The European Commission announced, on Tuesday 2 March, the opening of an in-depth investigation into the €4.35 billion in compensation that Germany plans to grant to operators for the early closure of lignite-fired power plants in the country.
“Our role is to safeguard competition by making sure that the compensation granted to the operators of the plants for phasing out earlier than foreseen is kept to the minimum necessary. The information currently at our disposal does not allow us to confirm this with certainty”, explained Margrethe Vestager, Executive Vice-President in charge of competition policy.
German law provides for the phasing out of coal for the production of electricity by 2038. To encourage the early closure of the power plants, the country’s authorities intend to reach agreements with the operators and compensate them to the tune of €4.35 billion for the loss of income suffered, but also for the additional costs of rehabilitating the mines.
The Commission considers that such compensation is “likely to constitute State Aid” and doubts that the measure is in line with EU State Aid rules.
In particular, the Commission’s doubts concern the proportionality of the compensation payments. The European institution questions whether compensating operators for foregone profits reaching very far into the future corresponds to the minimum required.
Link to the case: https://bit.ly/3bShY2u (Original version in French by Lionel Changeur)