Margrethe Vestager, Commissioner responsible for competition policy, commented: ‘The future of European economic growth will depend on our ability to make progress towards clean energy. In this context, I am pleased to validate four French initiatives in favor of green energies. These measures encourage investment in non-polluting production capacities while avoiding undue burdens on the end consumer. This is a very important balance for Europe in the pursuit of our environmental objectives.'
The French authorities have notified to the Commission four different projects intended to boost electricity production from renewable sources by granting a feed-in tariff or a top-up payment to the following installations:
- installations using energy extracted from geothermal deposits
- installations of less than 500 kW which use biogas produced by methanisation (i.e. gas produced from agricultural residues and organic waste)
- hydroelectric plants of less than 1 megawatt (MW)
- wind farms which submitted a complete aid application in 2016
These aid schemes, with an estimated budget of EUR 7 681 million until 2042, will help France meet its objectives in terms of renewable energy by boosting renewable energy production capacity by some 2 148 MW.
The Commission's 2014 Guidelines on State Aid for Environmental Protection and Energy allow Member States to support renewable energy sources, subject to certain conditions.
The Commission has noted that the four schemes in question helped integrate renewable energy producers into the market in line with the aforementioned guidelines. Only small installations of less than 500 kW will be eligible for feed-in tariffs. Installations of 500 kW or more will offer their electricity on the market and will receive support in the form of a premium on top of the market price (top-up payment), exposing them to market signals. The measures also include monitoring arrangements to prevent the installations from receiving excessive compensation and to ensure that the aid granted is limited to the minimum necessary to achieve the objectives pursued.
With specific regard to installations using geothermal energy, the Commission has observed that the potential number of projects is too limited to organise a competitive tender. In such cases, the Guidelines allow for the aid to be granted without going through a tender procedure. The Commission has also concluded that subjecting geothermal plants to competitive bidding with other technologies could jeopardise the long-term potential of this technology in France.
The four aid schemes are financed from the earmarked ‘Energy Transition' account. This account was funded in 2016 by the domestic tax on final electricity consumption. From 1 January 2017, it will be financed by a share of the domestic tax on coal, brown coal and coke and a share of the proceeds of the domestic tax on the consumption of petroleum and similar products.
In order to address any potential discrimination against renewable energy from abroad, in view of the funding arrangements for the aid schemes in 2016, the French Republic has committed to invest some EUR 49 million in interconnection projects. This investment corresponds to the total amount of the electricity tax imposed on estimated imports of renewable energy into the French Republic in 2016, and used to finance support for renewable energy in France.
The Commission has concluded, therefore, that the four aid schemes will boost the share of electricity produced from renewable energy sources, in accordance with the objectives of the European Energy Union, while the cost control measures will minimise any distortion of competition caused by the State aid.
Under the Renewable Energy Directive, France has a renewables target of 23% of gross electricity consumed by 2020.
The non-confidential version of the decisions will be published in the State Aid Register on the DG Competition website under case numbers SA.46898 (Support scheme for electricity generation installations using biogas produced by methanisation and for electricity generation installations using energy extracted from geothermal deposits), SA.46655 (Top-up payment for onshore wind farms in 2016) and SA.43780 (Tariff support for small hydroelectric plants), once any confidentiality issues have been resolved. The State Aid Weekly e-News lists new publications of State aid decisions on the internet and in the EU Official Journal.