According to the decree of 9 May 2017 defining the purchase conditions for rooftop PV plants with a capacity of maximum 100 kW, the developer has 18 months to complete and connect the installation following the request for grid connection. If this deadline is not met, the purchase agreement is reduced to three times the length of timeout. Exceeding this limit is charged to the developer only if the installation of the system is not completed within 18 months. Proof of compliance with this requirement is provided by the declaration of conformity issued by the office of control. If the time limit is exceeded due to the network manager, the developer must produce the declaration of conformity issued by the end of the period of 18 months. In this case, the network connection must be made within two months after the system operator has completed the connection work on the network. In this case, the purchase agreement has no reduction of its term. As of May 2019, this barrier is still valid.

The procurement of the grid connection permit for PV and wind installations is often slown down due to the long waiting periods existing between the file request, the sending of the technical and financial grid connection proposition (proposition technique et financière) and the grid connection and commissioning contract (convention de raccordement). This waiting time may be explained by several reasons, including missing application documents or a work overload of the distribution system operator regarding contract processing.

In order to ensure the good performance of grid operators in the field of service quality, the Energy Regulatory Commission (CRE) regularly monitors the development of several performance indicators. Each indicator is assigned a reference target below which the grid operator shall pay a penalty and above which he shall receive a bonus. This incentive regulation aims at encouraging grid operators to improve their services. The results of this performance analysis for 2015 have shown that Enedis' performance has yet to improve with regard to grid connections lead times. In fact, grid users have complained about the long waiting times and the lack of availability of contact persons from the grid operator. Figures show that the average delay for the realisation of grid connection works for producers connected to the low voltage grid > 36 kVA and to the medium voltage grid has increased from 185 days in 2014 to 192 days in 2015. This is due to the fact that the list of projects in need of a grid connection gets longer and Enedis does not reinforce the grid rapidly enough. In February 2018, the distribution network operator Enedis presented two new so-called "smart" connection offers to reduce the time and cost of connecting renewable energies installations to the grid. To subscribe, producers agree to be flexible by limiting their production punctually in case of peak supply or low demand. This solution thus will make it possible to rely on existing network capacities and to limit the development of new infrastructures. The smart connection offers from Enedis are a good solution in the short-term to help reduce the waiting time for grid connection. However, it does not solve the problem in the long-term. Grid reinforcement works are still necessary to connect the growing number of renewable energy installations. As of May 2019, this barrier still stands as the Smart connection solution is not yet in operation, furthermore, the connecting delays vary from one region to another.

In France, the grid connection costs are considered as “shallow-deep”, which means that:

• Producers of renewable energy installations shall bear the cost of the works directly related to their installation.

• Moreover, they shall pay a share of the grid reinforcement/ extension costs foreseen in the regional grid connection plan for renewable energy (Schéma Régional de Raccordement au Réseau des Energies Renouvelables - S3RENR). This share is proportional to the grid connection power of their installation. The calculation methods for the mutualisation of the grid development costs are laid down in the technical reference documents of the grid operators (Article D342-22 of the Energy Code). As a result, the amount of the share can vary significantly from region to region, depending on the grid development targets set in each regional plan as well as on the existing connection capacity of the grid.

The Energy Code foresees that grid operators shall offer a connection solution to the nearest station, in order to minimize the cost of the works to be borne by the RES producers (Article D342-23 of the Energy Code). However, the grid connection procedure is often hindered by technical constraints relative to the grid capacity in some areas. For example, if the installation is too far from the grid, or if the grid is overloaded, the distribution system operator (DSO) has to undertake specific works before being able to connect the installation to the grid. The problem is that the legal definition which determines which grid development works shall be borne by whom is currently unclear. As a result, grid operators charge the producers for a large part of the grid development costs necessary for their connection to the grid (e.g. including the reinforcement of transformer sub-stations or the replacement of existing electric lines). This procedure is consuming and may have heavy financial consequences for the project developer. The French Ministry for the Ecological and Inclusive Transition (MTES) announced in September 2017 that the grid connection costs will be covered up to 40% depending on the size of the projects. For installations up to 100 KvA, 40% of the cost should be covered, for other installations, it will vary between 0 and 40%. This support will apply to connections that are contracted after 4 December 2017. In that sense, a new decree was enacted in November 2017 and again in March 2019 to support this reduction of cost.

