s win might also cause concerns in the UK.

The task facing Macron is not an easy one. France is Europe’s third-largest country but is experiencing a lack of economic growth and this, according to the Organisation for Economic Co-operation & Development, represents “France’s fundamental problem”.

Unemployment is high at 10.2% – the second-highest among the G7 leading developed countries – and government finances are weak. The latest GDP figures showed economic growth of just 0.5% in the first quarter of 2017 and, over the last couple of years, those figures have barely exceeded zero.

This need to attract investment is one reason why Macron wants to pursue ambitious renewables targets and make France the most attractive European country to invest in.

During his campaign, he said he would close all coal power plants in France by 2022 and launch a tender for 26GW of renewable energy capacity at the beginning of his term, to reduce the share of nuclear in the energy mix from the current 75% to 50% by 2025.

This is part of his programme to spend €50bn over five years on investment in sectors including infrastructure and environment.

He has already had a boost at the start of his presidency. Just a couple of days before he was elected, the European Commission approved three major programmes to support the growth of electricity production from small-scale onshore wind, solar and sewage gas installations in France. For onshore wind in particular, the scheme has a budget of €1bn per year to support up to 15GW of additional capacity over the next ten years.

Wind was already a stable market in France and, if Macron’s campaign is to be believed and with the support of the European Commission, it could become a key player in Europe, threatening to overtake larger rivals including Germany, Spain and the UK.

So, in theory, Macron’s election should open new opportunities for wind investors in France.

It could also mean more export opportunities for UK companies, although this will extend to a large extent on what sort of trade deal the UK and EU can strike by March 2019. We still need to see what impact pro-EU Macron has on Brexit negotiations, if any, but there are reasons for concern in the UK about Macron’s victory.

Now that the risk of Le Pen’s presidency has been eliminated, it is more likely that global banks and financial institutions will have the confidence to move their London-based jobs to Paris.

Arnaud de Breton, chief executive of French organisation Paris Europlace, claims that around 10,000 bankers, fund managers and top financiers could now make the move. We should treat his figures with scepticism: Paris Europlace is an organisation dedicated to promoting Paris as a business destination, so he clearly has an agenda to talk up the city.

But there will be upheaval as the UK’s Brexit negotiations continue, and Macron has said he will do whatever he can to attract those businesses and jobs. Indeed, during his campaign, he promised to slash corporation tax to 25% from the current 33%.

It is an understandable goal but the new president needs some serious investment plans. To achieve his aim of taking over from London, Macron would be constrained by existing labour laws in France and infrastructure limitations in Paris.

There is also an argument that a Macron win is better for the UK than a Le Pen win would have been. Le Pen would have posed an existential risk to the EU, and managing her would have taken EU time away from Brexit talks. Without her, a deal is more likely.

But Macron’s priority will be to reinvigorate France’s economy, and wind could benefit.

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