The European Commission has extended the scope of its ongoing in-depth inquiry into Germany’s plans to compensate lignite-fired power plants operators for the early phase out. The extended investigation concerns an amendment to the agreement between Germany and RWE for the accelerated lignite phase-out in the Rhenish lignite mining area.

In March 2021, the Commission opened an in-depth investigation to assess whether Germany’s plan to compensate RWE and LEAG for the early closure of their lignite-fired power plants was in line with the EU State aid rules. In particular, the Commission had doubts as to the proportionality of the compensation payments covering forgone profits and additional mine rehabilitation costs.

In December 2022, Germany notified to the Commission an amendment to its agreement with RWE for an accelerated lignite phase-out in the Rhenish lignite mining area. The amendment included: (i) the delay from end-2022 to March 2024 of the final closure of two plants, and (ii) the advance from 2038 to 2030 of the final closure of three plants. Germany informed the Commission that the original €2.6 billion compensation to RWE remained unaltered and submitted a revised calculation of RWE’s forgone profits to demonstrate that the compensation is justified and proportionate. Therefore, the Commission has decided to extend the scope of its ongoing investigation to cover the new elements notified by Germany.

On the basis of the information at its disposal, the Commission’s preliminary view is that the compensation to RWE continues to constitute State aid. However, the Commission notes that the revised calculation of RWE’s forgone profits submitted by Germany appears more conservative compared to the previous calculation. The Commission will now verify whether the compensation to RWE is proportionate and whether the Commission’s doubts expressed on the aid to RWE in the opening decision of March 2021 have been dispelled.

The extension of the opening of an in-depth investigation provides Germany and any interested third parties with the opportunity to submit comments. It does not prejudge the outcome of the investigation.

Source: European Commission

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