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European Commission approves German support to CHP electricity

The European Commission has approved German plans to support high-efficiency cogeneration, considering that the measure was in line with EU state aid rules, promoted energy efficiency, lowered CO2 emissions and led to a better integration of CHP into the electricity market.



The German Heat and Power Cogeneration Act 2016 (Kraft-Wärme-Kopplungsgesetz - KWKG 2016) provides for state aid to operators of new and modernised highly efficient CHP plants (except coal and lignite-fired CHP). It also supports the construction and expansion of energy-efficient district heating or cooling networks (i.e. pipelines often built in towns, which allow the transfer of heat/cooling to end users) as well as the construction and retrofitting of heating/cooling storage facilities. The European Commission approved the form of support (a fixed premium on top of the market price), its limited scope (CHP plant will only receive the fixed premium during full load operating hours) and the introduction of tenders to allocate support to new CHP plants with installed capacity between 1 and 50 MW.



At the same time, the European Commission will start an in-depth investigation into reductions for certain users, namely users with high yearly energy consumption and certain energy-intensive industrial users, from the surcharges imposed to finance the support (€0.445c/kWh in 2016), to assess if the measure constitutes state aid within the meaning of EU rules.

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