EU approves German CHP state aid

The European Commission has approved state aid measures for four Combined Heat and Power (CHP) plants in Germany. It said supporting the plants, which will feed into district heating networks in Berlin, Cologne, Munich and […]

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By Jonny Bairstow

The European Commission has approved state aid measures for four Combined Heat and Power (CHP) plants in Germany.

It said supporting the plants, which will feed into district heating networks in Berlin, Cologne, Munich and Dusseldorf, will further energy and climate goals without distorting competition.

They will be supported as part of the CHP Act, an aid initiative that has already been approved the EU. However, individual measures under this act needed additional approval for projects exceeding 300MW.

State support will take the form of paying a premium on top of the market price for the electricity generated within certain peak hours. It will allow the plants to keep running at times when they would not otherwise be able to operate profitably.

The plants in Berlin and Munich’s district heating area already exist and will be entitled to a premium of €1.5 cent/KWh (£1.26p) for a maximum of 16,000 hours.

The plants in Cologne and Dusseldorf will be new installations and get a premium of €3.4 cent/KWh (£2.86p) over a maximum of 30,000 hours. This higher premium reflects the higher cost of investment.

A premium rather than a fixed feed-in tariff promotes integration into the energy market and helps to avoid overcompensation and distortion of competition, the Commission states.

Since the plants only receive the premium during limited operating hours, they have an incentive to produce power when the market price is higher. They will not receive any support when electricity supply exceeds demand.

The global market for combined heat and power (CHP) plants is forecast to be worth nearly $813 billion (£616.75bn) by 2024.