Brussels (Brussels Morning) – The European Commission approved a €3.2 billion Czech scheme to fund high-efficiency CHP plants, aiding Czechia’s National Energy and Climate strategy, the European Green Deal, and EU energy efficiency targets.
The European Commission has authorised, under EU State aid rules, a €3.2 billion Czech scheme to fund the production of electricity from fresh and modernised high-efficiency combined heat and power (‘CHP’) plants. The measure will assist in the implementation of Czechia’s National Energy and Climate strategy, the European Green Deal and the EU’s energy efficiency targets.
Czechia informed the Commission of its intention to sustain the production of electricity in high-efficiency CHP plants. The scheme will operate until 31 December 2025. The estimated allocation of the scheme is €3.2billion.
Who are the beneficiaries of the Czech energy scheme?
European Commission states that the beneficiaries are operators of new or updated CHP installations in Czechia that satisfy the definition of high-efficiency cogeneration as inscribed in the Energy Efficiency Directive.
What technologies are excluded from the Czech CHP scheme?
All technologies and projects that encourage the production of electricity from high-efficiency CHP installations are qualified, except for those powered by solid fossil fuels, diesel and oil. Projects concerning natural gas will be required to either close the assisted installations or allow the switch to renewable and low-carbon gases by 2050, to bypass the lock-in of natural gas.
Under the scheme, the aid will take the form of a feed-in premium (bonus) for each MWh of produced electricity for a duration of 15 years. The amount of bonus is set through tenders, except for small installations (up to 1 MWe) where the amount is set administratively by the Czech Energy Regulatory Office on an annual basis and limited to the funding gap. The scheme is anticipated to bring about 9.3 million tonnes of CO2 savings per year.
What is the duration and scope of the Czech aid scheme?
The Commission evaluated the scheme under EU State aid rules, in particular of the Treaty on the Functioning of the EU (‘TFEU’), which allows Member States to support the development of certain economic actions subject to certain conditions, as well as under the 2022 Guidelines on State aid for climate, environmental protection and energy. Under the Guidelines, Member States can fund energy efficiency through the production of electricity in high-efficiency cogeneration, subject to specific conditions. Aid can be given to small projects without a competitive bidding process.
What guidelines govern EU State aid for climate and energy?
The Commission’s 2022 Guidelines on State aid for climate, environmental protection and energy deliver guidance on how the Commission will consider the compatibility of environmental protection, including climate safety, and energy aid calculations which are subject to the notification provision under TFEU.
The Guidelines construct a flexible, fit-for-purpose enabling framework to support Member States provide the required support to reach the Green Deal goals in a targeted and cost-effective manner. The rules concern an alignment with the important EU’s objectives and targets outlined in the European Green Deal and with other recent regulatory differences in the energy and environmental domains and will cater for the raised importance of climate protection.
The Guidelines permit Member States to support the production of electricity from cogeneration plants, subject to specific conditions. These rules seek to help Member States meet the EU’s ambitious energy and climate targets at the undersized possible cost for taxpayers and without excessive distortions of competition in the Single Market.
