Lignite power plants; Source: Vonten

© Vonten

The European Commission has approved the security stand-by arrangements and confirmed that they are in line with EU state aid rules. This means that Germany can remove 13% of the lignite-based generation capacities from the market in the coming years for environmental reasons. The removal of 2.7 gigawatts of lignite-fired power plants will save between 11 and 12.5 tonnes of carbon emissions in 2020. This reduction is necessary if Germany is to meet its national climate targets.

Minister Gabriel said: "I welcome the European Commission's decision. It is an important step in the ongoing implementation of the Electricity Market Act and the security stand-by arrangement. Today's decision has created the necessary legal clarity and means we can now rapidly conclude the national legislative procedure. The security stand-by arrangement will play an important role in meeting our climate targets and can prevent abrupt structural change in the affected regions. This results in a good and viable solution for the workforce and the companies."

The security stand-by arrangement covers lignite-fired power plants of Mibrag, RWE and Vattenfall with a total capacity of 2.7 gigawatts. They will be gradually taken off the market from 2016 and decommissioned, initially on a provisional, and subsequently on a permanent basis. The operators will receive compensation for maintaining the stand-by capacity and decommissioning the plant. The total costs will be an average of €230 million per year over seven years.

The security stand-by arrangement is part of the Electricity Market Act, which is currently passing through parliament.

In parallel to the national legislative procedure, the Federal Ministry for Economic Affairs and Energy notified the security stand-by arrangement to the European Commission in November 2015 in order to ensure legal certainty under state aid rules. Today's decision by the European Commission represents the successful conclusion to the notification and scrutiny procedure. The European Commission has found that the envisaged security stand-by arrangement is in conformity with EU state aid rules.