ANNOUNCEMENT 11 Jun 2014

In June 2014, the Spanish authorities introduced a support scheme for electricity generation from renewables, cogeneration and waste. The scheme is in place for a period of ten years.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

European Commission, Letter to the Member State - Published on 30 November 2017, State aid SA.40348 (2015/NN) — Spain Support for electricity generation from renewable energy sources, cogeneration and waste: http://ec.europa.eu/competition/state_aid/cases/258770/258770_1945237_333_2.pdf
European Commission, press release of 10 November 2017, State aid: Commission approves Spanish support scheme for renewable electricity: http://europa.eu/rapid/press-release_IP-17-4542_en.htm
European Commission, state aid case SA.40348 Support for electricity generation from renewable energy sources, cogeneration and waste-Spain: http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_40348
Official Journal of the European Union, Authorisation for State aid pursuant to Articles 107 and 108 of the Treaty on the Functioning of the European Union, Cases where the Commission raises no objections, notice number 2017/C 442/01: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2017.442.01.0001.01.ENG&toc=OJ:C:2017:442:TOC

Inception date: 11 Jun 2014 | Removal date: 10 Jun 2024
Still in force

Production subsidy

On 11 June 2014, the Spanish authorities introduced a support scheme for renewable electricity generation named "regimen retributivo específico". The scheme has a annual budget of EUR 6402.1 million, i.e. a total budget of EUR 64.021 billion (approx. USD 86.7 billion).

Beneficiaries under the scheme are entities owning and operating facilities utilising renewable energy sources such as solar, wind, geothermal and biomass; certain waste to energy facilities; as well as cogeneration plants from natural gas, coal, biomass and waste or oil products.

Under the scheme, beneficiaries receive a specific remuneration which is paid as a premium and is granted in addition to the income generated from electricity sales on the market. The aim of the scheme is: "support the development of technologies that offer environmental benefits, but would not be economically viable without State support." and to help "the technologies supported to compete on an equal footing with other technologies on the market at a reasonable rate of return. The premium is made up of two components: compensation for investments and, if applicable, compensation for operations." 

The aid is calculated on the basis of the following: (1) reimbursement is granted for investments made and is calculated on EUR per MW based on the given facilities generation capacity, (2) facilities whose operation cost is higher than the revenues generated from the market receive a reimbursement equal to the loss incurred (3) facilities located in "non-peninsular territories" may be eligible for an additional investment incentive for reducing generation costs. The aid is granted to the beneficiaries between 20 and 30 years depending on the type of facility.

Aid approved to new installations is granted through competitive auctions or tenders in Spain. The authorities have committed to "opening up all future competitive bidding processes to producers of renewable energy sources established in neighbouring countries with which it has bilateral agreements in this area."

The European Commission noted in its decision text that: "The notified scheme favours the generation of electricity from renewable sources, high efficiency cogeneration and waste by the selected beneficiaries. The measure is therefore selective. Beneficiaries are compensated at a rate exceeding the returns that they would normally have received from the market in the absence of aid. The measure therefore provides an advantage. Electricity is widely traded between Member States. The notified scheme is therefore likely to distort competition on the electricity market and affect trade between Member States."

However, the European Commission approved the scheme on 10 November 2017 stating: "The Commission laments the fact that Spain implemented the aid measure in breach of Article 108(3) TFEU. The Commission has assessed the compensation that facilities receive under the scheme over their entire lifetime. For existing facilities, this includes the payments received under the premium economic scheme. On the basis of the aforementioned assessment, it has decided not to raise objections to the aid on the grounds that it is compatible with the internal market pursuant to Article 107(3)(c) TFEU."

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