The European regulator found that the aid is essential and also provides an incentive effect to developers
The European Commission clears the €22.5bn Polish scheme for offshore wind farms from any competition distortion. (Credit: Dimitris Vetsikas from Pixabay)
The European Commission (EC) has given its approval for the €22.5bn scheme of Poland to support the development of new offshore wind farms in the country’s territorial waters.
Approved under the European Union (EU) State aid rules, the Polish scheme is expected to help the country achieve its renewable energy targets without any undue distortion in competition, said the Commission.
According to the Commission’s findings, the aid is essential and also has an incentive effect as the offshore wind projects cannot be implemented without public support.
It also found that the state aid is balanced and limited to the minimum necessary. Besides, the Commission ruled that the positive impacts of the measure, especially the positive environmental effects are more than any potential negative effects in terms of competition distortion.
The Commission added that Poland had pledged to undertake an ex-post evaluation for studying the features of the scheme.
European Commission Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This Polish scheme is a very good example of how competition policy can enable Member States to support green energy projects, such as offshore wind farms. It gives the incentive to companies to invest in such green projects where they would otherwise not have invested.
“We hope that we will see many such initiatives in the future, which contribute to the EU’s Green Deal, without unduly distorting competition in the Single Market.”
Poland plans to grant the aid via a two-way contract-for-difference premium during 25 years. However, it will be only up to an installed capacity of up to 100,000 full load hours per MW.
The Polish scheme, which will run until 2030, will be rolled out in two phases. In the first phase, aid will be granted to projects using the exception to the auction requirement as they are in very limited numbers.
The reference price for projects in this phase will be fixed administratively based on their costs, with a maximum of PLN319,60/MWh (€71,82/MWh).
The Commission will evaluate individually the specific level of operating aid, based on the respective business plans of the offshore wind farms.
During the second phase of the scheme, Poland will grant the aid via open and competitive auctions which will be held as of 2025. The reference price of projects during this phase will be fixed depending on the respective bid.
Earlier this year, the Polish Parliament adopted the country’s first Offshore Wind Act. The country is aiming to install offshore wind capacity of 3.8GW by 2030, 10GW by 2040, and 28GW by 2050.