EU Commission has the authority to set guidelines
for state aid to safeguard the internal energy market.
It has set guidelines for renewable energy and other
environmental investments, for state support for
energy intensive companies, and for coal mining.
Aid for Evironmental Protection
guidelines were updated in July
cover support for renewable energy,
projects, back-up power capacity,
energy intensive industrial energy
users, and others. With
- The EU countries should gradually
replace the more effective feed-in
tariffs with the less cost-effective
competitive bidding processes (open
From 2017 countries shall set up
tenders for support to all new
- Countries can avoid the the tenders
if they can prove that the outcome
might not be optimal, i.e.
leading to higher costs, or if the installations are small. They
can support without bidding
smaller renewable energy installations,
below 6 MW for windpower and 1
MW power for other renewables.
For installations below 3-MW windpower
or 500-kW other power they can
maintain feed-in tariffs.
- From 2016 renewable energy producers shall have electricity balancing
responsibilities and pay the related costs
- Countries can allow lower renewable energy levies (PSO payments
on the electricity bills) for energy intensive sectors,
such as metal and ceramic producers,
that are subject to strong international competition. In general companies can
get reduced levies for renewable energy if at least 20% of their expenses are
the sector trades at least 4% of its turnover outside EU. The levies cannot be
set to zero.
- The countries can support energy infrastructure, such as power lines, and elements
of smart grids, when these investments cannot be realised on market basis.
- It it is not possible to maintain enough peak-power and back-up power capacity,
countries can support the establishment or maintaining of capacity. This support
must be available for both new and existing/retrofitted power plants,
well as to interconnectors to other countries, to electricity storages, and to
certain consumers). The support shall also be open to generators from other
- Under certain conditions countries can also support the development
of district heating and of increased energy efficiency of houses.
Support mechanisms will have to be notified to the EU Commission that will approve
or reject them in a lengthy process, typically lasting 1-2 years. Some mechanisms,
covered by a General Block Exemption Regulation, does not need to be notified,
such as support for renewable energy provided via an open tender process.
Aid in the Context of the EU Emissions Trading Scheme
The EU Commission
issued guidelines in 2012 for state support for companies that have
electricity costs as a major expense. The state
support can cover up to 85% of the eventual increase of electricity
costs because of the CO2 costs of electricity generation introduced
with the EU Emission Trading Scheme (EU-ETS).
Aid to the Coal Sector
The EU allows support to uncompetitive coal mines on certain conditions.
The EU Commission issued new guidelines for this
in 2010, following a decision by the EU countries. The countries
can support uncompetitive coal mines with a gradually reduced support.
They can also support the closure of coal mines and related costs.
2014 EU guideline for state aid for environmental protection and energy
is going against the use of the most effective support mechanism for
energy, the feed-in tariff. This leads
to less effective and more expensive support for renewable energy, making
it more difficult and costly for the EU countries to reach their renewable
energy targets and ambitions. The proposed alternative in the form of
tenders (competitive bidding) reduces the number of possible investors,
thus increasing the profit expectations of the investors. Linking the
support with electricity market prices increases an uncertainty in the
economy of renewable energy development, which increase the risk premium
they require to do the investments. This together pushes up the costs
of renewable and thus the support that the tax payers or power
uses have to pay. Further, limiting the feed-in tariffs will reduce the
possibility for small investors to participate in local investments,
reducing the public participation in renewable energy developments. This
for renewable energy.
The requirement of notification of state aid is becoming another barrier
for the support of renewable energy because of the long procedure and
long response time from the EU Commission. The process should be speeded
up and last a maximum of 3 months.
state of for coal mining, INFORSE-Europe finds that it should be
phased out as soon as possible.
Commission page on Eenvironmental State Aid
to EU Energy Policy