The legal framework for wind energy contains many requirements linked to aviation and military safety as well as weather radars. As a result, wind energy projects in the pipeline, totalling a capacity of 9 GW, currently cannot be finalized, due to radar vicinity, height ceiling of fly-zones as well as training flight zones. As far as military radars are concerned, the main difficulty lies in the strict application of the requirements by the administration, regardless of the distance between the installation and the radar. Besides, some military radars may be inactive and still block the development of certain projects. Further constraints linked to the definition of tactical and training flight areas (so called VOLTAC and SETBA areas), which are not based on any regulatory framework, also hamper the development of wind energy. In fact, despite the publication of regional wind plans (SRE), the French Airforce still issues unfavourable opinions for wind farms inside these schemes. As an example in the Lorraine region, the regional target for wind energy capacity was set at 1,500 MW, however over 810 MW are blocked due to VOLTAC and SETBA areas.

Project developers are informed about army constraints too late in the development process. Some constraints, such as the new low flying areas (SETBA and VOLTAC), are a significant barrier to the development of onshore wind projects.

Due to these military constraints, it remains difficult for wind energy developers to install wind turbines with a mast higher than 150 meters, although the newest technologies allow for more performant wind turbines reaching 180 meters height. As a result, French wind parks are technologically more obsolete and produce a more expensive kWh than in neighbouring countries, such as in Germany. The government has announced in January 2018 that the military should be making efforts to improve the situation: there is now a commitment by the military to do a case-by-case study, using software , and they will have to give a reasoned opinion. However, they will not have to share the results of the software analysis nor of how they've reached their decisions. In addition, the military will launch on the deployment of renewable energies on their land. They have large lots, large roofs, they want to green themselves and that will provide them with energy. In January 2019, it was agreed that 9,000 km² usually reserved for the army would be made available for onshore wind projects. This represents a release of 13% of the total reserved army spaces.

The noise regulations are too complex, unreliable and not adapted to wind turbines.

One observes a lack of coordination between the competent authorities involved in planning and permitting procedures, since both permitting procedures require different time schedules and are delivered by different authorities (DDT and DREAL). Whereas the building permit can be refused after one year of time, the acquisition of the ICPE authorisation can take more than 18 months.

This issue has been partly resolved for wind energy plants. In fact, since the entry into force of the unique environmental permit in March 2017, wind energy projects do not have to apply separately for the building permit and the ICPE authorisation anymore. For wind energy plants, the unique environmental permit is based on the ICPE authorisation and stands as authorisation for other permits, in order to replace the complex legal framework. This barrier is still relevant.

Since April 2012, regional grid connection plans for renewable energies were introduced for the enhanced connection of renewable energy installations to the grid (S3REnR). However, the implementation of these plans is sometimes problematic. These plans namely foresee for each renewable energy plant the allocation of a defined connection point. This solution is not deemed as cost effective. In fact some assigned connection points can be located very far from the renewable energy installation. Yet the project developer has to bear the costs of the electricity transmission infrastructure from the installation to the grid connection point. Moreover, the decree establishing the grid reinforcement plans foresees shared grid connection costs between producers and grid operators during ten years. However, in the 10 plans developed until now, 82% of the grid reinforcement costs are only borne by the producers. This current unfair distribution of costs for grid reinforcement leads to an average 22% increase in the grid connection costs of wind energy developers and thus jeopardises the economic feasibility of their projects.

However, RES associations point out that this situation is improving, particularly thanks to the introduction of an online system called “Caparéseau”, enabling the project developer to check the capacity of its connection point prior to undertaking the actual connection work. Depending on the grid access conditions estimated by grid operators, the RES producer is able to decide whether or not to start a connection procedure. If the access to the grid is too long or too expensive, the producer may opt for another connection point. No change on this barrier as of May 2019.

Formerly, the wind energy sector was mainly subject to a planning permission, whose lengthy procedure already affected the development of the sector. In fact, between 6 and 8 years were necessary to develop a wind park in France. Moreover, the application for building permits also required long processing periods. Despite these existing administrative procedures, a further legislative layer was added for wind turbines in 2011, with the operating permit for installations classified for environmental protection (ICPE). This permit implies a heavy administrative procedure normally reserved for the most polluting facilities, such as petrol stations or chemical factories. Thus, it is considered that wind turbines are likely to undermine environmental protection and should therefore be authorized by prefectural order after conducting a detailed environmental study. Apart from being discriminatory, this requirement further hinders the development of wind energy.

