Bill to accelerate the development of renewable energies
31 October 2022
31 October 2022
The bill to accelerate the production of renewable energies was presented to the Council of Ministers on Monday 26 September 2022 and submitted to the French Sénat on the same day. This was the result of the commitment made by the President during the election campaign to reduce delays and simplify procedures in order to promote the deployment of renewable energies with a view to achieving long-term “carbon neutrality“. The acceleration promoted by the bill is based not only on its content but also on its adoption procedure, with the objective of seeing the bill voted through quickly, justifying the use of the accelerated legislative procedure (the adoption of a bill after a single reading by both chambers of French Parliament).
The bill is structured around 20 articles divided into four titles, the main measures of which are presented below and include emergency measures to accelerate renewable energy and industrial projects needed for the energy transition (1), measures to accelerate the development of solar and thermal photovoltaic energy (2), measures to accelerate the development of offshore wind energy (3) and cross-cutting measures for financing renewable energy and value sharing (4). The bill has received a relatively favourable response by industry stakeholders.
As the main objective of the bill is to accelerate the deployment of renewable energy projects in France, the first accelerating lever being employed is the simplification of administrative procedures. Six measures (some of which will be applicable on a temporary basis, for a limited period of 48 months) are proposed.
These initial measures are intended to provide wider access to the opinion of the environmental authority as required by authorising its online publication as well as the publication of the response of the developer on the competent authority's website. These measures also remove the power of the environmental authority to request a public enquiry where one is not required and only electronic public participation is needed. The bill also stipulates that the application for an environmental authorisation may be rejected during the examination phase (and no longer at the end of it) if it is established ab initio that it cannot be granted. The bill also provides for the extension of the electronic public participation regime to projects subject to prior declaration, such as small-scale ground-mounted photovoltaic projects, and thus no longer restricts it to projects subject to a building or development permit.
In order to facilitate compliance with local urban planning documents that would oppose the implementation of renewable energy installation projects, the bill introduces a simplified amendment procedure which is faster than the French usual amendment procedure.
The bill stipulates that projects for renewable energy production facilities, as well as works for connection to the energy transmission and distribution networks, that meet certain conditions (to be specified by decree) relating in particular to the type of renewable source and the estimated power of the facility are deemed to meet a major public interest. This recognition, which appears to be merely a presumption, may take place as soon as the declaration of public utility is made and for the entire validity period. This is a major step forward. In addition to facilitating the granting of a derogation for protected species (which will however remain subject to the other two conditions of no satisfactory alternative solution and the maintenance of a favourable conservation status for the species), it also limits any possible challenge to the status of major public interest at the declaration of public utility stage, without this being able to be contested once the derogation has been granted.
The bill extends the system applicable to urban planning authorisations by obliging the administrative judge to allow the regularisation of an illegal environmental authorisation, even after the installation concerned is complete, before pronouncing its possible cancellation. This is a measure expected by the industry, which proposes to go further in the curtailment of environmental litigation, for example by sanctioning abusive appeals or by eliminating the practice of economy of means (« économie de moyens ») characterising the decisions of the French administrative judge.
Finally, in addition to these measures, the bill empowers the government to simplify by ordinance the procedures for connecting renewable energy installations, in order to accelerate their implementation and not to hinder the timetable for projects that are essential to the energy transition.
The measures in Title II aim to increase the capacity for setting up photovoltaic projects by freeing up available land. Through a series of 11 measures, the bill thus proposes to mobilise :
The development of offshore wind farms is the subject of a dedicated Title comprising various measures aimed at facilitating the realisation of these projects and adapting the social regulations applicable to the persons contributing to their installation and operation.
This measure aims to improve the coherence of public participation procedures by offering the competent ministers (energy and sea) the possibility of pooling the public debates for offshore wind farms and the strategic coastline document in order to improve the spatial planning of the transition, so that there is now only one public debate per coastline rather than for each offshore wind farm project. The aim is threefold: to guarantee the public better visibility and consistency throughout the planning process for these farms, while limiting the number of public participation procedures, thereby speeding up the development of projects.
