Renewables Financing [EU]

Table of Contents

EU renewable energy financing mechanism

Implementing Regulation (EU) 2020/1294 on the EU’s renewable energy financing mechanism

This implementing regulation sets out the rules on the functioning of the new EU renewable energy financing mechanism in line with Regulation (EU) 2018/1999 on governance of the energy union.

The mechanism supports new renewable energy projects across the EU and contributes to the renewable energy deployment in accordance with Directive (EU) 2018/2001 on renewable energy.

Key Points

Funding comes from three sources:

EU countries’ governments may provide voluntary payments;
other EU programmes and funds may make contributions, especially to reduce the cost of capital for renewable energy projects or to support regional cooperation inside the EU and with non-EU countries;
the private sector may offer finance, with the option of indicating the project, technology or end-use it would like to support.

All financing must respect EU financial rules as set out in Regulation (EU, Euratom) 2018/1046 (see summary).

The European Commission asks EU governments every year whether they would like to provide voluntary payment (contributing country) or to allow renewable energy to be installed on their territory (host country).

Host countries must provide certain information, such as:

maximum total capacity or renewable energy available to projects financed by the mechanism;
preferred technologies or end-use sectors;
any site or geographical restrictions.

Contributing countries must provide certain information, such as:

volume of renewable energy they intend to support and benefit from in statistical allocations;
their maximum financial contribution;
preference for technology-neutral, multi-technology, technology-specific, project-specific or end-use specific grant award procedures.

The Commission:

designs, on the basis of the offers and requests received, tenders (referred to as calls for proposals) specifying, for instance:
call’s objectives,
form of grants (investment or operating support) and award criteria,
ceiling price of proposals,
eligible technologies;
informs EU countries it intends to launch a call for proposals;
launches the call or calls, including the eligibility and selection criteria, after receiving binding commitments from host countries, whereby they will allow installations on their soil to receive the financial support, and from contributing countries, whereby they will provide the money they offered.
If a project promoter fails to deliver on their commitment, the rules on suspension, termination and reduction in Regulation (EU, Euratom) 2018/1046 apply.

The grant award system:

contains principles to ensure a competitive process, mitigate financial risk and limit transactions costs;
provides scope for different procedures depending on the technology or projects involved;
allocates grants to:
increase renewable energy production capacity (investment support),
give incentives to operate renewable energy installations by providing premiums in addition to market revenues (operating support).

Implementation periods reflect realistic delivery periods and are technology-specific and uniform across the EU, unless the Commission determines otherwise.

Projects financed by the renewable energy scheme may receive funding from other EU, national, public or private programmes provided they respect State aid rules and the EU budget does not finance the same costs twice.

The statistical benefits of renewable energy from installations financed by the scheme are, in general, divided 80:20 between contributing and host countries — however, the Commission may alter this ratio — during the implementation or support period. Afterwards, they remain entirely with the host. These statistical benefits count towards the national share of renewable energy regardless of where and how the actual renewable energy from the installations is consumed.

The Commission:

calculates annually, on the basis of the available energy production data from participating EU and non-EU countries, the actual statistical benefits that participating countries receive;
reports by 31 October every year to the:
Energy Union Committee, and makes public how the financing mechanism is helping to meet the EU’s 2030 binding renewable targets and European Green Deal objectives (see summary),
Energy Union Committee and to the European Parliament on the mechanism’s finances, including sums received, allocated and remaining.

Application & Background

It has applied since 7 October 2020 and does not have a deadline.

The legislation aims to help EU countries cooperate more closely to meet their individual and collective renewable energy targets.
For more information, see:
EU renewable energy financing mechanism (European Commission).

MAIN DOCUMENT

Commission Implementing Regulation (EU) 2020/1294 of 15 September 2020 on the Union renewable energy financing mechanism (OJ L 303, 17.9.2020, pp. 1-17)

ER 300 programme — increasing low-carbon technologies

Commission Decision 2010/670/EU laying down criteria and measures for the financing of commercial demonstration projects that aim at the environmentally safe capture and geological storage of CO2, as well as demonstration projects of innovative renewable energy technologies under the scheme for greenhouse gas emission allowance trading within the EU

The NER 300 decision sets out the rules and conditions under which the European Union (EU) finances innovative low-carbon demonstration projects to capture and geologically store carbon dioxide (CO2) gases. These are known as carbon capture and storage (CCS) and renewable energy sources (RES) projects.

The decision has been amended twice:

Commission Decision (EU) 2015/191 extended time limits for the final investment decision and the date of entry into operation due to the economic crisis (see Articles 9 and 11(1)).
Commission Decision (EU) 2017/2172 allowed funds not disbursed by NER 300 to be channelled to other financial instruments (InnovFin EDP and the Connecting European Facility debt instruments).

Key Points

Eligible CCS projects focus on power generation and various industrial applications, such as refineries and iron and steel production.
Eligible RES projects cover bioenergy, solar power, photovoltaics, geothermal, wind, ocean, hydropower (electricity generated by moving water) and smart grids (modernised energy networks that automatically monitor energy flows).

A first call for proposals, launched in December 2012, made €1.1 billion available to 20 renewable energy projects. They were due to start operating by December 2016, a deadline which was extended by Decision (EU) 2015/191 to December 2019, including a grace period of 1 year.
A second round, organised in July 2014, awarded €1 billion to 18 RES projects and one CCS project. These were originally meant to start operating by 30 June 2018, but this deadline was extended by Decision (EU) 2015/191 to June 2021, including a grace period of 1 year. Due to the COVID-19 outbreak, the dates of entry into operation have been further extended on a project-by-project basis, with the latest date being July 2022.

No further NER 300 calls for proposals are planned. The European Commission is now focusing on the projects already selected for funding and is monitoring their progress.
By 15 July each year, EU Member States must submit a report to the Commission on the state of implementation of projects in operation. This will contain information about the amount of CO2 stored or clean energy produced, the disbursement of the funding and the details of any significant problems.

Unspent funds from withdrawn projects under the second NER 300 call are channelled into the Innovation Fund.

Application & Background

It has applied since 5 November 2010.

For more information, see:

NER 300 programme (European Commission)
Innovation Fund (European Commission).
KEY TERMS

NER 300: the programme was given its name because it is funded from the sale of 300 million emission allowances (rights to emit 1 tonne of CO2) in the new entrants’ reserve of the EU’s emissions trading system. It subsidises installations of innovative RES technologies and CCS.

MAIN DOCUMENTS

Commission Decision 2010/670/EU of 3 November 2010 laying down criteria and measures for the financing of commercial demonstration projects that aim at the environmentally safe capture and geological storage of CO2, as well as demonstration projects of innovative renewable energy technologies under the scheme for greenhouse gas emission allowance trading within the Community established by Directive 2003/87/EC of the European Parliament and of the Council (OJ L 290 of 6.11.2010, pp. 39-48)

Successive amendments to Decision 2010/670/EU have been incorporated into the original text. This consolidated version is of documentary value only.

RELATED DOCUMENTS
Commission Delegated Regulation (EU) 2019/856 of 26 February 2019 supplementing Directive 2003/87/EC of the European Parliament and of the Council with regard to the operation of the Innovation Fund (OJ L 140, 28.5.2019, pp. 6-17)

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, pp. 32-46)x

Renewables Financing [EU]

EU renewable energy financing mechanism

Key Points

Application & Background

MAIN DOCUMENT

ER 300 programme — increasing low-carbon technologies

Key Points

Application & Background

MAIN DOCUMENTS

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