Lithuanian renewable energy funding approved under state aid rules

lithuanian renewable energy funding
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The European Commission has approved a €385 million state aid scheme in Lithuania supporting renewable electricity generation projects.

Under the new initiative, due to begin on 1 May 2019, new projects which generate electricity from renewable sources – such as wind, solar and hydropower – will receive financial support from the Lithuanian government in amounts to be determined through a competitive bidding process. The scheme, which was devised to help Lithuania meet its target of generating at least 38 per cent of its energy from renewable sources by 2025, will be in place until July 2025 or until the 38 per cent target has been achieved.

The funding directed to renewable energy producers must be worth no more than the difference between the average production costs of generating renewable energy – onshore wind power is used as a reference point – and the market price of renewable energy. The funding limit has been set in order to encourage production of renewable energy without distorting wider competition.

The scheme was assessed by the Commission under the EU’s state aid regulations, with particular reference to its 2014 Guidelines on state aid for environmental protection and energy. It was found that the state aid provided by the government in this case provided an incentive for potential beneficiaries to produce renewable energy which could not be matched by market prices; and that the aid was “proportionate” to the overarching needs of the country, as it only covered the necessary difference between the costs of producing electricity from renewable sources and the market price.

The Commission found that the allocation of Lithuanian renewable energy funding was in line with the EU’s legislation governing state aid; as the programme would support Lithuania’s transition towards renewable energy sources in line with wider EU targets, without occasioning undue distortion of market competition forces. Margrethe Vestager, Commissioner in charge of competition policy, said: “The scheme will contribute to Lithuania’s transition to low carbon and environmentally sustainable energy supply, in line with the EU environmental objectives and our state aid rules.”

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