Cuts in cogeneration surcharges for Europe’s energy intensive firms

EU state aid regulators approved lower surcharges to finance cogeneration for energy-intensive companies in Germany and Italy.
Published: Fri 26 May 2017

The European Commission (EC) has approved reductions in surcharges granted to energy-intensive businesses to finance support for cogeneration and renewable energies in Italy, and to provide incentives for cogeneration in Germany.

A level playing field for big energy users

In 2016 the EU investigated whether German reductions to these surcharges for users with high yearly energy consumption and certain energy intensive industrial users were in line with EU state aid rules. During this investigation, Germany limited the reductions to energy intensive companies exposed to international trade and to a maximum of 85% of the surcharge. Under Italy’s plans, the reductions of the surcharges used to finance the support for renewable electricity and cogeneration will also be limited in this way.

The EC had approved the Italian incentive scheme for renewable energies in April 2016, while the German Heat and Power Cogeneration Act 2016 containing the provisions to reduce the surcharges was approved by Brussels in October 2016.

In a statement, an EU executive said that both measures comply with the bloc's state aid rules designed to promote a ‘level playing field.’

Both countries have agreed to better align the level of reductions for eligible companies and phase out reductions for those that are not eligible.

Energy intensive companies supported by green policies

Commissioner Margrethe Vestager, said: “Cogeneration both produces electricity and puts to use the heat generated in the process – this efficiency can help us reach Europe’s energy and climate goals.

“Today’s decisions make sure that Member States can design sustainable financing to support cogeneration, same as for renewable energy. These promote green policies whilst preserving the competitiveness of companies that are heavily dependent on energy.”

The EU recently approved state aid to support renewable energy and cogeneration power plants in Latvia built between 2007 and 2012.