The European Commission has approved, under EU State aid rules, a €350 million Spanish scheme, made available through the Recovery and Resilience Facility (‘RRF’), to support the construction and operation of electricity storage facilities. The measure contributes to achievement of the European Green Deal targets, while helping to reduce dependence on Russian fossil fuels and fast forward the green transition in line with the REPowerEU Plan.
The Spanish scheme
The scheme notified by Spain, with an estimated budget of up to €350 million, will be fully funded through the RRF following the Commission’s positive assessment of the Spanish Recovery and Resilience Plan and its adoption by the Council.
The scheme, which will run until June 2026, aims to: (i) increase the share of renewable energy sources in the Spanish electricity system; (ii) decrease the deliberate reduction in renewable electricity generation at times of overproduction; and (iii) support the secure operation of the Spanish electricity system.
Under the scheme, the aid will take the form of investment grants for the construction of electricity storage facilities, with a joint capacity of approximately 1000 MW connected to the transmission or distribution network. The maximum amount of aid per beneficiary will be €50 million.
The projects will be selected through transparent and non-discriminatory bidding processes. The award of the contracts to the selected projects should take place before the end of 2024. The storage facilities should enter operation by the end of 2026 (except for pumped hydro storage, which may enter operation by the end of 2030).
The Commission’s assessment
The Commission assessed the scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (‘TFEU’), which enables Member States to support the development of certain economic activities subject to certain conditions, and 2022 Guidelines on State aid for climate, environmental protection and energy (‘CEEAG’).
The Commission found that:
- The measure facilitates the development of an economic activity, in particular renewable electricity generation. At the same time, it supports the objectives of key EU policy initiatives such as the the European Green Deal and the REPowerEU Plan.
- The scheme is necessary and appropriate to speed up investments in electricity storage facilities. In addition, the scheme has an incentive effect, as the electricity storage projects would not have been carried out without the public support.
- The measure is proportionate, as the level of the aid corresponds to the effective financing needs and necessary safeguards limiting the aid to the minimum will be in place, including a competitive bidding process for awarding the aid.
- The aid brings about positive effects that outweigh any potential distortion of competition and trade in the EU.
On this basis, the Commission approved the Spanish scheme under EU State aid rules.
Background
All investments and reforms entailing State aid included in the national recovery plans presented in the context of the RRF must be notified to the Commission for prior approval, unless covered by one of the State aid block-exemption rules.
The Commission assesses measures entailing State aid contained in the national recovery plans presented in the context of the RRF as a matter of priority and has provided guidance and support to Member States in the preparatory phases of the national plans, to facilitate the rapid deployment of the RRF. At the same time, the Commission makes sure in its decision that the applicable State aid rules are complied with, in order to preserve the level playing field in the Single Market and ensure that the RRF funds are used in a way that minimises competition distortions and do not crowd out private investment.
The 2022 CEEAG provide guidance on how the Commission will assess the compatibility of aid measures for environmental protection, including climate protection, and energy which are subject to the notification requirement under Article 107(3)(c) TFEU. The Guidelines create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support to reach the European Green Deal objectives in a targeted and cost-effective manner. The 2022 CEEAG aim to help Member States meet the EU’s ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.
With the European Green Deal Communication in 2019, the Commission reinforced its climate ambitions, setting an objective of net zero emissions of greenhouse gases in 2050. The European Climate Law in force since July 2021, which enshrines the 2050 climate neutrality objective and introduces the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, sets the ground for the ‘Fit for 55‘ legislative proposals presented by the Commission on 14 July 2021.
Electricity storage solutions, such as batteries, allow excess energy generated during periods of high renewable production to be stored and used later when weather conditions are less favourable. The share of renewable electricity in the mix is to rise considerably over the coming years, in line with the EU’s emission reduction targets. Therefore, batteries, along with other types of electricity storage facilities, are an increasingly indispensable component of decarbonised electricity systems.
The non-confidential version of the decision will be made available under the case number SA.103068 in the State aid register on the Commission’s competition website 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 Official Journal.
Quotes
This €350 million Spanish scheme will help develop electricity storage units and replace electricity generation from expensive fossil fuels by renewable electricity. It is a good example of how EU State aid rules enable Member States to support renewable electricity generation in line with the European Green Deal objectives. And without unduly distorting competition in the Single Market.