Latvian plan to exempt big energy consumers from renewables surcharge approved by EU

The European Commission has approved the extension of a Latvian program which reduces the amount of funding available to incentivize renewable energy plants.

The EU’s executive body on Monday announced its approval, under the bloc’s state-aid rules, of Latvia’s extension of a scheme to partially exempt some businesses from making their full electricity-related surcharge payments.

Under the terms of the original exemption program, which ran from May 2017 to the end of last year, certain electricity-intensive industries exposed to international competition could avoid paying up to 85% of a surcharge levied by the state upon electricity usage, the proceeds of which are used to finance renewables.

Latvia extended the scheme until the end of this year in a move which has now been rubber-stamped by the commission.

The extended program increased the number of industrial sectors which qualify for an exemption from the surcharge and also reduced the electricity-intensity requirements concerned, to help energy-intensive operations through the Covid-19 crisis.

The commission said this year’s budget for the surcharge exemption program had been set at a provisional €7 million by the Latvian authorities.

The commission has also approved Austria‘s planned renewables incentive scheme, under state-aid regulations.

Vienna plans to hold technology-specific auctions to determine the level of premium payments acceptable to developers of solar, wind, hydro, biomass and biogas facilities. The payments are intended to bridge the gap between the wholesale electricity price and the actual cost of renewables generation and the authorities plan to review auction rules and technology-specific premium price caps, with the possibility of also holding mixed renewables tenders to include wind and hydro.

The scheme approved by the commission on Monday will run to the end of the decade, with top-up payments granted for up to 20 years. Austria estimates the program will cost €4.4 billion over the next ten years.

The nation is aiming to source all its electricity from renewables by 2030.

This copy was amended on 22/12/21 to clarify the decisions made by the commission were announced on Monday.