However, one should note that this barrier is being improved. In this regard, the government has shown its willingness to simplify administrative procedures by introducing a unique environmental permit in March 2017. This permit is based on the ICPE authorisation and stands as authorisation for other permits, in order to replace the complex legal framework. Nevertheless, experts still highlight several issues related to the new environmental permit:

• The introduction of a new permit scheme tends to lengthen the time required to obtain permits. In fact, the competent administrations have to get acquainted with the new requirements formulated in the circulars. Moreover, the administrations also have to be trained to a new competence structure, which moved from being hierarchical to being transverse (meaning several administrations working together to issue the environmental permit).

• Experts question whether there is real simplification of the administrative procedure, since the documents requested for the application file are as numerous as for the former permitting procedure

• The new procedure foresees that the lead times for the examination process shall not exceed 9 months. Considering that the delay for the administrative procedure corresponded to 12 to 15 months until now, experts remain sceptical as to whether the permitting procedure can be carried out within a shorter period of time.

• The recourse to a "third party expert", which can be hired upon request of the prefect in case the application presents significant environmental risks, remains unclear according to experts. In fact, the expert may be hired at any time during the permitting procedure and shall be paid by the applicant. This unique environmental permit is being further supported by a new decree enacted in November 2018 aimed at simplifying measures to support onshore wind power. It thus includes three reform areas: speeding up litigation, simplifying administrative authorisation procedures and redefining the content of approvals. This barrier will need to be monitored to check whether the simplification leads to better outcomes for the sector.

Multi-level (national and regional) administrative procedures create numerous transaction costs and unnecessary long lead times. For example, the time required to process an application in order to obtain the authorization called "installation classified for the protection of the environment" (ICPE) for wind energy installations is very long. There is no time frame foreseen by law between the administrative process steps. The whole procedure takes usually at least 12 months and can even go over 18 months.

As far as wind energy projects are concerned, the government has shown its willingness to simplify administrative procedures by introducing a unique environmental permit in March 2017. This permit is based on the ICPE authorisation (operating permit for installations classified for environmental protection) and stands as authorisation for other permits, in order to replace the complex legal framework. However, experts still highlight several issues related to the new environmental permit:

• The introduction of a new permit scheme tends to lengthen the time required to obtain permits. In fact, the competent administrations have to get acquainted with the new requirements formulated in the circulars. Moreover, the administrations also have to be trained to a new competence structure, which moved from being hierarchical to being transverse (meaning several administrations working together to issue the environmental permit).

• Experts question whether there is real simplification of the administrative procedure, since the documents requested for the application file are as numerous as for the former permitting procedure

• The new procedure foresees that the lead times for the examination process shall not exceed 9 months. Considering that the delay for the administrative procedure corresponded to 12 to 15 months until now, experts remain sceptical as to whether the permitting procedure can be carried out within a shorter period of time.

• The recourse to a "third party expert", which can be hired upon request of the prefect in case the application presents significant environmental risks, remains unclear according to experts. In fact, the expert may be hired at any time during the permitting procedure and shall be paid by the applicant. This barrier should improve for wind power in the near future, as a new decree was enacted in November 2018 with the aim to simplify some measures to support onshore wind power. It thus includes three reform areas: speeding up litigation, simplifying administrative authorisation procedures and redefining the content of approvals.

The French Government owns 85% of the capital of the traditional national energy supplier EDF. As of December 2016, 78% of EDF’s electricity production stemmed from nuclear energy. In this context, one can estimate the willingness of the French government to develop renewable energies as rather weak. Whereas it remains true that the development of renewable energies in France is hindered by the important role of nuclear energy in the country’s energy mix, the current attention of the French Government to green growth and energy transition could represent a good opportunity for renewable energies in the near future. In fact, France’s energy policy has been praised by the International Energy Agency in its 2016 report, arguing that the country introduced “significant reforms towards more secure, affordable and sustainable energy supplies and the green growth of its economy.” In this regard, the Energy Transition for Green Growth Act, published in August 2015, is deemed by the IEA as a “first-class energy and climate framework, based on a low-carbon strategy, carbon budgets, and the related investment planning”. The government continues to show commitment to RES, as demonstrated by the Multiannual Energy Plan (PPE) released in January 2019 outlining its goals for RES: the plan aims for a reduction of fossil fuel consumption by 20% by 2023 and up to 35% by 2028. This should be achieved by closing down coal plants while increasing RES production. Meanwhile, nuclear power production will continue at the same rate and will only be reduced down to 50% of the total electricity production by 2030. More specifically, RES goals are as follow: to reach an installed capacity of 74 GW in 2023 - an increase of 50% compared to 2017 - and a capacity of 102-113 GW in 2028, which represents a twofold increase compared to 2017.

