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EU Commission approves €3.2 billion Czech State aid scheme to support high-efficiency CHP plants

The European Commission has approved, under EU State aid rules, a 3.2 billion euro Czech scheme to support the production of electricity from new and modernised high-efficiency combined heat and power (CHP) plants. The measure will contribute to the implementation of Czechia’s National Energy and Climate Plan, the European Green Deal and the EU’s energy efficiency targets.

“This 3.2 billion euro Czech scheme will promote energy efficiency and help Czechia meet its CO2 emission reduction targets,” commented Margrethe Vestager, Executive Vice-President in charge of competition policy. “Granting support through competitive tenders will limit the aid to the minimum and keep electricity prices low for consumers, at the same time ensuring that possible distortions of competition are limited.”

The beneficiaries are operators of new or modernised CHP installations in Czechia that meet the definition of high-efficiency cogeneration as set out in the Energy Efficiency Directive. All technologies and projects that enable the production of electricity from high-efficiency CHP installations are eligible, except for those powered by solid fossil fuels, diesel and oil. Projects involving natural gas will be required to either close the aided installations or enable the switch to renewable and low-carbon gases by 2050, to avoid the lock-in of natural gas.

Under the scheme, the aid will take the form of a feed-in premium (bonus) for each MWh of produced electricity for a duration of 15 years. The amount of bonus is set through tenders, except for small installations (up to 1 MWe) where the amount is set administratively by the Czech Energy Regulatory Office on an annual basis and limited to the funding gap.

The scheme is expected to bring around 9.3 million tonnes of CO2 savings per year.

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