Offshore wind law and regulation in France

French chapter: May 2017

Pursuant to Directive 2009/28/EC of 23 April 2009 on the promotion of the use of energy from renewable sources, France is committed to developing renewable sources of electricity – up to 23% of gross final energy consumption by 2020. This objective was transposed into law 1 : Law No. 2015-992 of 17 August 2015 on the Energy Transition for a Green Growth confirms the target of 23% by 2020, and includes a target for 2030 of 32%. At the end of 2016, more than 11,166 GW of renewable power plants were connected to the grid, through 1,465 installations 2 and wind farm production represented 4.3% of national electricity consumption 3 .

In the context of these objectives not only the Law of 17 August 2015 plays an important role, but also the former French Energy Policy Framework 4 of 2005 needs to be considered. This Energy Policy Framework aimed to establish a national strategy for electricity generation through a Pluriannual Investment Programme (Programmation Pluriannuelle des Investissements – PPI), requiring the amount of investments in electricity to be defined by Ministerial Order.

In line with the PPI, the objectives for the development of electricity production were set out in the Order of 15 December 2009 5 : i.e. by 31 December 2012 a total installed wind energy capacity of 11,500 MW, including 1,000 MW from offshore wind energy and other maritime energies. These targets were subsequently modified by the Order of 24 April 2016 6 on the development of renewable energies, which order includes the following targets:

The Law of 17 August 2015 replaced the PPI by so-called Multiannual Energy Programming (Programmation Pluriannuelle de l’Energie – PPE) 10 , that aims to provide a road map for meeting the general energy transition policy targets – subject to scrutiny by the French parliament – in order to save energy and diversify production sources. This law required the French government to issue a decree determining precise figures for energy production. This decree, which was issued on 27 October 2016 11 , however merely repeated the objectives already set by the aforementioned Order of 24 April 2016. It is however expected that after the elections of spring 2017, the next government will issue a new decree with a detailed roadmap.

To date, it seems unlikely that the objectives for renewable energies will be achieved, even though there has been a slight increase in the total capacity of commissioned power plants. For offshore wind farms, an important reason for not meeting the objectives is that legal proceedings have slowed down the development of most projects. With six offshore wind farm projects, with a total capacity of 3,000 MW, yet to be awarded, the target of 500 MW in 2018 is now unrealistic, and the objective of 3,000 MW in 2023 is unlikely to be reached.

In a call for tender – designated the “first call for tender” – launched in 2011 four areas have been allocated for a total capacity of nearly 2,000 MW. These areas are located off the coast of Fécamp and Courseulles-sur-Mer (Normandy), Saint-Brieuc (Brittany) and Saint-Nazaire (Pays de Loire).

In fact, a tender had already been launched seven years prior to the first call for tender, on 11 February 2004, in relation to an offshore wind farm near Veulettes-sur-Mer. In this tender Enertrag was selected by the Energy Ministry to develop the project. The project however failed – on the one hand because of the excessive price of the offers, and on the other due to strong opposition from residents, particularly fishers, resulting in legal proceedings with respect to the award of the building permit 12 . This experience was used to improve public information and participation in subsequent tenders, and as a result, it was decided that offshore wind farms would no longer be subject to town planning authorisation.

A second call for tender was launched in 2013, for a total capacity of 1,000 MW, in relation to two areas: Tréport (Normandy), and near the islands of Yeu and Noirmoutier (Pays de Loire) and a third tender was launched in December 2016, for a wind farm off the coast of Dunkerque (Hauts de France) with a capacity between 250 MW and 750 MW.

In addition, a tender is expected to be launched off the coast of Oleron Island (Charente-Maritime) and the Minister for Energy indicated on 26 February 2017 that yet another tender may be launched near the municipalities of Le Touquet and Berck (Hauts de France).

Consequently, even though commissioning of the projects is slower than expected, efforts are continuing towards a strong development of the offshore wind energy. Furthermore, governmental support is being considered for floating wind turbines: several calls for expressions of interest have been awarded 13 , and the Minister for Energy announced future tenders for pilot floating projects 14 .

The table below provides and an overview of offshore wind tenders.