Wind, solar and hydro energy installations with an installed capacity over 100 kW are subject to a flat-rate tax on network businesses called IFER (Imposition Forfaitaire sur les Entreprises de Réseau), which currently amounts to 7,400 € per MW for 2017. The IFER tax was introduced in 2010 to level out the amount of a previously existing local tax (taxe professionnelle). Initially the amount of the tax was set for all energies at 2,900 € per MW. In 2011 it was increased exclusively for solar and onshore wind installations to 7,210 € per MW (not for conventional electricity production plants). This tax represents a high burden for solar and wind project developers. As an example, it constitutes nearly 70% of the total amount of taxes and levies paid by wind project developers. Considering that the time of full load production is about 3 times less for wind power, it can be considered that a kWh of wind power is 6 times more taxed than a kWh of conventional power, including from nuclear source. The amount of the IFER tax is adapted every year. The rate has increased to €7,570 per MW on 1 January 2019 from 7,470 € per MW for 2018 for PV, and remains unchanged for hydropower at 3,115 € per MW. Meanwhile, wind power is taxed at € 7,570 per MW.

According to the wind energy association FEE, appeals in court against wind turbines are not always justified and take years to resolve. In fact, court appeals can be initiated very easily by opponents. There is no financial impact for the appellant when his appeal is not successful after many years of court proceedings. 70% of projects are now subject to appeal and almost all are appealing. Although the majority of appeals are eventually rejected, legal procedures still lasts several years. The development of wind parks takes between 6 and 8 years in France. The numerous appeals also impact the duration of the authorisation procedures. In order to accelerate the appeal procedure, the Environment Ministry has announced a plan to remove a level of jurisdiction for litigation (2018) - that of the administrative court of first instance. Appeals will be handled directly by the administrative courts of appeal, in France and overseas. This is already the case for offshore wind turbines. The hope is that it will lead to a homogenisation of case law. The rights of the litigant will not be diminished, and the appeal in Council of State will always be possible. This measure should save two to three years in the appeal process. The Decree No. 2018-1054 of November 2018 has enacted these changes to reduce these delays by entrusting the administrative courts of appeal, in the first and last instance, with the handling of onshore wind disputes (whether for appeals against wind project authorisations or refusals) for projects authorised as from 1 January 2019. This means avoiding the preliminary stage of the administrative court, while leaving the possibility of an appeal in cassation to the Council of State, keeping in mind that for each of these levels of jurisdiction, it can take about two years for a claim to be reviewed. Offshore wind energy has benefited from a single Administrative Court of Appeal in Nantes since Decree No. 2016-9 of January 2016.

In France, the regional territories classified as favourable for wind energy development in the Regional Wind Plans (Schéma Régional Éolien - SRE) are very limited. In some cases, these areas are not even sufficient in order to reach the wind energy objectives also defined in the Regional Wind Plans. In fact, territorial planning implies for wind energy projects not only to meet planning requirements, but also to be compatible with the territory areas classified as favourable by the Regional Wind Plans at regional, departmental and municipal levels. Each Regional Wind Plan is jointly drafted by the prefect and the president of the regional council as part of the regional plan for climate, air and energy (Schéma Régional du Climat, de l'Air et de l'Énergie - SRCAE) after consultation with the local authorities concerned. The classified areas for wind development are identified on the basis of following criteria:

• wind potential

• rules for the protection of natural areas as well as natural and cultural heritage, technical constraints and regional guidelines

Moreover, within these areas, additional constraints such as aviation army constraints can even apply (see Barrier FRE07).

