EU updates state aid rules for renewables with focus on tech-specific auctions

The European Commission (EC) on Tuesday released a set of new guidelines on state aid for climate, environmental protection and energy (CEEAG) that encourage EU member states to hold technology-specific auctions for renewables to back the block’s energy transition goals.

The state aid rules address environmental protection projects, including climate protection and green energy generation, and envisage support for decarbonising the economy by using “all technologies that can contribute to the European Green Deal”. The broadened categories of investments cover various decarbonisation technologies, among which are renewable energy, energy efficiency, energy storage and renewable hydrogen.

The guidelines contain new or updated sections on aid for the prevention or reduction of pollution, improved energy performance of buildings and clean mobility.

While technology-specific auctions will be organised in order to separate complementary technologies, with price remaining the leading factor in allocating support, up to 30% of non-price-based criteria will be allowed in the competitive rounds. Two-sided Contracts for Difference (CfDs) in the renewable energy sector are mentioned as a working model to support capacity expansion.

For the wind industry, in particular, direct state aid could be granted outside of auctions to pilot and demonstration projects.

The newly-adopted guidelines will come into force in the first quarter of 2022. Member states will be given two years to adjust their national support frameworks.

“Our goal is and will remain, phasing out reliance on fossil fuels – that includes gas,” said the EC’s executive vice president Margrethe Vestager.

When formally adopted, CEEAG will replace the EC’s existing energy and environmental state aid guidelines (EEAG).

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