March 2010 Selection of projects for the European Energy Programme for Recovery Table of contents 1 General Introduction 1 2 Call for proposals legal framework 4 Gas and electricity infrastructure pro[.]
Selection of projects for the European Energy Programme for Recovery March 2010 Table of contents General Introduction Call for proposals - legal framework Gas and electricity infrastructure projects Offshore wind energy projects Carbon capture and storage projects .6 Funding conditions Gas and electricity infrastructure projects (Annex A of the EEPR Regulation) Offshore wind energy projects (Annex B of the EEPR Regulation) .9 Carbon capture and storage projects (Annex C of the EEPR Regulation) Key elements of the EEPR Call 10 Gas and electricity infrastructure projects 10 Offshore wind energy projects 11 Carbon capture and storage projects .12 EEPR funding – OWE and CCS 14 Offshore wind energy projects 14 Carbon capture and storage projects .16 EEPR funding – Gas and electricity infrastructure projects .18 Gas infrastructure projects proposed for EEPR funding 18 Electricity interconnector projects proposed for EEPR funding .24 Small islands projects proposed for EEPR funding 26 Project proposals on the reserve list .26 Further steps for the EEPR Programme 27 Related documents; further reading .29 Geographical presentation of the selected proposals 30 General Introduction EEPR – helping the economy and responding to the challenges of security and climate change in the energy sector The origin of the European Energy Programme for Recovery (EEPR) is the global €200 billion European Economic Recovery Plan presented by the Commission on 26 November 2008 The focus in the Plan is on containing the impact of the crisis: protecting jobs and purchasing power, boosting infrastructure and creating jobs in the low carbon sectors of the future The Recovery Plan sets out how Member States and the European Union could coordinate their policies in order to provide new stimulus to the European economy and increase Union spending in strategic sectors Investments in energy interconnections were considered an important tool to support the economic recovery The Plan was endorsed by the European Council in December 2008 where the Commission was invited to present a list of concrete energy projects The EEPR Regulation2, which established the EEPR programme, was proposed by the Commission in January 2009, adopted in July and entered into force in August of the same year The EEPR proposed a significant Union contribution of almost €4 billion to co-finance specific energy projects within three sub-programmes: gas and electricity interconnections, offshore wind energy, and carbon capture and storage It is expected that the EEPR contributes to the recovery of European economy by responding to the key security and environmental challenges in the energy sector The EEPR will help to speed up and secure investments in the energy sector, which will have a direct impact on the EU economy and employment It will also help to improve the security of supply of the most vulnerable Member States and link ‘energy islands’ to the rest of the EU energy market The package is also an example of solidarity within the European Union In January 2009 some of the EU Member States in Central and Southern Europe were severely affected by the disruption of their gas supply This important energy crisis showed how vulnerable Europe's energy supply was and this strengthened the need to provide a quick and coordinated answer The EEPR is also intended to speed up the implementation of the 20/20/20 objectives for 2020, by supporting the deployment of innovative technologies in the fields of renewable energy and carbon capture and storage The EEPR Regulation created the basis for providing substantial co-financing from the Union budget to key energy projects Never before has the EU agreed to dedicate such a significant amount to energy infrastructures The €3.98 billion budget for the implementation of the Regulation is allocated as follows: gas and electricity infrastructure projects: offshore wind energy projects (OWE): carbon capture and storage projects (CCS): €2.365 billion (60% of budget) €0.565 billion (14% of budget) €1.05 billion (26% of budget) Gas and electricity infrastructure is the main priority of the EEPR Regulation This category includes electricity and gas interconnections, Liquefied Natural Gas terminals (LNG) and gas storage facilities Moreover, the gas reverse flow projects are also included in the scope of the EEPR Regulation with the specific objective of helping to prevent potential disruptions to the gas supply in the future The eligible projects represent a balance between those ready to start with major investments in the short to medium term and those addressing the EU's major security of supply issues in the long term Their implementation should also create a strong stimulus to the EU's economy by generating direct demand for equipment and providing employment opportunities in their construction The projects are in line with the requirements of the "2nd Strategic Energy Review" which was adopted by the Commission in November 2008 and endorsed by the Spring European Council This key political document set the priorities for the EU in the field of energy for the next years, in particular with regards to strengthening the EU's energy market and