Geothermal Transparency Guide
An overview of regulatory frameworks for geothermal exploration and exploitation
An overview of regulatory frameworks for geothermal exploration and exploitation
The Geothermal Transparency Guide is an online database, initiated and overseen by BBA law firm, which is intended to provide an insight into the legal frameworks governing exploration, exploitation and production of electricity from geothermal resources, in countries where geothermal capacity is being harnessed or is available for harnessing. The regulatory framework in respect of the exploration and development of geothermal energy is in many countries either not existing or fragmented with provisions located in the various sectors of legislation. Many countries rely on laws relating to other energy sources, such as mining. Furthermore, in certain cases no particular administrational authority is entrusted with geothermal matters.
This has in some instances resulted in substantial complications for developers when dealing with public authorities and municipalities, in the attempt to secure exploration licenses and exploit the reservoir. A lack of clarity in respect of the legal framework governing licenses can also be detrimental to public authorities, municipalities and other owners of land containing geothermal resources, as it is critical for such parties to maintain adequate control over the utilization of the reservoirs and make sure that environmental and administrational requirements are being met.
When the terms of a prospective license are not transparent and clear, the risks for financing parties and investors is also increased, therefore making the financing of geothermal activities more time consuming and expensive than necessary.
It is therefore of great importance to explore the possibility of creating certain industry standards for licenses and agreements in the field of geothermal exploration, utilisation and the production of electricity from geothermal resources. If such industry standards are successfully created on an international platform, they could facilitate and increase the development of geothermal energy in the world, which is of the utmost importance, from both an economical and environmental point of view.
We hope that this overview of geothermal regulatory frameworks in the countries included in this database provides a useful insight into certain aspects of the applicable rules in these countries. Such insight can be of importance for the purposes of increasing transparency and awareness of some of the rights and obligations governing applications for licenses to explore, exploit and produce geothermal energy. We also hope that this database can serve as a first step in an eventual international cooperation for the purposes of creating industry standards in this field.
In order to provide an overview of the rules and regulations governing geothermal development, we opted to set forth a list of questions to the most prominent law firms in the field of energy in the countries involved. We acknowledge and stress that neither is this an exhaustive exercise nor does this database provide solutions for public or private parties involved in geothermal energy activities. It can however be useful in gaining a better understanding of the rules applying to such activities. We hope that the information contained herein will be a small contributor in driving us towards a sustainable future.
We emphasize the fact that all contributing law firms have provided their contributions free of charge and for this, we are deeply thankful.
It is finally of vital importance to underline that no information contained herein is supposed to form any legal opinion or statement of facts or circumstances on behalf of the contributing law firms, but merely an overview of the various rules applicable in each country. In this respect, we refer to the Disclaimer, to be found in the database.
Sign up here to receive regular notifications on updates and regulatory framework changes, as our online database continues to expand.
The Geothermal Transparency Guide is intended as a practical guide to the general principles and features of the basic legislation and procedures in countries included in this database and is for general purposes only. The information contained herein does not purport to provide comprehensive full legal or other advice and is not expected to form basis of any advice provided to any parties whatsoever. BBA and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this database. This database and the information provided therein is intended to give an indication of legal issues upon which you may need further advice.
Allen & Overy
28. April 2018
1.1 What are the rules on ownership of geothermal resources? Can private parties hold ownership of geothermal resources?
Under French law, in principle, ownership of a plot of land includes the ownership of what is above and below such plot of land (Article 552 of the Civil Code).
As an exception, the exploration and exploitation of geothermal resources are subject to restrictive legislation (contained in the Mining Code) pursuant to which:
Please note that the landowner of the plot of land above which geothermal resource is explored or exploited is granted specific rights under mining law (see question 3 below); in particular, the landowner is entitled to:
Under the 2016 Law Proposal, the resources under mining legislation – including geothermal resources – are not owned by the landowner of the plot but are regarded as the common heritage of the Nation. As such they are managed by the State.
1.2 Who can grant access to geothermal resources, only state or also landowner?
In France, only the State is entitled to grant access to exploitation of geothermal resources. Indeed, the State confers rights of use in relation to geothermal resources, and also sets out exploitation conditions.
In addition, in principle, the landowner’s consent is required for a license holder to carry out geothermal activities (see below).
1.3 Is exploration/exploitation open to foreign investment?
In principle, exploration and exploitation are open to foreign investment; however, investments by foreign-based (or foreign-controlled) entities in certain sensitive activities listed in the French Monetary and Financial Code (for example related to energy supply) are subject to control (see question 14.5 below).
2.1 Which administrative bodies (ministry and/or governmental agencies) are involved in the licensing of geothermal resources, including licensing and developing?
