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2023

Global Onshore Wind Market Report

Key Regional Markets

France

Onshore Wind Capacity

15.3 GW

GDP (Current Prices) USD (2022)

2,957.42bn

GDP Growth Forecast (constant prices) (2023-2027)

1.64%

Currency

Euro

Country Credit Rating (S&P)

AA

Renewable Energy capacity (2022)

65.4GW

Onshore Wind Share in Renewables (2022)

32%

Renewable Energy Target

Producing 33% of its energy needs from renewable sources by 2030
Achieving 100GW of renewable capacity by 2050

France has made significant efforts to achieve its goal of an emission-free energy mix by 2050 (FINEER GREEN, 2022). Over the past decade, the country has increased the share of renewables in its power mix by 16%, indicating a significant shift from its reliance on nuclear to renewable energy. Onshore wind power is one of the key renewable energy technologies that France has been using to go carbon neutral, thanks to its favourable wind conditions. Additionally, the government has actively supported onshore wind by providing funding and implementing appropriate policies. As a result, France has surpassed 20GW of cumulative onshore wind capacity in 2022 (IRENA, 2023).

Pros

  • Policy support through a new Renewable Energy Acceleration Bill and revised multi-year energy plan (PPE2)

  • Overwhelming support of public created by the new strategy for communal inclusion in wind projects

  • Robust funding initiatives unveiled under the 2030 National Investment Plan

Cons

  • Limited focus on the onshore wind policy development and sturdy initiatives for offshore wind

  • Delayed permitting procedures and project approvals compared to other major European markets

Renewable Energy Mix

Source: IRENA Renewable Capacity Statistics July 2023

France heavily relies on renewable hydropower as its primary source of renewable energy due to its favourable topography and rain patterns. However, the popularity of wind and solar PV is gradually challenging hydropower as the leading source of renewable energy. This is evident from the 2% YoY decline in hydropower’s contribution to the renewable mix in 2022 (IRENA, 2023). The French government has played a crucial role in shaping the onshore wind energy industry. It has set a target of doubling the cumulative installed capacity of onshore wind to 36GW by 2050, to achieve the overarching Net Zero 2050 ambition (EN Former, 2023).

Over the last decade, onshore wind has exhibited a steady growth of 12% in its share in the energy mix, thanks to the government’s strategic policy formulation. The national law on Climate and Energy introduced in 2019 is an excellent example of this. It directly aims to phase out coal by closing the last four plants in 2022 and replacing them with new renewable capacity, including onshore wind (REUTERS, 2019).

Installed Capacity: Status and Trend

Trend in Installed Onshore Wind Capacity

Source: Preqin Global Report 2023: Private Equity

Following the outbreak of the Russia-Ukraine war, the REPowerEU, mandated by the European Commission (EC) in May 2022, is prioritizing the simplification and speeding up of the permitting process for renewable projects in order to address the energy crisis. Member states will receive an additional €20 billion in funds under this mandate (European Commission, 2023). France intends to use its share of the funding to clear its permitting backlog, which will help to accelerate onshore wind activity. Currently, there are about 11GW of onshore wind projects that are waiting to secure permits, and 4.8GW are in the final stage of the permit procedure (Wind Europe, 2023). By resolving permitting delays, developers will be able to start their projects and achieve the assigned targets for installed capacity later on.

The onshore wind market’s sustained development is heavily reliant on policy support. The multi-year energy plan (PPE), now revised to PPE2 in 2021, is of utmost importance. It aims to achieve over 34GW of installed capacity for onshore wind by 2028 through a series of auctions (Wind Europe, 2023). The latest onshore wind auction held in July 2023 resulted in the award of more than 1.1GW of onshore wind tenders. This is a significant oversubscription from the scheduled capacity of 925MW (Renewables Now, 2023). Moreover, in February 2023, the French government introduced the Renewable Acceleration Bill. This bill empowers local authorities to provide consents for renewable projects, and the permitting process is faster. The bill also includes auctions of 6.5GW of onshore wind capacity with an additional 2GW for technology-neutral, scheduled until 2028 to accelerate onshore project builds (Wind Europe, 2023).

Although strategic policies are the main drivers for the development of the French onshore wind sector, there are other opportunities that can lead to growth in the industry. The merchant market and PPAs, for example, can also create new avenues for growth, especially with the decreasing prices of wind technology. Since 2019, PPAs have been gaining momentum in France, and the French government is taking steps to attract companies by creating schemes such as PPA guarantee funds for renewables. The objective is to cover the default risks of renewable power projects with up to 500MW of cumulative installed capacity (PV Magazine, 2022). By mitigating the risk from high market prices, companies would be more likely to sign long-term PPA contracts in France. Already, companies such as Boralex, Octopus Energy, RWE, and ENGIE are showing interest in the French onshore wind market.