The multiplicity of appeal proceedings is a major barrier and a source of insecurity for the wind energy industry. In fact, for wind energy installations, between 3 and 6 legal permits are delivered by the Prefect, each of them being potentially subject to lawsuits (planning permit, authorisation to operate an installation classified for the protection of the environment, electric authorisation, derogation regarding protect species, clearing permit...). According to the French Wind Energy Association (FEE), the number of judicial appeals against building permits for wind energy projects has remained stable over the past years, from which 70 to 75% are eventually rejected. In this regard, anti-wind associations have made it their goal to challenge 100% of wind energy projects on appeal. As an example, building and operations permits for wind turbines are often attacked by opponents because the simultaneous visibility of a historic monument and of a wind farm is considered as inacceptable. The resulting court proceedings can last several years and the interpretation of the competent administration in order to protect heritage is frequently excessive.

On 19 August 2013, an order came in force limiting legal recourses against planning permits. This measure has been welcomed by the wind energy industry. However, the multiplicity of permits currently needed for wind energy installations in France (see Barrier No. 11FRE) offers numerous opportunities for wind energy opponents to challenge the legality of wind energy installations and delay or even block their commissioning. The Environment Ministry has announced a plan to remove a level of jurisdiction for litigation (2018) - that of the administrative court of first instance. But 70% of projects are now subject to appeal and almost all are appealing. This measure should save two to three years in the appeal process. The Decree No. 2018-1054 of 29 November 2018 has enacted these changes to reduce these delays by entrusting the administrative courts of appeal, in the first and last instance, with the handling of onshore wind disputes (whether for appeals against wind project authorisations or refusals) for projects authorised as from 1 January 2019. This means avoiding the preliminary stage of the administrative court, while leaving the possibility of an appeal in cassation to the Council of State, knowing that for each of these levels of jurisdiction, it can take about 2 years to review. Offshore wind energy has benefited from a single Administrative Court of Appeal in Nantes since Decree No. 2016-9 of 8 January 2016.

While a poll from French Institute of Public Opinion IFOP published in September 2016 shows that more than 75% of respondents have a positive image of wind turbines in general, the installation of wind farms remains sometimes problematic. In particular, the lighting provisions regarding wind farms undermine their social acceptance. Unlike other European and international legislations, the French legislation requires specific visible flashing output for each and every wind turbine (2000 cd red at night and 20,000 cd white during the day). The lighting must be visible within a radius of 360° and have an autonomy of at least 12 hours in case of network failure. However, those requirements disturb a number of residents who frequently lodge complaints about abnormal troubles of the neighbourhood. In addition, most Regional Climate, Air quality and Energy plans (SCRAE) as well as numerous individual permits are sued. The wind energy industry is thus very concerned by these too systematic complaints often resulting into legal proceedings in court. The nocturnal flashes disturb the residents. The government announced in January 2018 that there will be a mix of lighting options on the turbines: half will have permanent lights, there will be the same with flashing lights but with an extension of time between two flashes to three seconds. They believe this is a good consensus which was validated by the army and the ministry. A decree to that effect was released in April 2018, it repeals and replaces the decree of November 2009. The text sets out for the first time the rules for marking offshore wind farms and modifies the rules applicable to onshore wind farms. It introduces a series of provisions aimed at reducing the inconvenience to residents for both type of technologies. Among these is the possibility to introduce, for certain wind turbines within a park, a fixed markup or a low-intensity flash lighting, to mark only the periphery of wind farms by day as well as the mandatory synchronisation bursts of beacon lights. The decree will came into effect on 1 February 2019. From that date, all new installations must comply with it. For existing fleets, a retrofit is only required if at least half of the wind turbines are replaced.

The French electricity market is strongly dominated by single players (EDF), which is limiting the liberalisation and diversification of the energy market. As a result, independent power producers are only very limitedly able to financially benefit from the market. Although it is still an issue, it appears that independent electricity suppliers increasingly take on a more important role in the electricity sector. As of 31 December 2018, 75% of residential and non-residential sites are under a regulated rate contract type with the 'historical' provider (EDF or one of the 162 local distribution companies). Meanwhile 25% of consumers chose market offers (22% with an alternative supplier). 34% of electricity consumption is supplied at the regulated selling rate and 66% by market offers (35% from an alternative supplier). The market for non-residential customers is much more open (37% of sites on market offer) than that for residential customers (with 23% of sites on market offer).

Grid operators charge RES producers for a large part of the grid development costs necessary for their connection to the grid (e.g. including the reinforcement of transformer sub-stations or the replacement of existing electric lines). This situation is due to the uncertain legal definition which determines which grid development works shall be borne by the grid operator and which costs shall be borne by the producers.