Offshore wind farm projects can in principle be built and operated without a tender procedure – with an authorisation awarded by the Minister for Energy. This is however unlikely to happen, as demonstrated by a project that was being developed by Eole-RES near the municipality of Grunes, which project was stopped after the launch of the first call for tender in 2011. Since there is a strong need for coordination with the development of the transmission grid, and the French Government prefers to keep control of the development of offshore wind farms, a party that wishes to develop and operate an offshore wind farm de facto has to win a tender.

Two different tender procedures can be distinguished: the classical tender procedure, which was the only available procedure prior to 17 August 2016, and the so called “competitive dialogue” (dialogue concurrentiel) procedure, drawn from the competitive dialogue (dialogue compétitif) under article 30 of Directive No. 2014/24/EU dated 26 February 2014 on public procurement.

For the classical tender procedure 16 tender specifications are drawn up by the Minister for Energy. The specifications (that are not subject to public consultation) will include a description of the characteristics of the call for tender (including the geographical area concerned and the maximum capacity forecast) and a detailed description of the installations subject to the invitation to tender, as well as specific requirements of the installations (such as the foreseen output, and technical, economic and financial conditions, including inter alia the duration and financial terms of the power purchase agreement) 17 . Following submission of the specifications for advice to the national regulatory authority (Commission de régulation de l’énergie), the specifications are published on the national regulatory authority’s website 18 and a notice of invitation to tender is published in the Official Journal of the European Union. Tenderers are entitled to submit requests for clarification of the specifications. Answers are published on the website of the national regulatory authority 19 .

The national regulatory authority will examine the tender applications within the time limit set by the specifications (which may not be less than fifteen days, nor more than four months from tender closure 20 ) and will inform the Minister for Energy on the offers that meet the tender criteria, those that do not meet these criteria, the ranking of the candidates (including a detailed rating) and the projects that the national regulatory authority proposes to select. The Minister for Energy subsequently selects the successful candidates 21 . If the Minister thereby deviates from the ranking of the national regulatory authority, the Minister shall request the national regulatory authority for its opinion (which will be made public). The Minister for Energy is entitled to decide not to proceed with the tender, in which case the tenderers are not entitled to reimbursement of expenses incurred.

The competitive dialogue 22 is a relatively new procedure that was introduced by decree of 17 August 2016. It aims to allow for more flexibility and parallel discussions between the Administration 23 and the tenderers. Since offshore wind is not yet considered a mature technology, this procedure aims to help the government to better define the offshore wind projects, in terms of aspects such as the location of the wind farm and the harbour, the type of foundations, and the connection to the grid. Hence, the competitive dialogue will generally be favoured by the Administration above the classical tender procedure (as is the case for the Dunkerque project).

The competitive dialogue procedure starts with a consultation document that is drawn up by the Minister of Energy. This consultation document includes the subject matter of the competitive dialogue, a provisional timetable, the requirements concerning the candidates’ technical and financial capacities, related supporting documentation and the applicable assessment procedure, as well as the criteria – with their order of importance – for the selection of the tender applications at the end of the competitive dialogue 24 . Following submission of the consultation document for advice to the national regulatory authority 25 , the consultation document is made public and a notice of the invitation to tender is published in the Official Journal of the European Union 26 . Similar to the classical tender procedure, candidates are entitled to submit requests for clarification and the response to such queries is published on the website of the national regulatory authority 27 .

The national regulatory authority will examine the technical and financial capacities of the candidates, within the time limit set by the consultation document (which may not be less than one month, nor more than two months from tender closure 28 ) and will make a substantiated proposal to the Minister for Energy for the selected and the non-selected candidates, which is not made public 29 . The Minister for Energy subsequently appoints the selected candidates 30 . If the Minister thereby deviates from the proposal made by the national regulatory authority, the Minister shall request the national regulatory authority for its opinion (which will be made public).

If the number of candidates that meet the selection criteria is less than three, the Minister for Energy may continue the procedure with the candidates that have the required qualifications 31 . In that case, the Minister for Energy will invite the selected candidates to participate in the competitive dialogue 32 and provides the selected candidates with draft specifications and consultation rules 33 .

At the end of the competitive dialogue, the Minister for Energy draws up the tender specifications 34 and – following receipt of the national regulatory authority’s advice 35 – provides the candidates that have participated in the competitive dialogue with the tender specifications and invites these candidates to submit their offers to the national regulatory authority within the deadline set out in the tender specifications 36 . For the remainder of the proceedings reference is made to the classical tender procedure described above 37 .

