Zelya Energy

The decree of March 14, 2011, known as the "renovation decree", opens the right to the feed-in tariff after 2012 for hydroelectric plants that have or will be subject to renovation investments. It therefore offers hydroelectric operators the opportunity to benefit again from tariffs guaranteed by the State for the sale of their electricity, subject to making certain investments validated by the administration.

The key points and important questions that arise today for these operators are as follows:

  • The evaluation of the eligibility of their installations to this decree by determining the eligibility threshold according to the nature of their past and future investments,…
  • The optimization of the investment period to be taken into account and the modeling of the feed-in tariffs to which they will be entitled…
  • The preparation and completion of the required administrative procedures: negotiations of access conditions with the network manager, obtaining the feed-in tariff certificate from the DREAL, notification to EDF…

New tariffs

However, the complexity of the tariff formula of this new decree implies, as for other types of electricity production from renewable resources, a particular attention, in order to optimize as much as possible its future income, on:

  • The indexing of the contract start tariff: the date of complete application of the purchase contract is decisive; it can significantly (and irreversibly) impact the future turnover of the hydroelectric plant
  • The inventory of investments to be taken into account in the declaration on honour.

Other factors

Other factors are also important and depend on the power and exact nature of the plant under study.

Some operators, despite the advent of this new decree and after analyzing their situation, may still prefer the competitive market and will turn to electricity suppliers or specialized brokers and wholesalers in order to minimize the new investments to be made while benefiting from interesting tariffs.

The behavior of wholesale market prices, impacted by the implementation of the new Electricity Law (NOME Law), should strongly influence the choice of these operators who, for the most part, are likely to wait a few more months before making a rather difficult decision…