Jun 09 2017

EC creates website of NER300 project info

The European Commission has released a few paragraphs of information on the status of eleven NER300 projects. These are projects that have not yet entered into operation. Every year they must report on their progress towards operation as per the Annual Reporting Template downloadable from this page. The paragraphs are contained in one-page “public fact sheets” here.

Projects that have entered operation must share knowledge with other NER300 projects and with the public according to a different template (the ‘relevant knowledge collection forms’ here). Bioenergy projects, for example, are prompted for “Average monthly performance (e.g. in MWh) compared to target, including reliability and causes of downtime plus impacts of any changes to operating conditions and/or product(s) made (litres, tonnes, MJ and cubic metres)”. By now, DE BIOh Verbiostraw should have reported three years’ worth of data, IT BIOg BEST three and a half years’ worth and the wind project SE WINf Windpark Blaiken two years’ worth, but this information has not been published by the EC. No explanation has been given.

  1. NER300.com’s comment

    ***UPDATE 28 June 2017: Many more public fact sheets have now been posted on the webpage, but still none pertaining to projects in operation.***


    Only eleven projects on the webpage?! Excluding those of withdrawn projects and of projects that are already operating, there should be 32 factsheets posted up.

    These reports were a long time coming. For years the EC received filled-in Annual Reporting Templates, but never found a way to summarise them for public consumption.

Jun 09 2017

European Court of Auditors to report on NER300 in 2018

The European Court of Auditors has confirmed that NER300 will be in the scope of a report it expects to publish in summer 2018 on the management of EU instruments supporting the large-scale demonstration of innovative renewable energy and carbon capture and storage technologies.

This report is a “priority audit task”, which it started this year. It and other such tasks are presented in its 2017 Work Programme.

Earlier this year it approached stakeholders to help define the scope of its work.

The ECA will not give any details of the content of its report until it has been published.

May 16 2017

Three further projects withdrawn from NER300. Total unspent awards: 436 M EUR

***UPDATE 9 June 2017: The EC now says 16 projects have reached FID across both calls (presentation 31 May 2017).***


The Commission informed the Climate Change Committee on 27 April that the following projects from the first call of NER300 (which closed in 2011) “have been officially withdrawn by Member States”:

Country Project name Technology subcategory Award /EUR
FR UPM Stracel BIOd 169 960 000
NL Woodspirit BIOd 199 000 000
SE Gobigas phase 2 BIOc 58 797 168

They join a Belgian project known to have been formally withdrawn in October and an Irish project re-submitted to the second call. The awards made to the Belgian project and the three in the table above add up to 436 M EUR.

Zombie projects out there

A total of 23 projects were awarded in the first call including the five referred to above and two more (Pyrogrot, PTC50-Alvarado) withdrawn to make way for two substitute projects in the second call. But the EC says that Final Investment Decisions have been reached by only 14 projects across both calls. That means there are at least two projects that the EC has chosen not to identify that did not reach FID by the December 2016 deadline. NER300 rules state that even if they have not been “officially withdrawn” by the Member States behind them, those projects’ awards are revoked.

553 M EUR of unspent awards?

“Approximately € 553 million” was the EC’s estimate in September 2016 of the total awards from the first call that could go unused (article). This is half of the value of all the first-call awards.

New lease of life for Ajos BTL; EOS apparently on-course, too

One award that has been saved is Finland’s ‘Ajos BTL’ (award: 88.5 M EUR). A new owner, Kaidi took over the project and reached FID in the second half of 2016. Another project presumed to be in rude health because its backers will present it publicly on 8 June in Cyprus is “EOS GREEN ENERGY”, a concentrating solar power plant.

May 16 2017

Member States close to accepting EC’s proposal for reallocation of awards

After eight months of discussions, EC and Member States are close to agreeing an amendment to the NER300 Decision that would allow money that had been awarded to failed projects to be reallocated. It contains the following elements:

Cash for the “Innovfin Facility”

The EC proposes that, “as a priority” the money goes here. A memo accompanying the draft shows that the EIB Group and EC intend the “EDP Innovfin” facility specifically to receive the money. This particular facility “is designed to support first-of-a-kind renewable energy demonstration projects, via 95% first-loss risk coverage of EIB financing for selected projects.” The memo lists five ways in which EDP Innovfin’s rules need to be changed to bring it into line with NER300’s scope. This alignment exercise is planned for June.