Several administrative bodies are involved in the licensing and developing of geothermal resources. Below you will find some examples of the administrative bodies involved.
(A) Administrative bodies involved in the licensing process:
(i) In respect of exploration and exploitation licenses
Regarding low temperature resources (where the temperature of the heat-carrying fluid is below 150°C), numerous administrative bodies are likely to be involved – inter alia:
Regarding high temperature resources (where the temperature of the heat-carrying fluid is above 150°C), numerous administrative bodies are likely to be involved – inter alia:
As far as the concession permit is concerned, the opinion of the Council of State (Conseil d’Etat) is also required, and the permit is delivered by the Prime Minister (Article 31 of the Decree No. 2006-648 dated 2 June 2006)
(ii) In respect of works permit (autorisation d’ouverture de travaux):
1) The regional environment, planning and housing agency (la direction régionale de l’environnement, de l’aménagement et du logement – DREAL) is consulted;
2) The regional commission responsible for the environment, health and technological risks (Commission départementale compétente en matière d’environnement, de risques sanitaires et technologiques – CoDERST) is consulted;
3) The Environmental Authority (Autorité environnementale) which is a body of the minister in charge of Energy, examines the project.
In addition, when a public inquiry is required (see below), an inquiry commissioner is involved in the process.
Further, irrespective of the temperature of the resource and the license, the representative of the State at sea (préfet maritime) and the French Research Institute for Exploitation of the Sea (Institut français de recherche pour l’exploitation de la mer - IFREMER) will be consulted as the sea bed is concerned by the project.
Finally, please note that specific process applies in some overseas territories. Particularly the region may be involved in the licencing, such as a departmental commission for mines (Commission départementale des mines).
(B) Administrative bodies involved in the developing of licenses:
Generally, regarding the extension of the licenses, the same administrative bodies as these for granting are involved in the process.
The local representative of the State is the competent authority for the administrative surveillance under the mining legislation (police des mines). Under the 2016 Law Proposal, the representative of the State may consider creating a Special Commission for the monitoring.
 A draft decree contemplates to modify the temperature threshold; if this decree is enacted, a resource would be considered as a high temperature resource when the temperature of the heat-carrying fluid is above 110°C.
2.2 Do administrative bodies assign any of their respective roles to a third party, including but not limited to a peer review, during the period of exploration, exploitation and/or production of geothermal resources?
To our best knowledge there is not any peer review during the period of exploration, exploitation and/or production of geothermal resources.
We understand that regarding the premium contracts (see below), an accredited control body delivers the certificate of conformity (attestation de conformité – see below) and control the installation (Article L. 314-25 of the Energy Code).
Please note that under the 2016 Law Proposal, when the granting of a license is subject to an enhanced public information and coordination procedure (see below), an information and coordination participatory body is involved and is composed inter alia of mining sector professional organisations (fédération professionnelles du secteur minier) and of qualified personalities (personnes qualifiées).
2.3 Is there a government policy in place concerning geothermal resources? If so, what is the object and to what end?
The Multiannual Energy Plan (the MEP) (Programmation pluriannuelle de l’énergie – PPE) sets out the priority actions to ensure the energy transition. The current MEP provides for general guidance concerning geothermal resources:
The MEP is reviewed every five years and is currently reviewed for the time periods of 2018-2023 and 2024-2028.
Please note that under the 2016 Law Proposal, a national resources and mining uses policy (politique nationale des ressources et des usages miniers) will be set out, aiming at determining national guidance in order to fulfil the economic, environmental and social interests of the territories and the nation.
3.1 Is exploitation of resources subject to licensing? Do landowners have the right to exploit recourses without a license? If yes, to what extent?
Exploitation of geothermal resources is subject to license in compliance with the Mining Code and Decree No. 78-498 dated 28 March 1978 (see above, 1).
As a result, under French law, landowners do not have the right to exploit resources without a license.
For clarity, under French law:
For low temperature resources, exploration and exploitation are, in principle, subject to specific geothermal licenses granted by the local representative of the State (préfet) (Decree No. 78-498 dated 28 March 1978) – inter alia:
For high temperature resources, exploration and exploitation are subject to general mining licenses granted in principle by the prime minister or the minister for mines (Decree No. 2006-648 dated 2 June 2006) – inter alia:
In respect of exploration:
In respect of exploitation:
Please note that:
Please note that under the 2016 Law Proposal, the granting of all exploration or exploitation licenses would be, in principle, subject to a tender procedure (some exceptions would be provided for);
4.1 Does the landowner or any “project affected people” have a role in the process of granting a license for:
(ii) exploitation, and
(iii) power plant (generation license)?
