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Glossary entry

French term or phrase:

la sortie d\'obligation d\'achat

English translation:

opt-out of the power purchase obligation

Added to glossary by Leigh Ann Benlian
Sep 13, 2022 07:38
1 yr ago
46 viewers *
French term

la sortie d'obligation d'achat

French to English Tech/Engineering Energy / Power Generation
Hello to all,
This is an example, not relating to the one I am working on due to sensitive info.
But the subject remains renewable energy.
Les sorties d’obligation d’achat n’ont jamais été aussi attrayantes
Quelle stratégie adopter lorsque son actif sort de l’obligation d’achat ? Cette question, de plus en plus de propriétaires d’énergies renouvelables se la posent, notamment dans l’éolien sous contrat pour 15 ans, contre 20 ans pour le photovoltaïque.

Any help would be appreciated, I just can't wrap my head around the "la sortie" part
Proposed translations (English)
3 +1 opt-out of the power purchase obligation
4 +1 release from buy-back commitment
4 +1 ending of guaranteed sales (/ending of compulsory buying)
4 exemption from the purchase obligation
4 withdrawal from the Renewables Obligation scheme
4 phase out of/exit from the mandatory purchase scheme OR end of the mandatory purchase contracts
References
Obligation d'achat

Discussion

FPC Sep 14, 2022:
@Wolf It's the assets, i.e. the energy producing plants, which to be precise are "exiting' the scheme.

The idea is when a renewable soiurce of power generation exits the OA scheme, then either party is free to go other ways.

That's what the person speaking in this text is wondering about: now that our power producing plants are not covered by the compulsory purchase programme anymore, what can we do (considering that ditributors are not tied to buy from us as they were under the OA scheme) and how can we make our investment still profitable? The answer he gives himself is partly that there are new lucrative opportunities on the market ("le sorties n'ont jaais été ay=ussi attaryantes", because energy prices on the free market are steeper and steeper).

THIS is what's happenoing. Then you can see it form any point of you, producer (in this transaction acting as seller), distributor/seller (to the public)/customer (in this case acting as buyer)
Wolf Draeger Sep 14, 2022:
Sortie It's not EDF and smaller buyers who are exiting or pulling out of their purchase obligations (PPA/power purchase agreements), but rather the sellers of renewable power who can switch from feed-in tariffs to the "market premium" mechanism, which is actually going to be more lucrative for them. Not that they have much of a choice.

The 15/20 years are the duration of the PPAs or contrats d'obligation d'achat, which from what I gather was the estimated depreciation period for the wind turbines/solar panels.

Still not 100% sure about this, but that's what makes most sense to me.
FPC Sep 13, 2022:
@Daryo That's how it is. It's not "my" logic, but the logic of the lawmaker in this case. There could be nothing wrong with a 15-year old plant, but poducers have often the option to revamp (change old assets with similar but new) or repower (installation of upgraded material). There's a loss of security because the market you know. There are new forms of agreement called PPA with clients (even business end users), which are kind of fixed price fixed term contracts that provide them with some stability.
Wolf Draeger Sep 13, 2022:
I think the joke Is on the ratepayer/taxpayer (isn't it always?), because the so-called market pricing is in fact another thinly disguised state subsidy, whereby "market" prices for renewable power are topped up with a "premium" to repay producers' costs and ensure their profits.
Daryo Sep 13, 2022:
@FPC There is a small fly in the ointment in your logic: "guaranteed prices" and "compulsory buying" (by the grid) of renewable energy were introduced to prevent producers of renewable energy from sinking on day one.
Are you telling that the situation has changed so much in the meantime that now 15 year old wind turbines need no longer any holding hand and can do far better on a really free market? Not convinced.

