Brussels, 19/02/2015 (Agence Europe) - On Thursday 19 February, the European Commission announced that it had opened an in-depth investigation into the British plan to support the conversion of the coal-fired power station of Lynemouth to operate entirely on biomass. It will verify whether the public funds used are limited to what is necessary and do not result in overcompensation. It will also assess whether the positive effects of the project in achieving EU energy and environmental objectives outweigh potential competition distortions in the market for biomass.
The project would enjoy support in the form of a so-called “contract for difference”, fixing a certain sales price for electricity. This would mean that the operator of the coal-fired power plant at Lynemouth will earn money from selling its electricity into the market. When the average wholesale price of electricity falls below the strike price, the operator will receive a top-up payment.
In its preliminary analysis, the Commission considered that the financial calculations and estimates regarding key cost parameters presented by the parties may be too conservative and was concerned that overcompensation could result. The volume of wood pallets that would have to be imported from overseas is considerable in relation to the volume of the global wood pallets market. Subsidising the import of such a large volume could significantly distort competition on the biomass market. (Élodie Lamer)