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:

Reference  
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 547 705 340 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
??? ??? ???
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).

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.