E R E F European Renewable Energies Federation

Transcription

1 The new EC guidelines : what is the likely impact of making RES support mechanisms compatible with the State Aid provisions of the TFEU? Dr. Emmanuelle Raoult

2 Presentation of EREF 2

3 EREF Action in the last months - Taking part in consultation procedures, esp. regarding the new guidelines on state aid for environmental protection and energy - Publishing position papers on the new guidelines on state aid for environmental protection and energy - Open letter to Heads of States and Governments on 2030 Framework EU Council in June Letter to EU Heads of State and Governments calling for ambitious and binding EU and national RES targets in March Different press releases esp. concerning the ECJ decision in the Aland case and the new guidelines on state aid for the protection of the environment and energy - Meeting the Commission with the Danish Photovoltaic Association in order to speed-up the decision procedure concerning the Danish RES Law - Speaking on behalf of EREF at conferences - Joining different events and representing EREF member s interests on their behalf - EREF activities within kot: policy briefing and workshop 3

4 Commission s State Aid approach 4

5 Commission s State Aid approach There is no fixed definition of state aid in the EU Treaty. Under the applicable case-law precedent, a measure constitutes State aid within the meaning of Article 107(1) of the TFEU Treaty if the following conditions are cumulatively fulfilled: the measure (a) confers an economic advantage to the beneficiary; (b) is granted by the State or through State resources; (c) is selective; (d) has an impact on intra-community trade and is liable to distort competition with-in the EU. In evaluating such aid schemes or measures, the relevant competition authority would pay attention to issues such as whether the costs are eligible, the level of aid intensity, the incentive effect, and the financing mechanism to be used. In some cases a detailed assessment under a balancing test may be required. Aid may not be implemented prior to its notification to and approval by the relevant competition authority. However, regulations on exemptions may provide for streamlined procedures.

6 Commission s State Aid approach Under the Guidelines, State Aid needs to be notified, and still requires assessment by the Commission. State Aid to Energy & Environmental protection: Either the support scheme involves no State Aid in first place Or it is State Aid, but then it can be justified Aid can get clearance, if it complies with the following principles: Aid aimed at common interest Aid is appropriate instrument Aid has incentive effect Aid is proportionate to the objective State aid should be limited in time and amount.

7 Guidelines on environmental and energy State aid for

8 Guidelines on environmental and energy State aid for Adopted by the Commission on 9 April 2014 Have entered into force on 1 July 2014 The guidelines are soft law. However, factually binding as every National support system designed as a State aid mechanism will have to comply to be approved by the Commission. 8

9 Guidelines on environmental and energy State aid for Type of support: Type of support allowed based on installation size: - Installations under 500kW (3MW wind): Feed-in tariff still possible - Installations under 1MW (6MW wind): Feed-in premium - Installations above 1MW (6MW wind): Feed-in premium and technology neutral tendering Member State have several derogations where they can decide: not to use a bidding process And/or to use a technology specific process

10 Gradual implementation Guidelines on environmental and energy State aid for In 2015 and 2016: 5% of new RES electricity capacities should be granted by technology neutral tendering. In 2016, installations above 500kW (3MW wind) should receive a Feed-in premium From 2017, all installations above 1MW (6 MW for wind), should apply for support through a technology neutral bidding process and will receive a Feed-in premium Application of the guidelines Guidelines enter into force on 1 July 2014 Guidelines apply only for new schemes that are being newly notified to the Commission The approval for the Commission is only valid for 10 years

11 Guidelines on environmental and energy State aid for Application of the guidelines Guidelines have entered into force on 1 July 2014 Guidelines apply only for new schemes that are being newly notified to the Commission The approval for the Commission is only valid for 10 years

12 Relevant Cases 12

13 Alands Vindkraft AB v Energimyndigheten Background Ålands Vindkraft AB ( Ålands ), a power producer, thought otherwise and, sought for approval from the Swedish regulator to participate in the Swedish renewable energy support scheme for its wind farm. The plant was located on an island off the Swedish shore, but while being an autonomous region administratively belonging into Finland. It was only connected to the Swedish, not to the Finnish grid. However, the Swedish regulator rejected Ålands application on the grounds that only renewable electricity production installations located in Sweden were eligible to participate in the Swedish renewable energy support scheme. AG Bot s opinion Bot agrees that the member state acted in accordance with Directive 2009/28/EC, but says the law itself is at fault. However, he does not think a declaration that parts of the Directive are invalid should be applied retroactively; as this would affect investor confidence. Instead, he recommends that there be a two-year grace period, to allow alternative measures to be put in place.

