"NER300" is a financing instrument managed jointly by the European Commission, European Investment Bank and Member States, so-called because Article 10(a) 8 of the revised Emissions Trading Directive 2009/29/EC contains the provision to set aside 300 million allowances (rights to emit one tonne of carbon dioxide) in the New Entrants’ Reserve of the European Emissions Trading Scheme for subsidising installations of innovative renewable energy technology and carbon capture and storage (CCS). The allowances have been sold on the carbon market and the money raised — 2.1 bn EUR — will be made available to projects as they operate. More information is available under the tab Basics. Official information is available on the Commission website here.

NER300.com is an unofficial, independent portal dedicated to renewable energy and grid integration projects wishing to access this instrument, providing
  • News
    ...to keep you up to date with the latest developments, key dates and deadlines
  • Analysis
    ...understand the NER300 instrument and how to use it for your project
  • Access to consultancy
    ...for specific guidance for your proposal.
Oct 24 2014

Successor programme to NER300, “NER400″, agreed

As part of their deliberations on the EU’s Framework for Climate and Energy 2020-2030, European leaders last night mandated the creation of a successor programme to NER300, “NER400″, which would be “initially endowed with 400 million carbon allowances”. The current programme raised 2.1 bn EUR for innovative renewable energy projects and one CCS project. The next one would raise over 9 bn EUR on the assumption of a carbon price of 23 EUR/tonne. This price is a forecast made in August 2014 by Thomson Reuters for the period 2021-2030.

The European Council wants NER400 to cover “low carbon innovation in industrial sectors” as well as CCS and renewables. A reference to “small projects” has been included in the four lines devoted to the topic in the summit’s Conclusions.

  1. NER300.com’s comment

    The creation of NER400 turned out to be one of less contentious parts of last night’s deal. According to a source, the form of words had been agreed last week. What a difference six years makes. As this account from a similar European summit in 2008 shows, the setting up of the original NER300 was a much harder fought battle.

Oct 20 2014

Notes from NER300 meeting 20 Oct 2014 – afternoon MS, PS + 6

Hot news

EC (Kerstin) is willing to allow projects flexibility on the requirement to generate at least 75% of the energy they bid to generate in their first five (10 for CCS) years of operation in order to get 100% of their Award.

She said, “If a majority of projects find that, 2-3 years after their entry into operation, they are not on track to generate 75% of the amount they bid for technical reasons, the EC might be prepared to look again at the rule.”

Oct 20 2014

Notes from NER300 meeting 20 Oct 2014 – morning MS and PS only

Annual conference

EC proposes an annual NER300 conference in Brussels every autumn to showcase funded projects. Also (Andreas): EC presentations at “conference like EWEA or the biomass conference” and “this year there will be presentations at the SET Plan conference in Rome (10-11 December).”

Best questions so far

What if, in the case of upfront funding, the MS can’t recover Award money from the PS and the PS is not entitled under NER300 rules to keep money it has already been paid?

EC confirms (Kerstin): “The MS is still liable towards the EIB to repay the money.”

Relevant costs: how will the EC check the relevant costs at FID?

If the RC are less than the ones quoted in the application, the EC may need to reduce the award. EC (Lorenzo): “We are confident that the relevant costs as identified at the time of the selection process [i.e. quoted in the application] are the ones that will apply at FID.”

Best new info

Disaster averted

EC (Kerstin): “Up to half of projects in the first call would have not been able to reach FID and therefore would have lost entitlement to their Award if we had not extended the deadlines“.

Reporting MWh production

The EC is prepared to be flexible in the reporting deadlines as these are “not laid down in the Award Decision”. The questioner used the example of a national grid operator that fails, by the start of Year N+1, to report the electricity fed into the grid in year N. This info is necessary to calculate the NER300 award disbursement to the project.

Award Decision amendments

Amendments to Award Decisions collected throughout the year by EC, EC bundles them into one leglislative procedure done once a year. Suggestion that a deadline might be March for the procedure completed by June.

