State aid: Commission approves Greek scheme under Recovery and Resilience Facility to support development of electricity storage facilities
The European Commission has approved, under EU State aid rules, a Greek measure with an estimated budget of €341 million to support the construction and operation of storage facilities in the electricity system. The measure will be partly funded by the Recovery and Resilience Facility (‘RRF'), following the Commission's positive assessment of the Greek Recovery and Resilience Plan and its adoption by the Council. The measure aims at allowing a smooth integration in the Greek electricity system of an increasing share of renewable energy coming from wind and solar sources. The scheme will also contribute to the EU's strategic objectives relating to the EU Green Deal.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Increasing available electricity storage capacity in the system is key to make grids more flexible and better prepared for a future in which renewables form the backbone of the decarbonised electricity mix. The Greek aid measure we have approved today, which will be partly funded by the Recovery and Resilience Facility, will contribute to the development of competitive markets for electricity system services, while helping Greece meet its emission reduction targets.”
The Greek scheme
The scheme notified by Greece will promote the establishment of several electricity storage facilities, with a joint capacity of up to 900 MW, connected to the high-voltage network. The projects will be selected through a transparent and non-discriminatory bidding process. The award of the contracts to the selected projects should take place before the end of 2023 and the storage facilities should be completed by the end of 2025.
The aid will be granted, cumulatively, in the form of: (i) an investment grant, which will be paid during the construction phase of all supported projects; and (ii) an annual support to be paid during the operations phase of the projects, for a 10-year period.
The total amount of annual support per beneficiary will be determined in a competitive tender and adjusted through a claw-back mechanism in case the project has excess market revenues from its participation to the market during the operations phase.
The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union, which enables EU countries to support the development of certain economic activities subject to certain conditions, and the Guidelines on State aid for climate, environmental protection and energy 2022.
The Commission found that the aid is necessary and has an incentive effect, as the electricity storage projects would not be carried out without the public support. Furthermore, 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 and an adjustment of the annual support by means of a claw-back mechanism in case of excess market revenues. The Commission therefore concluded that the positive effects of the measure outweigh any potential distortion of competition and trade brought about by the support. On this basis, the Commission approved the measure under EU State aid rules.
Background
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 expected to rise considerably over the coming years, which is in line with the emission reduction targets. Therefore, batteries, along with other types of electricity storage facilities, are going to become an increasingly indispensable component of decarbonised electricity systems.
Thanks to their high flexibility and the ability to enter the market and begin producing at full output almost instantly, electricity storage facilities enhance market liquidity, support competitiveness and transparent price formation, and contribute to a reduction in the prices of system services as they stabilize the grid. Storage facilities installed in congested network areas could also provide network congestion relief, by absorbing locally produced renewable electricity, which would otherwise be curtailed due to the network's transmission constraints.
The Guidelines on State aid for climate, environmental protection and energy 2022 provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3), point (c), of the Treaty.
The new guidelines, applicable as from January 2022, create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support to reach the Green Deal objectives in a targeted and cost-effective manner. The rules involve an alignment with the important EU's objectives and targets set out in the European Green Deal and with other recent regulatory changes in the energy and environmental areas and will cater for the increased importance of climate protection. They include sections on energy efficiency measures, aid for clean mobility, infrastructure, circular economy, pollution reduction, protection and restoration of biodiversity, as well as measures to ensure security of energy supply, subject to certain conditions.
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.
The non-confidential version of the decision will be made available under the case number SA.64736 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved.