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Brussels, 8 July 2014
Questions and Answers on the outcome of the second call for proposals under the NER 300 programme
NER 300 is one of the world's largest funding programmes for innovative low-carbon energy demonstration projects. The programme aims to successfully demonstrate environmentally safe carbon capture and storage (CCS) and innovative renewable energy (RES) technologies on a commercial scale with a view to scaling up production of low-carbon technologies in the EU.
NER 300 is so called because it is funded from the sale of 300 million emission allowances from the new entrants' reserve (NER) set up for the third phase of the EU emissions trading system. The funds from the sales are to be distributed to projects selected through two rounds of calls for proposals. Grants under the first call were awarded in December 2012.
The Commission has awarded €1 billion to 19 innovative renewable energy projects and the first carbon capture and storage (CCS) project under the NER 300 programme. The projects cover a wide range of low-carbon technologies − from CCS oxyfuel technology, bioenergy (including advanced biofuels), concentrated solar power and geothermal power to wind power, photovoltaics, ocean energy and smart grids. The projects will be hosted in 12 EU Member States: Croatia, Cyprus, Denmark, Estonia, France, Ireland, Italy, Latvia, Portugal, Spain, Sweden and the United Kingdom. The projects are listed in the Annex to this document.
The projects selected represented the most cost-effective use of NER 300 public funding, and demonstrated that they are financially and technically robust and fulfil strict eligibility criteria. This includes how innovative the technology is and the potential for it to be scaled up and replicated, as well as the reasonable expectation of the project being up and running by July 2018, the deadline for entry into operation.
The projects were chosen following a rigorous selection process. After an initial eligibility test carried out by Member States, applications were submitted to the European Investment Bank (EIB) which performed an in-depth technical and financial assessment of the project proposals. In parallel, the European Commission performed the eligibility verification. In March 2014, Member States were asked to confirm their projects, as well as the relevant funding package. On the basis of the final list of confirmed projects, the funding proportion between the CCS and the RES groups was established and the final list of projects for award was developed. The funding decision was adopted by the European Commission following a favourable opinion expressed by the Climate Change Committee on 4 June 2014.
The NER300 funding comes from the EU Emissions Trading System (ETS) and not from the EU budget. The funds were raised from the sale of 100 million allowances set aside from the new entrants' reserve (NER) of the ETS and the unspent funds from the first call. The first batch of 200 million allowances had already been sold to fund projects selected under the first call for proposals, awarded in December 2012.
Member States are required to provide free allowances to new ETS entrants or to installations that have had a significant capacity extension since their free allocation was determined. For this purpose a new entrants' reserve was created, where free allowances were provided. It was decided that 300 million of these allowances would be set aside to fund projects aiming to deploy innovative low-carbon technologies to reduce CO2 emissions mainly from power production.
The sales were carried out by the European Investment Bank between November 2013 and April 2014. For more details, see http://www.eib.org/products/ner-300/reports.htm
Yes, projects submitted under the first call that were not awarded (low ranking, non-confirmation) were entitled to apply under the second call. The European Investment Bank received 12 re-submitted projects for the second call (out of 32 proposals). Ten passed the selection assessment and 8 were confirmed by Member States and are awarded under the second call.
The funds raised were sufficient to support all projects that passed the selection assessment and were confirmed by their Member States under the second call. Consequently, the technology subcategories not awarded in the first call were awarded under this second call, for example carbon capture and storage and photovoltaics.
These are projects taking place across the border of two or more Member States. The first NER 300 trans-boundary project has been awarded under the second call: a geothermal plant to be built near Strasbourg, over the French-German border. Trans-boundary projects do not count towards the maximum number of projects that can be awarded per Member State (see question 14).
One of the conditions of the NER 300 programme is that projects must enter into operation within four years of the funding award. With the entry into operation they will start generating renewable energy or storing CO2. The date of entry into operation of individual projects will take place between 2015 and 2018.
Projects will receive funding on an annual basis, based on proven performance. For the renewable energy projects, this will depend on the amount of clean energy produced each year for the first five years following entry into operation. For the CCS project, it will depend on the amount of CO2 stored each year for the first ten years following entry into operation.
In recognition of the risks associated with such first-of-a-kind projects, only 75% of the targeted performance has to be achieved to receive full funding under the award decision. Annual funding payments are also conditional on specific knowledge sharing requirements (see question 12).
Annual payments will be transferred from the European Investment Bank to the Member States, which will in turn distribute the money to project sponsors.
The Member States play a central role in monitoring the projects. From the adoption of the Award Decision, Member States have to report on an annual basis to the European Commission on the progress made by the projects in their country, as well as on any issues with project implementation, and recommended solutions.
Project sponsors who receive financing from the programme must report and share information on technical set-up and performance, costs, project management, environmental impact and any potential health and safety issues related to the project. The European Commission will check that the information provided is adequate and will organise knowledge sharing events.
