The World Cup has energised France – but investors are losing

Winning the World Cup could benefit France socially and economically, according to a short video by the World Economic Forum that I saw on LinkedIn. This caught my attention even though my enthusiasm for the World Cup this year was very limited – non-existent actually. Italy didn’t qualify so what’s the point?!

The WEF argued that winning the World Cup had positive social effects as it helped strengthen bonds and overcome cultural differences. (The analysis didn’t include the rise of the National Front in France despite the previous World Cup win in 1998!) It also said the win could support France’s economy by boosting consumer confidence.

Goodness knows, investors in the country’s wind sector could do with a confidence boost themselves, after being put under pressure by new administrative issues.

The administrative and bureaucratic hurdles facing wind investors in France are well-known. The French government is well aware of them too and has committed to fix them, but it has been slow to transfer its good intentions into practice.

In the latest chapter of this saga, industry body France Energie Eolienne (FEE) has this month warnedthat the development of new onshore wind farms had stalled in the last seven months. This is because of the absence of an environmental authority.

This is what happened. Until the end of last year, the prefecture of each region acted as environmental authority and decision-making authority, giving the final approval to wind developers to build the projects. It was a slow process but worked fairly well.

However, in December 2017, France’s Council of State suspended this approach to comply with European Union rules that there should be separation between these two functions. It hasn’t introduced an alternative system.

This means that for more than seven months, every new wind project proposal has been frozen. According to the FEE, at least 170 wind projects totalling 3GW are now in limbo, waiting for environmental approval.

The government is taking steps to fix it. This month, it presented a draft of a decree that is set to be put to public consultation imminently. This would appoint France’s General Council of the Environment & Sustainable Development as environmental authority. However, it does not say which entity should issue the final authorisation for the projects, and it is unclear if regional prefectures would be still able to do so.

The FEE said the first consequences of this regulatory uncertainty would be seen in the country’s second onshore wind energy auction this year. This is because, to be eligible to participate in the auction, developers must obtain environmental approval and authorisation to build the project. In absence of an environmental authority and a decision-making authority, developers have not been able to submit their proposals and hence they did not apply for the auction.

The FEE has estimated that the second 500MW call for onshore wind projects would be undersubscribed, with bids totalling less than 300MW. This compares to its first 500MW onshore auction in February, where projects of 900MW were in the mix.

We appreciate that the decree draft is a first step to resolve the situation. However, it will take time before the draft is agreed and becomes law.

And even then, the new environmental authority will have to examine all the delayed 170 projects and any other project that might come, adding new delays. In addition, it still remains the uncertainty surrounding the decision-making authority.

The French wind market does not need to add further obstacles to the already-long permitting process and all the other administrative hurdles that developers have to face. For example, the FEE has reported that a further 2GW of authorised projects are subject to “a high risk of cancellation by the administrative courts”. We reported in February of a government’s proposal to eliminate a level of jurisdiction for resolving this issue, but we have seen no progress since then.

Development times of up to seven years and new administrative issues continually arising are putting wind developers and investors’ patience under constant pressure.

France might have won the next World Cup, in 2022, before many of them complete.