The incentive scheme for renewable power in France is mainly based on the power purchase obligation mechanism ("mécanisme de l'obligation d'achat"), which is set and described in article 10 of the law n°2000-108 of February 10th 2000.

Under this tariff mechanism:

• A producer can sell its whole production to EDF or other state companies at a regulated price (called feed-in tariff).
• The feed-in tariff is determined by the French minister in charge of Energy and based on the proposal from the national energy regulator. Current feed-in tariffs have been determined by the ministerial orders of June 8th 2001, July 10th 2006 and November 17th 2008 (detailed in section 2.1).
• The benefit from this power purchase mechanism depends on various requirements:
  • The producer must request a CODOA (green electricity certificate called "Certificat Ouvrant Droit à l'Obligation d'Achat") to the regional administrative entity in charge of environment and energy (the DREAL) and then sign a power purchase contract with EDF or another state company (specified in section 1.3.1). The procedure is described by the decree n°2001-410 of May 10th 2001.
  • To obtain such CODOA, the wind power plant must be located within a wind development area called ZDE ("Zone de Développement Eolien", which is detailed in section 1.1.2). These areas are defined in the circular letter of June 19th 2006 and established, at a regional level, by the municipalities. In French overseas departments, where there is no such ZDE, the maximal capacity installed is limited at 12 MW according to the decree n°2000-1196 of December 5th 2000.

Up to know, and particularly in the wind industry, such tariff system has boosted wind project developments in France whereas the legislation relative to environment, which is - on the contrary - very complex, has led to important delays in the development of new farms.

Current changes in the feed-in tariff of the French wind sector

Regarding Feed-in tariffs ("FIT") applicable to the French wind sector, the E08 order is still in force. This shows a relative stability since 4 years compared to other renewable energy sources.

However, a judicial review of the E08 order has been submitted to the Council of State ("Conseil d'Etat", i.e. France's highest administrative court) by an anti-wind energy organization, "Vent de colère". This organization claimed that the ministerial order setting the feed-in tariff scheme was inappropriate since the government had failed to notify the European Commission of the tariff, as required for state aid under European law.

The judicial review has been analyzed by the Council of State on March 12th 2012 and its decision has been given on May 15th 2012. It has referred the decision to cancel or not the ministerial order to the European Court of Justice (ECJ), asking the court to rule if the system constitutes a state aid or not.

A decision from the European Court of Justice is awaited and could take up to 12 months. In the meantime the council has declared that the tariff remains in force. Thus, following the council's statement, wind development was able to continue based on the existing tariff. However, the industry needs the government to provide reassurance to the banks, in order to facilitate project financing.

For the moment, the French renewable-energy syndicate (SER), said that the industry is "pretty confident" that the ECJ will rule that the system is legitimate.