In 2024, nearly 5 GW of new solar capacity will have been connected, a record illustrating the enthusiasm of individuals and businesses for solar panels. Faced with this success, the government has initiated a major reform of photovoltaic purchase prices, aimed at adapting public support to a maturing market. The subject is crucial: it affects the profitability of solar installations, and more!
A rapid reform
In February 2025, a draft tariff decree will be put out for consultation. At this stage, it is a draft (not yet implemented) aimed at amending the decree of October 6, 2021. At the same time, a draft decree amending the Energy Code (articles D.314-15 and D.314-23) is proposed in order to adapt the legislative framework.
This draft plans to apply new tariffs in the coming weeks for new installations. But these new final pricing conditions are not due to be published until April. At that date, the revised decree could then come into force, formalizing the reform for the months and years to come.
The next step will take place on July 1, 2025, with the end of the guaranteed purchase tariff for medium-sized installations (200–500 kWp). The support system will switch to a remuneration supplement, where electricity will be sold on the market and supplemented by a premium. This marks the end of the administrative and financial mechanism as it existed for these intermediate power sources.
Finally, on October 1, alongside this reform, a tax measure passed in the 2025 Finance Act will lower VAT to 5.5% (instead of 10%) for the supply and installation of self-consumption solar panels up to 9 kWp. This tax reduction aims to encourage private individuals to equip themselves despite the reduction in feed-in tariffs.
Not necessarily good news for everyone
This 2025 reform aims to bring several notable changes to the support mechanisms for solar energy in France.
Reduction in feed-in tariffs for solar electricity
The guaranteed feed-in tariff (the price at which EDF buys solar electricity) will significantly decrease for new installations (<9 kWp). The government justifies this reduction by the fall in solar costs and the need to reduce public spending, as the sector has gained economic maturity. Concretely, the buy-back price for surplus electricity (in the context of self-consumption) for small installations would be divided by three, going from approximately 12.7 euro cents per kWh to 4 cents/kWh!
For larger installations, the purchase price for total sales would also be revised downwards: for example, support for power plants of 100 to 500 kWp would decrease from approximately €105/MWh to €95/MWh for new projects submitted from mid-2025. Intermediate installations (9–100 kWp), often rooftops of businesses or communities, would a priori retain their current rate for the time being, but this will now be subject to a more rapid reduction in the event of market enthusiasm. In other words, if too many projects are submitted in a quarter (exceeding the target volume of ~92 MW), the tariff offered to the following ones will automatically drop by a few percent, which gradually reduces the financial aid per kWh.
Sharp reduction in self-consumption aid
The government also intends to redirect support towards self-consumption rather than total sales. For individuals and small businesses equipping residential installations (< 9 kWp), the investment bonus (aid paid upon installation for self-consumption with sale of the surplus) will be drastically reduced. This bonus had already fallen by around 40% in 2023, and the reform plans to halve it further. For example, the premium for a 3 kWp installation, which exceeded €1,500 before August 2023, would be reduced to around €384 in 2025 (a quarter of the level of two years ago) according to the project data. At the same time, for these small installations, the buyback rate for surplus electricity injected into the network is reduced to €4 c/kWh, compared to ~€12–13 c/kWh for contracts signed before 2025. This is a very significant reduction that aims to encourage owners to consume as much of their on-site production as possible (since the surplus will be much less remunerated).
Furthermore, the “full sale” mode (where 100% of the electricity is resold without self-consumption) would be purely and simply eliminated for new residential installations. In other words, an individual who installs panels will no longer be able to benefit from a contract where all of their electricity is purchased at a fixed rate; they will have to opt for self-consumption (total or with a minimal surplus). These changes mark the gradual end of profitable “plug and play” solar power: it will now be necessary to size their installation as closely as possible to their needs or invest in batteries to maximize the value of the energy produced.
Towards a reduced VAT, but no new tax
Contrary to some fears, the tariff reform is not accompanied by a new direct tax on solar energy. In particular, no “self-consumption tax” has been introduced to date. On the contrary, the legislature has adopted a favorable tax measure: from October 1, 2025, photovoltaic installations up to 9 kWp for self-consumption will benefit from a reduced VAT rate of 5.5% (aligned with the rate already applied to other energy renovations). This measure, introduced in the 2024-2025 Finance Act, aims to partially offset the reduction in aid by reducing the investment cost for individuals. For example, for a standard 6 kWp installation costing €12,000, reducing VAT from 10% to 5.5% represents approximately €500 in savings. This is a financial "boost" that could encourage some households to launch their solar project rather than postpone it. On the other hand, for professionals, no specific tax changes for solar (other than the VAT regime already deductible for them) have been announced as part of this reform.
Focus on self-consumption
For individuals equipped (or wishing to equip themselves with) solar panels, the upcoming changes will have significant consequences. The drop in surplus feed-in tariffs will lengthen the return on investment. Indeed, selling excess kilowatt-hours will now only bring in €4 cents compared to €10 to €13 cents previously, which reduces the annual income from an installation accordingly. For example, a household with 3 kWp that injected 2,000 kWh per year into the grid will only receive around €80 per year with the new tariff, compared to €250 previously. This drop in profitability means that a much larger proportion of solar electricity will need to be self-consumed to make the project profitable. Homeowners will therefore be encouraged to adapt their behavior (program household appliances and water heaters for sunny hours, charge an electric vehicle at midday, etc.), or even invest in battery storage to conserve surplus energy for the evening.
In other words, self-consumption is becoming the norm for individuals equipped with solar energy. They will have to optimize their installation for their own use. The good news is that savings on the electricity bill (by consuming solar instead of buying from the grid at ~€0.20/kWh) remain unchanged and become the main source of gain. In addition, the reduction in VAT to 5.5% at the end of the year will reduce the cost of purchasing panels, which will partially mitigate the reduction in subsidies. Individuals already under a purchase contract are not affected retroactively: their existing contracts with a guaranteed rate continue to run under the initial conditions. However, anyone planning a solar installation in 2025 will have to integrate these new rules to recalculate profitability and perhaps adapt the size of their project accordingly.
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