14 Alands Vindkraft AB v Energimyndigheten CJEU s Judgment The CJEU deems the Swedish green certificates scheme conform to EU law. It confirms that, based on the Renewable Energy Directive 2009/28/EC and the Treaties, national governments can continue restricting access to their support schemes to renewable electricity generated on their territory. In terms of the workability of the current system foreseen by the Renewable Energy Directive, which is based on different national targets, the CJEU confirmed expressly that Member States must be able to remain in control of their national support schemes, and that territorial limitation contribute to investor confidence, which can in turn of enabling those States to meet their mandatory targets under the Renewable Energy Directive with regard to the production of green energy in their territory.

15 Background Essent Belgium NV v Vlaamse Reguleringsinstantie voor de Elektriciteits- en Gasmarkt (VREG) Essent Belgium, a BelgianFlemish electricity provider, which had submitted guarantees of origin covering renewable electricitynergy generated in the Netherlands, Denmark and Norway as part of its quota requirements between 2005 and VREG did not accept these guarantees and fined the energy company for failing to comply with its quota obligations. AG Bot s opinion Advocate-General Bot released his opinion on May 8th, 2013, in which he seemed to say that national support schemes should be opened up Free movement of goods prohibits discrimination CJEU s judgment The CJEU confirmed that principally the free movement of goods does not conflict national renewable electricity support schemes. Highlighted that support schemes are inherently important means of means of achieving the aim of the Directive which eventually is to guarantee the proper functioning of support mechanisms for renewable energy sources at national level.

16 Essent Belgium NV v Vlaamse Reguleringsinstantie voor de Elektriciteits- en Gasmarkt (VREG) Two conditions for national support schemes which has been mentioned by CJEU, also in its previous case law, that is that... (1) mechanisms are established which ensure the creation of a genuine market for certificates in which supply can match demand, reaching some kind of balance, so that it is actually possible for the relevant suppliers to obtain certificates under fair terms ; (2) the method of calculation and amount of the administrative fine to be paid by suppliers who have not fulfilled that obligation are fixed in such a way as not to exceed what is necessary to encourage producers actually to increase their production of green electricity and suppliers subject to that obligation actually to purchase the required certificates, by avoiding in particular penalising those suppliers in an excessive manner.

17 Reflection on the new EC Guidelines 17

18 Reflection on the new EC Guidelines 1. Ignoring support system best practice and imposing a support mechanism that has not yet been tested could lead to a halt in renewable energy development. By restricting the definition of what constitutes allowed state aid, the Commission threatens to interfere with the functioning of some effective and cost-efficient tools. It thus endangers the further development of mature renewable energy technologies and risks bringing the development of emerging ones to a halt. Not only technology-neutral tenders, but tenders in general have a number of disadvantages when it comes to supporting renewables. They favor large companies which have larger administrative capacities and budgets that allow them to submit economically more advantageous bids and provide the high upfront financial guarantees that are often required. Furthermore, tenders imply significant risks in regard to the timely development of renewables. Support systems exist to compensate for market failures such as unfair competition resulting from subsidized conventional and nuclear energy technologies. Establishing a fully transparent, fair and robust internal energy market is therefore a first step in the transformation process towards renewables.

19 Reflection on the new EC Guidelines 2. A technology-neutral support mechanism has negative impacts on the development of more innovative renewable technologies. Support mechanisms should be differentiated according to the development stage and particular features of various technologies, so that they ensure a sufficiently broad portfolio of renewable energy in a cost-efficient manner. More important than forcing Member States into adopting an unproven instrument is ensuring that tailor-made national support mechanisms avoid overcompensation and guarantee the development of a wide range of technologies.

20 Reflection on the new EC Guidelines 3. leaves it up to Member States to decide if and to which extent they support renewable energy generated in another Member State could destabilize national support schemes and worsen the crisis currently experienced by the sector. According to the Guidelines, the existing aid schemes within the meaning of Article 1(b) of Council Regulation (EC) No 659/1999 (105) concerning operating aid in support of energy from renewable sources and cogeneration only need to be adapted to these Guidelines when Member States prolong their existing schemes, have to re-notify them after expiry of the 10 years-period or after expiry of the validity of the Commission decision or change (106) them. However, this approach is too restrictive as it could lead to a situation where a Member State does not introduce any necessary change to a given scheme (other than the support level) in order to avoid being obliged to switch to another, less relevant support mechanism.

21 Reflection on the new EC Guidelines Summarized analysis of the guidelines Overall, it is not positive for the RES industry Globally in favor of large-scale centralized project and mature technologies However, a lot of exemptions have been introduced that give more flexibility to member States Final version clearly improved from the 1 st drafts However, Still an excess of power by the European Commission Lack of reflection of the current EU energy system situation No proven record of use and success over a longer period of the methodologies used such as the introduction of a very restricted choice of state aid mechanisms.

22 Thank you for your attention! Dr. Emmanuelle Raoult