In France, most of the renewable energy projects are connected to the distribution system operator Enedis (former ERDF). The grid connection costs are formulated in a technical and financial proposal (PTF) by Enedis (or non-nationalized distributors). However, Enedis does not provide any transparency regarding the details of costs and duration of connection proposals, in particular as regards the breakdown of costs for grid connection. Costs and time-lag for connection are also non-negotiable. The grid connection agreements are not stable, nor do they have a firm duration. They are concluded for a duration of 3 years, the last year being renewable for one year with the possibility for the grid operator to change the terms of the agreement. The grid curtailment then may happen without financial compensation.

Last but not least, the grid access contracts with Enedis are not in line with the EU directive on non-discriminatory access to the grid. In this regard, it is to be underlined that the distribution system operator is not regulated by the energy regulatory authority (CRE).

The degressive revision of the feed-in tariff (FiT) every 3 months for photovoltaic installations below 100 MW installed on buildings is perceived as a factor of instability, since it allows very little planning possibility for the project developer as regards the exact amount to be granted. In fact, it is the date of the complete connection request which determines the amount of the feed-in tariff for the PV installation. Considering that the development of a project can be easily delayed due to lengthy administrative procedures, the project developer cannot calculate in advance which FiT he will be able to receive by the time his connection request is completed.

Moreover, in practice, it appears that the decrease of the FiT does not correlate with the actual number of projects connected to the grid. According to the legislation, the reduction of the FiT is calculated based on the number of connection requests submitted during the previous quarter. However, according to statistics provided by the distribution system operator Enedis, only 40% to 50% of the projects that submitted an application for connection are actually commissioned. Therefore, the FiT decreases more rapidly than it should.

This barrier might improve as a decree was enacted in May 2017 to harmonise the remuneration of rooftop solar PV. For installations that sell the totality of their production, there will be a gradual phase out of the previous feed-in-tariff which was specifically allocated to PV systems integrated to a building. The new feed-in-tariff will apply to all types of rooftop systems.

Self-consumption: for installations that fully self-consume their production, or sells on part of it, there will be a specific premium and a feed-in-tariff.

However, there is an eco-conditionality attached to the subsidies: the installations will need to be performed by a qualified ‘RGE’ (recognised guarantee environment) installer as was the case with renewable heating equipment. These measures only apply for continental France.

The feed-in-tariff will continue to be adjusted quarterly depending on the number of completed grid connection.

A report of the Court of Auditors on renewable energy policies in France, published in July 2013, casted doubt on the support to solar energy, which is deemed too expensive and inefficient. These conclusions gave rise to public debates on whether or not to focus on the promotion of more cost-effective technologies such as wind energy, to the detriment of more expensive technologies such as photovoltaic energy. In November 2016, the cost of support to photovoltaic electricity was called into question again in a report from the Senate, casting doubt on the actual effects of PV support with regards to sustainable development. This continuous debate hampers the development of solar energy and misrepresents the photovoltaic technology. In fact, there are some areas in France where the use of photovoltaic systems makes more sense than other technologies. The Court of Auditor's 2018 report continues to be critical of the support to Renewables, especially towards wind and solar power. It is deemed too expensive, too lenghty vis-a-vis the goals. As of 2019, there were no new comments from the Court of Auditors, so this barrier still stands.

Self-consumption remains low in France but the sector is growing. The question of grid access and its cost is being discussed as collective self-consumption utilises the grid. Enedis would like to see a new grid fee (the so-called TURPE) set up for this type of consumption (currently individual consumers do not use the grid and are not subject to a fee). The CRE deliberated on the matter and proposes an optional fee for collective usage. The CRE also recommends that the government sets some specific support for the sector which will be evolving in the years to come, especially with the growth of the electric vehicle fleet which will also be part of the self-consumption sector. However, experts warn that if fees are introduced, they should be carefully monitored as there is a tendency to exaggerate the cost to the grid by the grid operator. Too costly grid fees could jeopardise the profitability of collective self-consumption.

The gas price is regulated at a lower level than its real costs. It does not take into account the systems costs and the externalities, such as the negative impacts on the environment, soil and water pollution etc. As a result, it is even harder for renewable energies to compete with gas. The gas market will open in 2023 to follow the EU open market policy, the fixed price of gas will no longer be allowed after that date. However, no mention is made to the role of externalities. Furthermore, the price comparison for heating networks and traditional gas is sometimes established by taking into account different elements (for instance excluding maintenance cost and replacement of a boiler after a number of years), which can create a disadvantage for the former and giving the impression it is more expensive than traditional gas.

