EU backs high-efficient cogeneration of electricity and heat in Slovakia

Slovak plans to support the production of electricity from high-efficient cogeneration installations connected to district heating networks in Slovakia comply with EU aid rules, the European Commission’s antitrust chief said on March 4.

“This over €1 billion Slovak measure will provide an important contribution to EU energy and climate objectives, without unduly distorting competition,” Commission Executive Vice-President Margrethe Vestager, in charge of competition policy, said.

According to the Commission, the scheme aims to increase or maintain high efficiency of existing high-efficient cogeneration installations, incentivise their switch from coal to natural gas or renewable sources, and stimulate investments in new high-efficient cogeneration facilities.

Slovakia will select the beneficiaries based on multi-technology tender procedure for new installations with a capacity of 1 megawatt (MW) or higher and an administrative procedure for small installations and existing installations. In this case the aid will be calculated based on the costs of producing electricity from those installations (levelised cost of energy – LCOE).

All selected installations above 250 kilowatt (kW) will receive aid in the form of a feed-in premium, i.e. the installation sells its output on the market and receives a top-up payment over the market price). Installations below 250 kilowatts will receive a fixed feed-in tariff, i.e. a guaranteed price for the electricity produced, the Commission said, noting that the support will be granted for a maximum period of 15 years, and the overall budget of the scheme amounts to €1050 million (€70 million/year).

The Commission said it assessed the measure under EU State aid rules, in particular, its 2014 Guidelines on State Aid for environmental protection and energy, which allow Member States to support high-efficient cogeneration under certain conditions, in order to stimulate energy savings.

According to the Commission, the scheme will support the production of electricity from high-efficiency cogeneration, in line with the EU energy and climate objectives, without unduly distorting competition in the Single Market. On this basis, the Commission concluded that the measure is in line with EU State aid rules.