1. Developments, prospects and issues

Until the 1990s, small hydropower plants, located in very specific areas, accounted for virtually all decentralized generation on France's public distribution networks (RPD). Feed-in tariffs were closely aligned with the marginal cost theory that has underpinned EDF's (Électricité de France) general sales tariffs since its inception. As a result, feed-in tariffs were based on the cost price of centralized generation, and thus disconnected from decentralized generation systems and their set-up and operating costs.

The first wave in the development of decentralized generation resulted from EDF's application of the "EJP" tariff (effacement jour de pointe). Based on marginal costs, this tariff was in fact the public authorities' first effort to ensure that decentralized producers...