One of the main barriers identified hindering the development of renewable energies in the French heating and cooling sector is the competition with electric heating appliances. In fact, currently over 30% of the existing individual and collective housing in France are equipped with electric heating systems, corresponding to 9,5 million households. Until the entry into force of the thermal regulation (the so-called “RT 2012”) in 2013, 80% of the new residential buildings were equipped with electric heating. Several reasons explain this situation. The development of the market for electric heating was encouraged in the 1970s with the launch of the French nuclear programme, in order to absorb the overproduction of electricity from nuclear power plants. The electric heating appliances were all the more successful in that their installation was easy and their installation cost was up to ten times cheaper than the cost of a boiler. Besides, the price per kWh of electricity is less volatile than the price of fossil fuels. Nevertheless, the French Energy Agency ADEME points out that the overall cost of electric heating appliances still remains more expensive if one considers the cost paid through the electricity bill. In fact, 40 to 50% of the kWh electricity price corresponds to the cost of grid expansion of the national distribution grid needed among others to supply the heating systems. Moreover, it should be noted that another element that complicates this barrier is that converting an electric heating system towards a heating network is technically demanding and expensive.

As far as new buildings are concerned, the thermal regulation “RT 2012” currently in force requires the mandatory use of a renewable source of energy, primarily for heating production. However, this regulation only applies to new buildings. In 2020, a new regulation, the so-called RT2020 is expected, updating the RT 2012.

There is a lack of stability regarding support schemes for the production of heat from renewable energy sources, which affects among others the investment decisions of manufacturers. As an example, the Heat Fund, which is used for the financing of call for tenders, is renewed every year and thus results into a lack of planning security of the sector as regards the content of the tenders from one year to another. Moreover, the lack of stability and visibility of the support policy hinders investments in research and development activities in order to foster innovations at the technical level. As far as the solar thermal sector is concerned, no significant innovation has been brought to the market over the past 20 years. As of 2019, this barrier is improving: in terms of visibility, a working group set up by the French Ministry for the Ecological and Inclusive Transition (MTES) is currently looking at how the communication around the sector could be improved. In terms of stability, some improvements are already happening, the state energy agency ADEME, which is responsible for the support to the heating sector though the Heat Fund, began to publish its yearly budgets in 2018 up to 2022 for the Fund. The budget has been determined as follow: the 2018 budget of €245 million will increase to €315 million in 2019, up to €350 million in 2020 and 2021 and €339 million in 2022. This increase was outlined in the revised Multiannual Energy Plan (PPE) released in January 2019 by the MTES and should be accompanied by a simplification of the rules in place with the Fund. For instance, the requirement for reimbursement of loans that applied to projects over €2 million will be abolished in 2019. The rules of the Heat Fund will also be aligned from 2019 with the ceilings of the Community framework for heating networks.

In France, the main share of renewable heat consumption comes from low capacity installations. Yet two important support mechanisms, namely the Heat Fund and the tendering processes of the French energy regulatory authority, do not address low capacity installations. In fact, the calls for tenders of the regulatory authority favour large operators through the tendering of large heat production capacities and the high complexity of the required administrative procedures. As for the Heat Fund, only communities, collective housings as well as businesses in the industry, service or agricultural sectors are eligible. Moreover, the output threshold required to be eligible to the Heat Fund makes it only accessible to large projects and therefore penalises projects carried out by individuals. Moreover, the Heat Fund is not sufficiently adjusted to the specificities and capacities of certain technologies. For example, the productivity thresholds defined in the requirements of the Heat Fund do not depend on the technology used. Furthermore, the ceilings for eligible investments are not adjusted according to the size of the installation. Also, the Heat Fund does not foresee the financial support of investments needed for the supply of boilers, meaning the wood transport and delivery from the forests to the heating plant. Overall, the support schemes are designed to support community and heating network systems with the aim to see buildings, community amenities and businesses (especially in high density areas) prioritised in terms of improving their heating and insulation capacity. Hence, this is reflected in the Heat Fund support scheme designs.