Cash for “CEF Debt”

“CEF Debt” is an instrument within the Cleaner Transport Facility (set up in Dec 2016) that provides loans and guarantees. Extra money will “support the demonstration and roll out of innovative renewable energy technologies in the transport sector, which is a key priority for low-carbon innovation,” says the EC.

Grants

The memo says that undisbursed NER300 money could contribute to project development assistance “for projects falling under the NER300 scope”. It goes on, “PDA would (among other services) cover the costs related to the preparation of:

  • Technical preparatory studies;
  • Business plans;
  • Front-end engineering studies;
  • Training courses for relevant personnel;
  • Development of procurement documents until projects’ launch.”

But this rather limited interpretation of grants didn’t satisfy the Member States. To try to win them round, shortly before the CCC meeting, the EC added a recital to its text saying, “Considering the specific situation of highly innovative low-carbon projects, a part of financing should be provided in the form of grants.” The vehicle for providing these grants is not specified (and is very unlikely to be described in the amendment to be adopted on 19 May) but one source said it might be a new instrument created within Horizon 2020 that blends loans and grants.

Why no decision already?

The Climate Change Committee had been meant to vote through the amendment to the Decision on 27 April. This is was “essential”, the EC said, “to allow for related Innovfin Delegation agreement amendment in June 2017 and CEF Debt Delegation agreement amendment in the second half of 2017.” But the EC and Member States felt they needed more time to consider some last-minute ideas, so they decided not to risk a vote that day. To meet the June deadline, an extraordinary CCC meeting has been called for 19 May where NER300 is the only topic on the agenda.

Member States’ concerns

“first and faster”

The memo had talked of both EDP Innovfin and CEF Debt being available on a “first-come, first-served basis” but the latest version of the amendment would give “first and faster consideration” to NER300 projects “under the first or second call for proposals that have reached final investment decisions and are under implementation”. This has been pushed by a few Member States and is resisted by others.

the funding of transport projects

The Cleaner Transport Facility can fund a greater variety of transport-related projects than NER300, where support was only available for the production of biofuels. In the last eight months, the EC has suggested that the NER300 contribution to CEF Debt could fund the roll-out of “rapid-charging stations for electric vehicles along major motorways” or “alternatively fuelled buses, such as with electric and hydrogen fuel cells”. Now in this (fourth) memo it settles on “renewable energy-related e-mobility and innovative charging infrastructure in transport” as the focus. But some Member States are nervous: NER300 can only fund transport projects to the extent that they concern innovative renewable energy technology. This is hard-wired into NER300’s rules. They wonder whether, if it can’t be ensured that the infrastructure only delivers renewable electricity to the vehicles, the problem might again arise that NER300 money remains unused.

governance

One Member State wanted the EC to explain how the Climate Change Committee could intervene in the repurposed NER300. “It is foreseen to consult the CCC,” it wrote, “but it is not clear how the Commission will proceed according with the outcome of that consultation.”

tweaks

Another Member State proposed several edits for clarification, including one that would ensure that the publicity drive around the expanded EIB facilities reaches a fresh audience, not just people already connected to NER300.

  1. NER300.com’s comment

    On the second paragraph of page 10, the memo insinuates that a guarantee is a grant. Nice try, Commission, but the Member States won’t fall for it. Project Development Assistance, however, is a kind of grant. If covering the cost of Front-End Engineering Design (FEED) studies is in the scope of PDA, and PDA covers a high share of the FEED costs, this will take substantial sums out of the Innovfin kitty. A FEED for a plant costing hundreds of millions is tens of millions.

May 16 2017

European Parliament asking questions

Three MEPs have co-signed a question to the Council and one to the European Commission on NER300. The MEPs are Tomasz Piotr Poręba (Poland ECR), Ruža Tomašić (Croatia ECR), Davor Škrlec (Croatia Verts/ALE). The questions were put on 7 April. The addressee must reply within six weeks (18 May).

To the Commission (E-002587-17):

NER 300 has awarded EUR 2.1 billion to projects, but the Commission has communicated little on how the scheme has functioned. There have been ad hoc presentations by the Commission at stakeholder conferences, as well as one before Parliament (ITRE hearing on 27 Nov 2013), and some information is made available in the impact assessment of Phase 4 of the EU Emissions Trading System (SWD(2015)0135).