Role of the landowner in the process of granting licenses:
Although the exact role of the landowner is not clearly addressed in the regulations governing license granting processes, our understanding is that his/her role in this process is limited. However, irrespective of license granting processes, the landowner’s consent will have to be obtained by the license applicant/holder to perform works or to occupy the land (Article L. 153-1 of the Mining Code). If the landowner refuses to lease or to transfer the land, then the plot will have to be expropriated by the State.
Exploration works may be carried out by the landowner himself/herself or the person authorised by him/her (Article L. 121-1 and L. 153-1 et seq. of the Mining Code).
As far as high temperature resources are concerned, in case the landowner’s consent cannot be obtained, the exploring entity may obtain a special authorisation to occupy the plot from the local representative of the State, after the landowner was invited to submit its observations and under conditions set by decree (see Decree dated 14 August 1923 and Article L. 153-5 of the Mining Code). The landowner must know whether there are any operators above ground so that the latter can submit their observations as well (Article L. 153-5 of the Mining Code).
Our understanding is that such a possibility does not exist for low temperature resources.
The same principles apply: the landowner’s consent must be obtained; an exception is provided for in respect of high temperature resources (see articles L.153-3, L.153-4 and L.153-5 of the Mining Code).
We have not identified any particular role for the landowner in respect of approval of the power plant operation in the Energy Code (see Article L. and R. 311-1 et seq. of the Energy Code).
Role of any “project affected people” in the granting of licenses:
We understand that project affected people will have a role as part of the public inquiry, which is required inter alia:
Further, neighbouring landowner’s consent may be required for the exploration of some high temperature resources as (i) the depth of the drilling goes beyond 100 meters and (ii) the drilling takes place within a radius of 50 meters of houses and fenced plots (Article L. 153-2 of the Mining Code).
When the neighbouring landowner’s consent is not required (i.e. for low temperature resources), such neighbouring property owners directly receive notice of the public inquiry (Article L. 124-6 of the Mining Code).
Finally, under the 2016 Law Proposal, the “project affected people” could also be involved in the procedure as members of the information and coordination participatory body (groupement participatif d’information et de concertation) (see question 15.1).
4.2 Will an opposition of a landowner or any “project affected people” have a bearing on the process of granting a license for:
(ii) exploitation, and
(iii) power plant (generation license)?
The opposition of a landowner may have a bearing on the occupancy rights of a license holder and on the rights of the latter to perform works. But such opposition can be overcome through expropriation.
Concerning the granting of licenses, as indicated above, our understanding is that, in most cases, landowner’s consent is not required for the granting of a licenses itself, although licenses and landowner’s consent is generally sought simultaneously by license applicants.
In particular, it should be noted that:
Finally, please note that:
4.3 Are the terms of land lease agreements regulated and if so, (i) what is a general timeframe of land lease agreements and (ii) what are the obligations for decommissioning at the end of the term?
The terms of land lease agreements depend on whether or not the plot is included in the public domain (domaine public).
(a) Land lease agreements on the public domain
The terms of land lease agreements (i.e. the authorisation for temporary occupation of the public domain) are regulated. Such authorisation is granted, in principle, after a competitive tender procedure (Article L. 2122-1 of the Public Ownership General Code – code général de la propriété des personnes publiques (CGPPP)).
As a general principle, an authorisation for temporary occupation of the public domain is precarious and revocable (Article L. 2122-3 of the CGPPP).
As provided for by Article L. 2122-2 of the CGPPP, the duration of an authorisation for temporary occupation of the public property is determined, unless otherwise provided:
In principle, at the end of the authorisation, any constructions must be demolished by the authorisation holder – unless (i) the public landowner choses to keep them or (ii) otherwise provided in the authorisation.
If the constructions are not demolished, the public entity can in principle keep them free of charge.
At the end of the concession permit, the resource (gîsement) must be transferred to the State without indemnification of the holder (Article L. 132-13 of the Mining Code).
(b) Land lease agreements on private property
Land lease agreements are subject to several requirements.
(i) Timeframe of land lease agreements on private property:
A series of requirements apply. For example, a long-term lease (bail emphytéotique) must comply with (i) a minimum duration of 18 years and (ii) a maximum duration of 99 years.
(ii) Obligations of decommissioning at the end of the land lease agreement on private property:
Our understanding is that regarding the long-term lease, the installation may not be demolished (Article L. 451-7 of the Rural Code).
As indicated above, at the end of the concession permit, the resource will be transferred to the State.
5.1 Which documents need to be submitted and what is the criteria for obtaining a license for:
(ii) exploitation, and
(iii) power plant (generation license)?
As a general comment, in all cases, the applicant must prove its technical and financial capacities: this is a requisite for a company to be granted an exploration and/or an exploitation license.
For each license category, the application filings must include (but are not limited to) the documents listed below.
