Push for breakthrough in French renewables

Omnes- and BPI France-backed Neoen, a renewable energy project developer, recently filed documents ahead of its upcoming IPO. Aiming to raise around €450m, the listing would be the largest seen in France in 2018, according to Unquote Data.

Aside from the titanic exit, last year's fundraisings of two renewables-focused vehicles are positive signs for the sector. BPI France launched its €100m France Investissement Energie Environnement, while Omnes closed Capenergie III on €245m. The latter is expected to be 60% deployed by the end of 2018.

Serge Savasta, managing partner at Omnes, and Edouard de Cassini, investment director at Generis Capital Partners, both stress that renewables could become an economically viable option for the country and will present a compelling investment case as they become cheaper. Generis's de Cassini says this is mostly due to technology improvements, referring to huge improvements in solar panel technology.

Despite this, France's former environment minister Nicolas Hulot lamented the difficulties in making concrete changes at a government level when he resigned in August. The malaise is embodied by the government's lack of progress in drastically diminishing the country's use of nuclear energy. In 2015, the energy transition bill passed by the French parliament determined that nuclear energy's share of electricity production should be reduced to 50% by 2025. But in November 2017, Hulot admitted the goal was not achievable and stopped short of setting a new deadline.

Omnes's Savasta says: "It is a fact that, for many years, renewable energy was perceived as a very expensive option, in contrast to nuclear energy. Bureaucracy, regulations and lobbies determined to keep nuclear power as the main source of energy for the country are slowing the transition towards renewables."

Shocking figures
France derives about three quarters of its electricity from nuclear energy, with renewable hydroelectric energy accounting for 9.2% of its electricity last year, thermal fossil fuel 10.3%, and wind, solar and renewable bioenergy a combined 7.5%.

While the recent fund closings highlight that renewables-focused French companies do benefit from private equity backing, aggregate deal value in the sector lags behind other European regions. According to data from Unquote sister publication Inframation, in 2018 to date, around 0.5% of Europe's renewable deal value is accounted for by France, compared with 3.3% in 2017 and 5.7% in 2016.

Furthermore, the country has seen no mid-market renewable deals since 2017, while mid-cap and large-cap transactions are increasingly common elsewhere. Italy, for example, was home to Terra Firma's €1.3bn sale of solar energy platform RTR to Italian infrastructure GP Fondi Italiani Per Le Infrastrutture (F2i) in July.

It is a fact that, for many years, renewable energy was perceived as a very expensive option, in contrast to nuclear energy" – Serge Savasta, Omnes

Nevertheless, France does boast several large corporates that are significantly developing their renewable activity, including EDF, Engie and Total. EDF's renewables-focused arm, EDF Renouvelables, is planning to double its 2015 renewables capacity from 28 GW to more than 50 GW by 2030.

The most recent renewables deal in the country was the Generis-led €12m round for biogas plant specialist Naskeo. Asked about the attraction to biogas, de Cassini says: "Biowaste methanisation is a solution towards more sustainable economic development and improvement of the local circular economy, as it allows the production of local renewable energy, enhancement of the local agricultural sector and reduction of greenhouse gas emissions. These factors reinforced our decision to invest in a market we believe has strong potential."

At a government level, Hulot's successor, François de Rugy, a long-time environmentalist, is tasked with implementing France's energy transition and demonstrating that the government's endeavours are genuine. "Whether the Macron government will assess that nuclear can be brought down to 50% will give a strong message to the industry," says Omnes's Savasta. "France could do even more to make the renewables sector more attractive. For example, it could deregulate its solar and wind energy markets, similar to what is seen in the use of wind power in northern Europe."

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