France Environment Market

Trends and opportunities

The market

In 2009, the French renewable energy market generated revenues of $9.5 billion representing an in general increase rate of 2.7 % between 2005 and 2009. The French renewable energy market has posted decreasing increase rates over recent years, with decline felt in 2008 and 2009. Further decline throughout the remainder of the estimate period until 2014 is expected. Renewable energy generation in France is dominated by hydropower, accounting for additional than 90 % of production. Though technologies such as wind and solar are currently only supplying a fraction of total renewable market, they are showing rapid increase in the volume of energy generated.

France currently sources 75 % of its electricity through nuclear fuel. However, in accordance with the European Union's 2001 Renewable Electricity Directive, France was bound to source 21 % of its electricity generation from renewable energy by 2010. Although the French Government did step up its wind power generation in order to meet these obligations, the contribution of renewables to total electricity generation is still estimated to represent only around %.

Environment and energy matters are listed very high on the French political schedule. The protection and preservation of the natural environment was of President Nicolas Sarkozy’s major electoral themes. In 2008, the French Government announced plans to double the amount of power coming from renewable energy by 2020, generating nearly a quarter of the country’s energy from renewable energy.

President Sarkozy made this focus very visible both internationally and nationally by creating a new Ministry of Ecology, Energy, Sustainable Development and National Planning.

France is a signatory of the Climate Change Convention and ratified the Kyoto Protocol in 2002. It nearly reached the Protocol’s objectives by reducing its greenhouse gas emissions by % between 1990 and 2005.

French efforts for the environment are reinforced by the ‘Grenelle de l’Environnement’, a national multi-parties round table aiming at developing a roadmap for the environment, sustainable development and planning, through 15 to 20 sets of recommendations. Amongst these are new ‘eco-responsible’ public purchasing procedures

France has unveiled a renewable energy investment program, ‘Demonstrateurs Energies Renouvelables et Chimie Verte’ (Renewable Energy and Green Chemistry Demonstration, which will see the government provide €1.35 billion to support the development of cutting-edge clean energy technologies. This may help chart a new developmental roadmap for the French energy industry, which has until now focused primarily on nuclear energy.

The investment program aims to support the development of renewable energy sources other than wind, such as solar, marine and geothermal, and as well to help develop carbon capture and biofuel technology. The French Government hopes to significantly increase the share of renewables in the country's energy mix by attracting considerable private investment in solar, marine and geothermal projects.

The market is mainly driven by household consumption, followed by business request, exports and the public sector.

(Source: French Agency for the Environment and Energy Management (ADEME)

Solar

Historically, photo voltaire (PV) in France was mainly implemented to supply electricity to off-grid sites. On-grid PV applications overtook off-grid PV applications in 2005. Solar energy capacity increased sevenfold between 2007 and 2009. France has set its target for installed solar energy capacity at 5,400 megawatts (MW), the equivalent of nuclear reactors, by 2020 and expects to hit this figure next year.

While the solar share of electricity consumption has grown at 90 % per annum since 1997, the market remained marginal until late 2006, when the French Government introduced additional attractive feed-in-tariffs and tax credit incentives; 2007 marked an significant turn for the French market. These tax breaks are expected to be cut in the 2011 budget, however falling prices and production costs are helping to maintain the industry’s momentum.

The French market can potentially develop around segments:

• Individual houses (<3kWp)
• Public building roofs (10-100kWp)
• Industrial or tertiary building roofs (>250kWp)
• Ground solar farms (>1MWp)

However, the structure of in-feed tariffs have pushed the request around building integrated photo voltaire (BIPV).

Forecasts indicate that the cost of conventional electricity (nuclear and from primary resources) and the cost of PV electricity should reach the same level between 2014 and 2019, based on the development of high-power solar farms.

The major obstacles to the development of PV solar market in France are:

• The lack of administrative efficiency in connecting production sites to the network and authorising the production of electricity.
• The restricted approved product offer in terms of BIPV and the lack of profitability for other segments than BIPV.

The following R&D priorities have been identified in France:

• Critical components for on-grid production
• New manufacturing processes
• System integration and industrialisation
• Basic research on innovative technologies (eg. performance improvement, thin layers, polymer).

Wind

France enjoys Europe’s second major wind potential, and the wind resource is well distributed across the country. With nearly 4,500MW of wind power installed at the end of 2009, France is the fourth major market in Europe after Germany, Spain and Italy. In the last years, wind electricity production has been multiplied by 20.

Although this development shows that the sector is continuing to grow, the current pace of annual installations will not be sufficient for the country to meet its 2020 objective. According to the EU Directive, France must increase its share of renewable energy in its final energy request from 10.3 % in 2005 to 23 % by 2020.

In December 2009, the French Government set itself a target for achieving 11,500 MW of installed wind energy capacity by 2012, 1,500 of which should be offshore, and 20,000MW by 2020, including 6,000MW offshore.