It is important to note that these tender procedures are not subject to public procurement legislation 38 due to the fact that: (i) the energy is not generated for the needs of the State; and (ii) the tender will result, in addition to the unconditional acceptance of the tender specifications, in the award of several administrative authorisations, as opposed to the conclusion of one global and single agreement with the State, encompassing all legal aspects of the project. Therefore, although the administrative authority is on the basis of the principle of equality subject to the principles of non-discrimination and transparency, it is not bound by European and national legislation on public procurement.

The ranking criteria are set out by the Minister for Energy in the tender specifications. These criteria must be either weighted or hierarchized. Quantitative criteria must constitute at least 50 % of the total weighting, in order to guarantee fairness of the selection 39 .

For the 2011 and 2013 tenders, three groups of criteria were used for candidate selection:

• price (40 points out of 100)
• industrial and social quality of the project (40 points)
• conciliation with the environment and the other uses of the sea (20 points).

For the third tender (Dunkerque), three criteria have been announced: price, optimisation of the use of the area, and environmental impact.

On the basis of the tender criteria the national regulatory authority (Commission de régulation de l’énergie) shall rank the offers 40 . It should be noted however that in view of the inapplicability of public procurement rules, and to allow for the introduction of other considerations, the Minister for Energy has discretionary power 41 to decide on the ranking. The Minister may therefore deviate from the ranking by the regulator. In case of such deviation, the Minister must however take advice from the regulator.
Indeed, the offer ranked first by the regulatory authority is not always selected by the Minister. In 2011, a project was granted to Ailes Marines, “for economical and industrial reasons” 42 , whereas the regulatory authority had ranked this offer in second place. A claim by a competitor contesting the ranking was rejected by the Court 43 , as was a second claim that was (indirectly) related to the ranking: an applicant appealed against the decision of the selected candidate to modify its offer after the tender award, arguing that the modification was irregular and altered the terms of the selected offer 44 .

Due to the quick pace of technological change in this sector, and the relatively long lifetime of the projects, the possibility to make changes to the initial offers of the selected candidates – notably prior to construction of the wind farm – is essential. The tender specifications allow for such modifications, provided that a large number of conditions is satisfied.

Although the specifications may vary from tender to tender, and regardless whether a tenderer is committed to develop and operate the wind farm in accordance with the terms and conditions of its initial offer 45 , the specifications must set out the conditions for modification of a project after the selection of the winning tenderer 46 and more specifically, the specifications must address the conditions pursuant to which in the event of hardship, negotiations may take place with the government on modifications of the project.

Following the designation by the Minister for Energy of an area for the tender procedure, the préfets (local representatives of the government) shall, on the basis of wind studies, choose the location within such area that will maximise the efficiency of the wind turbines.

In their decision the préfets will take into account the different uses of the sea – mainly for freight/passenger transport, fishing, sailing, and military purposes – as well as the environmental impact on both the ocean and the landscape, which constitute the main political constraints for the projects. The préfets are assisted in the spatial planning of offshore wind farms by various coastline marine councils, i.e. advisory administrative bodies pursuant to article L.219‑6-1 of the Environment Code.

The wind farms built further to the 2011 and 2013 calls for tender will benefit from feed-in tariffs for a period of 20 years, since these tenders were organised under the EU Commission’s State Aid Guidelines of 1 April 2008 regarding the protection of environment.

In 2016 a new premium support scheme (complément de rémunération) 47 was introduced in France, consistent with the EU Commission’s Guidelines for Energy and Environment of 28 June 2014. This scheme will apply to new offshore wind farm projects, such as the Dunkerque project.

Pursuant to this new premium support scheme, EDF is obliged to purchase all electricity generated by these offshore wind farms under a power purchase agreement which shall be based on a template approved by the Ministry. The electricity price payable by EDF under these power purchase agreements is set by the winning tenderer, and is reimbursed to EDF by the State through a tax on energy consumption called CSPE 48 . As a consequence, the winner of the tender has the certainty of selling all the electricity generated by the wind farm, and of being paid at a price that will enable repayment of its investments.

