In 2020, the EU Commission’s Guidelines on State Aid for Environmental Protection and Energy 2014 – 2020 (the ‘EEAG’ or ‘Guidelines’) are up for change. However, the Directorate-General for Competition (‘DG Comp’) appears to consider that the Guidelines are still adequate and need no change for at least two more years (until 2022). To verify such opinion, in 2019 DG Comp launched a Public consultation as part of its comprehensive policy evaluation in the area of State Aid (the ‘Fitness Check’). DG Comp sought to gather stakeholders’ position on how the Guidelines and the General Block Exemption Regulation (‘GBER‘) govern the application of aid rules in the area of environmental protection and energy, expecting to receive insights about potential gaps, overlaps or excessive regulatory burden.
The Fitness Check was held between 14 May 2019 and 19 July 2019. One of the more solid stakeholder positions was contributed in the area of wind power by WindEurope, the Brussels-based association which promotes the use of wind power in Europe. WindEurope offered its position on behalf of its membership, which includes the Romanian Wind Energy Association (RWEA) and through it some of the most vocal participants to the Romanian renewable energy market: CEZ Group, Enel Green Power, Engie and Iberdrola. They determined that the following topics comport change:
- Bidding process needs optimization of its design to secure cost reduction alongside build-out, which can be achieved through: (a) better visibility on tender rounds (bidding processes to be organized regularly, with reasonable notice and proper visibility on aspects of size and budget); (b) design and rules of tenders to be clear and stable; (c) preferred award mechanism to be price-only; (d) bidding processes to be technology-specific; (e) design of bidding process to ensure coordination between different administrative levels responsible for project development; (f) clear and comprehensive prequalification criteria; (g) set construction times.
- Future tender design should consider: (a) repowering of assets approaching decommissioning; (b) cross-border competitive bidding processes to have mechanisms of resolving contradictions between different regulatory regimes; (c) permitting processes should avoid undersubscription of tenders.
- Providing for revenue stabilization mechanisms for bid winners (such as two-sided Contracts for Difference / CfDs or sliding market premiums).
- Zero bid tender design should be made compatible with the 2018 Renewable Energy Directive and provide for a transparent process.
- Corporate Renewable Power Purchase Agreements (RES RPAs) to become relevant to the scope of State Aid provisions in order to ensure that future revenue stabilization mechanisms allow that revenue from corporate renewable PPAs stand in conjunction with any form of government support.
- Energy Intensive Users (EIUs) to play their fair role in the energy transition: State Aid rules to factor in energy procurement strategies amongst the conditions for exemptions from renewable energy surcharges.
- Negative prices rules must be re-shaped and harmonized across all Member States to avoid market fragmentation.
- New and innovative technology should receive better definition.
- Provisions pertaining to electricity storage should take into account the following: (a) that stand-alone energy storage systems should be treated as any other technology that offers services to the electricity system; and (b) that wind energy asset owners should not need to reapply for support schemes when adding energy storage to an existing wind farm.
- Capacity Remuneration Mechanisms (CRMs) should be a last-resort option among the system adequacy measures.
- Production of hydrogen should increasingly rely on electrolysis powered by wind energy and other renewable energy resources.
Our view is that all of these areas of change should be given due consideration and incorporated in the new restatement of the Guidelines.
The full position paper prepared by WindEurope on the topic is available for download HERE.
