Citing EU state aid rules, the European Commission has endorsed German plans to reduce renewable energy surcharges for electricity users producing their own electricity using highly efficient cogeneration plants, the EC said on August 1.

The Commission decision on August 1 follows an agreement in principle reached on March 7 between the EU Commission’s competition chief, Margrethe Vestager, and Germany’s Economic Affairs and Energy Minister Peter Altmaier.

According to the Commission, the German Renewable Energy Act (Erneuerbare Energien Gesetz – EEG) provides support for the production of renewable electricity. This support is financed through a surcharge, the EEG-surcharge, imposed since August 2014 on all electricity users, including users producing their own electricity (self-suppliers).

Germany grants reductions to users generating their own electricity by using cogeneration, i.e. combined heat and power (CHP).

The Commission said the EC has assessed this support measure under EU State aid rules, in particular, the 2014 Guidelines on State aid for environmental protection and energy, which allow support to cogeneration installations on condition that the support is necessary to trigger the investment and does not lead to overcompensation.

The German support scheme takes account of several criteria, which influence the self-suppliers profitability: the electro-intensity of the sector in which they are active (in line with the Guidelines), the installed electrical capacity and the number of running hours of the installation. Based on these criteria, the scheme defines several categories of installations and grants an appropriate level of reduction in EEG surcharge.

For installations that entered into operation between August 2014 and December 2017, the Commission in 2014 approved an adjustment plan notified by Germany, ensuring an annual increase of the EEG surcharge until 2017. Under the measure, approved on August 1, a transitional regime will apply for an additional year before the same surcharge mechanism applies as for all other installations, in line with the Guidelines.

On this basis, the Commission said the EC concluded that the German support scheme is designed to prevent overcompensation of self-suppliers using highly efficient cogeneration and is in line with EU State aid rules, while any distortion of competition caused by the public support is minimised.