Oct 16 2014

EC hosts invitation-only meeting on NER300 20 October

DG CLIMA will hold a ‘Second NER300 Information Event’ on NER300 on 20 October. The invitation and programme sent to the Member States is here.

The morning session will be taken up with a series of presentations similar to those given to First Call awardees and their host Member States on 10 April 2012. One difference will be that the thinking on ‘Knowledge Sharing’ obligations is now much more advanced than it was in 2012, with DG CLIMA having published (here) the templates of Knowledge Sharing collection forms and preliminary details of the techniques it will use to obfuscate the knowledge shared. Also key deadlines have been extended.

Five representatives from associations linked to CCS, wind, ocean energy and biomass and one NGO have been invited to join in the afternoon for ‘Session II: Exchange of experiences and views on NER 300′. DG CLIMA took the position that only renewable energy associations representing particular technologies are eligible to attend, as opposed to associations having a more general view. No webstream will be available.

The renewable energy associations will push for another NER300-type programme, beginning before 2020 if possible.

  1. NER300.com’s comment

    Bellona, the invited NGO, has interests in a number of the technology areas funded by NER300, so why should it have a seat but not an association like Eurelectric or EREF?

    Two of the three renewable energy associations admitted to the meeting were chosen because they were the first to take the initiative to request a seat when they saw the invitation.

    Dissenting voices seem to be absent (specifically Project Sponsors whose proposals were rejected in either the First or Second Call or who withdrew or suspended their projects), so are those of the sectors that NER300 might include in future: heavy industry at risk of delocalisation.

Oct 06 2014

Extensions to NER300 deadlines

***UPDATE 19 November 2014: The amendment extending the deadlines***

***UPDATE 20 October 2014: adopted unanimously***

***UPDATE 15 October 2014: Reuters reports the Climate Change Committee approved DG CLIMA’s proposal***

DG CLIMA — pending a vote in the Climate Change Committee on 15 October — is to push back NER300’s deadlines by two years.

For a project awarded in the First Round (i.e. selected for award in Dec 2012), the deadlines applicable to

  • Dec 2014 (final investment decision, receiving all permits, State Aid clearance) will be extended to 31 December 2016.
  • Dec 2016 (date of entry into operation) will be pushed to 31 December 2018, with an obligation to generate at least some renewable energy in the year that follows. For this extension, notification of the EC by the Member State hosting the project is required.

The EC says, “The extension of time-limits would apply to any project under the first and second calls,” implying that two-year extensions will be available to second call projects, too.

  1. NER300.com’s comment

    The EC finally gave in to pressure to extend NER300’s deadlines after seven Member States (France, UK, Germany, Italy, The Netherlands, Sweden and Finland) co-signed a letter pressing for extensions. Its refusal to countenance this in 2013 had meant that the Westwave project (OCNa, Ireland) felt it necessary to hand back its First Round award and reapply in the Second Round, which was a big and (it turns out) unnecessary risk. Since then, there have been changes to State Aid rules around renewable energy, a debate on the ‘2030 Framework for climate and energy’ has got underway and the ILUC Directive has hit an inter-institutional blockage. This made pressure to extend irresistible.

    Many of the countries signing the letter were awarded colossal sums for bioenergy projects. There is no sign of a target for renewable energy in transport in the ‘2030 Framework for climate and energy’, let alone one involving advanced biofuels. It may turn out that extensions by themselves are not what projects need in order to survive, but rather supportive regulatory frameworks.

    Instead of a day of reckoning coming two months from now, the viability of awarded projects will not be known for two years at the earliest. To recall, NER300 rules give Member States no incentive to reveal the viability of their projects (or the true intentions of their Project Sponsors) at any point before the Final Investment Decision/permits/State Aid clearance deadline. Projects need to report their progress annually before their entry into operation, but there is no sanction attached to slow progress.

