Client Alerts

Does the sun still shine on solar power in France? The proposed amendment to France’s solar feed-in tariffs and the rights of solar investors

Volterra Fietta Client Alert
25 November 2020

On 13 November 2020, the French National Assembly adopted an amendment (the “Amendment” or the “Proposed Measure”) which, if approved by the Senate and passed into law, will revise downward the feed-in tariffs (“FiTs”) payable under solar power supply contracts concluded more than ten years ago between the State and photovoltaic energy producers. This Amendment has provoked concerns among many parties involved in this sector, some of whom fear a systemic risk to all renewable energies. Solar industry participants in France and around the world should pay careful attention to these developments, and their implications for solar projects generally, and to their legal rights in this regard.

The Amendment reflects an issue that is arising around the world: in order to induce investments in solar energy projects, many Governments guaranteed favourable FiT rates in order to encourage investment. However, based in part on the support for solar technology created by those FiTs, the unit production cost of energy from solar projects has diminished significantly in recent years. As a result, some early investors have benefited from what some consider “excessive profits” and others consider the benefits of early-mover status.

Through the Amendment, the French Government plans to save hundreds of millions of euros per year by modifying the oldest solar energy contracts, on the basis that these contracts are now generating “excessive” profits. For investors, some of whom purchased pre-existing projects at high prices, this has sparked outrage. They claim that the measure could cripple their businesses, breach the government’s promises and threaten the viability of future renewable energy projects. It might also give rise to legal claims by investors in the French solar industry.



The Proposed Measure takes the form of an amendment to the annual Finance Bill. It aims to modify certain solar power contracts signed between 2006 and 2010. These contracts guaranteed producers a fixed electricity FiT of around €600/MWh, or around ten times then market prices, for 20 years. In 2010, a new decree applied lower FiTs to contracts signed after its entry into force but did not modify tariffs applicable to existing contracts. On 13 November 2020, the Amendment, which seeks to reduce FiTs payable under contracts signed prior to 2010, passed its first reading in the National Assembly by 91 votes to 32.

France is the latest country to discover that the rapid development of solar technology and the resultant collapse in photovoltaic cell costs have left its government obliged, for years into the future, to purchase electricity from early solar projects at a significantly higher cost than that of electricity produced by more recent solar generators.

Many countries, in Europe and around the world, have faced similar issues. Further, the economic recession that followed the 2008 global financial crisis, and now the COVID-19 pandemic, have significantly reduced demand for electricity. Many States have argued that this exacerbates their already-fragile financial situation and a number of governments have in the past taken measures that are in some ways not dissimilar to those proposed by France. These regulatory changes and their consequences to foreign investments and investors have resulted in a significant number of investor-State disputes under bilateral investment treaties and the Energy Charter Treaty (the “ECT”). Investors have generally sought relief based on alleged violation of the obligation to accord fair and equitable treatment to foreign investors and/or alleged expropriation.

Most investor-State cases initiated to date have been brought against Spain, the Czech Republic and Italy, as well as Bulgaria, Romania and the Slovak Republic. According to the Energy Charter Secretariat website, as of October 2020 some 80 cases had been brought in relation to renewable energy, including solar plants, under the ECT alone. Claimants in these cases have claimed a total of approximately $21 billion and had recovered approximately $1 billion as of October 2020. Many cases have given divergent results, even in relation to apparently similar situations.

President Macron’s government is committed to greening the French economy. From the government’s viewpoint, the Amendment is part of that process. 800 major photovoltaic energy contracts (out of a total of 235,000 contracts in force) are potentially affected by the Amendment. The Ministry of Ecological Transition has stated that only “the largest contracts” that benefit from “disproportionate profitability” will be reviewed. It also has stressed that there will be a “safeguard clause” for the benefit of photovoltaic installations that the measure would otherwise risk “compromising”. Installations of less than 250 kWp will not be affected. In the Ministry’s view, the existing system has enabled some producers to achieve “a profitability out of all proportion to a normal return on capital invested”. It referred to an “internal rate of return in excess of 20%” for certain photovoltaic parks before 2010, which “corresponds to a return on equity for the shareholder of up to 80%”.

The government hopes to save €400 million per year by the Amendment. By way of comparison, the current cost of the relevant contracts is around €2 billion per year.



Responding to opposition MPs, the Minister of Ecological Transition, Barbara Pompili, recalled that “business secrecy” prevented the disclosure of a list of targeted solar power producers. She nevertheless insisted that the actors in question were “informed investors” aware of the risks they took in exchange for high remuneration. A number of investors with significant interests in the solar industry have protested against the Proposed Measure. A movement known as Solidarité Renouvelables has been formed by some 300 solar investors, including Amundi (Crédit Agricole), Eurazeo, Mirova (Natixis) and Eiffel Investment. Solidarité Renouvelables recently issued a press release indicating that it plans to oppose the Amendment vigorously, including by arguing before France’s Constitutional Council that the measure fails in many ways to comply with constitutional norms.

During the initial debate in the National Assembly, Charles de Courson, a centrist MP, warned the government of potential future legal claims that it would likely face as a result of the Amendment. The Amendment has also been subject to criticism by the Chairman of the National Assembly’s Finance Committee, Eric Woerth, who expressed concern regarding its likely effect on the willingness of future investors to invest in renewable energies. For its part, the government has indicated that it considers that its legal position is secure and that the Proposed Measure has been notified to the European Commission, which has formally approved the proposed new level of remuneration. It would seem that an opinion of the Conseil d’Etat, France’s highest administrative court, also supports this view.



Investment treaties exist to protect foreign investors against, among other things, arbitrary changes in government policy and the breach of foreign investors’ legitimate expectations. At the same time, they generally recognise a degree of discretion for governments to regulate in the public interest. Depending on their nationality, foreign investors in the French solar sector may be entitled to make claims against the French government in relation to the Proposed Measure under a variety of investment treaties, including the ECT and the many bilateral investment treaties to which France is a party. These treaties offer international investment arbitration in addition, or as an alternative, to any remedies that may be available in French domestic courts. However, preserving investors’ rights under international investment law requires careful coordination of steps taken before international and domestic tribunals, as well as any statements made in public or in private discussions with governmental authorities. For investors wishing to preserve their rights, specialised advice in order to ensure such coordination from an early stage is highly desirable.

Solar power investors with generation facilities located in countries that have not yet adopted measures similar to the Proposed Measure may wish to consider restructuring their investments, if necessary, to secure the benefits of international investment treaty protection. Such restructuring can benefit domestic investors as well as foreign investors from States without investment protection treaty coverage and is much more effective if carried out before a dispute with the host State crystallises.

For further information, please contact Graham Coop ( In addition, should you wish to know more about these highly topical legal issues, you can listen to Volterra Fietta’s recent Virtual Seminar on “Protecting Renewable Energies: Investment Treaties and State Regulation of Solar, Wind and Water Energy”.