The French government and the EU Commission have long struggled to negotiate a new support model for renewable energy that will facilitate the achievement of the expansion goals. The uncertainty has now finally come to an end, and Neas Energy is planning the market entry.
A long-awaited French ministerial order came into force in mid-December last year, which lays out the conditions for the direct marketing of on-shore wind power in 2017: The management premium is set at 2.80 euro per MWh and is to be paid for a period of 15 years. This new regulation was approved and published by the EU Commission before December 31st – and consequently, direct marketing of on-shore wind power got off to a punctual start this January.
The new regulation predominantly covers projects which received a so-called tariff confirmation from EDF over the course of 2016. If the tariff application was made prior to 1 January 2016, the projects must be completed within three years, but no later than 18 months after May 2016 to benefit from the management premium.
The current tariff decree does not stipulate a tariff change for existing wind assets, although the French legislature originally promised such a change, unless, the financial support under the alternative system were to be completely discontinued.
French model closely resembles the German model
“The direct marketing model in France is very similar to the German model,” explains Eva-Maria Kovre, Manager Business Development at Neas Energy GmbH. To market their electricity, the plant operator concludes a contract with an aggregator (Aggregateur), in other words a direct marketer, such as Neas Energy.
The remuneration is made up of a reference stock market price calculated in a similar way to the German market value, a share for the available capacity, a floating market premium, and a management premium. The value of the remuneration is then decided in the tender process.
In France, direct marketers are also expected to contribute to the physical plant management: To avoid the risk of a payment at hours with negative market prices, wind farms must be operationally steered. This becomes doubly interesting in France: If the period with negative energy prices amounts to more than 20 hours in one year, producers shall receive a premium if they reduce their output from the 21st hour onwards. For this reason, remote controlling offers explicit advantages in France, but is not compulsory, as it is in Germany.
One difference between the French and German systems is found in the capacity market. A capacity mechanism came into force at the start of January, after being approved by the EU Commission under state aid rules. In France, all power producers and suppliers, as well as load managers have capacity obligations and are required to issue capacity certificates, according to their client portfolio. “As an aggregator, Neas Energy will manage the required certificates for its customers, which also means optimising their trading on the capacity market,” adds Eva-Maria Kovre.
Market entry facilitated by experience and unique software
The in-house trading and direct marketing software, which Neas already uses for its trading and management activities in several European countries, will also be an option for clients with portfolios in France, and they would directly benefit from this: Neas recently introduced its new portal Neas Direct, which enables direct marketing clients to view the production forecasts and current feed-in data from their wind assets. The data is collected directly from the Neas direct marketing software.