State aid: Commission approves €24 million Hungarian investment aid to Volta Energy Solutions’ battery copper foil plant

This article is brought to you in association with the European Commission.

The European Commission has found Hungary’s €24 million investment aid to Volta Energy Solutions for the extension of a battery copper foil plant in the Hungarian region of Közép-Dunántúl (Central Transdanubia) to be in line with EU State aid rules. The aid will contribute to the development of the region, whilst preserving competition.

The Hungarian measure

Volta Energy Solutions (previously Doosan Energy Solution) is a subsidiary of Solus Advanced Materials Co. Ltd, a large Korean company, which produces copper foil, display materials, and biomaterials.

The €24 million Hungarian investment aid will support Volta Energy Solutions’ €206 million investment in the extension of its battery copper foil manufacturing plant in Környe, situated in the Hungarian region of Közép-Dunántúl (Central Transdanubia). Copper foil is generally used to manufacture batteries, and the copper foil manufactured in this plant will be specifically used for batteries for electric vehicles.

The project, which started in October 2020 and is planned to be completed in 2022, is expected to create nearly 200 direct jobs. The new unit will more than double the current production capacity of the plant.

The production plant is located in the Közép-Dunántúl (Central Transdanubia) region – an area eligible for regional aid under Art. 107(3)(a) of the Treaty on the Functioning of the European Union.

The Commission’s assessment

The Commission assessed the aid measure under the applicable Guidelines on Regional State Aid for 2014-2020, which were prolonged until 31 December 2021. The rules on regional State aid enable Member States to support the economic development and employment in the EU’s less developed regions and to foster regional cohesion in the Single Market.

The Commission found that:

• the investment aid will contribute to job creation as well as to the economic development and to the competitiveness of a disadvantaged region;
• in the absence of the public funding, the project would have been carried out outside the European Economic Area (EEA);
• the aid is limited to the minimum necessary to trigger the investment in Hungary, rather than outside the EEA and complies with all aid intensity requirements, also taking into account the aid which Hungary granted to the company for the same plant in 2018 under the General Block Exemption Regulation.

On this basis, the Commission concluded that the positive effects of the project on regional development clearly outweigh any distortion of competition brought about by the State aid. Therefore, it approved the measure under EU State aid rules.

Background

Under the rules on Regional State aid, an aid measure has to meet the following conditions in order to be approved by the Commission:

• The aid must have a real “incentive effect”, in other words, it must effectively encourage the beneficiary to invest in a specific region;
• The aid must be kept to the minimum necessary to attract the investment to the disadvantaged region;
• The aid must not have undue negative effects, such as the creation of excess capacity in a declining market;
• The aid must not exceed the regional aid ceiling applicable to the region in question;
• The aid must not directly cause the relocation of existing or closed down activities from elsewhere in the EU to the aided establishment; and
• The aid must not divert investment away from another region in the EU, which has the same, or lower, level of economic development than the region where the aided investment takes place.

In April 2021, following an evaluation of the Guidelines on Regional State Aid for 2014-2020 conducted in 2019 and an extensive consultation of all stakeholders on the draft text, the Commission adopted revised Regional Aid Guidelines. While the main elements of the rules remained unchanged, the revised Regional Aid Guidelines include a number of targeted adjustments to simplify and reflect experience gained from the application of the previous rules, as well as to reflect new policy priorities related to the European Green Deal and the European Industrial and Digital Strategies. Within the framework of the revised Regional Aid Guidelines, on 16 September 2021, the Commission approved under EU State aid rules, Hungary’s map for granting regional aid from 1 January 2022 to 31 December 2027.

The revised Guidelines started applying as of 1 January 2022. They do not apply to aid granted before 1 January 2022 (as in case at stake), which is assessed under the Guidelines on Regional State Aid for 2014-2020.

The non-confidential version of the decision will be made available under the case number SA.59516 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.