The French government is reportedly looking retain its subsidies for small CHP plants while a new capacity obligation mechanism is finalized.

In an attempt to increase the viability of small plants, CHP producers will have the opportunity to sell electricity to power incumbent EDF at above market prices. The premium will be used to fund investment in CHP.

The market premium deals with EDF were set up for small CHP plants with a total capacity of below 12 MW, as well as renewable electricity like wind, hydro, sea, photovoltaic and thermal solar, geothermal, hydrothermal and biomass.

The decision to extend the subsidy is essentially a stop-gap measure, as eventually the French government aims to create a new capacity obligation mechanism providing CHP producers with incentives to run their plants.

EDF currently has agreements with around 500 CHP generators, accounting for around 4.7 GW of the 6.3 GW CHP capacity in France.

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