European Commission approves €1 billion in Portuguese state aid to support energy transition

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The European Commission has approved a €1 billion Portuguese scheme to support investments for the production of equipment necessary to foster the transition towards a net-zero economy.

The plan, which is in line with the Green Deal Industrial Plan, was approved under the State Aid Temporary Crisis and Transition Framework (TCTF), adopted by the Commission last year. Under the measure, the aid will take the form of direct grants and be available to companies producing relevant equipment, namely batteries, solar panels, wind turbines, heat-pumps, electrolysers, equipment for carbon capture usage and storage, as well as key components designed and primarily used as direct input for the production of such equipment or related critical raw materials necessary for their production.

The Commission found that the scheme was in line with the conditions set out in the TCTF. In particular, the aid will incentivize the production of relevant equipment for the transition towards a net-zero economy, the Commission said, noting that it was necessary, appropriate and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance for the implementation of the Green Deal Industrial Plan.

The Commission adopted the TCTF in March 2023 to foster support measures in sectors that are key for the transition to a net-zero economy and in line with the Green Deal Industrial Plan.

The TCTF provides for the following types of aid, which can be granted by member states until December 31, 2025, in order to accelerate the green transition:

  • Measures accelerating the rollout of renewable energy, including schemes for investments in all renewable energy sources and with simplified tender procedures.
  • Measures facilitating the decarbonization of industrial processes, including support for investments in the decarbonisation of industrial activities with a view to reduce dependency on imported fossil fuels.
  • Measures to further accelerate investments in key sectors for the transition towards a net-zero economy, including investment support for the manufacturing of strategic equipment, the production of key components and the  production and recycling of related critical raw materials.

“This €1 billion Portuguese measure supports investments in strategic equipment to accelerate the transition to a net-zero economy,” said Margrethe Vestager, the European Commission's executive vice-president in charge of competition policy. “This includes batteries, solar panels, heat-pumps, wind turbines, electrolysers and carbon-capture usage and storage. This is in line with the objectives of the Green Deal Industrial Plan and the EU’s climate neutrality target, whilst ensuring that competition distortions remain limited.”

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