French law provides details on the numerous pieces of information to pass on to the competent authority when applying for a license. Some elements are common to exploration and exploitation; some are specific to one type of license.
(i) Common provisions applicable to exploration and exploitation licenses
(ii) Exploration licenses:
If the exploration license concerns drilling operations (forage) the location of which can be determined:
If the exploration license concerns a perimeter:
(iii) Exploitation licenses:
(b) High temperature geothermal resources (>150°C) (Decree No. 2006-648 dated 2 June 2006):
(i) Exclusive exploration permit (permis exclusif de recherches – PER)
(ii) Concession permit (concession) and exploitation license for overseas departments (permis d’exploitation – PEX)
The application file includes similar documents to the exclusive exploration license, it being specified that this file must also contain the applicant’s commitment to respecting the concession permit’s general conditions (Article 24 and 33 of Decree No. 2006-648 dated 2 June 2006).
(c) Carrying out works:
Irrespective of exploration and exploitation licenses, please note that separate licenses are necessary to carry out exploration or exploitation works; corresponding applications are described in Article 6 et seq. of Decree No. 2006-649 dated 2 June 2006.
(d) Power plan (generation license):
We understand that, in case the installed capacity of an installation using the energy from aquifers and underground rocks (installation utilisant l'énergie des nappes aquifères ou des roches souterraines) is under 50 MWh, an application is not necessary as such installations are presumed authorised (Articles L. 311-7, R. 311-1 and R. 311-2 of the Energy Code).
In respect of installations whose installed capacity exceeds 50 MWh, the application filling must inter alia include:
6.1 What is the maximum duration of a license for:
(ii) exploitation, and
(iii) power plant (generation license)?
The duration of the main licenses depends on whether the resource at issue qualifies as a low or high temperature resource.
Low temperature resources:
High temperature resources:
Please note that in case of absence of a response by the competent authority on the renewal application submitted by the holder of an exclusive exploration permit (PER) or of a concession permit, the holder is entitled to continue its exploration/exploitation activities until the authority has taken an explicit formal decision regarding the renewal (although the initial permit has lapsed).
Power plant licenses: Our understanding is that the duration is provided for by the license.
7.1 What are the general terms of the license for:
(ii) exploitation, and
(iii) exploration drilling and other drilling,
(iv) power plant (generation license)?
To our best knowledge, there are no publicly available, general terms to which all specific licenses refer.
Generally, each specific license provides for:
For concession permits:
For works permits: Particular conditions under which research and exploitation works are carried out, in the respect of the environmental interests (Article L. 162-5 of the Mining Code).
For power plant licenses: Information about the production capacity, primary energy sources, production techniques used and the location of the installation (Article R. 311-11-1 of the Energy Code).
 We refer in particular to the concession permit for the Soultz plant (Decree dated 22 September 2015).
7.2 Are exploration license holders granted pre-emptive rights with regards to exploitation or do exploration licenses automatically convert into exploitation licenses if the resource has been substantiated? If so, are there any conditions?
The inventor has a preferential right regarding the exploitation licenses (“privilège de l’inventeur”).
Only exploration license holders can be granted an exploitation license in the perimeter of the exploration license. Further, if the resource is exploitable, exploration license holders have a right to be granted an exploration license.
We understand that, in principle, all exploration license holders (regardless the temperature of the resource) are entitled to these rights (Article L. 134-5, L. 132-6, L. 132-12 and L. 611-9 of the Mining Code).
In a nutshell, in principle, an exploration license holder who (i) discovers an exploitable resource and (ii) applies for an exploitation license (iii) during the validity period of the exploration license, will be granted an exploitation license.
7.3 Is an exploitation license included in a power plant license or are these licenses separate?
These licenses are separate. In compliance with the Energy Code, a power plant license does not exempt from obtaining the licenses required by other legislations (Article L. 311-8 of the Energy Code).
7.4 Are there any encumbrances in place for the licence holder to keep a license, once granted?
Our preliminary analysis is that the license holder should avoid acting in such a way that could lead to the revocation of his/her license (see below, question 8).
Generally, irrespective of the temperature of the resource, the license holder, must - inter alia:
As far as the high temperature resources are concerned:
The license holder must maintain its technical and financial capacities (Article 43 of Decree No. 2006-648);
Regarding the power plant license: The installation must be commissioned within three years of the granting of the license (Article R. 311-10 of the Energy Code).
Finally, please note that some requirements apply for the purpose of the premium contract (see below).
8.1 What actions by the license holder would warrant revision of exploration-, exploitation- and power plant (generation) licenses?
We have not identified so far particular actions by the license holder which would entail the revision of the exploration, exploitation or power plant license.
8.2 Does the license granting authority license have the power to revoke or terminate licenses? If yes, what actions of the license holder would warrant the termination of the license?
