German renewables targeted by EC 'state-aid' investigation

GERMANY: The European Commission has opened a formal investigation into whether the reduced renewable energy levy rates paid by parts of German industry is compatible with competition law.

The EC says the Renewable Energy Act 2012 turned the support into state aid because the state now controls the support funds.

The law requires the renewables levy on electricity consumption to be administered by four transmission system operators and to be monitored by the federal energy regulator.

Germany's feed-in tariff support support and the alternative option, the so-called market-premium system, are deemed compliant with the EC's 2008 guidelines on environmental state aid.

However, these guidelines are being reviewed and, in the EC's view, will then apply to Germany, triggering new uncertainty in the German renewable sector.

The commission's aims include reducing distortions to competition in the electricity market caused by state aid for renewable energies, its statement says.

Indeed, German conventional generation has not yet fully adapted to the big expansion in German solar and wind energy, and as a result companies benefitting from state-aid are exporting low-priced power to neighbouring countries, including the Netherlands and the UK.