For the industry stakeholders, this measure is insufficient to provide the public with an overall vision of the development plan for offshore wind energy, as envisaged in the framework of the Offshore Wind Pact signed between the State and the sector in March 2022, which sets an objective of 18 GW in service by 2035 and 40 GW installed by 2050. According to them, it should be completed by the establishment of a national plan for offshore wind energy which would define the timetable, the volumes and the land and sea areas of installation likely to be the subject of competition.
In order to prevent the multiplication of the number of authorisations required under the different applicable legislation (occupation of the domain, operation, environment) and the legal risks associated with offshore wind farm projects straddling the public maritime domain and the exclusive economic zone (“EEZ” – including connection works to the public electricity grids), the bill intends to establish a single legal regime which would be that of the territorial sea. However, the bill retains the application to the part of the project located in the EEZ of certain provisions of the order of 8 December 2016 which are required in order to comply with the United Nations Convention on the Law of the Sea, signed in Montego Bay in 1982. While the objective of simplification is to be welcomed, the practical arrangements for implementing this new system nonetheless raise certain questions, particularly with regards to the competence of the authority responsible for issuing the required authorisations. The system adopted departs from the recommendations contained in the CGEDD - IGAM - IGF report of June 2021, which recommended favouring the single authorisation system for the EEZ, which is simpler than that for the public maritime domain, at least for parks whose largest surface area (80%) is located in the EEZ.
The bill creates a new legal regime for artificial islands, floating installations or structures, including floating wind turbines. It is based on the extension to these projects of certain provisions relating to ships (registration, possibility of francization, control by an approved body of compliance with the rules relating to maritime safety), and organises an administrative police regime for the installation similar to that provided for environmental authorisations in the Environmental Code. Finally, it completes and unifies the system of criminal sanctions applicable in the event of failure to meet the obligations of the owner or operator. By creating this new legal regime, the bill again moves away from the recommendations of the above-mentioned CGEDD - IGAM - IGF report of June 2021, which recommended creating an ad hoc legal regime for floating wind platforms rather than assimilating them to the status of ships.
This welcomed measure makes it possible to authorise, by way of derogation, but subject to a case-by-case examination (technical, financial and environmental), the installation of connection works to the public electricity transmission network in areas subject to the provisions of the urban planning code applicable to the development and protection of the coastline (coastline law).
If these acceleration measures are considered as positive advances for the development of offshore wind energy, the industry stakeholders propose to mobilise additional acceleration mechanisms. For example, the limitation to nine months for the period for instruction and delivery of the required administrative authorisations or the framing of the period for the realisation of the studies to be transmitted by the State to the candidates/lessees tender process, so that the latter can quickly finalise the impact assessment of the project. It is also suggested that the date of availability of the grid connection works for offshore wind projects be defined in advance in the section of the multiannual energy programme relating to the development of the use of renewable and recovered energy.
In its final Title, the bill includes a variety of stand-alone measures to promote the financing and local attractiveness of renewable energy projects.
The bill introduces in Article L. 333-1 of the Energy Code (relating to suppliers carrying out an activity of purchase of electricity for resale) a legal framework specific to direct sales contracts between producers and end consumers (and network operators for their losses) commonly called Power Purchase Agreements or Corporate Power Purchase Agreements (PPAs or CPPAs). This new framework aims to encourage the development of this type of contract, which is likely to lead to the emergence of installations without public support. Like electricity suppliers, electricity producers wishing to enter into CPPAs will have to hold an administrative authorisation.
Failing that, the CPPA may designate a third party holder of such an authorisation to assume, by delegation, the obligations incumbent on electricity suppliers vis-à-vis final consumers (information, security of electricity supply, guarantees of consumption and electricity production curtailment capacities). The terms of application of this legal framework, and in particular the obligations attached to this authorisation, will be specified by decree. The question arises, however, as to how this new legal framework will relate to the CPPAs already concluded by producers who do not have the administrative authorisation now required.
A number of stakeholders (professional associations, local elected representatives) propose to complete this new legal framework by introducing into the Energy Code the possibility for purchasers subject to public procurement rules to contract long-term public contracts for the purchase of "green" energy from electricity producers (thereby derogating from public procurement rules).
The bill also opens up the possibility for candidates in future calls for tenders to submit mixed bids based on a combination of CPPA / purchase contract – contract for differences for the sale of the electricity produced, as is the case in other countries (Denmark in particular), which should facilitate the establishment of long-term contracts in the field of renewable energy.
