State aid: Commission approves amendments to German scheme to support offshore wind energy generation

The European Commission has approved, under EU State aid rules, amendments to a German scheme to support offshore wind energy generation in Germany (German Offshore Wind Energy Act –  ‘WindSeeG’). The scheme complements the German Renewable Energy Act (Erneuerbare Energien Gesetz – ‘EEG 2023′) and will further contribute to achieving Germany’s energy and environmental targets and the EU’s strategic objectives relating to the European Green Deal.

The German scheme

Germany notified to the Commission its intention to amend the existing WindSeeG scheme to further develop offshore wind energy generation in Germany. The original scheme was approved by the Commission on 23 July 2014 (SA.38632) and was prolonged and amended several times, lastly in 2021 (SA.57610), under the 2014 Guidelines on State aid for climate, environmental protection and energy.

Germany notified the following amendments to the scheme, with a total budget of €1.5 billion:

• An increase of expansion targets for installed capacity of offshore wind energy installations (i) from 20 GW to at least 30 GW by 2030; (ii) to at least 40 GW by 2035; and (iii) from 40 GW to at least 70 GW by 2040;
• A new tender procedure for a different type of sites in the German Exclusive Economic Zone (‘EEZ’) allowing offshore wind electricity producers to bid for sites that have not been centrally pre-investigated by the German government. With this new procedure, Germany expects to increase and speed up offshore wind development.
• A dynamic bidding procedure for tenders for non-centrally pre-investigated sites, which will allow Germany to differentiate and select between multiple bids with a bid value of zero.

The amended scheme will continue to be applicable until the end of 2026.

The Commission’s assessment

The Commission assessed the amended scheme under EU State aid rules, in particular the 2022 Guidelines on State aid for climate, environmental protection and energy (‘CEEAG’) that apply since January 2022.

The Commission found that the measure continues to be necessary and appropriate to promote the use of renewable energy sources and to reduce greenhouse gas emissions.

Furthermore, the Commission found that the aid is proportionate and limited to the minimum necessary. The Commission also found that the positive effects of the scheme, in particular the environmental ones, outweigh any possible negative effects in terms of distortions to competition. In particular, the aid is granted through a premium on top of the electricity market price, based on the lowest bids in an open and transparent bidding process. The aid is limited to a maximum defined by the funding gap, which is the amount needed to develop projects.

In line with the evaluation requirement envisaged by the CEEAG, Germany has developed a detailed plan for the independent economic evaluation of the scheme and has committed to improve the data gathering and the use of empirical methodologies in this respect.

On this basis, the Commission approved the amended German scheme under EU State aid rules.

Background

The Commission’s 2022 Guidelines on State aid for climate, environmental protection and energy (‘CEEAG’) provide guidance on how the Commission assesses the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) TFEU.

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 European 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 2022 CEEAG allow Member States to support the production of electricity from renewable energy sources, subject to certain conditions. These rules aim to help Member States meet the EU’s ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.

The Renewable Energy Directive of 2018 established an EU-wide binding renewable energy target of at least 32% by 2030. With the European Green Deal Communication in 2019, the Commission reinforced its climate ambitions, setting an objective of net zero emissions of greenhouse gases in 2050. The European Climate Law in force since July 2021, which enshrines the 2050 climate neutrality objective and introduces the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, sets the ground for the ‘Fit for 55′ legislative proposals presented  by the Commission on 14 July 2021. Among these proposals, the Commission has presented amendments of the Renewable Energy Directive and the Energy Efficiency Directive with more ambitious binding annual targets to increase the production of energy from renewable sources and reduce energy use at EU level.

The non-confidential version of today’s decision will be made available under the case number SA.103069 in the State Aid Register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.