The selected projects will bridge a critical gap in the innovation chain by specifically tackling some of the key obstacles that often hamper the large-scale deployment of technologies that have successfully been piloted. The funding awarded will help to lower costs, manage risks and tackle knowledge barriers. The €1 billion allocated to projects under the second call for proposals will leverage over €860 million of private investments and increase the annual EU renewable energy production by almost 8 TWh (equal to the annual electricity consumption of Latvia, or Cyprus and Malta combined). At the same time, the CCS project alone will capture 1.8 million tonnes of CO2 per year (equivalent to taking over a million passenger cars off the roads). Projects under the two NER300 calls will collectively increase the annual EU renewable energy production by some 18 TWh. Adding the emissions captured by the CCS project, the amount of avoided CO2 corresponds to taking more than three million cars off the roads in the EU.
Crucially, these projects are intended to spur new investment in the sector, leading to substantial increases in production capacity from low-carbon energy technologies in the mid-term.
NER 300 projects under both calls will also create several thousand jobs during the construction and operation phase. Positive growth and employment are also expected along the entire supply chain in the power generation sector.
Yes. Under NER 300 rules, no more than three projects can be funded in any Member State across the two calls. However, trans-boundary projects between two or more Member States do not count towards this maximum (see question 7).
Next Steps for the NER 300 programme
Two calls for proposals have been carried out under the NER 300 Decision. The first award decision was adopted in December 2012, the second in July 2014.
In its recent Communication 'A policy framework for climate and energy in the period from 2020 to 2030 ' the Commission outlines the possibility of exploring an expanded NER 300 system in the post-2020 climate and energy framework. This could be a means of directing further revenues from the EU Emissions Trading System towards the demonstration of innovative low-carbon technologies in the industry and power generation sectors.
References and further reading
For more information on the NER 300 Programme, visit:
See also IP/14/780
PROJECTS AWARDED FUNDING
SHORT DESCRIPTION OF PROJECTS
Croatia – Geothermae – Geothermal power
The project concerns the production of electricity and heat from a geothermal aquifer and its associated natural gas. The project, in Draskovec, close to the city of Prelog in Croatia, will generate 3.1 MWe from geothermal hot brine using an Organic Rankine Cycle (ORC).
Cyprus – EOS GREEN ENERGY – Concentrated solar power
Concentrated solar power plants use mirrors to concentrate a large area of sunlight onto a small area to produce electrical power. The planned 50 MWe concentrated solar power plant aims to produce 172 GWh/year. It is located north of Limassol in Cyprus. The technology is based on a multi-concentrated solar tower using superheated steam cycle and incorporates a graphite thermal storage. Some 300 solar thermal receivers surrounded by sun-tracking mirrors will be deployed.
Cyprus – Green+ – Smart grids
The project aims to convert a region with a traditional grid to a micro-grid concept targeting the challenges that distributed generation imposes onto network operation, such as voltage, frequency, power quality parameters and balancing renewable generation. The project will be implemented in a rural mountain area in Cyprus with 25,000 customers.
Denmark – MET – Bioenergy
The project targets commercial-scale production of second generation ethanol from plant dry matter in Holstebro, Denmark. The plant will produce 64.4 Ml of ethanol, 77,000 t of lignin pellets, 1.51 MNm3 of methane and 75,000 t of liquid waste annually which will be transformed into biogas and injected into the national gas grid after its upgrade into methane. The process will use 250,000 t/year of locally sourced straw.
Estonia – Fast pyrolysis – Bioenergy
Pyrolysis is a thermochemical decomposition of organic material at elevated temperatures in the absence of oxygen to produce gas and liquid products. The project concerns fast pyrolysis technology for conversion of woody biomass to pyrolysis oil, the liquid product of this technology. Annual feedstock needs are 130,000 t of woodchips. The plant in Pärnu, Estonia, will also receive energy inputs from a combined heat and power (CHP) plant and deliver by-products as inputs to the CHP plant. Annual output of pyrolysis oil is expected to be 50,000 t which will be exported to Sweden and Finland to replace heavy fuel oil in power plants.
Estonia – TORR – Bioenergy
Torrefaction of biomass is a mild form of pyrolysis (see fast pyrolysis project above) at low temperatures typically ranging between 200 and 320°C. The project concerns a torrefaction plant in Rakke, Estonia, for the production of 100 kt/year of bio-coal from 260 kt/year of local woody biomass. The project includes a biomass gasification CHP unit that will provide heat and power to the plant. The technology has been developed in order to use cheaper feedstock (low quality biomass) to produce an intermediate product with a high calorific value.
France – GEOSTRAS – Geothermal power
The French-German cross border project aims to produce electricity and heat from a high temperature geothermal resource near Strasbourg. It involves creating a circulation loop several kilometres long at a depth of between 4 km and 5 km that will function as a semi-open underground heat exchanger. The proposed geothermal plant is expected to produce 6.7 MWe electricity and 34.7 MWth heat.
