EU renewable energy financing mechanism

 

SUMMARY OF:

Implementing Regulation (EU) 2020/1294 on the EU’s renewable energy financing mechanism

WHAT IS THE AIM OF THE REGULATION?

This implementing regulation sets out the rules on the functioning of the new EU renewable energy financing mechanism in line with Regulation (EU) 2018/1999 on governance of the energy union.

The mechanism supports new renewable energy projects across the EU and contributes to the renewable energy deployment in accordance with Directive (EU) 2018/2001 on renewable energy.

KEY POINTS

Funding comes from three sources:

• EU countries’ governments may provide voluntary payments;
• other EU programmes and funds may make contributions, especially to reduce the cost of capital for renewable energy projects or to support regional cooperation inside the EU and with non-EU countries;
• the private sector may offer finance, with the option of indicating the project, technology or end-use it would like to support.

All financing must respect EU financial rules as set out in Regulation (EU, Euratom) 2018/1046 (see summary).

The European Commission asks EU governments every year whether they would like to provide voluntary payment (contributing country) or to allow renewable energy to be installed on their territory (host country).

Host countries must provide certain information, such as:

• maximum total capacity or renewable energy available to projects financed by the mechanism;
• preferred technologies or end-use sectors;
• any site or geographical restrictions.

Contributing countries must provide certain information, such as:

• volume of renewable energy they intend to support and benefit from in statistical allocations;
• their maximum financial contribution;
• preference for technology-neutral, multi-technology, technology-specific, project-specific or end-use specific grant award procedures.

The Commission:

• designs, on the basis of the offers and requests received, tenders (referred to as calls for proposals) specifying, for instance:
  • call’s objectives,
  • form of grants (investment or operating support) and award criteria,
  • ceiling price of proposals,
  • eligible technologies;
• informs EU countries it intends to launch a call for proposals;
• launches the call or calls, including the eligibility and selection criteria, after receiving binding commitments from host countries, whereby they will allow installations on their soil to receive the financial support, and from contributing countries, whereby they will provide the money they offered.

If a project promoter fails to deliver on their commitment, the rules on suspension, termination and reduction in Regulation (EU, Euratom) 2018/1046 apply.

The grant award system:

• contains principles to ensure a competitive process, mitigate financial risk and limit transactions costs;
• provides scope for different procedures depending on the technology or projects involved;
• allocates grants to:
  • increase renewable energy production capacity (investment support),
  • give incentives to operate renewable energy installations by providing premiums in addition to market revenues (operating support).

Implementation periods reflect realistic delivery periods and are technology-specific and uniform across the EU, unless the Commission determines otherwise.

Projects financed by the renewable energy scheme may receive funding from other EU, national, public or private programmes provided they respect State aid rules and the EU budget does not finance the same costs twice.

The statistical benefits of renewable energy from installations financed by the scheme are, in general, divided 80:20 between contributing and host countries — however, the Commission may alter this ratio — during the implementation or support period. Afterwards, they remain entirely with the host. These statistical benefits count towards the national share of renewable energy regardless of where and how the actual renewable energy from the installations is consumed.

The Commission:

• calculates annually, on the basis of the available energy production data from participating EU and non-EU countries, the actual statistical benefits that participating countries receive;
• reports by 31 October every year to the:
  • Energy Union Committee, and makes public how the financing mechanism is helping to meet the EU’s 2030 binding renewable targets and European Green Deal objectives (see summary),
  • Energy Union Committee and to the European Parliament on the mechanism’s finances, including sums received, allocated and remaining.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 7 October 2020 and does not have a deadline.

BACKGROUND

• The legislation aims to help EU countries cooperate more closely to meet their individual and collective renewable energy targets.
• For more information, see:
  • EU renewable energy financing mechanism (European Commission).

MAIN DOCUMENT

Commission Implementing Regulation (EU) 2020/1294 of 15 September 2020 on the Union renewable energy financing mechanism (OJ L 303, 17.9.2020, pp. 1-17)

RELATED DOCUMENTS

Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions — The European Green Deal (COM(2019) 640 final, 11.12.2019)

Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, pp. 1-77)

Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (recast) (OJ L 328, 21.12.2018, pp. 82-209)

Successive amendments to Directive (EU) 2018/2001 have been incorporated in the original text. This consolidated version is of documentary value only.

Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, pp. 1-222)

last update 25.11.2020