State aid: Commission approves €10 billion Finnish scheme to support electricity producers in the context of Russia's war against Ukraine
The European Commission has approved a €10 billion Finnish loan guarantee scheme to support energy producers in the context of Russia's war against Ukraine. The scheme was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022, and amended on 20 July 2022, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU'), recognising that the EU economy is experiencing a serious disturbance.
Executive Vice-President Margrethe Vestager, in charge of competition policy, recently said:
“In the context of economic uncertainty caused by the current geopolitical crisis, this €10 billion loan guarantee scheme will enable Finland to provide liquidity support to electricity producers, allowing them to continue their activities. We continue to stand with Ukraine and its people. At the same time, we continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, while protecting the level playing field in the Single Market.”
The Finnish liquidity support measure
Finland notified to the Commission, under the Temporary Crisis Framework, a €10 billion loan guarantee scheme to provide last-resort liquidity support to electricity producers in the context of Russia's war against Ukraine.
The measure will be open to (i) electricity producers with a production capacity of at least 100 MW; and (ii) other producers with regional importance, significance or criticality in electricity markets.
A significant proportion of Finnish energy producers have traditionally used derivative contracts to hedge themselves against future price drops. The adverse price movements caused by the current geopolitical crisis have required these companies to post significant amounts of additional cash collateral. The measure aims at providing electricity producers with a last-resort financing option, ensuring that sufficient liquidity remains available to them.
Under the scheme, the loans will be granted directly by the Ministry of Finance. The eligible loans must relate to working capital needs, with a maximum maturity of two years.
The maximum loan amount per beneficiary cannot exceed the liquidity needs derived from the projected additional collateral requirements for the coming 12 months. Furthermore, the eligible beneficiaries are required to submit documentary evidence of their liquidity needs based on their hedging activities, which will be verified by the Ministry of Finance.
The Commission found that the Finnish scheme is in line with the conditions set out in the Temporary Crisis Framework. In particular, (i) the maturity of the loans does not exceed eight years; (ii) loans granted under the measure relate only to working capital needs; (iii) the annual interest rates respect the minimum levels set out in the Temporary Crisis Framework; (iv) the maximum loan amount per beneficiary respect the conditions set out in the Temporary Crisis Framework; and, (v) the guarantees will be granted by 31 December 2022 at the latest.
The Commission therefore concluded that the Finnish guarantee scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Crisis Framework.
On this basis, the Commission approved the aid measure under EU State aid rules.
Click here for the full press release
Latest News from
Climate change: Deal on a more ambitious Emissions Trading System (ETS)20/12/2022 10:33:00
On Saturday night, MEPs and EU governments agreed to reform the Emissions Trading System to further reduce industrial emissions and invest more in climate friendly technologies.
EU and Ukraine sign €100 million for the rehabilitation of war-damaged schools *20/12/2022 09:25:00
Exactly three months after President von der Leyen's announcement in her 2022 State of the Union Address, the European Commission and the Government of Ukraine have signed a €100 million support package for the reconstruction and rehabilitation of schooling facilities damaged in Russia's full-scale war of aggression against Ukraine.
NextGenerationEU: European Commission endorses positive preliminary assessment of Portugal's second request for €1.8 billion disbursement under the Recovery and Resilience Facility19/12/2022 16:33:00
The European Commission recently (16 December 2022) endorsed a positive preliminary assessment of Portugal's payment request for €1.8 billion of grants and loans under the Recovery and Resilience Facility (RRF), the key instrument at the heart of NextGenerationEU.
'Fit for 55': Council and Parliament reach provisional deal on EU emissions trading system and the Social Climate Fund19/12/2022 15:25:00
The Council and the European Parliament reached a provisional political agreement on important legislative proposals of the ‘Fit for 55’ package that will further reduce emissions and address their social impacts.
Ukraine: EU agrees ninth package of sanctions against Russia19/12/2022 14:33:00
The Commission welcomes the Council's adoption of a ninth package of hard-hitting sanctions against Russia for its aggression against Ukraine.
Council and European Parliament agree on new safety requirements for machinery products19/12/2022 13:25:00
The Council and the European Parliament negotiators have reached a provisional agreement on the regulation for machinery products. The proposed legislation transforms the 2006 machinery directive into a regulation.
Human rights breaches in China, Chad and Bahrain19/12/2022 12:38:00
On Thursday, the European Parliament adopted three resolutions on the respect for human rights in China, Chad and Bahrain.
Commission welcomes political agreement on new rules to ensure the safety of machinery and robots19/12/2022 11:33:00
The Commission welcomes the political agreement reached by the European Parliament and the Council of the European Union on a new Machinery Regulation.
EU Cohesion Policy: €223.8 million for a just climate transition in Portugal19/12/2022 10:38:00
Portugal will receive more than €223.8 million under the Just Transition Fund (JTF) following hte recent (15 December 2022) adoption of three multi-fund programmes that include the Territorial Just Transition Plans (TJTPs).