Now that a successor scheme, the ETS Innovation Fund (NER 400) is being set up, likely to be even bigger and with wider scope, it is all the more important to report comprehensively on how NER 300 operated and whether it met its goal of hastening the commercialisation of innovative technology.

The Commission is therefore asked whether it is prepared to publish, at the earliest opportunity,

  • a report on the lessons learned in the implementation of NER 300, disclosing which projects are not going ahead;
  • the report on the verification of Eligibility Criteria Assessment, containing details of the innovative nature of the projects supported, or, if necessary to avoid the release of confidential information, a summary or redacted version of this report?

To the Council (E-002588-17):

not co-signed by Ruža Tomašić

The Climate Change Committee will soon be invited to mandate the Commission to change the NER 300 Decision. The changes aim at finding alternative uses for money that had been awarded to projects now known not to be going ahead. These are projects from the first call for NER 300 funding, launched in 2010.

In the light of the above, does the Council agree that it would be judicious to keep some of the money readily available to address possible successful challenges by project sponsors or their hosting Member States on the size of their awards, and, in consequence, that not all money should be committed to new uses?

Jan 15 2017

The fate of cancelled first-call NER300 awards

The EC is poised to publish a report on its “outcomes of the analysis” of NER300.

In September the EC warned Member States that 553 M EUR of awards were likely to be cancelled due to projects failing to meet a major December 2016 deadline. The report will set out an alternative use that can be made of that money.

Four options had been on the table, including a third NER300 call, giving more money to NER300’s active projects or rolling the money over to ETS Innovation Fund (suggested by Commissioner Cañete in June). In the end the EC, with the support of most Member States, has settled on “Option 2”, which involves topping up some of the EC’s non-grant financing schemes: EDP Innovfin, EFSI and maybe the Cleaner Transport Facility. An amendment to the NER300 Decision to allow this transfer will be put before the Climate Change Committee in April.

A reference to the need for “strong linkages” between ETS Innovation Fund and two of these financing schemes was made in the Accelerating Clean Energy Innovation Communication of 30 Nov 2016 (COM(2016) 763). DG CLIMA was one of four DGs involved in a “collective exercise” to write it. A reference to “an enlarged” EDP Innovfin appears in the Horizon 2020 scoping paper for the Energy Work Programme 2018-2020.

NER300 money handed to these instruments will be tracked separately to their existing capital. This is to ensure that the Member States (represented in the Climate Change Committee) can monitor the projects selected for financing and, if the NER300 portion of the capital is not fully subscribed by the end of 2020, have this remaining amount refunded to them. Projects funded with the infused NER300 capital will need to follow NER300’s rules for being innovative renewable or CCS, knowledge-sharing (though perhaps in modified form), and others.

“With the allocation from NER300 funds, the [Cleaner Transport] Facility would support the demonstration and deployment of innovative renewable energy technologies in the transport sector (e.g. rapid charging stations for electric vehicles along major motorways, alternatively fuelled buses, such as with electric and hydrogen fuel cells),” the EC says. The infrastructural examples in that list are outside NER300’s original scope. The EC has asked Member States to comment specifically on whether they have enough innovative transport-related projects to warrant giving a boost to the CTF.

The Zero-Emissions Platform, representing the CCS community, supports the re-allocation of unspent funds to financial instruments, but suggested in a November 2016 position paper that a special instrument dedicated to CCS should be set up. Instead the EC has chosen to expand the scope of EDP Innovfin to include CCS.

Jan 14 2017

Commission due to release update on NER300 status imminently

“Of the projects awarded under the first call only three projects have been withdrawn,” announced the European Commission a year and a half ago, even as ever more projects were pushing back their Date of Entry into Operation to the latest possible date.

The situation was presented more soberly in September 2016, 45 months after First Call projects had been notified of their award and 3 months before their deadline to obtain all relevant permits and reach their Final Investment Decision. The EC revealed that six projects out of the 19 in the First Call had reached Final Investment Decision. By the end of November, that number had risen to 9. The deadline for first call projects has now passed. “Full clarity on the scale of unused funds from the first call will be known by the end of February 2017,” states the EC.

