State aid: Commission approves €5.7 billion French scheme to support production of electricity from small solar installations on buildings

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The European Commission has approved, under EU State aid rules, a €5.7 billion French aid scheme to support renewable electricity production from small solar installations located on buildings. The measure will help France achieve its 2030 target of producing 33% of its energy needs from renewable sources and will contribute to the European objective of achieving climate neutrality by 2050, without unduly distorting competition.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This €5.7 billion support scheme will further help France in its transition to an environmentally sustainable energy supply. The measure, which will support production of renewable energy from small solar installations, complements another €30.5 billion French scheme to support production of electricity from renewable energy sources that the Commission has approved last month. It will further stimulate the development of renewable energy sources, while ensuring a level playing field in the French energy market. “

The French scheme

France notified to the Commission its plans to introduce a new scheme to support the production of electricity from solar installations.

The scheme, which has a provisional budget of around €5.7 billion and will run until 2026, will be open to operators of small photovoltaic installations located on buildings with a capacity of up to 500 kilowatt.

These installations will be eligible to receive support in the form of a feed-in tariff (i.e., a guaranteed price for the electricity produced) over twenty years. The level of the feed-in tariffs will vary according to the size of the installation and the business model (i.e., installations injecting all electricity into the grid or installations consuming part of the generated electricity).

With this measure, France expects to develop 3,700 additional megawatt in solar renewable energy.

The Commission’s assessment

The Commission assessed the scheme under EU State aid rules, in particular the 2014 Guidelines on State aid for environmental protection and energy.

The Commission found that the aid is necessary to further develop renewable energy generation and to enable France reaching its environmental goals and renewable energy targets. It also has an incentive effect, as the projects would not take place in the absence of public support.

Since it concerns small solar installations below 1 megawatt, the aid will be granted without a tender process. This is in line with what is foreseen by the 2014 Guidelines on State aid for environmental protection and energy. The Commission found that, in any event, the aid is proportionate and limited to the minimum necessary.

Finally, the Commission found that the positive effects of the measures, in particular, the positive environmental effects, outweigh any possible negative effects in terms of distortions to competition.

On this basis, the Commission concluded that the French scheme is in line with EU State aid rules, as it will facilitate the development of renewable energy production in France and reduce greenhouse gas emissions, in line with the European Green Deal, without unduly distorting competition.

The scheme complements the general renewable aid scheme approved by the Commission on 27 July 2021 (SA.50272), which enables support to be awarded via competitive tenders to various renewable installations including solar installations with a capacity above 500 kilowatt.

Background

The Commission’s 2014 Guidelines on State Aid for Environmental Protection and Energy allow Member States to support the production of electricity from renewable energy sources, subject to certain conditions. These rules aim to help Member States meet the EU’s ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.

The Renewable Energy Directive of 2018 established an EU-wide binding renewable energy target of 32% by 2030. With the European Green Deal Communication in 2019, the Commission reinforced its climate ambitions, setting an objective of no net emissions of greenhouse gases in 2050. The recently adopted European Climate Law, which enshrines the 2050 climate neutrality objective and introduces the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, set the ground for the ‘fit for 55′ legislative proposals adopted by the Commission on 14 July 2021. Among these proposals, the Commission has presented an amendment to the Renewable Energy Directive, which sets an increased target to produce 40% of EU energy from renewable sources by 2030.

The non-confidential version of the decisions will be made available under the case number SA.61902 in the State aid register on the Commission’s Competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.