French Industrial Policy

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Adam Barber
September 13, 2012
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This content is from our archive. Some formatting or links may be broken.
French Industrial Policy

The news from France this week that the country is to provide a further two tenders for new offshore wind farms on Sunday, has been greeted with little more than a Gallic shrug.

And yet the two projects are in no way small beer. The first is the Le Treport project off the North French coast (705MW), whilst the second is to be located off the island of Noirmoutier on the West coast (600MW).

In most other markets, these tenders would possibly have aroused a bit more interest than they have so far. So why not here?

Perhaps it's because there’s a suspicion the main winners will be the French. They did pretty well out of the first tender, outlined for four offshore wind developments back in April.

For that tender, the only outside winner was Spain’s Iberdrola, which still found itself partnering with French firm Areva.

Of course on the one hand, you can argue the French have merely been the better executors of a European industrial policy that has sought to create domestic jobs in flatlining economies by embracing the deployment of offshore wind.

But there are EU regulations that try and set a balance, and whilst the UK still struggles with seeing circa 80% of project capital expenditure going overseas, the tenders have, more often than not, seen the most cost competitive firms, if perhaps controversially, not always the best, win the contracts.

And it’s this balance that is crucial to managing future success. The French tender winner may not always be the most cost effective; which keeps industry costs high and doesn’t encourage the market to adjust to tighter margins.

Witness an example in another renewable industry: solar. German panel manufacturer SolarWorld is doing its utmost to encourage a pan-European tariff on imported Chinese solar equipment.

Unfortunately in trying to regulate against the Chinese solar boom and protect domestic markets, governments will artificially keep panel prices higher than the market rate.

This, in turn, slows the global panel price fall that has enabled the industry to reduce its cost base. And by slowing this fall in costs, governments are forced to slow planned subsidy reductions, if domestic solar industries are to survive.

It’s a worrying trend and one that sadly doesn’t always cross the minds of the policy makers.

Planned state support doesn’t always equal secure employment – a fact that President Hollande is now only beginning to realise as mass redundancies in the French motor industry simply cannot be avoided. And it doesn’t encourage the offshore wind sector to innovate on price, either. Furthermore, the same firms doing very well will eventually be seen as politically unsupportable.

When this happens, the industry will have blundered into handing its critics a stick with which to be beaten. Beware the law of unintended consequences.

The news from France this week that the country is to provide a further two tenders for new offshore wind farms on Sunday, has been greeted with little more than a Gallic shrug.

And yet the two projects are in no way small beer. The first is the Le Treport project off the North French coast (705MW), whilst the second is to be located off the island of Noirmoutier on the West coast (600MW).

In most other markets, these tenders would possibly have aroused a bit more interest than they have so far. So why not here?

Perhaps it's because there’s a suspicion the main winners will be the French. They did pretty well out of the first tender, outlined for four offshore wind developments back in April.

For that tender, the only outside winner was Spain’s Iberdrola, which still found itself partnering with French firm Areva.

Of course on the one hand, you can argue the French have merely been the better executors of a European industrial policy that has sought to create domestic jobs in flatlining economies by embracing the deployment of offshore wind.

But there are EU regulations that try and set a balance, and whilst the UK still struggles with seeing circa 80% of project capital expenditure going overseas, the tenders have, more often than not, seen the most cost competitive firms, if perhaps controversially, not always the best, win the contracts.

And it’s this balance that is crucial to managing future success. The French tender winner may not always be the most cost effective; which keeps industry costs high and doesn’t encourage the market to adjust to tighter margins.

Witness an example in another renewable industry: solar. German panel manufacturer SolarWorld is doing its utmost to encourage a pan-European tariff on imported Chinese solar equipment.

Unfortunately in trying to regulate against the Chinese solar boom and protect domestic markets, governments will artificially keep panel prices higher than the market rate.

This, in turn, slows the global panel price fall that has enabled the industry to reduce its cost base. And by slowing this fall in costs, governments are forced to slow planned subsidy reductions, if domestic solar industries are to survive.

It’s a worrying trend and one that sadly doesn’t always cross the minds of the policy makers.

Planned state support doesn’t always equal secure employment – a fact that President Hollande is now only beginning to realise as mass redundancies in the French motor industry simply cannot be avoided. And it doesn’t encourage the offshore wind sector to innovate on price, either. Furthermore, the same firms doing very well will eventually be seen as politically unsupportable.

When this happens, the industry will have blundered into handing its critics a stick with which to be beaten. Beware the law of unintended consequences.

The news from France this week that the country is to provide a further two tenders for new offshore wind farms on Sunday, has been greeted with little more than a Gallic shrug.

And yet the two projects are in no way small beer. The first is the Le Treport project off the North French coast (705MW), whilst the second is to be located off the island of Noirmoutier on the West coast (600MW).

In most other markets, these tenders would possibly have aroused a bit more interest than they have so far. So why not here?

Perhaps it's because there’s a suspicion the main winners will be the French. They did pretty well out of the first tender, outlined for four offshore wind developments back in April.

For that tender, the only outside winner was Spain’s Iberdrola, which still found itself partnering with French firm Areva.

Of course on the one hand, you can argue the French have merely been the better executors of a European industrial policy that has sought to create domestic jobs in flatlining economies by embracing the deployment of offshore wind.

But there are EU regulations that try and set a balance, and whilst the UK still struggles with seeing circa 80% of project capital expenditure going overseas, the tenders have, more often than not, seen the most cost competitive firms, if perhaps controversially, not always the best, win the contracts.