    The consequences of the deadline extension are

    1. while it was already unlikely that waiting-list NER300 projects (See Annex II here) would be funded, it is now extremely unlikely that they will. The 2009 Emissions Trading Directive stipulates that all awards must be made by 31 December 2015 (See page 18), which is one year before the new 2016 deadline.
    2. With no new NER300 awards now seeming possible, money for failed projects will have to be returned to the Member States or, better, channeled to first-of-a-kind demonstration energy demonstration projects via Horizon 2020 (another EU funding programme).
    3. The innovative quality of these projects may be quite out-of-date by the time they become operational. Benchmarks for innovation that were determined in 2009 became the basis for the NER300 calls for proposals in 2010 and 2013 and may now only be realised in installations that enter into operation in 2019 — fully a decade later. The purpose of the awards, which was to reward first movers, may be redundant by the time they come to be paid out.

    The decision to grant the extension appears to have been made in the last month. On 4 September, in documentation circulated to the contractors that the EC outsources some of its NER300 tasks to, the EC requested that they review the progress reports of Project Sponsors only in 2014 and 2015. Under the deadline extension, progress reports would need to be monitored in 2016 and 2017, too.

Sep 01 2014

Strongest push yet for a third NER300 call…

… comes from the Member States. A leak of draft ‘Conclusions’ for the European Council of 23-24 October 2014, which will define the main features of the EU’s climate and energy policy for the foreseeable future, suggests that maybe 5% of allowances required by the Emissions Trading Scheme to reach a 40% GHG emissions cut by 2030 be used as an ‘initial endowment’ for an ‘enlarged’ NER300-like fund that would include industry.

The EIB would manage it. The focus of the fund would be ‘new innovations’.

Jul 15 2014

Nine proposals were kicked out of Second Round. Four on the waiting list.

The EC has published the Rejection Decision (Part I: legal text, Part II: lists of projects), showing how the 32 projects sent by Member States to the EIB for Technical and Financial Due Diligence were filtered down to the 19 awarded. Five projects failed TFDD. Of the projects that passed, a further four were deemed ineligible (for example, for not being innovative enough). Thus 23 projects made it onto the long-list for funding. The rule of “maximum three projects per Member State over both NER300 awarding Rounds” meant three Member States (France, Sweden, Portugal) with four or more projects that had passed the TFDD and eligibility-check stages had to move projects to a waiting list for funding (Annex 2 of the Rejection Decision) to bring their totals down to three.

The EC is not clear about the circumstances under which these projects may be awarded, saying only it will happen “if funds become available” and if Member States confirm them as per Article 8 of the NER300 Decision. As paragraph 91 of the Call text shows, the EC has not entirely excluded the possibility of awarding more than three projects to a Member State.

The success rate (projects awarded / projects entered to the EIB for evaluation) is high both compared to the First Round…

  Round 1 Round 2
RES projects 23/65 = 35% 18/31 = 58%

…and compared to early indications from the EC’s other funding instrument for energy technology development, Horizon 2020. 420 ‘stage-1’ proposals were submitted the two-stage LCE-01-2014 and LCE-02-2014 calls that closed in April 2014. Of these, 106 have been invited to submit proposals for ‘stage-2’. The grand total of the budget request of the 106 projects is still six times the budget available.

  1. NER300.com’s comment: Coincidence

    The NER300 pot happens to be just big enough to award every single project that passed both TFDD and the eligibility check except those that would have implied funding a fourth project in a Member State. If you don’t believe in coincidences, you might prefer to think that the EC would already like to award funding to those projects, but is checking the legal position before committing itself. This interpretation is given credence by the fact that the EC has not released information on the volumes of each of the components that make up the Second Round pot (see this post).

    With the success rate (and magnitude of some of the awards) eye-wateringly high, Member States (especially those who have ended up with less than three projects) might be kicking themselves for not having entered more projects into the Second Round.

