The European Commission has approved a €385m scheme, under EU State aid rules, to support electricity generation from the renewable energy sources in Lithuania.

25Apr - EU

Image: The scheme is intended to help Lithuania reach its reenewable energy target. Photo: Courtesy of Free-Photos from Pixabay.

The EU commission said that the approval is applicable for all types of renewable generation, and is expected to contribute to the EU environmental objectives without unduly altering competition.

In its 2014 Guidelines on State Aid for Environmental Protection and Energy, the Commission facilitates member states to support the production of electricity from renewable energy sources, subject to certain conditions.

On 1 May 2019, Lithuania is expected to introduce a new scheme, with an overall budget of €385m, open to all installations that generate electricity from renewable sources like wind, solar or hydropower.

The scheme is intended to help Lithuania reach its national goal of renewable energy sources in gross final energy consumption, targeted at 38% by 2025.

The commission said that the renewable energy scheme will be continued to be applicable until 1 July 2025 or, alternatively, until the 38% target is reached.

European Commissioner for Competition Margrethe Vestager said: “The scheme will contribute to Lithuania’s transition to low carbon and environmentally sustainable energy supply, in line with the EU environmental objectives and our state aid rules.”

The installations benefitting from the scheme are expected to receive support in the form of a premium, which is to be set through a competitive bidding process for all types of installations, irrespective of the size of the installation and the renewable technology used.

The EU commission said that the final premium will not be set at a level greater than the difference between the electricity market price in Lithuania (reference price) and the average production costs of the most cost-efficient renewable energy technology in Lithuania (maximum price).

Furthermore, the reference price and the maximum price is expected to be set by the Lithuanian national energy regulator for each auction.

It stated: “The Commission found that the aid has an incentive effect, as the market price does not fully cover the costs of generating electricity from renewable energy sources and the beneficiaries will have to apply for the aid before the generating installations start operating.”