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State Aid

State aid: Electricity agreements for PCC silicon metal plant may entail state aid

10.12.2014

PR(14)69

The EFTA Surveillance Authority has opened an in-depth investigation into the power purchase agreement between PCC Bakki Silicon and Landsvirkjun, the national power company of Iceland as well as PCC's transmission agreement with Landsnet, the operator responsible for transmission of electricity in Iceland.

The Authority has doubts as to whether Landsvirkjun's expected revenues from the power contract will be sufficient to render profitable the planned construction of a 45 megawatt geothermal power plant at Þeistareykir, close to Lake Mývatn in Iceland.

The Authority has also doubts as to whether the EUR 32 million investment needed in the transmission grid to connect the planned silicon metal plant is in line with the statutory rules in Iceland and might entail an advantage in favour of PCC financed by extra costs of existing users.

Oda Helen Sletnes, president of the EFTA Surveillance Authority, stated:  “When in doubt, we have no other choice than to open a formal procedure to investigate whether state aid is involved. Without prejudice to the final outcome of the case, the opening of this in-depth investigation constitutes an opportunity for the Icelandic authorities to put forward evidence that may convince the Authority that these agreements do not entail state aid.”

The German based company PCC plans to construct a silicon metal plant at a greenfield site in the North-East of Iceland, close to the town of Húsavík. In March 2014, the Authority approved Iceland's granting of regional investment aid to that project. Subsequently, in April 2014, Iceland notified the power contract. The Icelandic authorities maintain that the contract is entered into on market conditions and that it does not entail state aid.

The Icelandic authorities and third parties will be invited to submit their comments to the Authority's preliminary view before a final decision is taken. A non-confidential version of today's opening decision will be published on the Authority's website and in the Official Journal of the European Union once any confidentiality issues have been resolved.

 

More information

 

For further information, please contact:

Mr. Andreas Kjeldsberg Pihl
Press & Information Officer
tel. (+32)(0)2 286 18 66
mob. (+32)(0)492 900 187

 




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