(i) exploration license,
(ii) exploitation license,
(iii) power plant (generation license)?
Yes, the State may withdraw a license granted in compliance with the Mining Code, if the license holder has not complied with or answered to a prior formal notice, in certain cases, which include but are not limited to (Article L. 173-5 of the Mining Code):
As far as the power plant license is concerned, the Energy Code provides that such a license may be suspended or revoked after the license holder (i) has received a prior formal notice requesting compliance within a fixed time period, (ii) has received a notification of grievances, and (iii) has been invited to review its administrative file and to submit its observations (Article R. 311-11 of the Energy Code).
The license holder can warrant the termination of the license complying with all licenses and applicable laws.
8.3 Can the license granting authority set forth conditions into licenses which provide for (i) stricter terms and conditions of licensees or (ii) more lenient terms and conditions for licensees, when such terms and conditions (whether stricter or more lenient) are not otherwise provided for by law?
We have not identified specific provisions laid out in geothermal legislation restricting the possibility for licenses to provide for stricter or more lenient terms and conditions for licenses.
For instance, the Mining Code indicates that concession permit consists of general conditions and, as the case may be, particular terms (Article L. 132-2 of the Mining Code).
In any event, please note that the competent authority must comply with the principle of equality (principe d’égalité) when granting licenses, meaning in principle that the criteria for obtaining a license should be the same for all applicants.
 On the application of principle of equality to authorisations, see Council of State (Conseil d‘Etat), 30 December 2010, Case no. 308067: the criteria could be modified by the competent authority when justified by a general interest.
8.4 What remedies does the License granting authority have in order to enforce compliance to the terms and conditions of a license, other than by revoking the license?
We have not identified other possible remedies for the License granting authority than revocation (or non-renewal) to enforce compliance of the terms and conditions of a license.
That being said, please note that some cases may lead to the application of penal fines – in particular:
9.1 Briefly outline the surveillance carried out by the regulatory authorities during the license period, e.g. with regards to reporting duties and/or on-site visits.
The competent authority is the local representative of the State (préfet);
Administrative surveillance includes the following measures:
Please note that specific licenses may provide for additional surveillance or reporting requirements (see Section 7, above).
9.2 Which information is required to be submitted to regulatory authorities during the license period for the holder of a license for:
(iii) power plant (generation license)?
License holders have reporting obligations in compliance with laws and regulations. Below you will find some examples of information requirements for each category of license.
Each license may provide for further reporting obligations, as the case may be a follow-up committee (comité de suivi) may be created, and may examine technical information.
License holders are also subject to information requirements in case of modifications of the project or of the holder (articles of association, control of the company, etc.), that are not addressed here.
(a) Exploration licenses
In compliance with the Article 44 of the Decree No. 2006-648, the holder of an exclusive exploration permit (PER) has to submit to the local representative of the State (préfet):
We understand that, the holder of an exploration permit is not subject to these reporting obligations.
(b) Exploitation licenses
Exploitation license holders have to submit to the regulatory authority a yearly report on the impact on the ground occupation and on the essential characteristics of the surrounding area by 31 March of the next year (Article L. 172-1 and Article L. 177-1 of the Mining Code, Article 35 of the Decree No. 2006-649). This report includes, in compliance with the Article 36 of the Decree No. 2006-649:
(c) Power plant (generation licenses)
We have not identified any specific reporting obligation as far as the power plant license is concerned. However, the license holder has, for example, reporting obligation regarding its activity.
(i) In respect of the premium contract the license holder may enter into:
Generally, the producer must keep available to the local representative of the State (préfet) the documents relating to the characteristics of the production facility, its performance and the results of the controls.
For installations of an installed capacity exceeding 100 kW, the producer must:
For installations of an installed capacity not exceeding 100 kW: The producer must keep available the documents mentioned above to the CRE and the Minister of Energy. These documents are submitted to the regulatory authority within a month after the request (Article R. 314-14 of the Energy Code).
ii. In respect of the sale of the energy produced
The license holder may be subject to the wholesale energy market integrity and transparency regulation (REMIT). Under the REMIT, the producer must submit to the Agency for the Cooperation of Energy Regulators (ACER):
 We refer to the concession permit for the Soultz plant (Decree dated 22 September 2015).
10.1 Are general terms and conditions, such as duration of Power Purchase Agreements regulated? If no, are there any soft law or general recommendations in place in your jurisdiction?
The French legislation applying to the purchase of renewable energy power has been recast following the law dated 17 August 2015 on energy transition. In particular, a new premium system (complément de rémunération) is currently being rolled out:
As a result:
In principle, producers will no longer enter into a single PPA with EDF but will enter into sales contract with several aggregators (which are in charge of selling electricity produced by the producers on the markets, on the producers’ behalf) or directly with purchasers on the wholesale markets.