France – NEMO – Ocean energy
The project is a 16 MWe floating ocean thermal energy conversion system. It is expected to be mounted within a floating barge moored some 5 km off the west coast of Martinique, with export cable landfall by the Bellefontaine oil-fired, thermal power plant. It aims to deliver approximately 395 GWh in the first five years of operation.
Ireland – WestWave – Ocean energy
The project will consist of a grid-connected array of five wave energy converters (WEC) installed within one km of an onshore site at Killard Point in County Clare, Ireland. The electrical power generation capacity of each WEC is 1 MWe giving an overall capacity of 5 MWe. The WEC, together with the hydraulic power take-off and shore based power train is being tested first at the European Marine Energy Centre site at a smaller scale of 0.8 MWe.
Italy – Mazara Solar – Concentrated solar power
The project concerns a Concentrated Solar Power (CSP) plant with a capacity of 50 MWe, which will be built in western Sicily, Italy. It represents one of the first large-scale commercial CSP projects, based on an innovative central tower technology producing superheated steam to drive a steam turbo-generator and using the saturated steam as storage fluid. The expected energy output is 534 GWh in the first five years of operation.
Italy – Puglia Active Network – Smart grids
The aim of the project is to demonstrate active large-scale network management at distribution level and to show the extent to which this enhances the capability of the grid to accommodate large quantities of renewables. This includes active control of power flows, facilitation of demand response, ancillary services to control supply quality, reduction of network losses and vehicle-to-grid service from electric vehicle battery storage.
Latvia – CHP Biomass pyrolysis – Bioenergy
The project concerns fast pyrolysis technology for conversion of woody biomass to pyrolysis oil in Jelgava, Latvia. The project plant will receive energy inputs from a CHP plant and deliver by-products of the pyrolysis as inputs to the CHP plant. Annual output of pyrolysis oil is expected to be 40,000 tonnes. Feedstock needs are 100,000 t of woodchips/year. The bio-oil will be exported to Sweden and Finland to replace heavy fuel oil use in energy installations.
Portugal – Santa Luzia Solar Farm – Photovoltaics
The project concerns a 24 MWp solar farm expected to be built in Alentejo, Portugal. A total of 1340 trackers, each holding 108 solar modules, are expected to cover a surface of around 91 ha. Electricity export is foreseen through a 15 kV power line connecting with a substation at Beja, Portugal. Concentrated photovoltaics technology is based on the use of optical devices that increase the light received on the solar cell surface.
Portugal – SWELL – Ocean energy
The project concerns a large-scale, grid-connected wave farm with a capacity of 5.6 MW that will be built on the coast a few miles north of the Peniche Peninsula, central Portugal. It will consist of sixteen 350 kW modules. Oscillating Wave Surge Converters will be placed on the seabed and only the top part of the flap will be surface piercing.
Spain – BALEA – Wind power
The project comprises two 5 MW and two 8 MW wind turbines placed on floating foundations. The wind turbines will be placed on either a tension leg platform or a semi-submersible structure. The total capacity of the wind power project is 26 MW. The project is expected to be located in the Bay of Biscay off the coast of Armintza in Spain.
Spain – FloCan5 – Wind power
The project is a floating offshore wind farm consisting of five 5 MW wind turbines with a total capacity of 25 MW with floating moored foundations, internal grid and grid connection to an onshore substation. The foundation is a semi-submersible concrete construction. The project is expected to be located at 1.5–3.7 km from the south-eastern coast off the island of Gran Canaria, in water depths of between 30 and 300 m.
Spain – W2B – Bioenergy
This Waste-to-Biofuels (W2B) project concerns a municipal solid waste (MSW) to bio-ethanol plant with a capacity of 28 Ml/y. It is envisaged that the plant will be built in Seville, Spain. A total of 500 kt/year of MSW will be processed to recover the organic matter and cellulosic fibres. These will be converted into second generation bio-ethanol via enzymatic hydrolysis and fermentation.
Sweden – Bio2G – Bioenergy
The project aims to demonstrate the large-scale production of synthetic natural gas (SNG) from woody biomass. The capacity of the plant is 200 MWth of SNG. Pressurised SNG will be fed into an existing natural gas pipeline. The process will use some 1 Mt/year of woody biomass, mainly composed of forest residue. Two project locations are under consideration within the environmental permitting process: Landskrona or Malmö, Sweden.
United Kingdom – White Rose – Carbon Capture and Storage (CCS)
The project concerns the building and operation of a full CCS chain, which includes a coal power plant capturing CO2, onshore and offshore pipelines transporting CO2 and an offshore storage safely encasing CO2. The new oxyfuel coal power plant and CO2 processing and compression units will be built at the Drax power plant site near Selby, in the United Kingdom. The technology will capture 90% of the CO2 emissions from the coal power plant −on average 1.8 million tonnes of CO2 per year. The captured CO2 will be transported by a short pipeline to a larger pipeline system and injected into storage offshore in the southern North Sea.