The European Commission has approved, under EU state aid rules, a Greek measure with an estimated budget of 341 million euros to support the construction and operation of storage facilities in the electricity system. The measure will be partly financed by the Recovery and Resilience Mechanism (RMF), following the positive assessment of the Greek recovery and resilience plan by the Commission and its approval by the Council. The aim of the measure is to enable the smooth integration into the Greek electricity system of an increasing share of renewable energy coming from wind and solar sources. The program will also contribute to the EU’s strategic objectives related to the EU Green Deal.
Executive Vice President for Competition Policy Margrethe Vesteyjer said: “Increasing the available electricity storage capacity in the system is key to making grids more flexible and better prepared for a future in which renewables they will form the backbone of the decarbonised electricity mix. The Greek aid measure we approved today, which will be financed in part by the Recovery and Resilience Facility, will contribute to the development of competitive markets for electricity system services while helping Greece meet its emissions reduction targets.”
The Greek regime
The scheme notified by Greece will promote the creation of various electricity storage facilities, with a total capacity of up to 900 MW, connected to the high voltage grid. Projects will be selected through a transparent and impartial bidding process. The award of the contracts for the selected projects should take place before the end of 2023, and the storage facilities should be completed by the end of 2025.
The aid will be granted, cumulatively, in the form of: i) an investment grant, which will be paid during the construction phase of all supported projects; and ii) annual support, which will be paid during the operation phase of the projects, for a period of 10 years.
The total amount of annual support per beneficiary will be determined in a tender and adjusted through a recovery mechanism in case the project has excess revenue from its market participation during the operational phase.
The Commission assessed the measure in accordance with EU State aid rules, namely Article 107(3)(c) of the Treaty on the Functioning of the European Union, which allows EU countries to support the development of certain economic activities under certain conditions, and the 2022 guidelines for state aid in the fields of climate, environmental protection and energy.
The Commission considered that the aid is necessary and of an incentive nature, given that the electricity storage projects will not be implemented without public support. Furthermore, the measure is proportionate, given that the level of aid corresponds to the actual financial needs, and there will be the necessary safeguards that limit the aid to a minimum (among other things, a competitive tendering process for granting the aid and adjustment of the annual support through recovery mechanism in case of excess market revenue). The Commission therefore concluded that the positive effects of the measure offset any possible distortion of competition and trade caused by the support. Based on the above, the Commission approved the measure in accordance with EU State aid rules.
Electricity storage solutions such as batteries make it possible to store excess energy produced during periods of high renewable production and use it later when weather conditions are less favorable. The share of renewable electricity in the mix is expected to increase significantly in the coming years, which is in line with emission reduction targets. Therefore, batteries, along with other types of electricity storage facilities, are set to become an increasingly necessary component of decarbonized electricity systems.
Thanks to their high flexibility and ability to enter the market and start producing at full capacity almost immediately, electricity storage facilities enhance market liquidity, support competitiveness and transparent price formation, and contribute to the reduction of system service prices, as they stabilize the network. Storage facilities installed in grid-saturated areas could also act as grid congestion relievers by absorbing locally generated renewable electricity that would otherwise be curtailed due to grid transport constraints.
The 2022 State aid guidelines for climate, environmental protection and energy provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, with measures aid in the energy sector subject to the notification obligation under Article 107(3)(c) of the Treaty.
The new guidelines, which will apply from January 2022, create a flexible, fit-for-purpose framework that will help Member States provide the necessary support to achieve the Green Deal objectives in a targeted and cost-effective way. The rules are aligned with the EU’s important goals and objectives set out in the European Green Deal as well as other recent regulatory changes in the energy and environment sectors, and will take into account the increased importance of climate protection. They include sections on energy efficiency measures, aid for clean mobility, infrastructure, circular economy, pollution reduction, biodiversity protection and restoration, and measures to guarantee security of energy supply, under certain conditions .
In the framework of the MAA, national recovery plans are presented, which include measures involving state aid. The Commission assesses these measures as a matter of priority and has provided guidance and support to Member States during the preparatory phases of national plans to facilitate the rapid development of the MAA.
The non-confidential version of the decision will be published under case number SA.64736 on the State aid register of the Commission’s competition website once any confidentiality issues have been resolved.