The European Commission has approved a €3.1 billion Spanish State aid scheme to support electricity produced by new or substantially refurbished high-efficiency combined heat and power plants.
The scheme will run for 10 years and is open to operators of qualifying installations located in Spain, the Commission announced on Wednesday.
Combined heat and power — also known as cogeneration — produces electricity and captures heat that would otherwise be wasted, using it for heating or industrial processes.
Support will be available for plants powered by natural gas, bioliquids, biogas and solid biomass.
Projects involving natural gas must include equipment enabling the use of at least 10% renewable hydrogen by volume.
Aid will be paid as a premium with two parts: an investment component awarded through competitive auctions, and an operating component that will be calculated and updated every quarter using factors such as electricity prices, fuel costs and CO₂ prices.
How the scheme was cleared under EU rules
The Commission said it assessed the measure under EU State aid rules that allow support for certain economic activities under conditions set out in Article 107(3)(c) of the EU treaty, as well as its 2022 guidelines for climate, environmental protection and energy aid.
It approved the scheme on the basis that it supports electricity production and that, without public support, beneficiaries would not make the same investments to the same extent.
The Commission also stated the support is limited to what is necessary, with investment aid allocated through open tenders and operating aid monitored and adjusted quarterly.
