EC approves €30.5 billion aid scheme to support renewable energy production in France

Euros

The European Commission has approved, under EU State aid rules, a French aid scheme to support renewable electricity production, including hydroelectric power.

The measure will help France achieve its renewable energy targets without unduly distorting competition and will contribute to the European objective of achieving climate neutrality by 2050, according to a press release.

“This aid measure will stimulate development of key renewable energy sources and support a transition to an environmentally sustainable energy supply, in line with the EU Green Deal objectives. The selection of the beneficiaries through a competitive bidding process will ensure the best value for taxpayers’ money while maintaining competition in the French energy market,” said Executive Vice-President Margrethe Vestager, who is in charge of competition policy.

France notified the commission of its intention to introduce a new scheme to support electricity produced from renewable energy sources, namely to onshore operators of solar, onshore wind and hydroelectric installations. The scheme grants support to these operators, awarded via competitive tenders. The measure includes seven types of tenders for a total of 34 GW of new renewables capacity that will be organized between 2021 and 2026: solar on the ground, solar on buildings, onshore wind, hydroelectric installations, innovative solar, self-consumption and a technology-neutral tender. The support takes the form of a premium on top of the electricity market price. The measure has a provisional total budget of about €30.5 billion. The scheme is open until 2026 and aid can be paid out for a maximum period of 20 years after the new renewable installation is connected to the grid.

The EC assessed the measure under EU State aid rules, in particular the 2014 Guidelines on State aid for environmental protection and energy. The commission found that the aid is necessary to further develop the renewable energy generation to meet France’s environmental goals. It also has an incentive effect, as the projects would otherwise not take place in the absence of public support. Furthermore, the aid is proportionate and limited to the minimum necessary, as the level of aid will be set through competitive tenders. In addition, the commission found that the positive effects of the measure, in particular the positive environmental effects, outweigh any possible negative effects in terms of distortions to competition. Finally, France also committed to carry out an ex-post evaluation to assess the features and implementation of the renewables scheme.

The commission’s 2014 Guidelines on State Aid for Environmental Protection and Energy allow Member States to support the production of electricity from renewable energy sources, subject to certain conditions. The Renewable Energy Directive of 2018 established an EU-wide binding renewable energy target of 32% by 2030. With the European Green Deal Communication in 2019, the commission reinforced its climate ambitions, setting an objective of no net emissions of greenhouse gases in 2050. The recent European Climate Law, which enshrines the 2050 climate neutrality objective and introduces the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, set the ground for the “fit for 55” legislative proposals adopted by the Commission in July 2021. Among these proposals, the commission has presented an amendment to the Renewable Energy Directive, which sets an increased target to produce 40% of EU energy from renewable sources by 2030.

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