The state aid package of EUR 150 million that Romania earmarked for operators of district heating plants and networks obtained clearance from the European Union. Projects that switch from fossil fuels to green energy will be eligible for the government funds.
The European Commission has approved, under the European Union’s state aid rules, a Romanian scheme to support building and upgrading district heating systems based exclusively on renewable energy sources. The executive body of the administration in Brussels said the EUR 150 million in funds, earmarked for switching from fossil fuels to green solutions, is in line with the objectives of the European Green Deal.
“This measure has been made possible also thanks to the European Green Deal’s investment plan. In order to unlock the potential of district heating to contribute to the transition to a climate-neutral economy, the plan has given member states more flexibility when it comes to granting support for district heating generation, in line with EU state aid rules,” said the commission’s Executive Vice-President in charge of competition policy Margrethe Vestager.
Overhaul projects can count on covering up to 20% of investment
Romania intends to construct and overhaul a series of district heating generation installations and distribution networks. The upgrade projects will be able to apply for a maximum of 20% of the overall investment. The planned support would take the form of direct grants from the country’s share in EU structural funds.
Units with up to 60 MW in district heating capacity will be eligible for transformation with state support
Existing district heating systems generate heat predominantly from gas or coal-fired boilers. The measure aims at supporting investments in district heating generation installations up to a total 60 MW that would turn to sources such as biogas, biomass and geothermal energy.
It is expected to lead to an overall decrease in greenhouse gas emissions, by up to 48,000 metric tons of CO2, and other polluting substances, the commissioners added. The scheme is designed to be implemented by 2023.
District heating switch scheme is necessary, according to EU
The EU guidelines on state aid stipulate the projects must meet the criteria of efficient district heating set out in the Energy Efficiency Directive (EED). The European Green Deal’s Investment Plan – also referred to as the Sustainable Europe Investment Plan – presented by the Commission in January 2020, enables member states to use additional flexibility when it comes to the maximum amount of support that can be granted in the sector.
The European Commission concluded the scheme is necessary, as the supported projects would not be carried out without the public support and proportionate, as the projects will deliver a reasonable rate of return.
Of note, Romania expects EUR 6.7 billion over the next ten years from the recently established EU Modernization Fund.