EU rethinks energy state aid to break France-Germany deadlock – document
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European Union countries may scale back plans to expand state aid for power plants in an attempt to break a deadlock between France and Germany, a document seen by Reuters showed.
The 27 EU countries want to agree a joint position on a reform of Europe’s power market next week, which Brussels hopes will make bills more predictable by shifting power generators to more long-term contracts with stable prices.However, countries including Germany and France have been at odds for months over whether the rules could give some countries a competitive edge.In a bid to break the deadlock, a new EU compromise proposal would only let countries offer state-backed fixed-price power contacts – known as “contracts for difference” – to new power plants, not existing power plants.Berlin has raised concerns that France will be able to offer such contracts to its existing nuclear energy fleet – then use excess revenues generated by these contracts on subsidising industries.French officials are aggrieved by what they describe as an attempt to sabotage the competitiveness of France’s nuclear industry.
The compromise drafted by Spain, which holds the EU’s rotating presidency, amends the proposal “to focus its scope on direct price support schemes for investments in new power-generating facilities”.
That would mean existing power plants would not be eligible for CfD subsidies under the reform, potentially restricting France’s ability to offer these state-backed power contracts to its existing nuclear fleet.
France typically produces over 70% of its electricity with its fleet of reactors.
Failure to pass this part of the reform would not ban France and other countries from offering CfDs to existing power plants. But it could make them harder to use, and subject to winning approval from Brussels under EU state aid rules.
EU country diplomats will discuss the proposal on Friday, before their energy ministers meet next Tuesday to attempt to clinch a deal on the reforms.
