The European Commission said it has opened an in-depth investigation to assess whether German plans to set up an electricity capacity reserve comply with EU state aid rules.

The Commission said on April 7 that has concerns that the measure may distort competition and favour power plant operators over demand response operators.

“Reliable electricity supplies are crucial to a functioning economy and Germany has a legitimate interest to ensure security of supply for its citizens and businesses,” EU Competition Policy Commissioner Margrethe Vestager said.

“It is our role to ensure that companies are granted state support only when it is truly necessary and in a manner that limits distortions of competition. We currently have a number of concerns regarding the need and design of the German strategic reserve. This is why we will investigate further and invite third parties to submit their views on the measure,” the EU competition chief added.

The Commission said that it would now investigate further whether its initial concerns are justified. The opening of an in-depth investigation gives Germany and interested third parties an opportunity to submit comments. It does not prejudge the outcome of the investigation.