Roman Doubrava, deputy head of the unit responsible for NER300 in the EC, said on 30 Nov, “We have been following the projects going on facing different difficulties, and there are some lessons learned. We will be publishing some outcomes of the analysis we are currently making towards the end of the year.” He was speaking at the SET Plan conference 2016 in Bratislava. That report is still not public, but is expected to be published before DG CLIMA’s conference, “Finance for innovation: Towards the ETS Innovation Fund” on 20 Jan 2017. This is the second conference on ETS Innovation Fund (details on the first one here).

The Commission’s only regular, formal and public report on the status of NER300 projects has, since 2014, been the annual publication of the latest version of the award decision. It contains the date that each project should enter operation. Every year more and more projects have pushed their date of entry into operation to the latest allowable date (details).

Oct 17 2016

Further delays to NER300 projects

The EC has published a new amended Award Decision detailing the current status of NER300 projects selected in the first and second calls.

The document shows changes to the dates that projects intend to begin operating.

The updates reflect the wishes of project sponsors and their host Member States as at late spring 2016, when the EC initiated this year’s annual process to amend the Award Decision.

Project withdrawn

One project was officially withdrawn, BE DRMc SLim. The White Rose CCS project, awarded 300 M EUR, has not been withdrawn even though the UK government scrapped its CCS demonstration programme a few months before the Award Decision amendment process began.

Delays

9 projects out of 37 have requested and been granted a later ‘date of entry into operation’ since their last opportunity to request this, in 2015. A tenth project, CY CSPe Helios Power, asked to postpone its date of entry in operation to 30 Jun 2020, but this is beyond the latest allowable date for its call of 30 Dec 2018, and the EC declined it.

6 of these 9 projects push their date of entry into operation to the latest allowable date for their respective calls, bringing to the total number of projects in this position to 23, which is 62% of all projects. This proportion has steadily increased since the first Award Decision of December 2012, when it was 13%. This compares to 34-36% in 2014 and 45% in 2015. All French, Spanish, Cypriot and Greek projects are in this position, as well as the single projects awarded to Austria, Hungary, Denmark, Latvia, Ireland and Finland.

The latest official status on all projects is available here.

Sep 06 2016

Cañete confirms NER300’s date with destiny in December 2016 and the recycling of unused NER300 money to NER400 Innovation Fund

Speaking at the Environment Council of 20 June the Commissioner for Climate Action Miguel Arias Cañete said, “Before the end of 2016 we will know how much money remains unused from those projects awarded in the first NER300 call.” By mid-December of this year NER300 rules say that projects in the first call, for which awards totalling 1.089 bn EUR were made, need to reach final investment decision and have secured all the permits necessary for their construction.

The unused money will be recycled to NER400 Innovation Fund, Cañete said: “The EC proposal foresees also that the money remaining for NER300 projects is added to the Innovation Fund. This was envisaged by the co-legislator when the Market Stability Reserve was agreed last year.” He hinted that it could allow NER400 Innovation Fund to start early, i.e. before Phase 4 of the Emission Trading Scheme begins in 2021: “If it turns out that a considerable amount remains unused, we may want to reflect how we can speed up the reuse of this money to boost innovation and accelerate the roll-out of innovative low-carbon technologies.”

The extent to which the following statement by DG CLIMA Director General Jos Delbeke is reality or caricature is unknown. He made it at the 9 June High Level Roundtable on Low carbon innovation (14:40:00). Referring to the risks inherent in designing funding mechanisms, he said that they’re at risk when “the business cycle turns around. The perspectives are less attractive and half of the projects fall apart because while they were put up before Lehman brothers, they were delivered after Lehman Brothers and a lot of the good intentions did not materialise because of that.” There’s an allusion in there to the amount of money that may be at stake. At the same event, Delbeke appealed for leniency when it comes to judging whether NER400 has succeeded or failed.

Sweden senses that many projects will be declared dead in December. In a written statement to the Council of Ministers it commented that “the NER300 program has significant volumes of funds which have not been disbursed,” preferring to use this non-disbursed money to boost the size of NER400 Innovation Fund than to sell another 50 M tonnes of carbon. The country is home to three NER300 projects, including one, GoBiGas Phase 2, that is “not currently being delivered” (presentation of 21 June at Stakeholder Plenary Meeting, European Biofuels Technology Platform). This project was awarded 58 797 168 EUR. The Belgian project ‘SLIM’, on smart grids, is also withdrawn (8 165 192 EUR).

