The European Commission has extended the scope of its ongoing in-depth inquiry into Germany’s plans to compensate lignite-fired power plants operators for the early phase out. The extended investigation concerns an amendment to the agreement between Germany and RWE for the accelerated lignite phase-out in the Rhenish lignite mining area.
In March 2021, the Commission opened an in-depth investigation to assess whether Germany’s plan to compensate RWE and LEAG for the early closure of their lignite-fired power plants was in line with the EU State aid rules. In particular, the Commission had doubts as to the proportionality of the compensation payments covering forgone profits and additional mine rehabilitation costs.
Extension of ongoing investigation
In December 2022, Germany notified to the Commission an amendment to its agreement with RWE for an accelerated lignite phase-out in the Rhenish lignite mining area. The amendment included: (i) the delay from end-2022 to March 2024 of the final closure of two plants, and (ii) the advance from 2038 to 2030 of the final closure of three plants. Germany informed the Commission that the original €2.6 billion compensation to RWE remained unaltered and submitted a revised calculation of RWE’s forgone profits to demonstrate that the compensation is justified and proportionate.
Therefore, the Commission has decided to extend the scope of its ongoing investigation to cover the new elements notified by Germany.
On the basis of the information at its disposal, the Commission’s preliminary view is that the compensation to RWE continues to constitute State aid. However, the Commission notes that the revised calculation of RWE’s forgone profits submitted by Germany appears more conservative compared to the previous calculation. The Commission will now verify whether the compensation to RWE is proportionate and whether the Commission’s doubts expressed on the aid to RWE in the opening decision of March 2021 have been dispelled.
The extension of the opening of an in-depth investigation provides Germany and any interested third parties with the opportunity to submit comments. It does not prejudge the outcome of the investigation.
Background
The European Green Deal has recognised that further decarbonising of the energy system is critical to reach climate objectives in 2030 and 2050. The production and use of energy across economic sectors account for more than 75% of the EU’s greenhouse gas emissions. Therefore, a power sector largely based on renewable sources must be developed, complemented by the rapid phasing out of coal and decarbonisation of gas.
The Guidelines on State aid for climate, environmental protection and energy 2022 provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) Treaty on the Functioning of the European Union.
These guidelines, applicable as from January 2022, create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support to reach the Green Deal objectives in a targeted and cost-effective manner. The rules align with the important EU’s objectives and targets set out in the European Green Deal and with other recent regulatory changes in the energy and environmental areas and cater for the increased importance of climate protection. They include sections on aid for renewable energy, energy efficiency measures, aid for clean mobility, infrastructure, circular economy, pollution reduction, protection and restoration of biodiversity, as well as measures to ensure security of energy supply, subject to certain conditions.
For More Information
The non-confidential version of the decision will be made available under the case number SA.53625 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.
Source – EU Commission