The European Commission has approved a €2.6 billion Estonian scheme to support renewable offshore wind energy to foster the transition towards a net-zero economy. The scheme was approved under the State aid Temporary Crisis and Transition Framework ('TCTF') adopted by the Commission on 9 March 2023 and amended on 20 November 2023 and on 2 May 2024 .
The Estonian measure
Estonia notified to the Commission, under the TCTF, a €2.6 billion scheme to support renewable offshore wind energy to foster the transition towards a net-zero economy.
The measure will support the construction and operation of offshore wind farms for electricity production in the areas determined by the Estonian Maritime Spatial Plan.
The aid will be granted on the basis of a transparent and non-discriminatory bidding process. The aid will take the form of a variable payment under two-way contracts for difference ("CfD") concluded for a period of 20 years. The aid amount will be calculated by comparing a strike price, determined in the tender offer of the selected beneficiary, to the market price for electricity. When the strike price exceeds the reference market price, the difference (price premium) is paid by the Estonian State to the beneficiary on top of the market price, with a maximum amount of aid granted capped at 65 €/MWh. Conversely, when the reference market price exceeds the strike price, the beneficiary will have to pay the difference to the Estonian authorities. There will be a limitation on the annual volume supported for a given year (set at a maximum of 2 TWh/year).
The Commission found that the Estonian scheme is in line with the conditions set out in the TCTF. In particular, the aid (i) will be granted through an open, clear, transparent and non-discriminatory competitive bidding process; and (ii) will be granted before 31 December 2025.
The Commission concluded that the Estonian scheme is necessary, appropriate and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance for the implementation of the REPower EU Plan and the Green Deal Industrial Plan , in line with Article 107(3)(c) Treaty on the Functioning of the European Union and the conditions set out in the TCTF.
On this basis, the Commission approved the aid measure under EU State aid rules.
Background
On 9 March 2023 , the Commission adopted the TCTF to foster support measures in sectors which are key for the transition to a net-zero economy, in line with the Green Deal Industrial Plan .
The TCTF provides for the following types of aid, which can be granted by Member States until 31 December 2025 in order to accelerate the green transition:
- Measures accelerating the rollout of renewable energy (section 2.5). Member States can set up schemes for investments in all renewable energy sources, with simplified tender procedures.
- Measures facilitating the decarbonisation of industrial processes (section 2.6). Member States can support investments in the decarbonisation of industrial activities with a view to reduce dependency on imported fossil fuels, in particular through electrification, energy efficiency and the switch to the use of renewable and electricity-based hydrogen which complies with certain conditions, with expanded possibilities to support the decarbonisation of industrial processes switching to hydrogen-derived fuels.
- Measures to further accelerate investments in key sectors for the transition towards a net-zero economy (section 2.8). Member States can grant investment support for the manufacturing of strategic equipment (namely batteries, solar panels, wind turbines, heat-pumps, electrolysers and carbon capture usage and storage), as well as for production of key components and for production and recycling of related critical raw materials. Support is capped at a certain percentage of the investment costs up to specific amounts, depending on the location of the investment and the size of the beneficiary. Higher support is possible for small and medium-sized companies, as well as companies located in disadvantaged regions to ensure that cohesion objectives are duly taken into account. Furthermore, in exceptional cases, Member States may provide higher support to individual companies, where there is a real risk of investments being diverted away from Europe, subject to a number of safeguards.
