NER300.com is an unofficial, independent portal dedicated to renewable energy and grid integration projects wishing to access this instrument, providing
… 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’.
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.
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 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|
|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|
|GRAND TOTAL||1.0 bn|
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).
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.
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”.
Commissioner Hedegaard will give a press conference. The press conference can be viewed via webstream here.
The Spanish CSPc project awarded in the First Round “PTC50-Alvarado” is the third one to hand back its award. Speaking at a conference today, Kerstin Lichtenvort revealed that Spain had formally notified the EC of its cancellation in order to be able to receive an award for a different project in the Second Round.
Including public announcements in the press, this brings the total of stillborn First Round RES projects to at least five.
Should a future NER300 have a wider scope or award more or less money than the present scheme?These are two specific questions from Part II.A of the questionnaire the public is invited to fill in in the EC’s consultation on the carbon leakage provisions of the Emissions Trading Scheme post-2020.
It may be wise to fill in questionnaire once the Second Round Award Decision has been made public (due mid-July).
Speaking at a conference today, Kerstin Lichtenvort, team leader on NER300 in DG CLIMA, said the Award Decision of the Second Call would come in mid-July. The unveiling would come at an EC press conference. The number of awarded Member States “would increase from 16 to 20″. This means that four out of following seven countries will all be awarded at least one project: Slovenia, Czech Republic, Cyprus, Latvia, Croatia, Denmark, Estonia (and possibly Ireland depending on how the EC has counted it). 12 projects from the First Round have been resubmitted for the Second Round. 10 passed EIB Technical and Financial Due Diligence and of those 8 were confirmed by Member States.
Lichtenvort said NER300 was “essential” to the EU’s climate and energy policy. She linked the expiry of the legal basis for further NER300 awards on 31 Dec 2015 to the difficulty in announcing a third call. “The date is set by the Emissions Trading Directive. Bringing in a new NER300 before 2020 would require re-opening the Emissions Trading Directive and as we have seen in discussions on backloading, such a process is difficult.”
Delegates to the Climate Change Committee will gather in Brussels to give their opinion on a draft Award Decision and Rejection Decision sent to them by the EC on 19 May. If there is no consensus view, the Committee may ask them to proceed to a formal vote.
The Committee is scheduled to address the NER300 topic between 14:40 and 15:40. If the Decisions are endorsed, the status of projects at the moment of endorsement (awarded/rejected) will not change. The EC is however not expected to present the Decisions to the public until the end of the month. Depending on the attitude of their Member State, some Project Sponsors may come to learn the fate of their and other proposals earlier.
The EC might link the publication of the Award Decision with its mini-conference on NER300 (which focuses mainly on First Round projects, which received their awards in Dec 2012) in Brussels on 26 June.
ENDS Europe reported on 27 February that a final investment decision on UPM’s Stracel project in France (BIOd) is ‘unlikely’ to be taken until next year because of uncertainty in the regulatory outlook for advanced biofuels. This means the project is likely to lose its entitlement to a NER300 subsidy of 170 M EUR, a condition of which is that the final investment decision is taken by the end of December 2014. This is the fourth project after Westwave, Pyrogrot and Ajos BTL to have publicly announced that it either cannot or is unlikely to use its award, bringing the total so far of unusable awards to a little over 300 M EUR.