In addition, and still with the same concern to create a market for long-term contracts, the bill provides for the perpetuation of the exceptional amortisation scheme of 50% for the acquisition of shares in electricity supply companies set up by Article 43 of Law No. 2005-1720 of 30 December 2005, the benefit of which was initially limited in time (sums paid before 1 January 2012). The bill also provides for the extension to approved electricity supply companies (in accordance with Article 238 bis HV of the General Tax Code) of the benefit of the deductibility of financial charges relating to the contracts they have entered into in this respect (mechanism provided for in Article 212 bis of the General Tax Code).
Finally, the bill authorises a party to a long-term electricity supply contract concluded before the entry into force of the forthcoming law to submit a request to the Energy Regulation Commission (CRE) to revise the market price indexation mechanisms of a current contract. In practice, only the "Exeltium" contract concluded in 2014 between EDF and the purchasing company Exeltium (for the supply of electricity for 24 years to the 27 electro-intensive companies that made up this company) is concerned by these provisions, which aim to introduce a mechanism of unforeseenability with the intervention of a third party (the CRE) in the execution of the contract, in order to take into account exceptional developments in the electricity markets that could compromise the economic balance of the contract. Although the applicability of new legislative provisions to an ongoing contract generally raises questions, particularly of a constitutional nature, it seems that in this case it can be justified by reason of general interest. In any case, this is what the Council of State considered in its opinion on this measure.
THE LINK BETWEEN THE CPPA AND THE FINANCE LAW FOR 2023 RELATING TO THE TAXATION OF SUPER PROFITS MADE BY ELECTRICITY PRODUCERS
Following the agreement reached on 30 September in the Council of the European Union on the capping of the income of so-called "infra-marginal" producers in the context of the discussion on the proposal for a Council Regulation on emergency intervention to deal with high energy prices (COM/2022/473 final) (the "Regulation"), the Finance Law (PLF) for 2023 – recently adopted by the French Assemblée Nationale - aimed at transposing a similar measure into the French law in its Article 4 duovicies (inserted on the French Government initiative).
For the record, the Regulation authorises the capping of revenues from the production of electricity from certain energy sources (including renewable energy) at 180 €/MWh throughout the European territory, with the exception of the outermost regions and overseas countries and territories, for a period running from 1 December 2022 to 30 June 2023.
Article 4 duovicies introduces a "contribution" based on the market revenues generated by the production of electricity, the amount of which corresponds to the fraction of the installation operator's market revenues exceeding a flat threshold of 180 €/MWh (which is consistent with the provisions of the Regulation). This fraction is equal to the positive difference between the sum of the market revenues and the product between, on the one hand, the quantities of electricity produced from which these market revenues were generated and, on the other hand, the above-mentioned flat-rate threshold (in principle equal to 180 €/MWh, except for certain technologies). It is subject to a reduction of 10% which may be increased to a maximum of 40% for electricity produced between 1 July and 31 December 2023.
The chargeable event for the contribution is the production of electricity during the period from 1 December 2022 to 31 December 2023 (i.e., for a longer period than that provided for in the Regulation, currently set at 30 June 2023).
With regard to installations for the production of electricity from renewable energy sources :
THE LINK BETWEEN THE CPPA AND THE FINANCE LAW FOR 2023 RELATING TO THE TAXATION OF SUPER PROFITS MADE BY ELECTRICITY PRODUCERS
To improve the acceptability of these projects, particularly from the point of view of local residents living near renewable energy production facilities, the bill intends to institute "territorial sharing of the value of renewable energy" which would involve a deduction from the electricity bills of the municipalities and residential end customers concerned the payment of an annual lump sum. While the amount of this payment remains to be defined, the bill provides that the costs incurred by suppliers will be considered as public energy service charges. The geographical scope of residents eligible for such a deduction will have to be determined taking into account the nature and characteristics of these installations. This clarification responds to the criticisms made by the Council of State regarding the risk of undermining the equal treatment of consumers or local authorities which could result from the application of this innovative system.
Authors: Jacques Dabreteau, Partner Public Law; Noëlene Grenard, Associate Public Law