The European Commission (EC) has approved, under EU State aid rules, an Austrian aid scheme to support electricity production from renewable sources (RES). The measure will help Austria reach its target of 100 percent renewable energy in 2030, in line with its Recovery and Resilience Plan as endorsed by the Commission and approved by Council, and will contribute to the European objective of achieving climate neutrality by 2050, without unduly distorting competition in the Single Market.
Austria notified the Commission of its intention to introduce a scheme to support electricity produced from renewable energy sources (RES) – wind, solar, hydro, biomass and biogas.
Commenting on the decision, Executive Vice-President Margrethe Vestager, in charge of competition policy, said that the scheme will enable Austria to support renewable technologies, as it has set its goal to achieve 100 percent carbon dioxide (CO2) free electricity generation in 2030.
The measure will contribute to the reduction of CO2 and other greenhouse gas emissions, in line with the EU Green Deal objectives and the environmental targets set in Austria’s Recovery and Resilience Plan, without unduly distorting competition in the Single Market, Margrethe Vestager said.
The Austrian aid scheme
Under the scheme, the aid will take the form of a top-up premium, calculated as the difference between the average production cost for each renewable technology and the electricity market price.
In particular, for electricity produced from wind, solar energy, and biomass, the aid will be granted through technology-specific competitive bidding processes, which should contribute to keeping the support proportionate and cost-effective. Austria has also foreseen mixed-technology tenders including wind and hydro in their framework.
Austria also committed to opening the renewable support scheme to energy producers established outside Austria, subject to the conclusion of bilateral or multilateral cooperation agreements with other countries.
The measure will apply until the end of 2030. The aid will be paid out to the selected beneficiaries for a period of a maximum of 20 years from the starting of the operation of the plant. Payments under the scheme have been estimated to amount to around EUR 4.4 billion by the end of 2032.
Austria has set itself the target to increase the share of electricity produced from renewable energy sources from the current 75 percent to 100 percent in 2030. The measure is one of the targets to be achieved by Austria in the context of its Recovery and Resilience Plan.
A capped price incentive
The Commission assessed the scheme under EU State aid rules, in particular the 2014 Guidelines on State aid for environmental protection and energy.
The Commission found that the aid is necessary to further develop energy generation from renewable sources and help Austria achieve its environmental targets. It also has an incentive effect, as current electricity prices do not fully cover the costs of generating electricity from RES, hence, the investments by the selected beneficiaries would not take place in the absence of aid.
Furthermore, the aid is proportionate and limited to the minimum necessary. The level of aid will be determined by competitive tenders for electricity produced from wind, solar energy, and biomass. Furthermore, Austria envisages maximum price caps based on the cost of production.
The aid will be granted in the form of a top-up premium, which cannot exceed the difference between the market price of electricity and the production costs. In this context, Austria will carry out a yearly review of the costs of producing electricity from the supported renewable energy versus the market prices.
Moreover, Austria has committed to ensuring sufficient flexibility to adapt the support scheme to market developments, with a view to maintaining cost-efficient support. In particular, in view of the novelty of the system for the country, Austria put in place a mechanism of review, notably with an interim evaluation by 2025. It has also envisaged a possible adaptation of the system in order to ensure that tenders remain competitive.
Finally, the Commission found that the positive effects of the measure, in particular the positive environmental effects, outweigh any possible negative effects in terms of possible distortions to competition.
On this basis, the Commission concluded that the Austrian scheme is in line with EU State aid rules, as it will facilitate the development of renewable electricity production from various technologies in Austria and reduce GHG and CO2 emissions, in line with the European Green Deal, without unduly distorting competition in the Single Market.