And it’s this balance that is crucial to managing future success. The French tender winner may not always be the most cost effective; which keeps industry costs high and doesn’t encourage the market to adjust to tighter margins.

Witness an example in another renewable industry: solar. German panel manufacturer SolarWorld is doing its utmost to encourage a pan-European tariff on imported Chinese solar equipment.

Unfortunately in trying to regulate against the Chinese solar boom and protect domestic markets, governments will artificially keep panel prices higher than the market rate.

This, in turn, slows the global panel price fall that has enabled the industry to reduce its cost base. And by slowing this fall in costs, governments are forced to slow planned subsidy reductions, if domestic solar industries are to survive.

It’s a worrying trend and one that sadly doesn’t always cross the minds of the policy makers.

Planned state support doesn’t always equal secure employment – a fact that President Hollande is now only beginning to realise as mass redundancies in the French motor industry simply cannot be avoided. And it doesn’t encourage the offshore wind sector to innovate on price, either. Furthermore, the same firms doing very well will eventually be seen as politically unsupportable.

When this happens, the industry will have blundered into handing its critics a stick with which to be beaten. Beware the law of unintended consequences.

The news from France this week that the country is to provide a further two tenders for new offshore wind farms on Sunday, has been greeted with little more than a Gallic shrug.

And yet the two projects are in no way small beer. The first is the Le Treport project off the North French coast (705MW), whilst the second is to be located off the island of Noirmoutier on the West coast (600MW).

In most other markets, these tenders would possibly have aroused a bit more interest than they have so far. So why not here?

Perhaps it's because there’s a suspicion the main winners will be the French. They did pretty well out of the first tender, outlined for four offshore wind developments back in April.

For that tender, the only outside winner was Spain’s Iberdrola, which still found itself partnering with French firm Areva.

Of course on the one hand, you can argue the French have merely been the better executors of a European industrial policy that has sought to create domestic jobs in flatlining economies by embracing the deployment of offshore wind.

But there are EU regulations that try and set a balance, and whilst the UK still struggles with seeing circa 80% of project capital expenditure going overseas, the tenders have, more often than not, seen the most cost competitive firms, if perhaps controversially, not always the best, win the contracts.

And it’s this balance that is crucial to managing future success. The French tender winner may not always be the most cost effective; which keeps industry costs high and doesn’t encourage the market to adjust to tighter margins.

Witness an example in another renewable industry: solar. German panel manufacturer SolarWorld is doing its utmost to encourage a pan-European tariff on imported Chinese solar equipment.

Unfortunately in trying to regulate against the Chinese solar boom and protect domestic markets, governments will artificially keep panel prices higher than the market rate.

This, in turn, slows the global panel price fall that has enabled the industry to reduce its cost base. And by slowing this fall in costs, governments are forced to slow planned subsidy reductions, if domestic solar industries are to survive.

It’s a worrying trend and one that sadly doesn’t always cross the minds of the policy makers.

Planned state support doesn’t always equal secure employment – a fact that President Hollande is now only beginning to realise as mass redundancies in the French motor industry simply cannot be avoided. And it doesn’t encourage the offshore wind sector to innovate on price, either. Furthermore, the same firms doing very well will eventually be seen as politically unsupportable.

When this happens, the industry will have blundered into handing its critics a stick with which to be beaten. Beware the law of unintended consequences.

The news from France this week that the country is to provide a further two tenders for new offshore wind farms on Sunday, has been greeted with little more than a Gallic shrug.

And yet the two projects are in no way small beer. The first is the Le Treport project off the North French coast (705MW), whilst the second is to be located off the island of Noirmoutier on the West coast (600MW).

In most other markets, these tenders would possibly have aroused a bit more interest than they have so far. So why not here?

Perhaps it's because there’s a suspicion the main winners will be the French. They did pretty well out of the first tender, outlined for four offshore wind developments back in April.

For that tender, the only outside winner was Spain’s Iberdrola, which still found itself partnering with French firm Areva.

Of course on the one hand, you can argue the French have merely been the better executors of a European industrial policy that has sought to create domestic jobs in flatlining economies by embracing the deployment of offshore wind.

But there are EU regulations that try and set a balance, and whilst the UK still struggles with seeing circa 80% of project capital expenditure going overseas, the tenders have, more often than not, seen the most cost competitive firms, if perhaps controversially, not always the best, win the contracts.

And it’s this balance that is crucial to managing future success. The French tender winner may not always be the most cost effective; which keeps industry costs high and doesn’t encourage the market to adjust to tighter margins.

Witness an example in another renewable industry: solar. German panel manufacturer SolarWorld is doing its utmost to encourage a pan-European tariff on imported Chinese solar equipment.

Unfortunately in trying to regulate against the Chinese solar boom and protect domestic markets, governments will artificially keep panel prices higher than the market rate.

This, in turn, slows the global panel price fall that has enabled the industry to reduce its cost base. And by slowing this fall in costs, governments are forced to slow planned subsidy reductions, if domestic solar industries are to survive.

It’s a worrying trend and one that sadly doesn’t always cross the minds of the policy makers.

Planned state support doesn’t always equal secure employment – a fact that President Hollande is now only beginning to realise as mass redundancies in the French motor industry simply cannot be avoided. And it doesn’t encourage the offshore wind sector to innovate on price, either. Furthermore, the same firms doing very well will eventually be seen as politically unsupportable.

When this happens, the industry will have blundered into handing its critics a stick with which to be beaten. Beware the law of unintended consequences.

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Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.