France Cuts Feed-In Tariffs to Prevent Solar Industry Crash

There’s been a lot of apprehension in the solar industry about impending feed-in tariff cuts in Germany, by far the world’s largest solar power producer. french solar tariffBut all eyes temporarily turned to France this week when the French government announced a 24 percent cut in its own feed-in tariff, dropping it from 55 to 42 euro-cents per kilowatt-hour of solar electricity. While industry panic is still a possible response to German tariff cuts, it seems most find France’s cuts reasonable. For one thing, the French solar market pales in comparison to that of Germany; remember that Germany accounts for more than half of all global solar production. Secondly, France may be avoiding a solar catastrophe on the level that Spain experienced when it drastically reduced its tariff in 2008. The problem is that a high 55-euro-cent tariff creates a speculative bubble that could become unsustainable. If and when, as Spain realized, you significantly reduce those tariffs, your solar industry can crash. Apparently, the French government could see their own bubble forming, with solar permit applications increasing from 5,000 per month last summer to 3,000 per day in the last two months, and decided a significant, perhaps preemptive cut would help stabilize the bubble without bursting it.solar french flag Obviously, solar installers and their customers in France would love to see the 55-cent rate continue unabated, especially given France’s still-small solar market, but that is almost certainly unsustainable. Furthermore, says Andrew Kinross of Navigant Consulting, 42 cents should be more than enough to continue incentivizing solar growth in France. Although some decrease must be expected, when you’re receiving 3,000 solar applications per day, you can bet that there will still be plenty of demand with a reduced, but still lucrative, solar feed-in tariff. Via The Street Photo Credit: GMU Library & RenewableEnergyWorld

Posted on January 15 in Solar Funding by .

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