In order to support and boost wind energy development, the French Government has launched some specific measures such as guaranteed energy purchase prices or the obligation to tender for wind farm projects.

The top three market players in wind turbine manufacturing are Enercon, Vestas and Repower.

The leading project developers in the market are EDF Energies Nouvelles, Eole-RES and La Compagnie du Vent.

The majority promising regions for wind power development in 2010 are located in the north of France, and a third of amount new projects will be located there. Out of 4,000MW of approved wind power projects, additional than 700MW are in the Champagne-Ardennes region and 500MW in the Picardy region.

Despite the high wind power potential in France, there are several barriers that remain and hinder the development of wind energy in the country. These barriers include the slow authorisation procedure for both ZDEs and individual projects, inadequate grid connection capacity, and the existence of zones in which wind power installations are forbidden.

Green building and energy efficient products

Favouring daily energy-saving practices and promoting renewable energies within residential, commercial and public buildings is at the heart of France’s priorities within its plans to reduce energy consumption and greenhouse gas emissions.

Buildings and housing currently generate 18 % of greenhouse gas emissions. Households account for 27 % of the final consumption of energy in France.

This sector is therefore viewed as presenting enormous potential for immediate energy saving.

The ‘Grenelle de l’Environnement’ laid out concrete targets, measures and incentives with regards to the construction of new buildings and the renovation of existing buildings.

In general targets for existing buildings:

• The national has agreed to renovate amount its public buildings within years
• Social residential – public-private partnerships to identify renovation priorities, lead-times and financing to be negotiated.
• Private buildings – a need for substantial financial incentives has been acknowledged, including tax credits, tax breaks, ‘carbon loans’ based on the German system and innovative bank financing products based on projects energy saving potentials.

The ‘Grenelle de l’Environnement’ outcomes are currently being translated into laws and regulations; such as the ‘Grenelle law 1’ which has set objectives such as phasing out inefficient light, lowering building energy consumption by 2012 and raising general renewable technologies in buildings by 23 %.

Opportunities

In order to raise the share of renewable energies, France is aiming at evaluating the feasibility of technologies which could contribute beyond 2010, and favouring cost reductions: photovoltaic solar, deep geothermal and offshore wind energies.

Boosted by stimulus funds, the building renovation market will in turn revitalise other markets. Business opportunities for Australian companies exist in the following sectors:

• Environmental engineering: particularly the implementation of energy performance assessments and contracts
• Heating devices using renewable energy sources
• Windows, insulation and the building materials industry
• Technical building audit: increased request for energy consumption audits
• Energy management services for households
• Manufacturers of rail and river/sea transport materials and freight transport businesses: the French Government aims to increase market share of non-road freight transport by 11 % by 2020
• Development of ‘soft’ modes of transport, and public transport: cycling, carpooling, self-service vehicles
• Manufacturers and installers of renewable energy equipment
• Players involved in development and consolidation of the electrical grid
• Waste management and treatment
• Water and sanitation: renovation of the French water system will cost €15.5 billion between 2009 and 2013

Construction of new buildings

Approximately 300,000 new accommodation units and 14M sqm of heated tertiary buildings are built each year in France.

To make new buildings which use around 50 % less energy than the buildings today, a number of products still need to be designed and manufactured, such as:

• Super insulation
• Windows with variable properties
• New products assembly and integration (thermal bridges, wind tightness)

Existing products for new buildings include:

• Renewable energy technologies (wood, solar, geothermal heating systems).
• New building methods such as double glazed windows, insulation for the roof and walls.

Renovation of existing buildings

Existing buildings consists of approximately 30 million accommodation units and over 814 million sqm of heated tertiary buildings.

Most energy-saving and business potential in existing buildings lies in the following areas:

• Thermal insulation
• Ventilation
• Heating and cooling systems
• Wood, solar and geothermal heating systems (renewable energies technologies)

There is a strong need for R&D to be conducted with regards to new techniques, methods of installation and customising of existing technologies for specific buildings (such as thin, high performance insulation inclunding substitute heating products and systems). The major drawback for the renovation of new buildings in France is the cost.

Other, specific opportunities include:

• Individual central heating boilers – over 3.5 million individual central heating boilers are over 15 years old. Their replacement by modern boilers can trigger efficiency gain of up to 20 %.
• Heating pumps – 28.4 % of residential buildings and 22 % of heated tertiary buildings in France are currently equipped with electric heating systems.

  Geothermal heating pumps have raised an increasing amount of interest in France in the last 10 years. The success of this heat pump is largely due to the 50 % tax credit incentive by the government, but as well performance improvements inclunding reduction in additional costs from traditional heat pumps. The development of this market in France is no longer restricted by the number of building professionals with a qualification in this area. However, installation costs are still an obstacle and opportunities still exist for heating pumps with improved installation processes.

• Thermal solar energy – In this industry, there are no environmental concern restrictions. This technology can be installed in new and existing buildings, and the government plans to install a minimum of 250,000 plates of 4m² (totalling 1 million m² of installation).