Brussels, 26 January 2011
State aid: Commission approves €26 million French aid for district heating network in Paris
The European Commission has authorised France, under EU state aid rules, to provide a €26 million direct grant for the construction of a district heating network in the North-East of Paris. The aid will be granted to CPCU, a subsidiary of GDF Suez and the current holder of the district heating concession in Paris. The Commission concluded that the aid is in line with EU state aid rules, because on balance, the positive effects of the measure outweigh the potential distortions of competition and of trade between Member States. GDF Suez has seen its concession extended by seven years until 2024, in order to allow it to recoup the total investment of €170 million in the network. The French authorities committed to tender the concession anew in 2024 or operate it directly as of then
Commission Vice-President in charge of competition policy Joaquín Almunia said: "This district heating project will allow new customers to switch towards a more environmentally-friendly heating source and facilitate the future development of renewable heating boilers by CPCU. Thus, it will also contribute to reaching the EU 2020 environmental objectives without unduly distorting competition."
The Commission has approved a €26.2 million French direct aid for the construction of a district heating feeder and related local district heating networks in the North-East of Paris by CPCU, a subsidiary of the GDF SUEZ group. The network is to be built along the T3 tramway line, which is under construction in Paris. District heating was not available before in this area – customers were using other forms of heating such as individual electric heating - and will result in a reduction of CO2 emissions by a total of 65,000 tonnes from 2011 to 2024 compared to heating from conventional sources. More generally, it will encourage future investments in renewable heating boilers to be connected to this network, and will lead to the closing of a conventional boiler using fossil fuel in this area. Thanks to this and other projects under way, by 2020 nearly 20% of the energy used in the heating of Paris would come from renewable sources (biomass, biogas, geothermal) as opposed to none at the moment. The French authorities also extended the district heating concession by 7 years until 2024, in order to allow the beneficiary to recoup the network investment costs without undermining the commercial operation of the concession contract.
The project will increase the beneficiary's sales by less than 5% and introduce a new competitor among the providers of heating in the North-East of Paris. The French authorities committed to either put out the concession for tender in 2024 or to operate it in their own account as of 2024 ('reprise en régie').
The development of district heating and of renewable energy is part of the climate and energy package designed for reaching the EU 2020 environmental objectives. The Commission concluded that the French measure is an appropriate and proportionate measure necessary to achieve an objective of EU interest. In particular, the Commission found that the aid is proportionate in view of the investment costs in the network, which amount to €170 million.
Furthermore, the Commission considered that the distortions of competition and the effect on trade were limited because the sales increase is limited and competition on heating services is fostered in the North-East of Paris; in addition, the French authorities committed not to prolong the competition distortions related to the concession prolongation beyond 2024.
The non-confidential version of the decision will be made available under the case number N 630/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.