The terms and conditions of both the tender rules and the PPA are subject to the control of the EU Commission under the State aid rules. This was not the case for the 2011 and 2013 tenders launched by the French State. These tenders are therefore subject to ex post verification, which is obviously undesirable for the generators, since their business model may be challenged once the project has been awarded and costs have been incurred. This will be different for Dunkerque and further projects, where control will take place in a more appropriate manner.

Before the winning tenderer can obtain the required administrative authorisations (please see para. 6.), it must take the advice of the National Public Debate Commission (Commission nationale du débat public), an administrative body 49 , on the various impacts of the offshore wind farm and the high voltage cables 50 .

Until now, the National Public Debate Commission decided to organise “public debates” for each offshore wind farm project, instead of a “prior consultation process” (being a lighter tool that is used for projects without a major impact). Through these debates the Commission gathers information on the questions, concerns, and requirements of the public, with the aim to involve local residents in the projects, to improve the acceptability of these projects and to facilitate the improvement and modification of the winning tenderer’s project in order to take account of public concerns.

Public debates may thus avoid or reduce legal proceedings. However, on the other hand it should be noted that a badly conducted debate may generate frustration if people feel that they are not being heard by the wind farm developer.

On 1 March 2017 a “single environmental authorisation” 51 , 52 was introduced, that aims to reduce the complexity and duration of the administrative authorisation process. This single environmental authorisation applies to various categories of projects, including offshore wind farms.

Prior to the introduction of the single environmental authorisation, the construction and the operation of an offshore wind farm required several administrative authorisations. In addition to these authorisations, certain contracts has to be entered into with the transmission system operator and EDF. Winning the tender merely entitled the tenderer to obtain an authorisation to operate the wind farm 53 , and to conclude a power purchase agreement 54 . All other administrative authorisations and all other contracts had to be applied for with the competent authorities, respectively entered into with the relevant parties.

It must be noted that, unlike onshore wind farms, offshore projects do not need ICPE 55 authorisations or town planning authorisations or declarations. In principle this should allow for faster development of such projects, however unfortunately maritime regulation and legal challenges have slowed down most offshore wind projects.

The main documents required are described below. Depending on the location of the wind park other authorisations may however be necessary, in relation to air navigation, national defence, “Natura 2000” areas and remarkable maritime areas.

Occupation of the maritime public domain, or of the exclusive economic zone

In France offshore wind farms are usually located in the maritime public domain, i.e. up to 12 nautical miles from the coast 56 , however they may also be located in the exclusive economic zone, especially offshore floating wind turbines.

Wind farms located in the maritime public domain require either an administrative authorisation by the préfet, or a concession agreement with the préfet 57 . In addition, the part of the offshore connection that is not owned by the transport system operator (i.e. the part from the wind turbines to the underwater substation) also requires an authorisation for being located in the maritime public domain 58 .

Since such authorisation is precarious and revocable 59 (i.e. the holder of the authorisation has no established right to maintain or renew the authorisation), generators generally favour a concession agreement to ensure that the duration of the occupancy of the maritime public domain equals the term of the power purchase agreement.

Execution of the concession is subject to the conduct of a public inquiry to gather the opinion of the public and certain public authorities 60 . The term of the concession can be set up to 40 years 61 to secure the financial conditions of the project. Pursuant to the concession, the producer is required to pay a fee to the State for occupying the maritime public domain 62 , consisting of EUR 1,000 per turbine, EUR 1 per meter of grid connection cable, and EUR 6,000 per megawatt 63 .

Wind farms located in the exclusive economic zone (EEZ) 64 , require an authorisation that differs from the authorisation referred to above in relation to the maritime public domain 65 , 66 . In relation to such authorisation an annual fee is due by the producer to the French Agency for Biodiversity 67 .

Authorisation under the Water Act

By virtue of the former Water Act, the development and operation of offshore wind farms required several prior authorisations, to mitigate the impact on the maritime environment 68 . This authorisation process was simplified in 2014 by the introduction of a “sole authorisation in relation to the Water Act” (IOTA) that became the general rule in 2015. Along with the right to carry out works, it includes authorisations to disturb national reserves, classified areas, and protected species and habitats. The préfet is the competent authority to grant such sole authorisation 69 , after a public enquiry 70 . The duration of the authorisation shall be set out in the préfet’s order.

This authorisation does not apply to offshore wind farms that are located in the exclusive economic zone, in which case a different authorisation 71 is required.

