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ClientEarth Communications

28th June 2017

State Aid
Fossil fuels
Clean energy

Spain’s funding of power plants faces legal challenge

Spain's been reported to the European Commission over hundreds of millions of Euros in allegedly unlawful subsidies given to power plants.

With the support of ClientEarth, Spanish organisations IIDMA and Px1NME have submitted a complaint to the Commission about unlawful State aid under two capacity mechanisms – amounting to around €700 million per year.

The capacity mechanisms are paid for by every consumer to guarantee electricity supply even at times of peak demand.

IIDMA director Ana Barreira said: "These capacity mechanisms breach EU State aid law on multiple grounds: there is no common interest objective, the aid is disproportionate and there is no need for state intervention, among other reasons. Why should we pay these extra costs in our electricity bill?”

Are capacity mechanism payments justified?

Capacity mechanisms in Spain are among the largest and most expensive in Europe. According to this complaint, this State aid is not justified to cover Spain’s electricity demand.

Piet Holtrop, lawyer for Px1NME, said: "Despite the overcapacity of electricity generation in Spain, the owners of coal and gas plants have unduly received multi-million Euro subsidies since 1997."

Renewable energy is excluded by law from receiving this kind of aid, which exclusively benefits the most polluting technologies.

The Spanish government also failed to notify the European Commission about the aid to gain the necessary approval.

If the Commission finds the aid is unlawful, the electricity companies will have to pay back more than €3 billion, the amount received between 2011 and 2015, according to the Comisión Nacional de los Mercados y la Competencia (CNMC).