France takes new direction in renewable energy infrastructure to play on global scale

The French Government launched yesterday the bidding program to build five offshore wind farms along the coasts of Britanny and Normandy. This represents 3,000 MW of capacity, or the equivalent of two new nuclear reactor sites, and is expected to cost $14Bn. Today, wind produces less than 2% of electricity in France and all turbines have been deployed in land.

The 600 hundred wind turbines to be deployed offshore by 2015 would double the current capacity and help the country join the European elite led by Denmark and the UK. The largest offshore wind farm is currently in Denmark: Horns Rev 2 generates more than 200MW of power in a country that has grown used to offshore turbines in the last 20 years.

If the first phase if succesful, another 3,000 MW is expected to be deployed in 2015-2020 to help meet the 2020 goals of producing 40GW from renewables. This announcement is all the more notable that the French Government decided earlier this year to limit aids for solar installations to 500MW per year.

The concept of quotas was received with uproar and disbelief by the emerging solar power industry in France lagging way behing its neighbor Germany. Industrials argue that any quota on solar will kill this industry. The Government argues in return that the solar power industry has not produced as many jobs as expected.

The French Government does not hide its intent with its the offshore wind power plants that represent twice as much solar installations in the next 3 years. "The objective is to create jobs" stated Nathalie Kosciusko-Morizet, the French Minister of Ecology who estimates to 10,000 the number of new jobs that could be created.

France is in a very different situation than Germany that has built an impressive network of solar panel installers for residences and businesses alike. The German market is an order of magnitude bigger than the new quota in France. Germany is much more reliant on its neighboring countries and did not have much choice in leading renewable energy initiatives ten years ago amid environemental concerns in the German Parliament. In contrast France has a far-reaching nuclear power industry and a strong presence in North African countries via its Oil&Gas industry.

While Chancellor Angela Merkel committed her country earlier this year to stop using nuclear by 2020, and by such comforting its leading position in the growing renewable energy market, France is now looking at strengthening its nuclear industrial complex via renewables to be a global player in green energy. Experts argue that the offshore plan favors the French nuclear giants according to French newspaper Le Monde.

Nuclear industry giants like Areva and EDF have already announced that they will participate to the bids that have to be submitted by January 2012. EDF will bid on the five locations in partnership with Alstom and Danish company DEONG Energy that manages 11 offwhore wind farms today, including Horns Rev 2. Areva is partnering with Spanish Iberdola on two sites and with GDF-Suez on the three other sites.

Some argue that the plan was cut into large pieces to favor existing French energy players but not big enough to favor the existing industry leaders. In any case, the biding program will likely not favor new entrants and it remains to be seen whether some of the 10Bn euro allocated will be awarded to start-ups in France. Most of the turbines are expected to be manufactured out of the country but some levels of assembly could be required to be done in France.

The head of the French subsidiary of Portuguese EDP, Frank Lanoe, explains that offshore wind is a mature technology with more than 1,000 wind turbines in operation. The UK passed the 1GW mark and E.ON is one of the major offshore wind actors in Europe. Mr Lanoe explains that "costs are 3-4 times higher but but an offshore wind turbine can produce 50 to 100% more electricity". Frank Lanoe hopes to have a chance to win one of the five contracts and that France will have a European perspective on the project.

This could be the case as Eric Besson, the French Minister of Industry and Energy, went to Marocco this week to meet his counterpart Amina Benkhadra. The French national agency AFD is allocating a $150M to help Morocco's solar energy plan. Marocco announced in 2009 that it would invest $9Bn to deployed 2,000 MW of solar generated electricity. When operational by 2020, this would representing more than 40% of Marocco's electricity needs.

Eric Besson explained the cooperation with Morocco is part of a larger plan among Mediteranean countries: "It is the centerpiece of the Mediterranean solar plan". North African countries benefit from ideal conditions for solar farms and excess capacity could be sold to European countries like France. Transport losses is an issue but Eric Besson reckons that new development in electricity transport and the integration of information and communication technologies can solve the problem.

To that effect the French Government decided to invest $35M across six smart grid projects. The balance between supply and demand is more and more difficult with the growing contribution of renewable energies. The reduction of transport losses is also critical to build a mediterranean smart grid in the future. The French agency ADEME is coordinating the Government aid and the industrial partners are contributing more than $125M. 

The official trip was also the occasion to promote the collaboration between Moroccan and French clusters like Systematic that are leading research & development in infrastructure verticals like Telecoms, Transport, etc. In this case, the cooperation is expected to benefit some smaller and larger companies. It has the merit to include developing countries in the equation but the French Government is clearly reorganizing its bets in clean-tech in order to have a better chance to be a global player.

The launch of the offshore wind program and the trip of Eric Besson both confirm a change of strategy in renewable energy from the meetings of Grenelle 4 years ago. France is now taking the course in solar to play on the world scale by betting on the underlying infrastructure that will be needed to connect the different pieces of the puzzle. Solar cells is only one component and France focuses rather on the international market. Like in the case of the wind project, French companies are encouraged to build international alliances.

France benefits from existing verticals in Telecom and Transport and seems to intend to leverage those cards  in an emerging international market that is blurring traditional lines among energy, transport, telecom, water, and construction sectors. Earlier this year Total acquired a majority stake in Califonian solar manufacturer Sun Power for $1.4Bn, and Schneider Electric acquired the smart grid leader leader Telvent from Spain for $2Bn.

Schneider Electric will lead the integration of the firm solar farm in Morocco in Ouarzazate scheduled in 2012. Partner in the project is the French semiconductor manufacturer Soitec located in Grenoble. Soitec acquired earlier this Concentrix from Germany and will use its concentrated-PV technology to provide the solar panels expected to generate the first 5 MW. Long-term the farm near Ouarzazate could generate up to 500 MW.

Comments

[Duane Gordon]

If the solar industry can't produce like it should then you have to look for other ways to meet energy goals.

[prabodh govil]

something about cost factor is also solicited.

[Olivier Jerphagnon]

Pradobh, you make a very good point about cost factor. Wind has established as cheapest renewable energy. It remains to be seen if off-shore projects can be as sound to justify economically not supporting domestic solar market