European Commission prepares a new EU financing mechanism to support new  renewable energy projects

On 3 June 2020 the term opened for feedback procedure on the draft Regulation on the European Union renewable energy financing mechanism (the “Regulation”) expires.

The funding mechanism will enable Member States to increase the share of energy from renewable sources in both the electricity and heating, cooling and transport sectors. The main objective of this mechanism is to enable Member States to work more closely together in order to achieve their individual and collective renewable energy targets. As a result, it will also facilitate a more cost-effective deployment of renewables across the EU, in areas that are better suited for it in terms of geography and natural resources and ultimately, it will feed into the European Green Deal ambition of achieving EU carbon-neutrality by 2050. The mechanism should be in place by the start of 2021, as foreseen under the Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action.

The actions under the mechanism may be financed both by voluntary payments by Member States and by EU funds and private sector contributions.

This new funding mechanism opens up the possibility for Member States to collectively benefit from renewable projects funded through tenders using this EU-wide financing mechanism.

According to the draft Regulation, this new mechanism enables Member States that are struggling to meet their targets for renewable energy share to be able to finance through voluntary financial contributions into the scheme projects in all Member States willing to host renewable projects, which are potentially more efficient and cost-effective, considering them in their indicators. On the other hand, the Member States on whose territory these RES projects are to
be implemented will be able to receive additional local investments for RES and, accordingly, to benefit from incentives in terms of local employment, lower greenhouse gas emissions, improved quality of air, modernizing the energy system and reduced dependency on energy imports. There is no direct link or negotiation between the contributing and hosting Member States, the Commission will lead the process.

In order to provide incentives for all parties, the draft Regulation provides that the statistical benefits of these projects should be split between the participants, reflecting their participation.

For more information, please contact:

Pavlin Stoyanoff
Managing Associate Legal | Energy & Technology
Deloitte Legal Law Firm
103, Al. Stambolijski Blvd, Sofia Tower (Mall of Sofia)
D: +359 (2) 802 33 88 | M: +359 (88) 77 23 987
pstoyanoff@deloittece.com

Viktoriya Dimitrova
Associate
Deloitte Legal Law Firm
103, Al. Stambolijski Blvd, Sofia Tower (Mall of Sofia)
D: +359 (2) 80 23 326 | М: +359 (88) 28 01 453
vdimitrova@deloittece.com