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PR(06)22: EFTA Surveillance Authority authorizes the Norwegian Energy Fund under certain conditions

3.5.2006

Today the EFTA Surveillance Authority concluded its investigation regarding the Norwegian Energy Fund, operated by Enova. The Authority found that the Norwegian Energy Fund is compatible with the EEA State aid provisions, so long as detailed conditions set out in the decision are respected. To the extent that aid has been disbursed and the conditions are not fulfilled, such aid has to be recovered from the recipients.

Enova is a state enterprise that grants support to companies:

  • for the production of renewable energy, like wind, biomass and solar energy;
  • to introduce energy saving measures; and
  • to develop new energy technologies in the mentioned fields.

In the past the Enova aid scheme also covered support for the development of educational material and information on energy efficiency. The Enova grants are based on the Energy Fund, whose budget is based on allocations from the Norwegian State budget. It is increasingly being financed from a levy on the distribution tariff of electricity, paid by the end consumer.

The Norwegian authorities notified the Authority of the Energy Fund system in June 2003.

In May 2005 the Authority opened the formal investigation procedure (see PR(05)12), because of doubts as to whether the Energy Fund as notified is compatible with the EEA state aid provisions. The Authority, in particular:

  • was concerned that the subsidies granted by Enova might overcompensate certain renewable energy productions as well as certain energy saving measures; and
  • doubted further whether the grants would be limited to investment support, as the Authority’s Environmental Guidelines prescribe, or whether ordinary running costs would be supported as well.

While the Norwegian authorities had suggested certain amendments to the system, the Authority could not be certain that these were sufficient to relieve its doubts and therefore started a more detailed analysis of the case.

Today’s decision authorizes the Energy Fund system for the future, provided that the conditions laid down in its decision are respected. These conditions provide:

  • For energy saving measures, only 40% of the extra investment costs of the project are covered, with the possibility of higher aid intensities for smaller and medium-sized companies, which can receive up to 50% of extra investment costs. Extra investment costs are the additional costs necessary to meet environmental protection goals, in this case by introducing energy saving modalities.
  • For renewable energy production, support may be granted to compensate for high investment costs which are often associated with such production. Assuming a fair return on capital, the aid may never exceed what is necessary for a project to break even or at any rate not exceed the costs of the project’s investment. To establish the amount of aid that can be granted to an individual project, Enova shall calculate the difference between the costs of investment and the estimated discounted value of the revenues and costs. A requirement is that an independent external expert must establish the risk premium and the discount rate which are to be applied.

As the Energy Fund system was put into place in January 2002, i.e. before the notification of the Fund to the Authority, Norway is ordered to recover any aid paid out, which is not in compliance with the EEA state aid provisions.   

The Norwegian authorities shall inform the EFTA Surveillance Authority within two months of the measures taken to comply with the Decision.


For further information, please contact:
Mr. Amund Utne
Director, Competition & State Aid Directorate,
Tel. (+32)(0)2 286 18 50; or

Ms. Annette Kliemann
Senior Officer, Competition & State Aid Directorate,
Tel. (+32)(0)2 286 18 80.

3 May 2006




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