French Solar Market to Remain Strong Despite Subsidy Cuts

News came out yesterday that France’s finance ministry would cut key solar feed-in tariff subsidies (FiT) cut for all commercial solar installations from September 1st, 2010.

As part of the plan, tariffs the French government plans to cut FiT subsidies by 12 percent for all solar installations above 30 square meters. Subsidies for installations below 30 square meters are set to remain the same at €0.58/kWh.

The news, given the trends in Europe these days, is not that surprising. Indeed, over the past year solar power-houses including Spain, Italy and Germany have, or are in the process, of cutting their respective FIT programs. France, a relatively late-comer in the solar power generation market, was not expected to start cutting its own subsidy program for at least another year.

A closer look shows that the French FiT cuts are finally calibratted to ensure that shipment of solar photovoltaic panels to France maintains to around  500 megawatts a year.

In a research note Barclays Capital analyst Vishal Shah remains bullish on the French market.

Shah Writes:

The finance ministry document suggests that FiTs should be adjusted in order to maintain a 500 megawatts annual target for the French solar market and does not suggest a hard cap…. We believe any new law implementation would take at least a few months and this would likely result in a surge in new demand…. Projects that have already started construction should still receive existing FiTs (proposed back in January)….

Shah concludes that he’s confident that despite the FiT cuts, French demand for solar PVs will continue to grow  from 185 megawatts in 2009 to about 500 megawatts in 2010 and 1 gigawatts in 2011.

Last year France’s solar capacity surged by more than 100 percent to  364.7 megawatts.

Also, First Solar and EDF Energies Nouvelles are jointly developing a 100 megawatts a year PV manufacturing line set to go live next year.

Photo: iStockphoto

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