EC reconfirms that support to manufacturers of RE in Latvia is legal


On March 13, 2018, Arvils Ašeradens, Minister of Economics, met with Jānis Endziņš, Chairman of the Board of the Latvian Chamber of Commerce and Industry (LCCI), and Inna Šteinbuka, Head of the European Commission Representation in Latvia, to discuss publicly available statements and assessment of the support provided by the Latvian government to electricity producers in the form of mandatory electricity procurement and guaranteed capacity payments in terms of installed capacity, expressed in the legal study commissioned by the LCCI, Report on Current Issues of MPC.

“The European Commission has acknowledged in the spring of 2017, after an assessment process of more than three years (harmonization started at the end of 2013) that Latvia's support to renewable energy producers has been legal and in line with the requirements of the European Union's internal market. Therefore, the publicly expressed the statement of the LCCI calling into question the legitimacy of this EC decision and the support measures implemented by the Latvian state is difficult to understand,” states Minister of the Economy A.Ašeradens during the meeting.

On the other hand, the Head of the EC Representation in Latvia, I.Šteinbuka, stated that “the decision adopted and published by the EC unequivocally confirms that it harmonizes the support mechanism for electricity producers established in Latvia and considers that state support for the period from 01.01.2007 to 09.10.2012 is permitted in accordance with Articles 107 and 108 of the Treaty on the Functioning of the EU”. Similarly, the Head of the Representation undertook to ensure that the EC decision would be translated into Latvian in order to avoid unwarranted interpretation of the text.

During the meeting, the Chairman of the Board of the LCCI J.Endziņš introduced the legal adviser to LCCI, a sworn advocate Jānis Junkers, who is the author of the legal analysis commissioned by the LCCI, Report on the Current Issues of MPC. The author of the legal analysis argues in his work that “by launching the [state aid] measures in 2007, the Republic of Latvia granted the aid measure a legal force before the final decision of the European Commission (final decision adopted on April 24, 2017) [.,]” “The legal consequences of such an irregularity are recovery thereof in order to reinstate the previous situation. Moreover, the fact that the European Commission has declared the aid compatible with the internal market retains the obligation of the State to order, under national law, recovery of such aid [...]”

The head of the LCCI J.Endziņš emphasized during the meeting: "The main aim of the LCCI in the field of energy is to achieve the competitiveness of the electricity costs in Latvia. To this end, one of the options is to reduce the overall amount of the MPC. In order to identify the possible paths, LCCI commissioned outsourced legal research of MPC regulation. The prepared opinion is currently publicly available. This opinion, inter alia, analyses the matter of the MPC as State aid and the resulting legal consequences. We will continue to analyse these issues for the LCCI to determine its position in this respect, and today's immediate dialogue with representatives of the European Commission and the Ministry of Economics has also been helpful in this regard.”

In accordance with the climate and energy targets set by the European Union in 2009, Latvia has a legally binding target for ensuring that the share of renewable energy in final energy consumption reaches 40% by 2020. Accordingly, in Latvia, the mandatory procurement of electricity and the capacity payments for the electric power installed in the power plant are used as a support instrument for the promotion of the energy production using renewable energy sources and high-efficiency co-generation. On April 24, 2017, the EC adopted a decision in the matter of state aid — Support to renewable energy and CHP in Latvia, concluding that the existing support mechanism in Latvia for mandatory electricity procurement and guaranteed payments for the installed capacity complies with the requirements of the European Union internal market.

Last update:    01-02-2019