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Projects and Energy | EU and Competition Law
On 4 July 2025, the European Commission (Commission) adopted Communication 2025/3602 (Communication), which aims to simplify the rules on state aid under the Clean Industrial Deal of 26 February 2025. This deal set out a joint roadmap for competitiveness and decarbonisation.
The tools provided by this Communication are complementary to the existing state aid rules in force as they establish the conditions of compatibility with the internal market according to Article 107 of the Treaty on the Functioning of the European Union. These rules are: (i) the General Block Exemption Regulation, (ii) the State Aid Guidelines on for climate, environmental protection and energy, as well as the status of the energy-intensive user, and (iii) the Regional Aid Guidelines.
This Communication will remain in force until 31 December 2030 and replaces the previous Temporary Crisis and Transition Framework.
Provided that certain requirements are met, the Commission will tend to consider as compatible with the internal market the granting of investment aid for installations intended for: (i) the production of renewable energy; (ii) the storage of RFNBOs, biofuels, bioliquids, biogas and biomass fuels; and (iii) electricity and thermal storage, provided the aid is granted for a maximum period of three years and that payments are made by 31 December 2030.
The projects referred to in (i) and (ii) may also be covered by direct price support in the form of contracts for difference (CfDs) and feed-in premiums.
Additionally, the Communication provides for the following: (i) aid schemes to accelerate the rollout of low-carbon fuels, supporting both investment and pricing; (ii) aid for capacity mechanisms based on two specific target models, a strategic reserve and a market-wide central buyer mechanism[1]; and (iii) aid for non-fossil flexibility support schemes.
The Communication anticipates the possibility of providing temporary electricity price relief for energy-intensive users. The Commission considers aid to be proportionate if it covers a reduction of up to 50% of the yearly average wholesale market price in the bidding zone in which the beneficiary is connected, up to a maximum of 50% of their annual electricity consumption. In any case, such reductions must not result in a price reduced to below 50 EUR/MWh for the eligible consumption.
The Commission will tend to consider aid for the decarbonisation of industry to be compatible if it contributes significantly to either: (i) reducing greenhouse gas emissions, or (ii) substantially reducing energy consumption through improved energy efficiency.
Investments designated for categories (i) and (ii) which rely wholly or partially on the use of hydrogen (or hydrogen-derived fuels), biofuels, biogas (including biomethane) and biomass fuels are only eligible if they meet the specific sustainability and greenhouse gas emissions saving criteria.
The Communication provides for a list of final products of net-zero technologies, including batteries, onshore and offshore wind turbines, and their main components such as modules and battery cells, among others. It considers that these products may be compatible with state aid provided they create additional manufacturing capacity.
It is established that Member States may adopt aid measures for investment projects and to support demand for clean technology equipment in the form of accelerated depreciation, provided that certain conditions are met. These conditions are that the assets must be new, depreciable and acquired or leased under market conditions.
For schemes aimed at supporting specific Innovation Fund projects, the Commission will generally consider the aid to be compatible with the internal market if certain requirements are met. This applies to measures supporting investments in: (i) clean energy production and storage, (ii) in the reduction of greenhouse gas emissions, and (iii) in and investments that create additional manufacturing capacity, that have been awarded the “Sovereignty Seal”.
In this scenario, aid can only be provided in the form of direct grants, repayable advances, loans, guarantees or tax advantages.
The Commission will also tend to admit that Member States may choose to incentivise investors in certain projects, particularly in energy infrastructure within a legal or natural monopoly framework, or in projects for energy production and storage.
Concluding note: Through this Communication, the Commission intends to encourage Member States to accelerate the rollout of renewable energies and industrial decarbonisation, as well as ensuring the manufacturing capacity of clean technologies.
[1] The target model makes it possible to quickly assess and approve Member-States' notifications on capacity mechanisms by listing the relevant criteria for assessing compatibility.