These companies have about as much "new opportunities" as someone who just got sacked after 15 years in a cushy job.
FPC Sep 13, 2022:
The issue is this (translations can vary) Two of the proposals are fine for me, insofar as they refer to the same notion. This must be about the energy market of course and how deregulation and free market have resulted in the splitting of the traditional entity that produced, distributed and sold power into three separate actors.
Producers those who own the assets (les actifs) whether wind farms, solar photovoltaic systems, etcetera. Then there are distributors, whose name needs no explanation, and suppliers which sell to end customers. EDF used to be one company and now is three. But there are companies that deal only in one area of course.
A French law from 2000 made purchase of "renewable energy" produced by plants connected to the grid mandatory, that is distributors were obliged to buy it at fixed prices.
Now the rules are changing and some renewable source are allowed to exit this scheme. This means that the distributor is not obliged anylore under the old scheme and producers can sell on the free market.
The speaker in the snetence is a producer whose asses (les actifs) are allowed to exit the OA scheme and considers business strategies to make the meost of this new situation/opportunity.
Julie Barber Sep 13, 2022:
You can use the legal code mentioned in the first link to get lots of great info online, such as this: https://uk.practicallaw.thomsonreuters.com/7-629-7567?transi...
Leigh Ann Benlian (asker) Sep 13, 2022:
More info So, this is a company furnishing renewable energy in France, and the person says "we are trying to benefit from this as much as possible, organizing 'la sortie d'obligation d'achat' for our oldest fleets."
After reading the link furnished by @Julie Barber, I am sure that Power Purchase Obligation is the subject.
Tony M Sep 13, 2022:
@ Julie This is the energy companies trying to wriggle out of their commitment to buy back excess production, and presumably vis-à-vis the parties generating it.
Julie Barber Sep 13, 2022:
Extra info on who is being released would be good - the energy firms towards the state, or customers towards the energy firms etc. Also, keep in mind that there is a difference between an obligation and a commitment.
Charles Julien Sep 13, 2022:
release from (the) purchasing commitment
Julie Barber Sep 13, 2022:
There are lots of great links on this subject in English (but about France). I'd looking at: coming out of, exiting. At a glance, the regulatory framework has obliged companies to buy the energy. I presume they can now opt out.

https://iclg.com/practice-areas/renewable-energy-laws-and-re...

https://natixis.groupebpce.com/natixis/en/is-it-the-end-of-t...

Proposed translations

+1
5 hrs
Selected

opt-out of the power purchase obligation

_ understood: 'from Renewable Sources' - making the answer 'far too long'.

Opt-out for sortie as in Julie B's discussion entry and as in my (widely ignored) 'derogation' favourite.

Contrast a drag- vs. tag-along opt-out in a company buy-out scenario.

Example sentence:

tarifs d'obligation d'achat - imposed/obligatory power purchase price, Bourth

A drag-along right is a provision or clause in an agreement that enables a majority shareholder to force a minority shareholder to join in the sale of a company.

Reference:

http://www.proz.com/kudoz/french-to-english/energy-power-generation/1194139-tarifs-dobligation-dachat.html

http://www.iea.org/policies/4025-obligation-for-power-purchase-from-renewable-sources

Peer comment(s):
neutral SafeTex : "Owners of renewable energy" ask themselves this question according to the text. So I find it hard to understand how they would have entered a POWER purchase obligation, as they are trying to sell energy, not purchase it.
3 hrs
Good point, Safetex. Cut to FPC's comment and the gen. consensus: 'it's a producer speaking here..., that is buyers are not mandated (required) to buy any more' cf. a C(iv) seller's binding 'call' option exercised to force a buyer to buy land & buildings,
agree FPC
6 hrs
Grazie, merci and thanks, FPC.
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4 KudoZ points awarded for this answer. Comment: "Thank you Adrian, your link was a great reference and helped me understand the PPA."
19 mins

exemption from the purchase obligation

Peer comment(s):
agree FPC : As for Daryo's comment he's correct, but in a way you could consider it it an exemption as it's phased in as contracts expire. https://www.centrales-next.fr/glossaire-energies-renouvelabl...
11 hrs
disagree Daryo : an "exemption" is some kind of special case - the ST is about regular contracts simply ending after 15/20 years.
13 hrs
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1 hr

withdrawal from the Renewables Obligation scheme

You'll find plenty about RO on the web.
Note from asker:
I am familiar with the RO, but this doesn't seem to be the same thing. In the RO, each supplier has an obligation to use a percentage of renewable energy. As @Tony M mentioned, in this situation, it is about buy-back (usually by EDF). But the more I dig, the more unsure I become!
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+1
1 hr

release from buy-back commitment

For some time, alternative power generation has been encouraged by lucrative buy-back of the excess power by the generating authorities at inflated prices.
This is now proving a problem for them, which is why they are offering people incentives to escape from these commitments.

--------------------------------------------------
Note added at 12 hrs (2022-09-13 20:21:02 GMT)
--------------------------------------------------

Buy-back rates for grid-connected photovoltaic power systems

https://iea-pvps.org › uploads › 2020/01 › rep1_02

This report summarises the different buy-back rate models implemented in the participating IEA member countries.

