May 16 2017

Three further projects (awarded 436 M EUR) withdrawn from NER300

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on 27 April that the following projects from the first call of NER300 (which closed in 2011) “have been officially withdrawn by Member States”: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They join a Belgian project known to have been formally withdrawn in October and an Irish project re-submitted to the second call.

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23 projects were awarded in the first call including the five referred to above and two more (Pyrogrot, PTC50-Alvarado) withdrawn to make way for two substitute projects in the second call.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 NER300 rules state that even if they have not been “officially withdrawn” by the Member States behind them, those projects’ awards are revoked.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?