In compliance with the Article D. 314-23 of the Energy Code and the Order dated 13 December 2016 applicable to the installations based on the continental metropolitan territory (“territoire métropolitain continental”), the main conditions under which an installation may benefit from a premium contract are the following:
The terms of the premium contracts (contrats de complément de rémunération) to be entered into with EDF are regulated.
An Order dated 13 December 2016 applicable to continental metropolitan geothermal installations describes the conditions for an installation to benefit from a premium contract: the geothermal energy must be extracted from “the same upstream unit”; geothermal wells of this upstream unit must never have been subject to a feed-in tariff PPA or a premium contract; and the premium contract request must be filed before the commencement the works related to the geothermal project.
This order also provides for the main provisions applicable to geothermal premium contracts (this list is not exhaustive):
Our understanding is that geothermal premiums will not be granted following a competitive procedure. Indeed, the European Commission has observed that the potential number of geothermal projects is too limited to organise a competitive tender. In such cases, the Commission guidelines on state aid for environmental protection and energy allow for the aid to be granted without a prior tender procedure. The Commission has also concluded that “subjecting geothermal plants to competitive bidding with other technologies could jeopardise the long-term potential of this technology in France”.
 ”Upstream Unit“ (unité amont) is defined by the Order as ”a set of one or several wells (puits) located on a geothermal resource (ressource géologique).
10.2 What is the permitted or general duration of PPA's?
As indicated above, producers will no longer enter into PPAs, but will conclude sales contracts with aggregators. We are not aware so far of a specific rule governing the duration of these contracts. We understand that the duration will be negotiated with aggregators.
In respect of the duration of premium contracts, please see above.
10.3 Are public and/or national regulatory authorities involved in any way in forming the terms of PPA's, either directly or indirectly?
Under the new legislation, it is unclear whether the terms of the sales contracts, to be entered into with aggregators or wholesale market purchasers will be regulated by public authorities. Our understanding is that the terms of these contracts will be negotiated with aggregators.
Please note that the main terms of premium contracts will have to be provided for in a ministerial order.
11.1 Is there any governmental support or funding available for exploration activities?
In addition to the public financial scheme for electrity generation (see above), we understand that the following public or private supports and funding are available, under certain conditions, for exploration activities:
Please note that two guarantee funds are to be constituted and are not operational yet:
 Source: Observ’ER Report.
 Source: Observ’ER Report.
11.2 Are there any incentives offered by the government or local authorities for utilization of geothermal energy? If yes, in what form (e.g. tax and/or feed-in tariffs) and what are the maximum amounts permitted?
The premiums are subject to recovery notably when the premium contracts are terminated. The premium contracts may be terminated as the administrative authority finds that the installation is not meeting the conditions set out by the authorisation, by the concession, by the Environmental Code or by the Labour Code (see Article L. 311-14 of the Energy Code).
11.3 What requirements must the project fulfil in order to be eligible to receive such incentives?
(a) Premium contracts (contrats de complément de rémunération):
Please, see question 10.1 above.
(b) Tax incentives:
To be eligible to the Crédit d’impôt transition énergétique the project must notably fulfil the following requirements (Article 200 quater of the French Tax Code):
We understand that to be eligible to the reduced rate of VAT the project must at least fulfil the first three conditions regarding the Crédit d’impôt transition énergétique (above).
11.5 In the case of production of electricity from geothermal, are there any incentives/rewards for utilizing the geothermal energy for other than producing electricity, such as waste heat?
Not that we are aware of.
12.1 Are the rights of indigenous peoples in connection to geothermal resources regulated?
In certain French overseas territories (such as New Caledonia or Wallis and Futuna) a special regime of indigenous ownership has been set out by the French Constitution and special statutes. A number of plots of land are considered as “terres coutumières” and are inalienable, indefeasible, immune from seizure and non-transferable. They can only give rise to long-term leases granted by indigenous communities pursuant to very strict proceedings.
We are not aware of any geothermal projects currently contemplated in these geographical areas, but the rights of concerned indigenous peoples would have to be taken into consideration if geothermal resources were explored on indigenous lands.
12.2 To what extent are indigenous municipalities involved in the process of granting licenses?
To our knowledge, where indigenous rights exist under French law, no particular local regulations have been enacted for the exploration and exploitation of geothermal resources. This point would have to be assessed on a community-by-community basis.
13.1 What are the principles regarding retroactivity of laws and regulations, can changes in such rules affect license holders?
Under French law, laws and regulations are not, in principle, retroactive and should accordingly not affect the rights granted under the licenses already issued.