About the New Buyback Program for Photovoltaic Generation ...

https://www.meti.go.jp › renewable › ref2002_02

Buyback prices in and after the second year are to be reduced by about a half in five years, in line with the progress in introduction of panels and their price ...
Peer comment(s):
neutral FPC : Ok I see. Only, really I think buy back refers to users that also receive power from the grid. In this case It's producers that only supply. So it's alwyas a one-way sale.
10 hrs
In fact, this is one of the dedicated terms used in EN. See refs. added above...
agree Wolf Draeger : In the end "release" may be the best word for sortie, but I think it's release from the feed-in tariff scheme or a PPA rather than a buyback commitment (EDF must buy all of a renewable generator's power, not just the surplus).
11 hrs
neutral Daryo : yes, that is correct from the view point of the buyers, but the ST is from the viewpoint of the sellers/producers of renewable energy.
12 hrs
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+1
14 hrs

ending of guaranteed sales (/ending of compulsory buying)


"we are trying to benefit from this as much as possible, organizing 'la sortie d'obligation d'achat' for our oldest fleets."

Les sorties d’obligation d’achat n’ont jamais été aussi attrayantes
Quelle stratégie adopter lorsque son actif sort de l’obligation d’achat ? Cette question, de plus en plus de propriétaires d’énergies renouvelables se la posent, notamment dans l’éolien sous contrat pour 15 ans, contre 20 ans pour le photovoltaïque.

Context: this written from the viewpoint OF THE SELLER - supplier of "renewable energy" which buyers had the obligation to keep buying for 15 / 20 years.

IOW it's buyers who have the right to "exit" from their obligation to buy whichever quantities of renewable energy are produced and offered to them.

From the viewpoint of "the assets owners" (="son actif") i.e. producers/sellers of renewable energy having to find some use for wind power generator that are nearing 15 years of service, this in effect the "ending of guaranteed sales".

"we are trying to benefit from this as much as possible, organizing 'la sortie d'obligation d'achat' for our oldest fleets."
=>
ours oldest fleet of wind turbines is/will be soon over 15 years old, and there will no longer be any "guaranteed sales" for their output, as our buyers have the right to "exit" (/terminate) their obligation to buy whatever energy we produce.

If it's a contractual obligation that can be terminated according to general law, it's hardly a derogation or an exemption.
Peer comment(s):
neutral Wolf Draeger : The "market premium" replacing the feed-in tarif = a higher subsidy = producers win and EDF passes the cost to ratepayers as before + still has to buy all that renewable power. // Feed-in tariffs were 15 years for wind and 20 years for solar.
10 mins
Being aware of the general context is fine, but you have still to take into account the specifics of the ST: why would "15 years" be mentioned at all if the "obligation to buy" was for ever?
agree FPC : As I said in my comment it's a producer speaking here, but the thing is you can see the new attitude towards trenewables from both sides, that is buyers are not mandated to buy anymore
9 hrs
Thanks!
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1 day 10 hrs

phase out of/exit from the mandatory purchase scheme OR end of the mandatory purchase contracts

It's just another suggestion on how to phrase it, and I don't need add anything to what I already said in the comments.
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Reference comments

13 hrs
Reference:

Obligation d'achat

As Leigh Ann says, finding a single term for sortie is the tricky bit; I think the idea is 'no longer covered by' or 'no longer part of' or 'no longer subject to'. But understanding what obligations d'achat are might be a first step.

From the last link provided by Julie in the discussion thread:
https://uk.practicallaw.thomsonreuters.com/7-629-7567?transi...

"Through various incentives, the French State and the EU have encouraged the development of renewable energies:
- Market premium. Power is sold by the generator on the market and a premium is paid to the producers by Electricité de France to address the potential difference between the market price and the target price.
- Feed-in tariff. All the electricity injected is bought by a purchaser, usually Electricité de France, who is compelled to do so due to a public service obligation, at a price over the market price."

From the CMS Law website:
https://cms.law/en/int/expert-guides/cms-expert-guide-to-ren...
https://cms.law/en/int/expert-guides/cms-expert-guide-to-ele...

"Like many other European countries, France decided at the beginning of the century to support clean electricity generation through a “power purchase obligation” support scheme. The generators benefited from a purchase obligation, at feed-in tariffs laid down by ministerial orders while the State organised public tenders when commercial initiatives were insufficient to reach the national objectives for a specific part of the territory (including overseas territories) or for a particular technology (eg offshore wind farms). [...] Purchasing agents designated by the law (EDF or, in some cases, local distribution companies) were compelled to enter into a regulated power purchase agreement (PPA) to buy the entire production of each renewable producer willing to do so. Every renewable producer agreed to this arrangement, as the feed-in tariff has remained above the market price. [...] Producers must now sell their energy on the market, and they receive, through an ex-post mechanism, an additional variable remuneration (complément de rémunération) from EDF (the local distribution companies are no longer part of the mechanism) in the form of a monthly premium. [...] As a result of this reform, the system of premium fees is now the main support mechanism for renewable energy."

