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.