Please note however that mining regulations being considered as “administrative police legislation” under French law, there is no right to law-stability; this implies that the conditions under which a holder operates its license may be modified by a change in law (e.g. level of mining fees or taxes, level of emissions, etc.).
As indicated above:
Under the 2016 Law Proposal, licenses requests under consideration which were deemed complete by the competent authority before the law came into force would be handled in compliance with the previous regulatory framework.
14.1 How does taxation in the sector affect license holders?
14.2 Please describe and provide information on the applicable tax rate and resource tax.
Our understanding is that French law does not provide for a specific income tax rate of geothermal energy license holders. In principle, the corporate tax rate is of 33%. Please note that the Finance Act for 2018 (loi de finances pour 2018) sets out a graduate reduction in the corporate tax rate, so that this rate will be of 25 % in 2022.
In addition, mines exploitation license holders are:
14.3 Is the sale of energy subject to VAT?
As indicated above, a 5.5% VAT rate is applied on the supply of calorific energy to the extent that this is derived for at least 50% from geothermal energy.
14.4 Is VAT refundable and what is the procedure for VAT refunding?
Yes, VAT is refundable and the procedure depends on the recoverable VAT amount and the status of the applicant.
Generally, a request for reimbursement of VAT may be submitted annually in parallel with the last online VAT Report of the fiscal year. Online form No. 3519 has to be used for asking for the reimbursement of VAT and the amount of VAT refundable must not be less than 150 euros.
This request may also be monthly or quarterly submitted under the same conditions if the amount of VAT refundable is not less than 760 euros.
14.5 Is the flow of foreign capital restricted with capital controls? If so, briefly describe the nature of such controls.
Foreign investments must be assessed on a case-by-case basis. They are subject to controls, inter alia, in so far as they concern the integrity, the security and the continuity of the electricity supply (“l’intégrité, la sécurité, et continuité de l’approvisionnement en électricité”) (Article R. 153-2 of the Monetary and Financial Code).
Such foreign investments are subject to prior authorisation from the Minister for Economy (Article L. 151-3 of the Monetary and Financial Code).
15.1 What demands are there regarding environmental impact assessment prior to exploration, exploitation and or production of geothermal energy?
As a general comment, environmental impact assessments (mainly consisting of impact statements, public enquiries and environmental assessments of works) are required prior to exploration and exploitation of geothermal resources; however, requirements in this respect are not harmonised among all categories of licenses.
(a) Low temperature resources (exploration and exploitation):
Public inquiry: a public inquiry (enquête publique) is required before the granting of an exploration and/or exploitation permit and must be conducted by the local representative of the State (préfet) (Article L. 124-6 of the Mining Code; Article 11 et seq. of Decree No. 78-498 dated 28 mars 1978).
(b) High temperature geothermal resources:
Environmental impact statement: an impact statement (notice d’impact) indicating (i) potential impacts of the works at issue on the environment and (ii) how the contemplated project includes environmental concerns is requested among necessary documents for the granting of an exclusive exploration permit (Article 17 of Decree No. 2006-648 dated 2 June 2006).
Public inquiry: a public inquiry (in principle, of a duration of 30 days) is requested before the granting of a concession permit and must be conducted by the local representative of the State (préfet) (Article L. 132-3 of the Mining code).
Environmental impact statement: an impact statement (notice d’impact) indicating (i) potential impacts of the works at issue on the environment and (ii) how the contemplated project includes environmental concerns is requested among necessary documents for the granting of a concession permit (Article 24 of Decree No. 2006-648 dated 2 June 2006).
(c) Commencement of works:
Public inquiry: a public inquiry is required before the granting of a works permit and must be conducted by the local representative of the State (préfet) (Article 13 of Decree No. 2006-649 dated 2 June 2006). In this respect, please note that if both high temperature exploration/exploitation license and works license are simultaneously requested by the applicant, a single public inquiry may be carried out (Article 36 of Decree No.. 2006-648 dated 2 June 2006).
Environmental assessment (évaluation environnementale) for some high and low temperature resources works: the commencement of some specific works related to the exploration or exploitation of geothermal resources requires a specific environmental assessment by the Environmental Authority (Autorité environnementale), which is a body of the minister in charge of Energy (Article L. 122-1 and R. 122-2 (including its Annex) of the Environmental Code).
Please note that the 2016 Law Proposal would increase environmental assessment requirements as it would provide for:
The participatory body can use experts or special assessments. A ‘simplified file’ is set up by the applicant and made available to the public by the participatory body;
16.1 What other licenses are needed in order to commence exploration, exploitation and/or production with geothermal energy?
As indicated above, declarations and authorisations for commencement of works (ouverture de travaux) are separate from exploration, exploitation or power plant licenses and are subject to a particular legislation.
