Commission approves Danish support for Thor offshore wind farm project

The European Commission has approved, under EU state aid rules, Danish support for the Thor offshore wind farm project, which will be located in the Danish part of the North Sea. The measure will help Denmark increase its share of electricity produced from renewable energy sources and reduce CO₂ emissions, in line with the European Green Deal, without unduly distorting competition in the Single Market.

Executive Vice President, Margrethe Vestager, in charge of competition policy, said:  “This Danish measure is a very good example of how member states can provide incentives to companies to take part and invest in green energy projects, in line with EU state aid rules. The Thor offshore wind farm project will contribute to achieving the EU’s ambitious energy and climate targets set out in the Green Deal, without unduly distorting competition in the Single Market.”

Denmark notified to the Commission an aid measure, with a total maximum budget of DKK 6.5 billion (approximately €870 million), to support the design, construction and operation of the new Thor offshore wind farm project. The project, which will have offshore wind capacity of minimum 800 Megawatt (MW) to maximum 1000 MW, will include the wind farm itself, the offshore substation and the grid connection from the offshore substation to the point of connection in the first onshore substation.

The aid will be awarded through a competitive tender and will take the form of a two-way contract-for-difference premium of the duration of 20 years. The premium will be paid on top of the market price for the electricity produced.

The Commission assessed the measure under EU state aid rules, in particular the 2014 Guidelines on state aid for environmental protection and energy.

The Commission found that the aid is necessary and has an incentive effect, as the Thor offshore wind project would not take place in the absence of the public support. Furthermore, the aid is proportionate and limited to the minimum necessary, as the level of aid will be set through a competitive auction. Finally, the Commission found that the positive effects of the measure, in particular the positive environmental effects, outweigh any possible negative effects in terms of distortions to competition, in particular, since the selection of the beneficiary and the award of the aid will be carried out through a competitive bidding process.

On this basis, the Commission concluded that the measure is in line with EU State aid rules, as it will foster the development of renewable energy production from offshore wind technologies in Denmark and reduce greenhouse gas emissions, in line with the European Green Deal, and without unduly distorting competition.

Background

The Commission’s 2014 Guidelines on State Aid for Environmental Protection and Energy allow member states to support projects like the Thor Offshore Wind Farm. These rules aim at helping member states meet the EU’s ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.

The Renewable Energy Directive established an EU-wide binding renewable energy target of 32% by 2030. The project contributes to reaching this target.

The recent EU Offshore Strategy identifies the importance of offshore wind as part of the Green Deal.

The non-confidential version of the decision will be made available under the case numbers SA.57858 in the state aid register on the Commission’s Competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.


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