in February 2003, the French Government and MIES announced new measures under "Climate Plan 2003" to ensure that France meets its commitments under the Kyoto Protocol. As of May 2004, implementation of this Climate Plan had not yet begun and in all likelihood never will since the Government lacks the political will to take measures seen as harmful to French industries. Most of the burden of reducing France's greenhouse gas emissions will fail onto French industry even though it is responsible tor only around one-third of total French emissions. in order to meet Kyoto commitments, French industry will need to make a 20%- 30% emission reduction. in comparison, the January 2000 MIES program aims to stabilise (at 40 million metric tonnes) by 2020 carbon emissions from the transportation sector, which accounts tor 39% of France's carbon emissions. Economies of Cogeneration A summary of electricity prices in France indicates that large users, small commercial and households, ali paid prices (July 2003) around the EU average and the overall trend since January 1999 points to falling prices (over 5% since January 1999). Electricity prices are not in themselves key factors far cogeneration in France. Most CHP plants seli electricity at a fixed price, according to the terms of the contracts between the generators and the transport and distribution utilities (mainly EDF). Electricity purchase prices in France tor cogenerated electricity are complex and the terms are set in the contracts signed with EDF (See section 6.3.3). While most large scale CHP (215kWe to 100MWe) is stili operating under the regime of the 97-01 contracts, small scale CHP of under 12 MWe benefits from a purchase obligation tor their electricity. This leaves out CHP plants of over 1 00MWe, which can seli their electricity on the French PowerNext market. Typically, the purchase price tor cogenerated electricity is in the % 80 to 90 per MWh while production costs are in the % 60 to 75 league. Barriers to Cogeneration • in general there are a lot of institutional barriers in France. Grid access is especially complicated as is a strong deterrent tor small-scale projects. in particular, the waiting list system put in place in September 2001 is very unsatisfactory because of the delays facing industrial projects. in March 2004, there were 97 cogeneration projects on the waiting list, tor a total theoretical installed capacity of 395 MWe. This number should be contrasted with the mere 71 MWe installed in 2003. EDF proposed a new procedure in February 2004 that should give more fluidity to the system. ARAŞTIRMA/RESEARCH • Grid access is not only administratively complex but also excessively costly. • French nuclear electricity generation is predicted to retain its market share in the decades to come, thereby limiting the scope tor cogeneration in France both in terms of capacity needs and emissions. • Third Party Financing techniques are alsa not very well established in France and are stili illegal in France tor the public sector (except tor new police stations). • The GDF STS price tor natural gas will be progressively phased out but CHP operators still do not know what pricing regime will replace it: a major source of uncertainty. • The purchase obligation tor CHP electricity plants of under 12 MWe is flawed with pernicious clauses that create substantial financial risks far cogenerators. • The introduction of the so-called "dispatchability system" also created more disadvantages than advantages. Although the implementation of the Electricity and Gas Directives liberalised the market, the opening was close to the required minimum, real competition has not occurred and 2 months before total market opening tor non-domestic customers, the outlook remains grim. lndeed, EDF holds a very dominant position and has frustrated any further development of CHP. Conclusions and Recommendations Cogeneration in France is in a state of limbo. On the one hand, large-scale cogeneration (12 to 100 MWe) is more or less protected under the 97-01 contracts and small-scale cogeneration of under 12MWe benefits from a state imposed purchase obligation tor its export electricity at a good price. On the other hand, !here is no longer a preferential regime tor new CHP of over 12 MWe and the clauses of the purchase contracts tor small CHP are very unfavourable to CHP. The cogeneration industry, after having flourished in the late 1990s faces a difficult future. France's energy policy gives cogeneration very little consideration and EDF is clearly opposed to any further development of the sector. it the Government wants to help improve the situation tor CHP, it should concentrate its eftorts on simplifying the administrative paperwork required; extend the purchase obligation to plants with a greater capacity and a longer operating period; and reassess the clauses of the purchase contracts that are a threat to cogeneration projects' viability. Finally, it is vital tor the French CHP industry that an indexation of cogenerators' remuneration on natural gas be kept, as is the case today. The choice of the next natural gas reference tariff already looms large on the French CHP agenda. "Kojenerasyon: Yüksek Verim, Temiz Çevre, Enerjide Yeniden Yapılanma" ♦ ENERJİ & KOJENERASYON DÜNYASI I 59
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