ANNOUNCEMENT 29 Apr 2021

In April 2021, the European Commission approved Germany's Renewable Energy Law (EEG 2021) establishing an aid scheme to support the electricity production from renewable energy sources. 

NUMBER OF INTERVENTIONS

2

  • 2 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

European Commission, Letter to the Member State on 29 April 2020, State Aid SA.57779 (2020/N) – Germany, EEG 2021:
https://ec.europa.eu/competition/state_aid/cases1/202124/288710_2283746_342_2.pdf

European Commission, SA.57779 Germany: EEG 2021: https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_57779

European Commission, Press Release from 29 April 2021, State aid: Commission approves prolongation and modification of German scheme to support electricity production from renewable energy sources:
https://ec.europa.eu/commission/presscorner/detail/en/IP_21_2042

The Federal Office for Economic Affairs and Export Control, Energie - Besondere Ausgleichsregelung: https://www.bafa.de/DE/Energie/Besondere_Ausgleichsregelung/Ueberblick/ueberblick_node.html

Inception date: 29 Apr 2021 | Removal date: 31 Dec 2026

Price stabilisation

On 29 April 2021, the European Commission approved Germany's Renewable Energy Act (EEG 2020), establishing a scheme to support renewable energy sources. The price stabilisation measure pays enterprises and households producing energy from renewable sources market premiums or feed-in premiums. Germany did not indicate a total budget for the scheme but estimates a yearly budget of EUR 33.1 billion (approx. USD 40.08 billion). This provides an estimated total budget of EUR 165.5 billion (approx USD 200.4 billion). The scheme is in force until 31 December 2026. 

More specifically, the measure supports the production of electricity from renewable sources and mine gas. Beneficiaries of the scheme will be selected through tenders conducted by the Federal Network Agency and separately organised for each technology. The aid is paid as a market premium received on top of the market price for electricity. In addition, for small installations (up to 100 kW), fixed feed-in tariffs are applicable.

The measures aim to increase the share of electricity produced from renewable energy sources to 65 per cent by 2030, with a determined roadmap with annual goals. Eligible sources are energy from hydropower, tidal power including wave power, tidal power, salt gradient and flow energy, onshore wind energy, solar, geothermal energy, energy from biomass, including biogas and biomethane, as well as the biodegradable fraction of municipal waste and industrial waste, landfill gas and sewage treatment gas and mine gas. The scheme also provides tax reliefs to reduce surcharges for energy-intensive enterprises when using renewable energy

In a press release, Executive Vice-President Margrethe Vestager is quoted as follows: “The scheme introduces new features to ensure that aid is kept to the minimum and electricity production occurs in line with market signals, while at the same time ensuring the competitiveness of energy-intensive companies and reducing pollution caused by ships in harbour.”

In its decision, the European Commission noted that the measures affect sectors where "trade takes place between Member States, and the beneficiaries are in competition with undertakings located in other Member States". Furthermore, the "electricity market is liberalised and electricity is traded between Member States". Therefore, the measure is "liable to distort competition and affect trade between Member States". 

The European Commission approved the state aid without raising objections, concluding that the measure is compatible with the internal market according to Article 107(3)(c) of the TFEU.

A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.

AFFECTED SECTORS

 

AFFECTED PRODUCTS

 
Inception date: 29 Apr 2021 | Removal date: 31 Dec 2026

Tax or social insurance relief

On 29 April 2021, the European Commission approved Germany's Renewable Energy Act (EEG 2020) which establishes a scheme to support renewable energy sources. The scheme provides tax reliefs to reduce surcharges for certain enterprises when using renewable energy. Germany did not indicate a total budget but indicated payments of EUR 4.9 billion (approx. USD 5.94 billion) per year, bringing the total estimated budget to EUR 24.5 billion (approx. USD 29.7 billion). The scheme is in force until 31 December 2026. 

More specifically, the measure reduces the EEG surcharges for electricity for certain energy-intensive enterprises and seagoing ships in the harbour. Beneficiaries are determined energy-intensive users and operators of seagoing ships at berth using shore-side electricity. Especially energy-intensive companies that are in direct international competition are beneficiaries of this aid. The Federal Office for Economic Affairs and Export Control (in German: BAFA) is responsible for administering this aid scheme. 

The background is that in 2000 a surcharge based on the polluter-pays principle was introduced for electricity consumers. The surcharge is used to finance electricity production from renewable energy. A second measure is a production subsidy to incentivise the production of electricity from renewable sources and mine gas, see also the second intervention. 

In a press release, Executive Vice-President Margrethe Vestager is quoted as follows: “The scheme introduces new features to ensure that aid is kept to the minimum and electricity production occurs in line with market signals, while at the same time ensuring the competitiveness of energy-intensive companies and reducing pollution caused by ships in harbour.”

In its decision, the European Commission noted that the measures affect sectors where "trade takes place between Member States, and the beneficiaries are in competition with undertakings located in other Member States". Furthermore, the "electricity market is liberalised and electricity is traded between Member States". Therefore, the measure is "liable to distort competition and affect trade between Member States". 

The European Commission approved the state aid without raising objections, concluding that the measure is compatible with the internal market according to Article 107(3)(c) of the TFEU.

A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.  

 
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