In addition, authorisations, registrations and/or declarations must be filed or made under the Environmental Code – in particular, under the legislation on classified facilities for the protection of the environment (installations classées pour la protection de l’environnement – ICPE) and under the legislation on water (loi sur l’eau). The different environmental procedures and decisions required for projects subject to these two regulations were merged within a single environmental authorisation (Article L. 181-1 of the Environmental Code).
Before filing an application for an environmental authorisation, the project holder may request information enabling him/her to prepare his/her project and the application file to the competent administrative authority and/or a project certificate (certificat de projet) which identifies the applicable regimes and procedures, the content of the contemplated application file and potentially determines a timeline.
Moreover, in case the contemplated use of the resource includes a food-related utilisation, the project may be subject to an authorisation under the Public Health Code (see below).
Further, in practice, the license holder needs authorisations to occupy private plots of land from local landowners (see Article L. 153-1 et seq. of the Mining Code).
Finally, please note that specific regulations apply in some overseas territories. For example, French Polynesia and New Caledonia have their own Mining Codes.
16.2 Which other regulatory requirements are in place, including but not limited to the need to provide insurances or guarantees, in connection with the commencing or continuing of exploration, exploitation and/or production of geothermal energy?
Yes, there are requirements in place regarding financial guarantees. For example, there are obligations to set up financial guarantees in respect of exploration, exploitation and/or production of geothermal energy (Articles L. 153-6, 155-1, L. 162-1 of the Mining Code).
17.1 Have there been any recent amendments to the legislation for licensing, exploration and/or exploitation of geothermal energy in the last 15 years? If so, have these amendments made a noticeable impact on the increase or decrease of production of electricity from geothermal resources?
The major amendments to the legislation for licensing in the last 15 years are the following:
We do not know whether each of these reforms had a direct impact on the evolution of the production of geothermal energy in France.
17.2 Have any other factors made a strong impact on the production of electricity from geothermal in the last 15 years? If so, for what reasons.
17.3 Is there a specific legislation in place regarding geothermal extraction?
The legislation regarding geothermal extraction is included in the Mining Code. The legislation depends on the temperature of the resource.
In respect of high temperature resources, the legislation generally refers to the one applicable for mines.
As indicated, this legislation is likely to change as the 2017 Law Proposal would enable the government to reform the geothermal regulatory framework. Under this proposal, the geothermal projects will be broken down between:
18.1 When applying for a licence, is it possible to apply for one license or authorization, which provides for multiple or cascade use of the resource, e.g. direct and indirect utilization (generation of electricity, district heating and cooling)?
Our first analysis is that, although the exclusive exploration permit holder can freely take advantage of the extracted products (Article L. 122-1 of the Mining Code), in practice the applicant must describe its project as part of its application form and the license is delivered for this use.
Under the 2016 Law Proposal, the exploitation licenses provide for an exclusive right to explore and exploit a perimeter for a specific use (usage déterminé).
We are not aware of permits containing a cascade usage clause so far, we understand it is possible to apply for both an exploration license for low temperature and an exploration license for high temperature regarding a single resource. As a consequence, multiple utilisations of the resource may be possible in practice.
Further, please note that the administrative authority may authorise the exploration license holder to take advantage of related substances (i.e. the substances contained in a mineral or fossil mass demolished to extract the substances mentioned in the title or authorisation) (Article L. 131-2 of the Mining Code).
Finally, in respect of the premium contracts, we understand that such a cascade use could have an impact on the premiums, as it would increase the revenues generated by the installation (see above, question 11.2).
18.2 Could mineral extraction from geothermal fluid be included under such cascade usage clauses?
We understand from existing projects that operators contemplate to extract mineral substances from the geothermal fluid. As the case may be, the terms are defined by the competent authorities.
Please note that the license may be extended to additional substances (see below).
 We refer to the concession for Soultz plant. The operator announced that he/she is considering the extraction of lithium from the geothermal fluid.
19.1 Once an exploitation license has been granted for the operation of a power plant, along with access to fresh water for power plant operation, can the licence allow for sales and distribution of fresh water to local communities?
The production and the distribution of water for human consumption are under the Public Health regulation. This distribution is subject to a prior authorisation of the local representative of the State in the Department (Article L. 1321-7 of the Public Health Code).
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BBA Legal ehf., Katrínartúni 2, 105 Reykjavík, reg. no. 661098-2959 (also referred to as ‘’BBA’’ and ‘’we’’’) is the controller of any personal information that we process in connection to the legal services we provided to our clients.
BBA Legal ehf.
c/o Sara Rut Sigurjónsdóttir
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BBA collects and processes certain personal information for the purposes of providing legal services to clients. Depending on whether you are a client of BBA or whether you are representing a legal person that is a client of BBA.
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