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HomeFinanceEU approves 22.5 billion euro Polish scheme to support offshore wind farms

EU approves 22.5 billion euro Polish scheme to support offshore wind farms

The European Commission has approved, under EU State aid rules, a Polish scheme to support offshore wind technology. The measure will help Poland reach its renewable energy targets without unduly distorting competition.

“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,” commented Executive Vice-President Margrethe Vestager, in charge of competition policy. “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 notified the Commission of its intention to introduce a new scheme to support offshore wind farms, a technology that is at an initial stage in the country. The aid will be granted in the form of a two-way contract-for-difference premium, during 25 years, but only up to 100,000 full load hours per MegaWatt of installed capacity. Under this model, this variable premium is calculated as the difference between the reference price and the market price for electricity. When the market price is below the reference price, beneficiaries will be entitled to receive payments equal to the difference between the two prices. However, when the market price is above the reference price, beneficiaries will have to pay the difference between the two prices to the State.

The scheme will roll out in two phases. During the first phase of the scheme, offshore projects will be granted aid using the exception to the auction requirement, due to the existence of a very limited number of projects. The reference price for projects in the first phase will be administratively fixed based on their costs, with a maximum set at 71,82 euro/megawatt-hours (MWh). After obtaining the environmental permit which will fix the final technical characteristics of the project, each project will submit an individual notification with a business plan to the Commission. Based on the respective business plan, the Commission will assess individually the specific level of operating aid.

Under the second phase of the scheme, aid will be granted through open and competitive auctions which will be organised as of 2025 and the reference price of projects will be fixed based on the respective bid. The scheme has a total maximum budget of 22.5 billion euro and will run until 2030.

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