Europe’s highest court says subsidies to encourage wind power in France have not been properly flagged to the European Union as state funding.
The ruling has prompted calls from the French wind industry for a new more legally sound funding system.
Reuters Newsagency reports the case also has implications for a EU-wide debate on renewable energy subsidies, a fiercely contested political issue as governments and consumers blame them for pushing up fuel costs.
Under EU rules, government help known as state aid should be notified to the European Commission, the EU executive, which is responsible for ensuring there is no market distortion.
France’s failure to follow this procedure provided a basis for a pressure group opposing onshore wind power, Vent de Colere or Wind of Anger, to challenge France’s preferential tariffs for wind energy in 2011 in a French court.
The French court turned to Europe’s top court for advice.
The Court of Justice of the European Union (ECJ), based in Luxembourg, found that “the obligation to purchase the electricity generated by wind turbines falls within the concept of an intervention by the State through State resources”.
It is now up to the French court, the Conseil d’Etat, to make the final judgment. It is widely expected to annul the 2008 tariff decree.
“The court’s decision started a race against the clock,” said Frederic Lanoe, head of French wind power lobby France Energie Eolienne.
Mr Lanoe said the Conseil d’Etat’s decision was not expected before two or three months and urged the French government and the EC to set-up a sustainable system in the meantime.
“The 11,000 workers of the French wind sector are holding their breath,” he said.
The EC said later it was in contact with French authorities over a new tariff decree notified by the government last October, which would pave the way for a new funding regime compatible with EU regulations.
“Good progress is being made in the contacts with the French authorities, which are very constructive,” EC spokesman Antoine Colombani said in a statement.
“On this basis and given the uncertainties that the ruling might create, the Commission is working towards a decision soon, probably in the first quarter of 2014.”
Legal uncertainty over the tariffs, which forced EDF to buy wind-generated power at costs higher than the general market, has paralysed investment in the French wind sector since 2011.
Only 348MW of new wind power capacity has been added in the first nine months of the year in France, 39 per cent less than during the same period last year, according to official data.
France now has a total wind power capacity of about 8.0GW, compared to more than 30GW in Germany.
“The goal now is that the European Commission’s approval of the new regime arrives before the Conseil d’Etat’s decision to annul the old one, to give legal continuity to the sector,” said Marion Lettry, wind energy specialist at the SER renewables lobby.
Supporters of renewable energy are concerned about wider uncertainty over the future of green subsidies.
The EC earlier said it was investigating Germany’s management of renewable subsidies.
