EU confirms €401m stade aid for Czech green heating scheme

The European Commission (EC) has approved, under EU State aid rules, a €401 million Czech scheme to promote green district heating based on renewable energy and waste heat.
The measure is designed to contribute to the implementation of Czechia‘s National Energy and Climate Plan and to the EU's strategic objectives relating to the European Green Deal.
The scheme, which will run until 31 December 2025, will support the installation of new renewable heat generation units based on biomass and waste with a capacity exceeding 500 kW.
It is open to owners of heat generation installations in possession of a heat energy production license, who produce heat from biomass; or waste that is considered a renewable energy source within the Renewable Energy Directive's definition.
In the case of heat generation based on waste, projects must respect the waste hierarchy principle in order to qualify. Under the scheme, the aid will take the form of a green bonus to heat generators for each gigajoule of heat supplied to the heat distribution system.
The scheme is expected to support the installation of approximately 345 MWt of renewable heat generation capacity.
The EC said that the aid is necessary and appropriate for the district heating sector in Czechia, and that it has an incentive effect.
"As fossil fuels have a cost advantage over renewable heat, in the absence of aid, investments in new heat generation facilities would be based on natural gas, potentially without the combined production of electricity, resulting in lower levels of energy efficiency," it said.
The level of aid is "limited to the minimum necessary", and is based on the funding gap quantification for a reference project, added the EC. In addition, the support for heat generation will be subject to annual monitoring by the authorities and adjusted to ensure that the funding gap is not exceeded.
The Commission went on to say that the positive effects of the aid will outweigh any prospective negative effects on competition and trade between Member States.
"The scheme will support the decarbonisation of the district heating sector in Czechia, in particular increasing the use of renewable energy in the heating and cooling sector, in line with the European Green Deal, without unduly distorting competition in the Single Market," it added.
Margrethe Vestager, executive vice-president in charge of competition policy, commented: "This €401 million scheme will further contribute to greening the district heating sector in Czechia. It will enable Czechia to support the construction of more efficient district heating systems and thereby to decrease its emissions. This will contribute to achieving the European Green Deal objectives and help Czechia meet its environmental targets, while limiting possible distortions of competition."