improving the security of energy supply In particular, the policy priorities for gas and electricity infrastructure are: Communication from the Commission to the European Council ‘A European Economic Recovery Plan’ COM(2008) 800 EEPR Regulation (EC) N°663/2009 of the European Parliament and of the Council of 13 July 2009 establishing a programme to aid economic recovery by granting Union financial assistance to projects in the field of energy (OJ N° L200/2009 of 31.7.2009) • Adapting and developing the energy networks to support the functioning of the internal energy market and, in particular, addressing the problems of the bottlenecks, especially of the cross-border nature, congestion and missing links, and taking account of the needs arising from the functioning of the internal market for electricity and natural gas and the enlargement of the European Union; • Establishing energy networks in islands, isolated, peripheral and ultra peripheral regions while promoting the diversification of energy sources and the use of renewable energy sources, together with the connection of those networks, where necessary Regarding offshore wind energy, while wind energy is now produced on an industrial scale in the EU, in many countries, environmental and other concerns continue to limit wind farm developments Therefore, attention is shifting to offshore sites, which are possibly less contentious and where the quality of wind resources is higher The development of offshore wind energy capacities is an opportunity for the industry By the same token, it increases the diversity of the energy mix, contributes to the security of electricity supply and helps reaching the EU objectives for renewable energy and for the reduction of greenhouse gases emissions Union support via the EEPR will contribute to the large-scale validation of projects in this sector The EEPR Regulation foresees that an important part of the budget for offshore wind energy will support integrative projects for interconnecting offshore wind farms, including large-scale storage systems The funded wind-grid integration projects aim to realise a substantial EU-wide improvement of the large scale supply of offshore wind electricity up to the end-user at acceptable costs, while ensuring a more efficient, stable and secure grid Carbon capture and storage (CCS) technologies represent a promising and potentially very powerful instrument for fighting climate change However, CCS is not currently demonstrated at a large scale nor is it commercially viable The next challenge on the way to the widespread use of CCS is to demonstrate its technical and economic viability on large-scale power plants In addition, CCS will represent a real opportunity for Europe to lead the global market In this respect, EEPR support will be decisive to facilitate wider demonstration of CCS technologies in Europe From the Regulation to providing Union financial assistance to projects It is well in the spirit of the Recovery Plan to ensure that the financial assistance reaches the projects in the shortest possible time to increase the stimulus effect on the real economies The progress of the EEPR to date shows that this principle has been shared by all the actors involved in the process: the European Institutions, Member States and the promoters of the projects Nevertheless, it is clear that the proper management of such a complex process requires following certain steps and it is also clear that it will take time to realise it The simplified blueprint below shows the main stages of the process Adoption of the EEPR Regulation Call for proposals Evaluation of the submitted proposals Proposal of the Commission on granting EEPR assistance to selected projects Comitology – approval of Commission’s proposal Right of Scrutiny of the European Parliament Adoption of the Award Decision Adoption of the Individual Decisions granting Union aid to individual projects / Signature of grant agreements Implementation of individual decisions / grant agreements (pre-financing, further payments; monitoring) The objective of this publication The present report summarises the results of the Call for Proposals under the EEPR programme and outlines the progress made in the implementation of the EEPR Call for proposals - legal framework Under the EEPR Regulation the Commission was entrusted with the task to call for proposals in order to identify the actions that would implement the projects listed in its Annex – parts A, B and C The Annex itself was divided into three separate sections where section A named the eligible projects in the field of gas and electricity infrastructure, section B – the eligible projects in the field of offshore wind projects and section C named the eligible projects in the field of carbon capture and storage The Regulation, while laying down rules for financing, common to the three subprogrammes, provided nevertheless for distinct eligibility, selection and award criteria for each sub-programme The call for proposals was launched on this basis It was published on 19 May 2009 as a single call for proposals for the whole EEPR programme, but provided separate criteria for each of the sub-programmes in its terms and conditions The Commission had the duty to assess the compliance of the submitted proposals with those eligibility, selection and award criteria as set out in the Call and in the Regulation Gas