Isra-Mart srl : French renewable feed-in tariffs saved taxpayers €5 million in 2008

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Flying in the face of conventional wisdom that renewables are expensive, it has been found that the cost of French feed-in tariffs for renewable energy over and above the cost of conventional fuels was negative in 2008.

Feed-in tariff expert Paul Gipe recently reported that in 2008, Cécile Bordier at the French bank Caisse des Dépôts examined the cost of France's renewable energy programme. Bordier found that French feed-in tariffs for wind, hydro, biogas and other technologies not only did not cost money in 2008, but also saved French taxpayers €5 million during the year.

Generation from renewables in France increased nearly three fold between 2003 and 2009 and while conventional wisdom suggests that as more and more renewables are added to a utility's generating mix, the average cost of electricity increases.

Thus, as France has added more renewable energy from its program of differentiated feed-in tariffs, the cost of the program should steadily increase. However, Gipe reveals that the opposite has actually occurred, with the cost of the French program declining as renewable generation has grown.

Though Bordier's original report is no longer available at its last known URL, her analysis illustrated the role of the "merit order effect" in France on the total cost of renewables to ratepayers. The merit order effect results when renewable generation replaces more expensive fossil-fired generation at the margin.

Previous studies in Germany, Denmark, and Spain have illustrated the significant monetary benefit when renewables offset conventional generation, but Bordier's analysis was the first to specifically look at France.

Renewable energy advocates have long argued that renewables are a hedge against both the rising price of fossil fuels and fossil-fuel price volatility. Bordier's analysis confirms this to be the case, showing that the negative cost of the French program in 2008 resulted because the increase in renewable generation during the year offset the dramatic rise in the price of fossil fuels that year.

France uses Advanced Renewable Tariffs--a system of differentiated feed-in tariffs--to develop renewable energy at minimal cost. Differentiated feed-in tariffs allow program administrators to carefully control costs to ratepayers while meeting development targets.

The French regulatory commission publishes the cost--or savings--of the renewable program and the electricity generated by each technology, as well as the methods used in their analysis in annual reports on the Service public de l'électricité (CSPE).