Agreements with the Transmission System Operator

A set of agreements, including the connection agreement, must be executed between the producer and RTE, the French transmission system operator (please see subparagraph 7.1), to allow the wind farm to feed the power generated into the grid.

Operating licence

The operating licence is granted to the winning tenderer by the Minister for Energy for the total duration of the operating phase 72 .

The operating licence is generally withdrawn in case of late commissioning or interruption in the operation of the wind farm, exceeding three years. However, for offshore production facilities the Minister for Energy may – upon request of the producer – extend this three-year period up to ten years, which ten-year period may subsequently be extended twice by another three-year period(i.e. in total up to sixteen years) 73 .

Power purchase agreement (with EDF Purchase Obligation Department)

Pursuant to the tender rules, the winning tenderer is entitled to enter into a regulated power purchase agreement (PPA) with EDF’s Purchase Obligation Department, allowing the producer to sell its electricity at the price mentioned in its offer, in accordance with the terms and conditions of the tender specifications.

The PPA is concluded for a fixed term, which, for offshore wind farms, is currently set at 20 years, with the aim of allowing producers to receive a return on their investment. After the expiration of the PPA term, and provided that the producer is still allowed to occupy the maritime public domain, the electricity generated by the wind farm can be sold on the market.

Pursuant to the Law-Decree on environmental authorisation of 27 January 2017 74 and its two implementing decrees 75 , as from 1 March 2017 only one environmental authorisation is needed, instead of the numerous authorisations that used to be required, such as, inter alia, the authorisation for the use of water, the operating permit, the authorisation to occupy the public domain, authorisations regarding air traffic and national defence and authorisations with respect to the performance of works in “Natura 2000” areas and remarkable maritime areas.

The introduction of this single environmental authorisation aims to simplify the authorisation procedure and reduce the time needed for the development of offshore wind farm projects. Under this new legislation competent authorities are now required to grant authorisations within a period of nine months (instead of the previous 12-15 months).

As indicated by the International Agency for Energy (IAE) in its recent report about France: “for historical reasons, the French grid was developed for centralised generation by nuclear plants generating baseload power”. The development of renewable energies is now changing the structure of the transmission grid, as this requires important works to the grid to connect small PV and wind farms, as well as major renewable plants such as offshore wind farms.

Consequently, offshore wind energy producers are required to enter into several contracts with RTE, the transmission system operator, that has a constitutional, legal monopoly with respect to the realisation and operation of the connection to the transmission grid.

The winning tenderer must enter into a connection agreement with RTE for the realisation of the grid connection. The connection agreement will include, among other things, a deadline for realising the connection and the costs for the realisation of the connection, which cost shall be for the account of the winning tenderer. This connection agreement enables RTE to start the works to commission the connection.

In addition to the connection agreement, the offshore wind energy producer must enter into the following agreements with RTE:

• a grid access agreement, which defines the conditions of access to the electricity grid (electricity metering, subscribed power and tariff option, power quality) and addresses the appointment of a balancing responsible and a programming entity;
• an operating agreement, which defines the relationship with RTE (i.e. its national dispatching), and the operating rules to be complied with in relation to the connection in normal operating mode and in incident mode, and, as the case may be, supply scheme and protection settings;
• a testing agreement, which specifies the operating and driving relations between the parties during the testing period. This agreement will need to be entered into prior to commissioning of the connection, and will expire when parties enter into the operating agreement; and
• a performance agreement, which determines the technical, legal and financial conditions relating to the technical performance of the installation, at the time of its commissioning and throughout its operation period. More precisely, this agreement defines the controls to which the installation is subject before its industrial commissioning and defines how the non-conformities are remedied. During the operation period, controls will be conducted by RTE and the agreement lays down a procedure for the treatment of performance gaps. This agreement is only required in case of connection to the high voltage grid (which is currently the case for all offshore installations, due to the installed power, which is beyond the threshold of 12 MW).

When connection works cross private properties, RTE may benefit from a declaration of public utility, granting RTE the right to cross such properties. Such declaration is issued either by the préfet (below 225 kV), or by the Minister 76 , following an impact study and a public enquiry.