From the ICLG website:
https://iclg.com/practice-areas/renewable-energy-laws-and-re...

"The French legal framework consists mainly in Articles L 314-1 to L 314-27 of the Energy Code. The sale of renewable energy was initially based on the power purchase obligation (PPA) mechanism with feed-in-tariff (FIT), by which the eligible producer concluded a PPA with EDF (or an ELD).

Since the LTECV law, the Energy Code sets forth a market-based premium mechanism whereby a CfD is signed with EDF, which includes a market-based premium that gradually replaced the FIT mechanism.

The premium mechanism is an ex post calculation equal to the difference between the target tariffs per kWh, and a reference tariff to which a management premium is added. The reference tariff is published by the CRE on a monthly basis.

Installations benefiting from an FIT PPA contract at the time of the entry into force of the premium mechanism will remain subject to the FIT PPA."

For more background on renewable electricity generation in France, see:
https://fee.asso.fr/comprendre-leolien/la-reglementation-en-...
https://ekwateur.fr/autoconsommation-guide/obligation-achat-...
https://www.centrales-next.fr/glossaire-energies-renouvelabl...






--------------------------------------------------
Note added at 13 hrs (2022-09-13 21:27:18 GMT)
--------------------------------------------------

Well, waddaya know:
https://www.centrales-next.fr/glossaire-energies-renouvelabl...

« Le complément de rémunération est le mode de rémunération qui accompagne le mécanisme de vente directe d’électricité à la bourse. Le complément de rémunération s’ajoute aux revenus boursiers, pour dans un premier temps atteindre le tarif d’achat de référence fixe et dans un second temps le dépasser pour compenser les frais administratifs liés à la vente de l’électricité sur les marchés. Il est constitué respectivement de la prime à l'énergie et de la prime de gestion. [...] Pour faire simple : quand le prix de vente de la production électrique et des garanties de capacité sont sécurisés, l’exploitant gagne l’équivalent de son ancien tarif d’obligation d’achat avec EDF plus la prime de gestion. Les revenus sont augmentés. »

But wait, there's more:
https://www.centrales-next.fr/glossaire-energies-renouvelabl...

« La prime à l’énergie est l’une des deux composantes du complément de rémunération ; mécanisme qui rémunère les producteurs d’énergie renouvelable ayant opté pour la vente directe d’électricité à la bourse. [...] Pour un producteur, cette prime est synonyme de revenus au moins égaux à ceux qu’il pouvait toucher grâce à son contrat d’obligation d’achat avec EDF, comme montré ci-dessous. C’est ensuite avec la prime de gestion que le producteur touchera un réel bonus. Les deux primes en questions sont versées par EDF, tout comme l’est le tarif d’obligation d’achat. »

It gets better:
https://www.centrales-next.fr/glossaire-energies-renouvelabl...

« La prime de gestion est perçue en complément du montant de la vente d’électricité à la bourse et de la prime à l’énergie. Son montant est fixe et peut varier filière par filière. De ce fait, elle est un véritable bonus. Grâce à elle, le propriétaire d’une installation d’énergie renouvelable (éolien, solaire, hydraulique ou biogaz), est assuré de gagner plus d’argent qu’avec un contrat d’obligation d’achat avec EDF. »

--------------------------------------------------
Note added at 1 day 1 hr (2022-09-14 09:10:06 GMT)
--------------------------------------------------

I missed that Julie also gave the ICLG link in her first discussion entry, so credit to her for that one too.
Reference:

http://www.orygeen.eu/docs-actus/glossaire/obligation-achat/

http://gazelenergie.fr/blog/2022/03/02/agregateur-gazelenergie-multiplie-les-offres-de-valorisation-des-actifs-sans-subventions/

Note from asker:
Hi Wolf, Thank you for all of the research and insight! I am impressed, and actually learned a lot about how France is handling the implementation of renewable energy into the energy mix. Luckily for me, being no specialist in the matter, the rest of the file was a lot more general. But thank you so much for your time and efforts!
Peer comments on this reference comment:
agree Daryo : yes, but there is also the bit about 15/20 years limit to all that ...
29 mins
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