State aid: Commission approves €450 million German measure to replace electricity generation amid Russian natural gas shortages

©European Union,2015 Source: EC Audiovisual Service Photo: Lieven-Creemers©European Union,2015 Source: EC Audiovisual Service Photo: Lieven-Creemers

The European Commission has approved, under EU State aid rules, a temporary German measure to enable five lignite-fired power plants to be on stand-by and ready to be activated to the extent needed in the event of natural gas shortages. The measure will compensate the operators of the power plants for the costs of getting the plants ready to operate if needed. The measure, under which aid may be provided until 31 March 2024 at the latest, will contribute to safeguarding natural gas availability amidst Russian natural gas shortages in the context of Russia’s war against Ukraine. Under the measure, the five power plants will be transferred into a temporary lignite supply reserve for the period between 1 October 2022 and 31 March 2024. Germany will also compensate the two affected operators, Lausitz Energie Kraftwerke AG and RWE AG, for the necessary costs incurred to ensure the plants are operational and ready to return to the market. The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(b) Treaty on the Functioning of the European Union, which allows Member States to grant aid to specific companies or sectors to remedy a serious disturbance in a Member State’s economy. The Commission found that the aid is proportionate and has a limited impact on competition and trade within the EU. Furthermore, the aid is limited in time. On this basis, the Commission approved the German measure under EU State aid rules. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This temporary measure will enable Germany to mitigate the economic impact of Putin’s war against Ukraine, as it will contribute to replacing gas in the event of shortage, thereby enhancing our preparedness for the next winter.” A press release is available online.