Demand Drivers

The growth of Canada’s onshore wind industry can be attributed to the strategic initiatives and policy support put in place by the Canadian government. Key efforts include the ambitious goal of decarbonizing the electricity grid by 2035 and collaborative efforts between federal, provincial, and local authorities to achieve a national carbon-neutral economy. To attract investor interest, the government introduced an Investment Tax Credit (ITC) system in Budget 2023. This system offers substantial incentives, providing up to 30% tax credits for renewable technologies such as wind, solar PV, and energy storage systems. The tax credit, starting at 30% in March 2023, is set to decline to 15% in 2024 and will conclude in 2034. Additionally, the budget outlines a 15% refundable ITC on investment capital costs made by non-taxable entities, including indigenous communities, municipally owned utilities, and Crown corporations, with an estimated value of $25.7 billion.

In alignment with the goal of increasing renewable energy penetration by 2030, the government is investing CAD 3 billion over 13 years in smart grid programs, upgrading transmission networks, supporting indigenous clean energy projects, and initiating offshore wind projects starting from 2023-24. Plans for a cross-Canada grid transmission are also in progress to enhance security and affordability. Provincial governments are actively implementing grid management policies, with initiatives such as Alberta’s Electricity Grid Displacement Factor (EGDF) introduced in March 2022. This policy incentivizes wind energy developers to renew and support their EGDF for the entire 8-year offset credit period, encouraging sustained investment in renewable energy.

Another significant initiative outlined in Budget 2023 is the carbon contract for difference (CCfD), designed to facilitate investment in a flourishing clean economy. This comprehensive CCfD strategy, complementing the existing CfD provided by the Canada Growth Fund, aims to enhance the predictability of carbon pricing, and stabilize revenues for renewable energy projects. This initiative creates a favourable market environment for both developers and investors, ensuring a stable and lucrative landscape for the renewable energy sector in Canada.

Market Opportunity

France is working towards its 2023 target through legislative reformulations and increased financial support for the expansion of renewable energy. In 2022, the French government announced the 2030 National Investment Plan, which includes an investment of EUR1 billion in renewable energy innovation projects to increase the installed capacity of renewable power to approximately 100GW by 2050 (IEA, 2022). With favourable wind conditions and supportive policies like the FiTs, onshore wind power has the potential to double its capacity by 2030.

Many companies are investing in France’s onshore wind due to favourable market conditions. Octopus Energy is one such example, having announced in 2023 that they will invest about EUR1 billion in three wind farms in France over the next two years (Octopus Energy, 2023). Additionally, RWE and TotalEnergies inaugurated the new Coupru onshore wind farm in April 2023 with a capacity of 12 MW in the French department of Aisne, investing EUR20 million. This project has increased RWE’s renewable portfolio in France to 21 GW, and they plan to invest more in the future (RWE, 2023).

Repowering has emerged as an important investment option for renowned developers in France, noting that 3,565 wind farms are estimated to reach the end of their operational life in 2025, entailing an investment of €18 billion to repower them (SIA PARTNERS, 2022). Notably, Q Energy is set to launch four projects in France for a total installed capacity of 56MW between 2023 and 2024 (Renewables Now, 2023). In association, the government provides suitable recycling options for decommissioned wind turbines. Thus, the repowering of legacy wind turbines is another profitable business opportunity. Alongside, hybrid wind-solar projects are noticing growing footfalls. In June 2023, France’s first hybrid project came online with a 24MW wind farm and a 5MW solar farm in Savigné (PV Magazine, 2023). Such hybrid projects would bring attractive investment opportunities since they offer the most efficient usage of land for renewable energy generation.

Outlook

Source: BNEF Global Wind Market Outlook

Although France has made notable progress in its energy transition to achieve its ambitious decarbonization goals, it has fallen short of meeting the targets it has set. This is due to the postponement of several major policy initiatives over the last decade. The original goal of reducing nuclear energy production from 70% to 50% by 2025 has been pushed back to 2035, and there are concerns that it may be abandoned altogether in order to ensure energy security (REUTERS, 2019). Additionally, the onshore wind industry has experienced a slowdown in capacity installations since 2020, which means that in order to reach the 2028 target, approximately 2.8GW of new capacity must be added each year. According to BNEF, annual cumulative additions will be less than 2GW until 2027, with more than 2.1GW being added from 2028 onwards. This indicates that there is currently not enough being done to meet the targets.

France’s onshore wind growth is being impeded by a number of challenges. Some of the main issues include administrative barriers, public opposition, and increased government focus on offshore wind projects. Since 2020, onshore wind projects have experienced delays in permit procedures, which has led to a halt in project developments (Windpower Monthly, 2022). Political support for public opposition has also contributed to a lack of project commencements. Furthermore, the government’s shift in resource allocation for offshore wind projects is causing further delays in the approval of onshore wind projects.

However, the government is taking proactive steps to design and implement policies that will speed up the permitting process. They are also including local communities in project approval to facilitate a faster commissioning process. Despite these backlogs, onshore wind power is expected to play a pivotal role in achieving carbon neutrality by 2050 due to favorable wind conditions and potential investment opportunities. Nonetheless, as recommended by IEA, significant investment is needed for the technology to have a realistic chance of reaching its 2028 target (IEA, 2023).

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