04 February 2016

General Court dismisses action against EU state aid guidelines for renewable energy

The General Court has published an order dismissing an action by the European Renewable Energies Foundation (EREF) against the EU ‘Guidelines on State aid for environment protection and energy 2014-2020’ (the Guidelines).

The Guidelines, which were adopted by the European Commission (the Commission) in June 2014 and replaced the 2008 guidelines on environmental aid, provide a framework for state aid to environmental and energy projects with the intention of helping Member States to meet their 2020 climate targets without distorting competition. In particular, the Guidelines set out the conditions that must be met in order for operating aid granted to energy from renewable sources to be deemed compatible with EU state aid rules. In summary, these conditions are that Member States must:

  • grant aid as a premium (in addition) to the market price at which generators sell their electricity directly to the market;
  • subject beneficiaries to certain balancing responsibilities;
  • put in place measures to ensure that generators have no incentive to generate electricity under negative prices; and
  • from 1 January 2017, grant aid in a competitive bidding process open to all generators producing electricity from renewable energy sources.

On 22 September 2014, EREF (which is the federation of national renewable energy associations from EU Member States) filed an action in the EU courts to annul these provisions on the grounds that they prevent Member States from organising and prescribing rules for their own energy markets. In response, the Commission raised an objection of inadmissibility. EREF claimed that, as an association, its action was admissible as it represented the interests of persons which themselves had standing to bring proceedings.

The General Court found that although this was one of the three situations in which an action brought by an association is admissible, the persons whom EREF represented did not meet the relevant test for standing to bring proceedings challenging an act which was not addressed to them. The test is found in Article 263 of the Treaty on the Functioning of the European Union and requires that either (i) the act in issue is of direct and individual concern to them, or (ii) the act in issue is of direct concern to them and does not entail implementing measures. The General Court held that the member undertakings which are represented by EREF did not meet either of these criteria as the Commission's adoption of the Guidelines does not directly concern them. The Commission can only apply the Guidelines through either a state aid decision or a decision to open and/or close a formal investigation. Therefore it is only these decisions that could directly affect the represented undertakings by finding that the operating aid they received is not compatible with state aid rules. As a result, it dismissed EREF's action in its entirety.

Interestingly for those who may be seeking state aid for renewable energy projects in the future, the General Court considered it probable that any aid granted in contravention of the Guidelines would be found by the Commission to be incompatible with the internal market. If this were to happen, only the Commission’s decision (and not its adoption of the Guidelines) would be open to challenge.

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