An MEP has joined the chorus of concern over unused funds. Ivo Belet said at the meeting of the European Parliament’s Environment Committee of 21 June 2016 that, learning from the NER300 experience, it will be important in NER400 Innovation Fund to “make sure there’s no money left at the end of the period” (10:34:44).

The agenda for the Climate Change Committee meeting of 22 September carries an item with the terse description ‘Full deployment of NER 300 funds’, indicating that the EC and Member States are considering options.

May 25 2016

NER400 Innovation Fund Impact Assessment reveals interesting information about NER300

An ‘Impact assessment’ is an explanatory document released by the EC alongside a legislative proposal to provide substance for the policy choices made in the proposal. This article refers to the Impact Assessment of the EC’s 2015 proposals for revision of EU Emissions Trading Scheme.

Maximum upfront financing was limited to 60%

“Maximum 60% of the awarded NER 300 funding can be provided as upfront funding”

This policy had been stated orally by ex-NER300 Head of Unit Piotr Tulej in a meeting with Member States and Project Sponsors on 10 April 2013.

By Jul 2015 the NER300 pot had swelled by 23 M EUR from asset management

The EC reveals that in 2014 23 M EUR was yielded from investment of the money not yet paid out to projects, and claims that this exceeds by “several times” the cost of “the EIB’s involvement” in NER300. It also says,

“All available funds resulting from the monetisation of 300 million allowances are now allocated to awarded projects, with the exception of a minor surplus of €2.6 million.”

  1. NER300.com’s comment

    The phrase concerning the cost of the EIB’s involvement is misleading: in a summary paper referenced by the EC in the Impact Assessment, the EIB writes, “The EIB sold 300,000,000 EUAs for a total value of EUR 2,156,830,800 EUR (before deduction of expenses and EIB fees)”. The sum of the total awards made to projects is 2,104,867,924 EUR. If the surplus is 2.6 M EUR, then the cost of administering NER300 (excluding the time of EC personnel) is 49 M EUR, which is double the income so far from asset management. This is consistent with the amount of 34,729,701 EUR used by the EIB to cover “expenses, market fees and its own fee” in the first round, an amount which is disclosed in the above-referenced paper.

We now know what the EC’s ‘eligibility check’ consisted of

As part of the eligibility check, projects were screened for innovation. The EC “estimate[s] that almost 80% of the NER 300 awards went to highly innovative or even potentially game changing projects.” An early draft of the Impact Assessment (which leaked) is more explicit: they were scored 1-4, one presumes according to the same scheme described in footnote 99 of the final version: “1. Little or no innovation 2. Some innovation demonstrated, but mainly incremental 3. Highly innovative project for some component or aspect of technology 4. Highly innovative project that is likely to represent a game changing step in technology.”

To determine eligibility, the EC performed “a qualitative analysis […] based on difference of the project’s technology from existing solutions, availability of the project’s technology amongst other vendors, availability of previous tests for the chosen technology, potential for scale-up and replicability and availability of resources to be used by the project.”

Project sponsors were never officially told their eligibility score, nor what the EC considered distinguished their technology from “existing solutions”, or of the EC’s assessment of the “availability” of the technology their projects would use.

  1. NER300.com’s comment

    With the existence of such information now confirmed, Project Sponsors will find it easier to request access to it in respect of their projects. They need to ask for the “report on the verification of Eligibility Criteria Assessment”, which, for first-call projects appears as item 22 on Table 1 at para 80 of the first-call Procedures Manual, or, for second-call projects, as item 14 on the table at para 69 of the second-call Procedures Manual.

White Rose’s award of 300 M EUR was 34% of its relevant costs

…meaning, from arithmetic, that its relevant costs were around 880 M EUR. According to NER300.com’s calculations and on the assumption that the NER300 project corresponds to the full 448 MWe project described here, the ‘relevant costs’ are about the same as the extra investment costs of applying CCS on the White Rose plant. This is because the ‘avoided cost’ of not having to buy CO2 allowances for the sequestered CO2 corresponds roughly to the additional cost of the coal needed to power the sequestering process.

EC declined half of applications for upfront finance

“It should be noted that although not all projects that required upfront funding were granted it this has not jeopardised their implementation. (Six projects awarded under the second NER 300 call applied for upfront funding but only three received it.)”