Sweden gets EU clearance to limit green energy support to national borders

Wind power. Bunkeflostrand, Skane, Sweden, 2010. [Håkan Dahlström/Flickr]

Sweden’s renewable energy support scheme is compatible with European Union law, the EU’s top court said on Tuesday (1 July), in a ruling that means other member states will avoid a radical overhaul of their renewable energy laws.

The EU’s Court of Justice (ECJ) said the ruling meant EU member states can continue to limit renewables support schemes to within their national borders.

The ruling was unexpected, as it went against the opinion of the court’s top legal official in January, which had argued that Sweden had broken rules in EU treaties on free movement of goods. The ECJ tends to follow the official’s judgement in most cases.

“The Swedish support scheme promoting green energy production in the national territory is compatible with EU law,” the Luxembourg-based ECJ said in Tuesday’s ruling.

EU states that support the production of green energy, such as wind and solar power, through subsidies or incentives are not required to support the use of green energy which is produced in another EU country, it said.

The case has political resonance as Europe struggles to wean itself off green energy subsidies, which are blamed for inflating costs and making the European Union less competitive.

The European Commission has been pushing for harmonised subsidies across the bloc and encourages cross-border movement of power, as part of a single energy market to limit costs and maximise available resources.

Germany welcomes ruling

The ruling will put less pressure on Germany – which is at odds with the European Commission over its energy subsidies – to reach a compromise with the EU executive.

German economy minister Sigmar Gabriel welcomed Tuesday’s ruling.

“The European Court of Justice has sent a clear signal on the continued support of renewable energy in Europe,” Gabriel said in a statement.

The Swedish case arose after Sweden, which offers energy subsidies to companies in Sweden, refused to award them to wind power generated on the Aland archipelago, which lies between Finland and Sweden.

Although it is part of Finland, Aland is connected to Sweden’s power grid and it is Swedish-speaking.

Wind energy company Alands Vindkraft in 2009 appealed Sweden’s decision on subsidies to the Swedish courts, saying the support scheme violated principles on the free movement of goods.

The case was referred to the ECJ in 2012, and in January this year, the court’s advocate-general Yves Bot advised that member states be given up to two years to restructure their support schemes to make them compatible with EU law, which would have paved the way for an integrated EU renewable energy market.

German renewables law

Renewable energy industry groups also welcomed Tuesday’s ruling.

“(The ruling) will provide added clarity for investors in the wind industry and reinforces stable regulatory frameworks, which are of paramount importance,” said Justin Wilkes, deputy chief executive officer of the European Wind Energy Association.

Germany and the European Commission have been wrangling for a while over a German policy under which consumers pay a surcharge to finance renewable energy while heavy industrial users are exempt.

The Commission raised new objections last week, which led to Germany offering to change its planned reform at the last minute.

The German government proposed that industrial companies which generate their own power on-site in new renewable or combined heat-power plants would pay a higher surcharge than previously planned.

Economy minister Gabriel said Tuesday’s ruling had removed any lingering EU obstacles to Berlin’s renewable energy law.

“I am assuming now that there are no more state-aid related obstacles to the German renewable energy law,” Gabriel said in his statement on Tuesday.

The European Commission said it was analysing the possible implications of the ruling.

“Regarding the ongoing assessment of the German Renewable Energy Act 2014, it should also be borne in mind that the concerns raised by the Commission relate to other treaty provisions than free movement and quantitative restrictions on imports,” a spokesman for Joaquin Almunia, vice president of the European Commission, said.

In the European Parliament, the Green’s energy spokesperson Claude Turmes MEP welcomed the ruling. “The Court ruled that the restriction of national support schemes to national operators is justified by the public interest objective of promoting the use of renewable energy sources. This does not question the possibilities for EU member states to cooperate on a regional basis (through joint support schemes, joint projects or statistical transfers), as this is already foreseen under EU law.

"This ruling must serve as a warning to the European Commission, which has already tried to undermine this fundamental element of the EU renewable energy directive by bullying the German government to exempt imported electricity from contributing to the support of renewable energy. Those in the Commission constantly trying to undermine standing EU law must take heed of this ruling.

The European Wind Energy Association (EWEA) applauded the ECJ ruling. “This will provide added clarity for investors in the wind industry and reinforces stable regulatory frameworks, which are of paramount importance,” said Justin Wilkes, deputy chief executive officer of EWEA. “Support mechanisms need continuity to ensure that the legitimate expectations of investors are guaranteed in order to foster investments in wind energy."

In Germany, the Renewable Energy Law (EEG) requires that the cost of expanding renewable energy sources is transferred to and distributed among end-users through a surcharge on the market energy price.

Heavy industries, which are big users of energy won an exemption from the surcharge, an issue which has become a key point of contention between Berlin and the European Commission.

Without industry rebates, the German government fears a domestic threat of de-industrialisation and says they are compatible with EU law.

German domestic energy prices are steadily creeping up to 48% above the European average. Industry energy prices in Germany are roughly 19% above the EU average.

In December, the European Commission announced the start of a full assessment over EEG compliance with EU law. The competition authority in Brussels wants to determine whether or not partial relief for energy-intensive companies is in compliance with EU state-aid law.

Court of Justice of the European Union

European Parliament

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