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Solar power may cause French electricity price rise

media Reuters

The sun is shining on France’s renewable energy sector, but the spread of solar power may mean a hike in household electricity bills. Two months ago France raised electricity prices by 3.4 percent, largely due to the decline in production by nuclear power stations. Now the Les Echos daily says a further rise is imminent.

Renewable energy is a budget burden for France’s energy company EDF, and the industry’s rapid-fire growth is only adding to the strain.

EDF’s mission has long been to support sustainable producers by buying at prices set by the government. But the industry’s success has seen costs skyrocket - and the government in turn has cut subsidies.

Les Echos on Tuesday reported that EDF chief Henri Proglio wrote a letter to French Energy Minister Jean-Louis Borloo warning that EDF’s 2009 budget gap of 1.6 billion euros stands to increase to 2.6 billion by the end 2010.

He added that this could exceed 15 billion after 2015.

Somebody has to cover the costs of renewable industry development – and the National Assembly’s Finance Commission is proposing that private power bills should bear the shortfall.

Michel Diefenbacher, a member of President Nicolas Sarkozy's UMP, has tabled an amendment to the budget currently being discussed – and it could mean a three per cent increase to the contribution to public service for electricity, known as the CSPE.

Since 2004, the government kept the rate of the CSPE to 4.50 euros per megawatt hour, while the Regulatory Energy Commission has on several occasions recommended an increase.

A report by the General Inspectorate of Finance predicts that the costs of solar energy will reach 500 million euros in 2013 if France reaches its goal of having a solar capacity of 5400 megawatts.

The Sustainable Development Ministry says that a new price rise is "not on the agenda".

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