Sun, Wind and Water
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Miscellaneous Information about Europe's Renewable Energy Industry
Do Germany, France and Spain include local content requirements? (by Bernard Chabot, France)
In France, there are no local requirements for projects. Explanation: since 1992, there is the "Single Market" in the European Union (now 27 countries) and such requirements are forbidden because they should distort fair competition against market players and within member states. In other words, if such requirements would be written, a competitor in another European country would be eligible to attack such a requirement on the ground of fair competition rules within the European Union either at the "Directorate Ge,eral (DG) for competition" (<http://ec.europa.eu/dgs/competition/index_en.htm>) level in the European commission in Brussels or even at the level of the "European Court of justice" in Luxembourg.
For Spain, it was reported unofficially that in the 1990's, within the frame of regional plans and allocation for wind energy, regional authorities "said" (and not "wrote" !) to potential proponents that they would not gain any allocations if they didn't open local factories. For example, the "Vestas-Gamesa" joint venture (voluntary terminated in 2001) and related local manufacturing facilities was said to be a result of such "verbal demands" (among other motivations). Another consequence of such regulation is that all calls for tenders must be published in the "official journal of European community" and open to all European companies (if not, the call for tender can be easily cancelled).
Do Germany, France and Spain include subsidies or incentives for manufacturers? If yes, what? How much? (by Bernard Chabot, France)
In France, also on the ground of the rules set up by the DG competition in the EC in Brussels, there must be no "state aid" (aid from tax payer money) for investment projects (including renewable projects) in order not to distort competition among technologies. That is why Germany and then France decided to compensate the over-cost of ARTs (advanced renewable tariffs or fair and efficient tariffs) not from state subsidies but from a specific regulation of the electricity market: a contribution from all electricity consumers on the same ground (€/kWh consumed), so without fair market competition rules distortion.
In Germany, E-on attacked such a scheme but they were rebutted both in Germany and at the European court of justice. France (as Germany) was obliged to submit its ARTs scheme to DG competition which admitted officially that it is not based on "state aid". To end with the story: in France the lobby of big electricity consumer industries get the decision from the government to have a contribution capped at a small level. DG competition has not ruled as "illegal" this market distortion.
For Spain, you have to check: I've read that "at the end" it is the government which compensate indirectly the FITs over cost from electric utilities because electricity price for consumers are still regulated and don't cover all the costs (not only for FITs) and so the electricity sector is subsidised every year. May be a reason for the September 2008 decision of the Spanish government to decrease the solar PV FIT (by around 30 %) and to cap the new installed PV capacity to 500 MW in 2009 and 400 MW in 2010 (instead of more than 2500 MW installed in 2008).
However, state and regional authorities subsidies to companies manufacturing RE components (wind turbine, PV modules...) are possible in Europe:
a) For R&D programmes (up to 100 % for universities, generally less than 40 % for private companies).b) For investments for new production facilities in special locations such as low income regions (the list is issued by the European Commission). Thatis why for example many solar PV companies (including from USA and Canada and Ontario) decided to place their PV manufacturing capacities inthe "solar valley" in a "new lander" where up to 50 % of initial investment was said to be possible. Of course, it is not the only reason: main oneswere also to be present on the German PV market (the larger in the world except in 2008 because of the Spanish surge) and the "synergy effect":many local PV capabilities created (R&D in universities, specialised local work-force, specialised PV SMEs for components and services...)