The European Commission has found $2.9 billion in aid to compensate Germany’s RWE Power AG for the early phase-out of its lignite-fired power plants in the Rhenish mining area. According to the German coal phase-out law, the use of coal for the production of electricity will have to be phased out by 2038.
Germany decided to enter into agreements with the main producers of lignite-fired electricity, RWE and Lausitz Energie Kraftwerke AG (LEAG), to encourage the early closure of lignite-fired power plants. In 2021, it notified the commission of its plan to compensate these operators with $4.8 billion: $2.9 billion were earmarked for the RWE lignite installations located in the Rhineland and $1.9 billion for the LEAG installations in the Lausitz.
In March 2021, the Commission opened an in-depth investigation to assess whether Germany’s plans amounted to state aid. In December 2022, Germany notified to the commission an amendment to its agreement with RWE, including a revised method of calculation of RWE’s forgone profits to demonstrate that the $2.9 billion compensation was justified and proportionate. In March 2023, the Commission extended the scope of its ongoing in-depth inquiry to cover the new elements notified by Germany.
“The measure will support the phase-out of lignite-fired power plants, thereby contributing to the decarbonization of the economy in line with the European Green Deal objectives,” said Margrethe Vestager, executive vice president in charge of EU competition policy.
