Finnish developer Alands Windkraft had applied to the Swedish government for green energy certificates, which it then planned to sell to Swedish utilities so that they could meet their renewable energy obligations.
Sweden refused to issue the certificates and was challeneged by Alands before the Swedish courts, with the developer arguing that the principle of the free movement of goods meant Sweden must buy the power.
However, the case was passed on to the ECJ and the court said that governments have no responsibility to financially support renewable energy producers in other countries.
The ruling means that renewable energy producers will be unable to shop around for the best deal from different subsidy regimes.
While the ECJ agreed with Alands that the subsidy scheme does constitute a restriction on the free movement of goods, it found that this was justified. The public interest objective of promoting the use of renewable energy sources was ruled to trump other interests.
In anticipation of a ruling on this issue, a clause was included in the newly passed German renewable energy law specifically stipulating that imported renewable electricity should not be subjected to the German levy.