New rules lower aid for home solar panels in France

Several government programmes related to installing solar panels on properties in France have decreased, including the rates at which surplus electricity can be sold back to suppliers. 

It is part of plans by the government to refocus the solar panel sector on ‘self-consumption’ as opposed to selling energy back to the national grid, as well as cut down on government expenditure.

The changes were included in yesterday’s Journal Officiel, and come into force from today (March 28), after a draft decree was published by the Ministry of Industry earlier this year. 

The changes will only apply to new installations, and not affect prices or rates to those who have already signed sales contracts for energy produced or begun receiving bonus payouts for selling surplus electricity.

The move has been criticised by companies and unions in the sector, who say that measures aimed to offset these reductions – in the form of reduced VAT on installations – come into force too late. 

“The residential segment will suffer a threefold reduction in its bonuses and rates,” over the coming months, said France’s renewable energy union (Syndicat des énergies renouvelables, SER). 

What has changed? 

The price at which state electricity supplier EDF purchases electricity from installations with a capacity up to 0-9 kWp (0-9 kilowatt-crête) via the autoconsommation avec vente de surplus method (selling excess production back to the grid) will drop by more than 60%, down from 12.7c per k/Wh to 4c per k/Wh. 

The prime à l’autoconsommation – a one-off payout for installing panels set up to sell surplus energy produced to the grid – has also seen payouts drop.

Previously, this pre-set monetary bonus was paid out over five years, but since 2023 it has been paid out in a single payment after panels are installed.

This bonus will drop to €80 per kW/c, roughly half of what it was before.

In addition, a one-off installation bonus from the government that can go towards the cost of installing certain panels (prime à l’installation) has dropped. 

For smaller systems of less than 3,000 W/c, it will drop from €660 to €240. For larger systems (up to 9,000 W/c) it will roughly half, down to €710 from €1,400. 

Read more: How is surplus energy sold to EDF declared on French tax form?

Reduced VAT… in October 

In return for the drop in payouts, the government will drop VAT prices on installations to 5.5%. Currently, it is 10% on smaller installations (under 3,000 W/c) and 20% on larger ones.

However, this reduction will not come into force until October 1, leaving a six-month gap. 

In addition, eligibility criteria for the reduced rates have not yet been published by the government.

“it is incomprehensible that the government did not wait for the reduced VAT rate to come into effect in order to partially offset the cuts imposed on self-consumption,” said the SER. 

“This accumulation of difficulties risks plunging a large number of small installers into several months of waiting without any construction work, especially since the conditions for accessing the reduced VAT rate are still unknown,” it added. 

Advice for property owners to wait 

Whilst the reductions may seem disheartening, some believe they will produce an overall positive effect on the market as more properties look to take themselves off the grid through solar installation as opposed to using panels to make money.

“The VAT reduction will more than offset the halving of the self-consumption bonus,” said journalist at consumer watchdog UFC-Que Choisir Fabrice Pouliquen.

“For example, a 9,000 W/c installation costs around €8,000. The VAT reduction will allow you to save more than the previous amount of the bonus.” 

“We advise individuals to wait to see things more clearly. There are seven months where we can expect things to be tough for the solar industry,” he added. 

Read more: Must solar panels installed at home be insured in France?