Jul 09 2014

Second Round Award Decision — analysis

Undisclosed failed First Round RES projects boost funding pot for Second Round

The composition of the 1.0 bn EUR funding pot for the Second Round is as follows.

First, there was left over money from the First Round:

1st call Award Decision 1 500 000 000 EUR (monetisation proceeds) -
1 211 945 062 EUR (awarded to projects)
SUB-TOTAL (A) 288 054 938 EUR

The second component is the proceeds from monetisation of 100 million Second Round allowances. The sales commission charged by the EIB and its carbon market intermediaries needs to be deducted from the gross value of the sales. From the first call, it is known that gross sales of 1 609 125 460 resulted in an NER300 pot of 1 500 000 000 EUR, thus the rate of commission was roughly 6.78%. Applying that to the gross Second Round proceeds yields the following:

Gross Net
Gross sales of 548 000 000 EUR After 6.78% commission = net income to the Second Round pot of 510 836 489 EUR (B)
SUB-TOTAL (A+B) 798 891 427 EUR

Ireland, Sweden and Spain formally notified the EC that one of each of their First-Round projects would not begin, allowing the EC to return their awards to the pot for the Second Round:

Member State 1st Round project Award /EUR
Ireland Westwave 19 828 007
Sweden Pyrogrot 31 404 829
Spain PTC50-Alvarado 70 000 000
SUB-TOTAL (A+B+above) 920 124 263
??? ??? ???

Therefore the collapse of one or more additional First Round project(s) with Award(s) of at least 80 M EUR, as indicated by the row(s) of question marks in the table above, must have formally been notified to the EC since 31 Jan 2014 or it would not have been possible for the EC to award funding to the 19 projects in the Second Round Award Decision.

3 M EUR of unawarded money remains in the NER300 pot at present (statement by Kerstin Lichtenvort on June 26).

Little information provided on the reasons for 14 projects being denied funding

On 3 July 2013 there were 32 RES projects in the NER300 Second Round competition compared to 18 awarded today. It would be interesting to know whether a) the EIB’s Technical and Financial Due Diligence and the EC’s eligibility check coupled with the requirement for no more than three projects per Member State account for the entirety of this difference or whether b) some viable projects were not awarded because of lack of funds. The language of Recital 8 of the Award Decision, though convoluted, suggests that the answer is a).

8. […] The Commission checked, if the available funds were greater than the total funding request. As some excess funds were available, all confirmed projects by Member States could be added to the final list of projects in the CCS and RES groups.

… which should be understood as

The grand total of NER300 funding requests of the confirmed projects was less than the funds available, so all were awarded.

To know for sure, however, one would need to see the Rejection Decision, which was adopted by the Climate Change Committee on 4 June. NER300.com has requested it under freedom of information rules.

Jul 08 2014

Chance of a third NER300 call before 2020 downplayed again

Announcing the results of the Second Call in a brief press conference (1 bn EUR to 19 projects in 12 countries, half of which went to just two projects), Commissioner Hedegaard again played down the idea of a third NER300 call (or something like it) before 2020: “A third call might be a tool to include in the Framework for Climate and Energy 2020-2030 – something for the next decade. Between 2014-2020, there is Horizon 2020. For a new call, we would need a new Decision.” [To recall, a European Commission Decision is the legal basis for the current NER300 programme.]

The European Commission has not published the Rejection Decision setting out which projects have been kicked out of the competition.

UPDATE 9 July 2014: Ocean Energy Europe has hailed NER300 as an programme that “helps address a funding gap for large scale demonstration of pre-commercial renewable energy projects”. The association’s press release refers to a “joint letter with Europe’s renewable energy associations to the Commissioner Connie Hedegaard” that calls for a “new EU funding programme for technology demonstration following the NER300 programme”.

Jul 07 2014

NER300 Second Round announcement to come at midday 8 July

Commissioner Hedegaard will give a press conference. The press conference can be viewed via webstream here.