The regulations set out the terms and conditions pursuant to which a power plant is entitled to receive compensation for grid connection delays 77 . Since this compensation scheme is applicable to power plants in general, it should be noted that, in the context of the amount of the investment required for the development of offshore wind farms, the compensation that is offered to offshore wind parks under this scheme is low. Recently an act 78 was passed that modified the Energy Code 79 to provide specific compensation to offshore wind farm operators. Such compensation is due in the event of a delay in the connection of wind farm projects that is caused by RTE or contractually for the risk and account of RTE, pursuant to the connection agreement. The compensation level, as well as its yearly ceiling, will be set out in a decree and a Ministerial Order, that have not been published yet.

Apart from the fees that are due for occupying the public domain, as mentioned in paragraph 4.1 above, the offshore wind energy producer shall pay an annual amount of EUR 15,471 per megawatt of installed capacity 80 . This fee is collected by the State and granted to the local municipalities, and local “users of the sea”.

Pursuant to the tender rules, and in compliance with environmental law, there is a general restoration requirement at the end of the occupation of the public domain. The offshore wind energy producer must inform the préfet that issued the administrative authorisation for occupation of the maritime public domain (or entered into the concession agreement, as the case may be), at least five years before the end of the operation phase.

The restoration must be performed in compliance with the conditions of the authorisation (or the concession agreement). The préfet may however prescribe specific conditions for the restoration. In addition, the Minister for Energy may through the tender specifications require specific actions from the winner of the tender. For example, in the second call for tender, the Minister for Energy required the producer to conduct a study, at least two years before the end of the operation of the wind farm, in order to optimise the decommissioning and the rehabilitation of the site, taking into account the impact of the decommissioning on the environment, maritime activities and security.

The Decree 81 of 8 January 2016 provides a specific legal framework for claims filed against various decisions regarding offshore energy production and transportation (please see para.8.1), with the aim to reduce the duration of legal proceedings, that have slowed down offshore wind farm projects in recent years.

This decree gives direct jurisdiction to the Administrative Court of Appeal of Nantes to settle litigation in relation to:

• offshore renewable energy facilities and works;
• grid connection works, in so far as the connection is at least partially located offshore;
• port works dedicated to building, storage and pre-assembly of the above-mentioned works, and transportation and dredging operations related thereto 82 .

The Court rules at first and last instance, which means that there is no second level of judicial authority. The sole remedy that is available after receipt of a Court judgement is submission to the Conseil d’Etat (the Administrative Supreme Court).

Most of the authorisations referred to in paragraph 6 will fall under this unique jurisdiction, such as:

• the decision by which the Minister for Energy appoints the winning tenderers;
• authorisations to operate the wind farm;
• decisions of the competent préfet to approve of network facilities;
• the single environmental authorisation;
• the sole authorisation in relation to the Water Act (IOTA);
• authorisations/concessions to occupy the maritime public domain;
• authorisations to create artificial islands, installations or infrastructures on the continental shelf and in the exclusive economic zone; and
• the building permits.

The claimant is required to file an action within four months following the notification of the challenged decision – where the claimant is the applicant of the authorisation, or within four month following the publication date of the challenged authorisation – where the claimant is a third party 83 .

Alternatively, third parties may also submit an administrative request before the préfet within two months following the publication date of the challenged authorisation, to request the administrative authority to withdraw its decision. Subsequently, third parties may file an action before the Administrative Court within two months following the préfet’s answer (or upon the expiration of a two month period as from the date of such request, in which case the préfet is deemed to have refused the request).

Within 15 days following the date of submission of its claim, the claimant must inform both the administration and the applicant of the authorisation of the commencement of proceedings 84 . The failure to comply with this notification requirement results in the claim being inadmissible.

Pursuant to the Decree of 8 January 2016 85 , the Administrative Court may set a period, after which the claimant is no longer allowed to add new legal juridical means or arguments (“crystallisation of means”). This “crystallisation of means” was created in 2013 in relation to town planning disputes, and is only exceptionally used by the administrative courts. The Administrative Court of Nantes is not obliged to make use of this power and it can currently not be foreseen whether it will actually do so.

Pursuant to the decree of 8 January 2016 the Administrative Court of Nantes shall render its decision within 12 months from the initiation of proceedings 86 . This deadline is not compelling, as the Court remains competent after this term. The Court will however take this rule into consideration and endeavour to give judgement within this period.