RGREEN INVEST, a 10-year-old French asset management company exclusively dedicated to green infrastructures, reacts to the news published by Les Echos according to which the French Government allegedly intends to renegotiate down financial subsidies granted before 2011 to support the French photovoltaic energy production. Such a measure, should it be included in the 2021 Finance bill, would jeopardize the fundamental dynamic initiated in favour of energy transition.
“ While this idea, neither confirmed nor refuted by the Government, has only been recently publicly revealed, we can already see how investors’ confidence gives way to strong concern”, comments Nicolas Rochon, RGREEN INVEST’s President. “For the sake of energy transition, we ask the State to clarify its position and renounce this project, in order to maintain the benefits of the positive dynamic initiated with the recovery plan” he concludes.
An undermining of the trust between the State and investors which will impact and delay the success of energy transition in France
State’s subsidies granted before 2011 to support the French photovoltaic energy production were founded on the fact that the green energy production generates and will generate long-term costs for industrials and investors, costs that can only be withstood with long-term public support.
This necessary complementarity of political will and investors’ risk-taking led the French State to guarantee feed-in tariffs by EDF for the energy produced over 20 years, to facilitate the launch of a photovoltaic industry in France during the 2000s.
It worked. Leading players emerged, created jobs and invested massively in the sector. They still do today. If this project were to be confirmed, a reconsideration of past contracts would create regulatory instability and undermine the long-term confidence of investors – banks – often public ones -, innovative funds, savers, and companies –in the State’s commitments.
The investments required to reach France’s targets regarding CO2 emissions and energy transition will be even greater, and the return on investment can only be expected over decades.
By breaking past commitments, the State would durably weaken investors’ confidence, meaning that the projects of today and tomorrow will not rise from the ground.
Considering the climate emergency and in the context of the implementation of the recovery plan, it is more urgent than ever for the State to create a stable and protective environment for economic and financial players in the long term.
A prejudice for investors and savers, who chose virtuous investments for their savings and their future retirement
One might argue that the photovoltaic energy production proved to be less expensive today than expected during the 2000s. Nevertheless, investors did not have this certitude back then and took a risk by immobilizing their financial resources in a long-term perspective. To deprive these investors of this return on investment means depriving French savers of a premium of their savings or retirement contributions, while they made a risky but virtuous choice
There can be no sustained shift in financial investment practices in favour of virtuous funds, companies, initiatives and projects if the State can decide, at any time, to downgrade their profitability, in order to make budget savings.
A project of uncertain legality that will lead to multiple and lengthy procedures with indeterminate outcome
The measure, taken by the State in early 2000, did not consist in the allocation of subsidies. The virtuous choice made at the time was to guarantee supply contracts between private producers who invested in photovoltaic production sites and the operator holding the monopole of electricity distribution, EDF. The measure envisioned today would therefore consist in allowing multiple purchase contracts duly concluded between companies to be called into question. There is little doubt that such an initiative would generate a multiplicity of disputes that none of the actors, nor the courts, really need today. On the contrary, the legal basis for such an initiative will undoubtedly be hotly debated, with no guarantee that the outcome would be the one envisaged by the State.
Nevertheless, actors who, today, lead structuring projects in the production of green energies, in the conversion of French agriculture, in housing renovation or in self-consumption, are sometimes the same persons as before. In any case, they cannot engage themselves in a legally unstable field. There is an urgent need to strengthen a peaceful dialogue between the State and the investors in order to finance the ecological transition.