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State aid: Commission authorizes UK aid for Teesside biomass CHP plant

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Wilton_power_stationThe European Commission has found that UK plans to support the building of the Teesside combined-heat-and-power (CHP) plant are in line with EU state aid rules. The plant will use biomass to provide electricity to the national grid and heat to local customers. The Commission concluded in particular that the project would further EU energy and environmental objectives without unduly distorting competition in the single market.

In November 2014 the UK notified plans to support the operation of a CHP plant, to be built in the Tees Valley in north-east England. The plant will be able to generate 299 MW of electricity running exclusively on biomass. It is expected to start operations in July 2018.

According to UK estimates, the project will save approximately 32 million tonnes of CO2 over its 30-year lifetime and supply about 2.1 TWh of electricity. The plant will have a steady output of energy throughout the day (a so-called "base load" plant) with low-carbon impact. This is especially important given that the UK has an increasingly intermittent non-fossil energy mix from sources such as wind energy.

The aid would be granted to the operator of the plant in the form of a variable premium above the market price for electricity to compensate for the higher costs of biomass energy.

The Commission assessed the project under its new Guidelines on State aid for environmental protection and energy that entered into force in July 2014. The Commission found that the project contributes to reaching the EU 2020 targets for renewable energy, while safeguards are in place to limit the potential distortions of competition brought about by the state aid. In particular, the amount of aid is proportionate to the objective pursued.

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