On Monday, the French government announced solar photovoltaic feed-in tariffs will be cut by 12% from 1 September, reflecting the maturing of the sector and the steady decline in module costs.

Observers say the government is looking to temper demand in an effort to prevent an overheated solar market, as experienced most notably in Spain last year.

The latest round of French cuts follows an earlier revision in January which set solar feed-in tariffs between €0.314 and €0.58 per kiloWatt (kW) hour. 

From 1 September, the tariffs will fall to between €0.276 and €0.51, while rates for residential building integrated PV systems of less than 3kW will remain untouched at €0.58, still a relatively high figure compared with incentives in other parts of Europe.

John-Marc Bunce, a clean-tech analyst with Nomura in London, said the effect of the tariff reductions would be minimal, particularly as France accounts for only around 5% of global solar demand. He added that France, like many other European markets, is adjusting its support mechanism to prevent excessive profit-making.

“Governments are trying to set an incentive level which is generous enough to make the markets grow and develop, but not to give too much money to particular companies and let them make super-normal profits,” he told Environmental Finance.

Toby C outure, a London-based analyst with energy consultancy E3 Analytics, echoed this view and said incentives are about fostering stable development and keeping profitability “within a modest range”.

“Well-designed feed-in tariffs are supposed to adjust to market realities,” he said. “That’s part of their success and part of what makes them efficient, both for developers and for society.”

Charlotte Dudley