Commissioner Margrethe Vestager, in charge of competition policy, said: "The construction of the Landivisiau power plant in Brittany will help making sure that there are no electricity blackouts in Brittany. At the same time competition on the electricity market is preserved. The Commission has worked closely with France to ensure that support for the construction of the power plant is in line with EU state aid rules.”
In 2012,Compagnie Electrique de Bretagne (CEB), a consortium of Direct Energie and Siemens, won a tender to build a gas-fired power plant in Landivisiau, the construction of which is ongoing. In order to address concerns over the security of electricity supply in Brittany, the tender provides for a subsidy of €94,000 per megawatt per yearover a 20-year period in return for a commitment from the plant operators to ensure electricity generation when required by the network operator.
The Commission's in-depth investigation found that the measure was compatible with EU state aid rules, in particular its 2014 Guidelines for Energy and Environmental Protection. This is because France has demonstrated that the measure is necessary for the construction of a viable power plant, which can ensure sufficient voltage levels in this part of the electric network. Currently, this part of the network is more exposed to voltage control issues because it is located far away from electricity generation plants. France has also demonstrated that the measure is appropriate to address the supply needs in the region, as the plant's output is flexible and can be ramped up and down at very short notice to ensure voltage levels at this location. Finally, the Commission considered that the aid amount is proportionate given the expected rate of return of the beneficiary.
The Commission was however concerned that the measure might, in certain circumstances, harm competition, if CEB were to sell its electricity to the national incumbent, as a significant market share on the generation market is already held by this market player. The Commission has therefore made its approval subject to the condition that CEB will not sell output from the Landivisiau power plant through long-term contracts to any undertaking with a share of over 40% of the French electricity-generation capacity market.
On this basis, the Commission concluded that the measure is in line with EU state aid rules because it is both necessary and proportionate to address the security of electricity supply concerns in Brittany.
The Commission launched an in-depth investigation into the support of the Landivisiau power plant in November 2015 in order to assess whether it is compatible with EU state aid rules for capacity mechanisms. In parallel, the Commission investigated plans for a country-wide capacity mechanism in France, which it approved in November 2016.
The Commission carried out a state aid sector inquiry into capacity mechanisms in 11 Member States, including France. In its final report of November 2016, the Commission has highlighted that a tender for new capacity may be an appropriate one-off measure to encourage investment in a specific location. The Commission gives the example of isolated regions where there are needs, such as for grid stability, which may not be achieved through market-based investment or market-wide interventions.
The non-confidential version of the decision will be made available under the case number SA.40454 in the State Aid Register on DG Competition's website once any confidentiality issues have been resolved. State aid decisions newly published in the Official Journal and on the internet are listed in the State Aid Weekly e-News.