State aid in the field of Energy: challenges Maria Segura Clayton & Segura State Aid Lawyers

ESI Funds support and state aid Article 6 of the ESIF Common Provisions Regulation (Regulation (EU) No 1303/2013 of 17 December 2013) Operations supported by the ESI Funds shall comply with applicable Union law and national law relating to its application Name of your presentation

ESIF - ex ante conditionalities The general obligation of Article 108(3) TFEU Additional requirement under ESIF which helps regarding compliance with the state aid rules (as opposed to pure “national state aid measures”) CPR Annex XI Part II - Ex ante conditionalities: The existence of arrangements for the effective application of Union State aid rules in the field of the ESI Funds. Ex ante conditionalities - stricter requirements or a reiteration of the general obligation?

Obligations for managing authorities Identify any state aid accurately Properly assess whether remuneration of private or public investors in line with the market economy operator principle Apply correctly the state aid rules and exemptions Meet the Commission’s administrative requirements for monitoring and aid schemes Secure compliance with the state aid rules including rules on cumulation for funding from different sources Name of your presentation

Definition of state aid applied to energy The “pre-test”: is the support provided to an undertaking engaged in an economic activity in a market for goods and services irrespective of its legal form? The “state aid test”: the four criteria or five conditions State resources (Preussen Elektra - Vent de Colère) Selective economic advantage (MEOP) Distortion of competition Effect on trade

ESIF priorities - State aid guidelines Article 5(4) ERDF Regulation No 1301/2013 / Article 4(a) Cohesion Fund Regulation No 1300/2013 - Investment priorities ...supporting the shift towards a low-carbon economy in all sectors Regarding support for energy, variety of instruments govern the assessment of compatibility of the aid: De minimis GBER EEAG

Measures covered by ESIF Promoting the production and distribution of energy derived from renewable sources; Promoting energy efficiency and renewable energy use in enterprises; Supporting energy efficiency, smart energy management and renewable energy use in public infrastructure, including in public buildings, and in the housing sector; Developing and implementing smart distribution systems that operate at low and medium voltage levels; Promoting low-carbon strategies for all types of territories, in particular for urban areas, including the promotion of sustainable multimodal urban mobility and mitigation-relevant adaptation measures; Promoting the use of high-efficiency co-generation of heat and power based on useful heat demand

Coherence between EU policies Communication “Energy 2020 – a strategy for competitive, sustainable and secure energy“ Objectives: secure, affordable and sustainable energy market with upgraded electricity grids, competitive and cleaner alternatives to replace obsolete plants, energy used more efficiently through the whole energy chain. State Aid Modernisation: Energy falls outside RAG GBER: energy generation, distribution and infrastructure are subject to sector-specific internal market legislation, criteria regarding compatibility with the internal market and consistency with the Union's environmental and energy policies

New state aid guidelines for energy and environmental aid (EEAG) The objectives: Make the rules clearer and simpler Definitions Common assessment elements for different categories of aid Limit detailed assessment to large projects with significant impact on competition Fulfilled?

GBER: the cornerstone of the 2014-2020 State Aid Regime Incentive for Member States to rely more on the GBER - three changes: The scope of the GBER has been extensively widened. It now covers almost all categories of exceptions in Article 107(2) and (3). The maximum allowable aid intensity for several types of aid has been raised. Many thresholds for notification of individual amounts of aid have also been raised. Measures covered: Aid to increase environmental protection (Art. 36 & 37), energy efficiency (Art. 38 & 39), high efficiency cogeneration (Art. 40), renewable energy (Art. 41-43), energy efficient district heating and cooling (Art. 46), recycling and re-utilisation (Art. 47), energy infrastructure (Art. 48)

Common challenges Definition of the objectives and design of measures including financing Determination of the eligible costs and the coverage of different support measures Introduction of competitive elements such as bidding procedures Counterfactual, incentive effect and necessity

Common challenges (II) One size fits all approach under GBER Different MS Guidance Accountability, responsibility, legal uncertainty, recovery

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