The Commission found that both measures further EU energy and climate goals and ensure the global competitiveness of energy-intensive industries, whilst preserving competition in the EU Single Market.
Commissioner Margrethe Vestager, in charge of competition policy, said: "Cogeneration both produces electricity and puts to use the heat generated in the process – this efficiency can help us reach Europe's energy and climate goals. Today's decisions make sure that Member States can design sustainable financing to support cogeneration, same as for renewable energy. These promote green policies whilst preserving the competitiveness of companies that are heavily dependent on energy."
EU state aid rules, in particular the 2014 Guidelines on state aid for environmental protection and energy, allow reductions of surcharges used to finance renewable support schemes for certain sectors and companies, and up to a certain level. This enables Member States to guarantee support to renewable electricity and ensure the global competitiveness of energy-intensive industries.
Similarly, cogeneration schemes (for combined heat and power plants) often require financial contributions from electricity consumers. The Guidelines do not apply to reductions of surcharges used to finance support schemes for cogeneration. However, the Commission's assessment revealed that there were many similarities between the aim of renewable and cogeneration support schemes, the aim and structure of the surcharges and the aim of the reductions. The Commission found that reductions from cogeneration surcharges could also be needed to make financing of cogeneration support schemes sustainable, in particular when the cogeneration surcharge is added to the renewable surcharge.
Germany provides support to operators of new and modernised highly efficient cogeneration plants. The support is financed by a surcharge imposed on electricity consumption collected by network operators as a supplement to network charges.
On 24 October 2016, the Commission opened an in-depth investigation to determine whether reductions to these surcharges for users with high yearly energy consumption and certain energy-intensive industrial users are in line with EU state aid rules.
In the course of the investigation, Germany modified the conditions under which reductions of cogeneration surcharges are granted. It limited the reductions to energy-intensive companies exposed to international trade and limited the reductions to a maximum of 85% of the surcharge. In addition, Germany submitted an adjustment plan in order to align past reductions to compatible aid levels.
On this basis, the Commission found that the modified German plans are in line with EU state aid rules, because they further EU energy and climate goals without unduly distorting competition in the Single Market.
Italy provides support to renewable electricity and the cogeneration of electricity and heat. The support is financed through surcharges on electricity consumption and connection collected by electricity suppliers and distributors.
Under Italy's plans, the reductions of the surcharges used to finance the support for renewable electricity and cogeneration will be limited to energy-intensive companies active in sectors exposed to international trade and will be limited to maximum 85% of the renewable and cogeneration surcharge.
Italy also submitted an adjustment plan to phase out the reductions for non-eligible companies and to align the level of reductions for eligible companies.
On this basis, the Commission found that the Italian plans are in line with EU state aid rules, because they further EU energy and climate goals without unduly distorting competition in the Single Market.
The German Heat and Power Cogeneration Act 2016 (Kraft-Wärme-Kopplungsgesetz - KWKG 2016) provides for state aid to operators of new and modernised highly efficient combined heat and power plants (except coal and lignite-fired plants). This aid was approved by the Commission on 24 October 2016. The Commission also approved on 23 July 2014 a German scheme to support renewable energy, including reductions for certain energy-intensive users.
The Commission approved the Italian renewable support scheme on 28 April 2016.
More information on today's decisions will be available, once potential confidentiality issues have been resolved, in the state aid register on the Commission's competition website under the case number SA.42393 (Germany) and SA.38635 (Italy). The State Aid Weekly e-News lists new publications of state aid decisions on the internet and in the EU Official Journal.