Development of renewable energies: cross views between Brussels and Paris

1. Introduction

 
In the context of the energy and climate crisis that France is facing as are many other European countries, the law No. 2023-175 of 10 March 2023 relating to the acceleration of the production of renewable energies was adopted by the French Parliament and enacted. Most of this law was declared constitutional by the Conseil constitutionnel[1].
 
This law introduces a series of provisions aimed at easing the development of renewable energy (RE) production projects, among which some can be compared with those resulting from the recent reforms introduced at the European Union level and pursuing the same objective.
 
Indeed, since the adoption of the Green Deal^[2] and more recently of the REPower EU legislative package^[3], we observe at the European level a certain will to accelerate the deployment of RE, an objective guiding the proposals of European texts undertaken by the European Commission in energy matters.
 
In that regard, the following provisions deserve special attention.
 
 

2. Analysis

 

• Creation of a guarantee fund intended to compensate part of the financial losses suffered by certain RE project developers resulting from the cancellation of administrative authorizations[4] by the courts (art. 24)

 
Project developers benefiting from a public support system (purchase obligation or remuneration supplement contract) will be able to subscribe to this fund by paying a fee. This subscription must be made after the issuance of the authorization and before the start of construction work. Article 24 of the law determines the financial losses that can be compensated and refers to a decree regarding the application of the mechanism.
 
This fund should have a direct impact on the acceleration of projects since it will prompt RE developers to start construction work despite third party appeals. However, consideration will need to be given to whether this mechanism will offer the same guarantees as those usually provided by the private insurance products used by RE project owners.
 
It is worth mentioning that the several European instruments (the energy market design proposal[5], the proposal for amending the directive on the promotion of energy from renewable sources "RED III"[6] and the energy efficiency directive[7]) do not propose a similar guarantee scheme. Therefore, this possibility represents in this sense a French specificity, which could usefully inspire the other Member States and even the European legislator.
 

• Presumption of "imperative reason of overriding public interest" (IROPI) for certain RE installation projects (art. 19)

Three conditions must be met in order for a derogation from the prohibition on the destruction of protected species (derogation licence) to be granted for an RE project[8]. The 10 March 2023 law provides that one of these conditions, IROPI, is presumed for certain RE projects.
 
This presumption introduced by the law of 10 March 2023 is likely to ease the installation of RE projects. However, it does not imply the automatic granting of a derogation license, since it only concerns one of the three conditions provided for by the Environmental Code. Moreover, article 19 of the law provides that the presumption will only apply to the installations concerned and provided that they meet the conditions that will be specified by decree.
 
The criteria of "overriding public interest" has also been subject to long and detailed discussions in Brussels. The proposal on the modification of the renewable energy and energy efficiency directives[9] includes in its newly published version (article 16e) a presumption according to which "the production of energy from renewable sources, their connection to the grid and the related grid itself and storage assets are being in the overriding public interest".
 
It can be noted as an example, that in the Flamish Region of Belgium, where this presumption does not exist, the RE producers need to prove that their projects can be considered as projects of public interest. Therefore, the introduction of this presumption will considerably decrease the administrative burden of energy producers and ease the deployment of RE projects, by reversing the burden of proof.
 
 

• Creation of a legal framework applicable to power purchase agreements (PPA) for renewable electricity and gas/low-carbon gas (art. 86)

The law of 10 March 2023 provides for several measures applicable to PPAs. In particular, it introduces the requirement for producers to obtain an administrative authorization in order to sell the electricity produced and allows to combine a PPA with the benefit of a public financial support scheme (purchase obligation or remuneration supplement contract). This new measure brings a legal framework to the conclusion of PPA, which was before not regulated.
 
In addition, the law expressly enables public purchasers (contracting authorities and contracting entities) to enter into a PPA with a producer in accordance with the rules set out in the public procurement code.
 
In particular, the law clarifies the compatibility of the long duration of PPAs with public procurement law (when the buyer is public): the duration of the contract must be defined taking into account the nature of the services and the depreciation period of the installations necessary for their execution.
 
This legal framework will help to secure PPA projects and make up for France's lag (by way of comparison, France has 600 MW of renewable capacity contracted under PPAs, whereas, for example, Spain has 13 GW and Belgium 1.3 GW[10]).
 
France and the EU have also put in place guarantee mechanisms to ease the deployment of PPAs.
 
In France, the government proposed in November 2022 the establishment of a fund of guarantee operated by Bpifrance designed to partially cover the default risk of industrial electricity buyers via PPAs. This new fund would concern all types of renewable electrical energy sources. This direct public support would allow RE developers to intensify the use of private supply contracts.
 
