Commission Finds EEG Support for 20 German Offshore Wind Farms in Line with State Aid Guidelines

The European Commission has found German plans to support the construction of 20 offshore wind farms under the Renewable Energy Sources Act (EEG) in line with EU state aid rules. The Commission concluded that the project would further EU energy and environmental objectives without unduly distorting competition in the Single Market.

In October 2014 Germany notified plans to support the construction and operation of seventeen wind farms located in the North Sea and three wind farms in the Baltic Sea under the EEG, which the Commission approved in 2014 (The EEG as applicable since 1 August 2014 is commonly referred to as EEG 2014). Aid is granted to operators in the form of a premium paid on top of the market price for electricity (under the EEG 2014 support is mainly granted in this form, for more information on mandatory direct marketing that is topped up with a market premium, please see here). Until the end of 2017 the reference value based on which the market premium for offshore wind power plants is computed for the first eight years of operations amounts to 19.4 ct/kWh if operators decide to claim support under the so-called Stauchungsmodell (acceleration model, cf. Section 50 para. 3 in connection with Section 30 para. 1 no. 2 EEG), in 2018 it decreases by 1 ct/kWh.

The 20 projects were notified individually to the Commission and assessed separately from the general scheme as they exceed the 250 MW threshold set out in the Guidelines on State aid for environmental protection and energy. As they differ only in certain technical aspects and engineering design so they were assessed together in one single decision.

Wind farm size ranges from 252 MW to 688 MW leading to a total of almost 7 GW of new renewable capacity. Investment costs will total EUR 29.3 billion, the Commission says. All wind farms are planned to start producing electricity by the end of 2019 at the latest. In total, they are expected to generate 28 terawatt-hours (TWh) of renewable electricity per year (presumably at the above mentioned costs) amounting to almost 13% of Germany’s 2020 scenario for renewable energy given in the National Renewable Energy Action Plan (NREAP).

The Commission gave the following reasons for the approval.

The Commission found that the projects contribute to reaching Germany’s 2020 targets for renewable energy without unduly distorting competition in the single market. In particular, the Commission verified that the state aid is limited to what is necessary to realising the investment. The rates of return that investors would achieve thanks to the premium were limited to what is necessary to implement each project and in line with rates previously approved by the Commission for similar projects. The Commission also took into consideration that these projects will enable new electricity providers to enter the German generation market. This will have a positive effect on competition.”

The non-confidential version of the decision will be published in the State aid register on the competition website under the case numbers SA.39722 to SA.39736 and SA.39738 to SA.39742 once eventual confidentiality issues have been resolved.

Source: European Commission

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