The European Commission has found French plans to support combined heat and power plants using natural gas to be in line with EU state aid rules.

The scheme will reduce CO2 emissions and improve energy efficiency, in line with EU energy and climate goals, without unduly distorting competition.

The French scheme will provide support to high efficiency combined heat and power plants with a power output up to 1 megawatt (MW). It will help France to reach its energy efficiency and CO2 emission reduction targets by supporting the deployment of around 7 MW of additional generation capacity. High efficiency combined heat and power units provide at least 10% primary energy savings as compared to units that produce heat and electricity separately.

The type of support these units can receive under the scheme depends on their size:

–    combined heat and power plants up to 1 MW will receive support in the form of a feed-in-premium on top of the market price
–    combined heat and power plants up to 300 kilowatt will receive support in the form of a feed-in tariff.

The Commission's 2014 Guidelines on State Aid for Environmental Protection and Energy allow Member States to grant state aid for high efficiency combined heat and power plants, subject to certain conditions. These rules are aimed at meeting the EU's ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.

The Commission found that the French scheme promotes the integration of electricity produced by combined heat and power plants into the market, in line with the Guidelines. Only small installations can benefit from feed-in tariffs, whilst larger installations will receive support through a premium, i.e. a top-up on the market price, which exposes them to market signals. The scheme will also support the refurbishing of existing plants, for example to increase their efficiency or extend their operational lifetime.

The Commission therefore concluded that the scheme will increase the proportion of electricity generated from renewable sources and reduce pollution, while limiting distortions of competition triggered by the state support.