This fund will be self-funded by the premiums paid by the guaranteed contracts and the recovery of part of their surplus income in the event of high market prices. The government announced the objective of guaranteeing the first contracts in 2023.
 
At the EU level, the Commission also encouraged in its "RED III" proposal[11] (in its article 15) the use of credit guarantees to reduce the power purchase agreements' financial risks.
 
This measure aims at ensuring that PPAs are accessible to smaller companies, through a guarantee scheme reducing financial risks associated to a buyer defaulting on its long-term payment obligations.
 
This necessity of guarantee schemes for PPAs is also mentioned in article 19bis of the Commission Proposal on Market design[12]. This instrument will certainly lower the long-term risk burden on offtakers and could certainly lead to standardization of the use of PPAs.
 
While the French mechanism would be operated by a public bank (Bpifrance), more reflections would, however, have to be pursued to identify how such guarantee schemes could be introduced and financed under other forms of mechanisms in other Member States.
 
 

• Go-to-areas for the establishment of land-based RE production installations (art. 15)

This provision aims at identifying specific zones on which projects could benefit from limited administrative procedure deadlines (fifteen days from the public inquiry for the investigating commissioner or commission of inquiry to submit its report and reasoned conclusions; three-month review period for the environmental authorization) as well as benefits in the bidding procedures (consideration of the location in a go-to-areas as an award criterion in the bidding process; modulation of the feed-in tariff for the electricity produced, in order to compensate for all or part of the losses of producibility due to less favorable location conditions than the average in the project zone).
 
The procedure for identifying the go-to-areas provided for by article 15 of the law is particularly complex and subject to the approval of the municipalities, with the result that the establishment of such areas could require timeframes and raise objections that are not compatible with the stated objective of accelerating. On 10 May 2023, a renewable cartography platform[13] has been launched in France in order to gather public data allowing local authorities to identify those areas.
 
In Brussels, the notion of "go to areas" has also been largely explored. As part of the REPower EU plan, the RED III proposal and the Commission recommendation on accelerating permitting for RE projects provides for the identification of "renewables-go-to-areas". This refers to specific locations whether on land or sea, particularly suitable for the production of energy from renewable sources. According to the proposal, Member States should give priority to artificial and built surfaces (i.e rooftops, transport infrastructure areas, parking areas, industrial sites) and exclude Natura 2000 sites.
 
In that regard, the French law is perfectly aligned with the European framework. The effective determination of those "go to areas" is still representing a challenge in terms of concrete application. Indeed, a close cooperation with local authorities will be essential to identify the potential zones. Also, this mapping could have consequences on the land pricing and therefore could become a break on deploy if it is not well implemented. In this sense, while the dispositions enshrined both in RED III and in proposal on electricity market design are definitely in favour of an intensive development of RE sources, it will be interesting to keep a close eye on how Member States conciliate their implementation with their national characteristics and constraints.
 
Also, in political guidelines issued by the Walloon government, the latter even envisages to broaden the scope of application of expropriation law in order to presume the installation of RE projects as being of general interest and in that regard justifying expropriation in selected favorable areas.  In practice, this measure would, most likely delete some barriers to renewable deployment. However, one may legitimately wonder whether the security of energy supply is such as to justify such an infringement of property rights.
 
 

• Strengthening of the obligation to install solar energy installations in parking lots (art. 40 and 41)

 
Article 41 of the French law provides for numerous measures to promote the development of solar energy. In particular, these provisions requires outdoor parking lots with a surface area of more than 1,500 m2 to be equipped, over at least half of their surface area, with shading systems incorporating a RE production process on the entire upper part providing shade.
 
In case of non-compliance with this obligation, the owner of the parking lot may be subject to a financial penalty of up to €40,000 each year until compliance is reached.
 
In the same way, this law to accelerate renewable energy provides a normative framework for agrivoltaic installations[14] in line with the objective of promoting agrivolatism while preventing the risk of conflict of use of land. As this concept is still in development and contested in France but also in the Benelux region, it will be interesting to analyze its concrete implementation in France and its adequacy with the different national and European legal frameworks.
 
 
 

3. Conclusion

With this new French law on the acceleration of renewables, France is taking one step ahead on European countries in transforming political climate objectives into practical legal obligations relating to the acceleration of RE sources. It is now left to see whether this framework will in practice allow France to increase energy produced from renewables sources and contribute effectively to EU energy transition objectives. In any case, this newly adopted law will be completed by several decrees and orders, which will participate in the creation of a complex legal regime. Equally, the proliferation of legislation in Brussels in the energy sector is making the role of expert lawyers both in national and European legal systems essential to achieve an effective application of those regimes, that will inevitably need to cohabitate in order to reach both the French and the European climate objectives.