A significant barrier related to the existing renewable energy strategy is the rivalry between solar thermal energy and other energy efficiency measures. Since heating is their largest source of energy consumption, households first tend to undertake refurbishment works in order to reduce their heating bill. Insulation works, the replacement of windows or of the heating system will thus be carried out in priority before installing devices for the production of hot water. This trend is reinforced by the fact that the purchasing costs of solar thermal systems is higher than conventional systems fueled by gas or electricity, especially for refurbishment works. This barrier continues to be present in 2019 as the overall policy is to prioritise and support the reduction of energy consumption first and foremost via insulation and renovation work. Furthermore, solar thermal is costly and requires a lot of space to generate the required energy needs for heating which further reinforces this barrier.

The project applying for financial support from the Heat Fund must first comply with the scoring model set for the support scheme, depending on the type of project developer, the size of the installation etc. The project shall also meet productivity and competitiveness requirements as well as maximum investment constraints. In addition, the project is subject to adjustments regarding the compliance with Community rules and the price spread between the heat produced from renewable energy sources and the heat produced from conventional energy sources. As of May 2019, this barrier continues to be valid.

There is a lack of communication and information regarding the benefits of solar thermal technologies in new and existing buildings. This applies for example to the use of individual solar water heaters when replacing old boilers. Quite often, installers do not put forward the option of solar thermal facilities, due to a lack of experience, the higher complexity of installation or the need for installers to come back to the installation site to check the proper functioning of the installation. In addition, the high investment costs related to the installation of solar thermal facilities does not help to convince households and companies. As a result, the total surface of solar thermal plants installed annually between 2010 and 2015 has decreased by 52%, even though the installations costs are between 15 to 20% cheaper. As of July 2018, this barrier remains, but there may be some improvements in the future as there may be better financial support with some tax credits for solar thermal heating. The 2018 finance law has modified the tax credit for the energy transition (CITE) and restored equity between the various solutions supported. Thus, a ceiling on expenditure on the acquisition of a thermodynamic water heater should lead to healthier competition with a solar water heater as this eligible expenditure has long been capped. A boost of up to € 3,000 has also been provided for households that will change from their oil heating and based on the Energy Saving Certificate (EEC) scheme. This should benefit combined solar systems, which use solar calories for both hot water and heating. A heating working group is underway and should make some propositions in June 2019 to the Ministry including on the topic of improving communication surrounding the sector. Nevertheless, thermal heating remains a RES product that is less prioritised with consumers. They tend to favour insulation and renovation work, and Solar PV for electricity consumption as all these options are more affordable and support a reduction in energy consumption.

There is no legal definition of “district heating” in the Energy Code. As a result, existing definitions of district heating may stem both from various public authorities as well as from heat associations. Although it has not led to major or known litigation problems, the industry would benefit from the currently commonly used definition being legalised. The industry stakeholders and the Ministry for the Ecological and Inclusive Transition agree on defining heating networks as public or private systems that sell energy to at least two distinct clients. Meanwhile, the industry is currently discussing how the cold system should be defined. However, there is currently no agreement on this topic.

In practice, the sub-station is part of the local authorities’ grid infrastructure and is therefore financed and installed by the local authority or its delegate. The user has a grid connection right and is only charged 20% of the cost of the sub-station and of the connection fees. The tax credit is therefore not effectively designed and should rather apply to the connection fee paid by private users of district heating. This barrier is improving, as in fact the current schemes supporting the sector can be used towards the sub-station grid connection.

The heating sector is dominated by the traditional gas industry which experiences a decrease of its market share when heating networks are deployed. Unlike the electricity market, heating networks can operate independently from the traditional gas industry. As municipalities and large cities are being encouraged to develop the ‘heating network classification’ procedure, lobbying also takes place at the local level to protect traditional gas provision.

The classification of a heating or cooling network is a procedure aimed at defining areas within which any new installation must be connected to the network. The procedure for classifying a heating or cooling network makes it mandatory to connect to this network for new constructions located in previously defined sectors. The contours and procedures for classifying heating and cooling networks were redefined in 2010.

The Heating Networking Classification tool is under-utilised by local authorities due to a lack of knowledge, and or a misunderstanding of the value of this tool. The classification of a heating or cooling network is a procedure aimed at defining areas within which any new installation must be connected to the network. The procedure for classifying a heating or cooling network makes it mandatory to connect to this network for new constructions located in previously defined sectors. The contours and procedures for classifying heating and cooling networks were defined in a law in 2010 which embedded the practice into law by outlining the regulatory procedures for the classifcation to take place. However, the under-utilisation of the procedure represents a missed opportunity to develop these networks and increase their number.