and electricity infrastructure projects Main requirements of eligibility and project selection criteria In order to be eligible for a grant, the proposals, submitted in writing, had to propose actions that implement the projects listed in the Annex, Part A of the EEPR Regulation as well as not to exceed the maximum amount of the EEPR assistance laid down in the Regulation Eligible applicants had to be either one or several Member States acting jointly, or a public or private entity, an international organisation or a joint undertaking, acting alone or jointly with several such bodies, with the agreement of the Member States directly concerned by the project in question Regarding the selection criteria, the proposals were to demonstrate the soundness and technical adequacy of the approach and also the soundness of the financial package for the full investment phase of the action Further, in line with the EEPR Regulation, the compliance of the proposals with award criteria was to be assessed on a point scale from to 100 as follows: (a) maturity, defined as the level of capital expenditure related to the action to be incurred by 31/12/2010 with respect to the total eligible cost of the project will be assessed Particular attention to be given to the political, economic and administrative commitments (Points 20/100) (b) the extent to which lack of access to finance was holding back the implementation of the action The potential impact of EEPR funds to secure or accelerate the project was to be assessed Particular attention was to be given to the ability to start the project earlier and to commit funds in 2009 and 2010 (Points 15/100) (c) the extent to which EEPR assistance would stimulate public and private finance The commitment of potential investors to funding the action was to be assessed (Points 5/100) (d) socio-economic impact The results of the socio-economic cost-benefit analysis or ex-ante evaluation were to be assessed In addition, the expected number of jobs created during the implementation of the action as well as during the operation was to be assessed (Points 15/100) (e) environmental impact - The impact of the action inter alia on nature, emissions, noise, land use and the measures to reduce or compensate any negative impacts to be assessed (Points 10/100) (f) the contribution to the continuity and interoperability of the EU's energy network, as well as to the optimisation of its capacity (i.e reverse flows) (Points 15/100) (g) the contribution to the improvement of service quality, safety and security (Points 10/100) (h) the contribution to the creation of a well integrated energy market (Points 10/100) Offshore wind energy projects Eligibility criteria Proposals, submitted in writing, were eligible for EEPR assistance only if they implemented the projects listed in the Annex, Part B of the EEPR Regulation, did not exceed the maximum amount of EEPR assistance laid down there and fulfilled the selection and award criteria under the specific sub-programme of the EEPR Regulation Proposals had to be submitted by one or several undertakings, acting jointly Proposals submitted by natural persons were not eligible Selection Criteria The selection criteria were the following: (a) the soundness and technical adequacy of the approach A detailed description of the work plan, including definition of milestones for the overall project, were to be provided (details and guidance were provided to participants as annexes) (b) the soundness of the financial package for the full investment phase of the project A cost plan describing all investment-related expenditures for the project was to be provided) Applicants needed to commit to making their own financial contribution to the project and identify other financing sources in case their own resources and EEPR funding together was insufficient to fully finance the project Award criteria, scoring In assessing the proposals received under the call, the Commission was to apply the award criteria mentioned below Each submission was assessed against the applicable criteria independently, giving marks and providing comments Proposals were evaluated on a points scale from to 100 as follows: (a) maturity, defined as reaching the investment stage, and incurring substantial capital expenditure by the end of 2010 A detailed list of investment-related expenditure planned for 2010 was to be provided3 The work plan needed to demonstrate soundness of management (e.g risk management plan including both technical and financial aspects as well as the granting permits) and to provide sufficient evidence that these expenditures can be realised by the end of 2010 A list of all permits and a strategy on how to obtain them needed to be provided Applicants had to provide evidence that all necessary permits had already been obtained or would be obtained shortly to allow for all planned expenditure in 2010 Particular attention was given to the political, economic, administrative and environmental aspects of developing and deploying the project (Points 20/100) (b) the extent to which lack of access to finance was holding back the implementation of the action In the Business Plan, detail needed to be given on all investment costs and all co-funding schemes Proposals had to show that there are insufficient other sources of financing available that would allow them to go ahead with the initial phase of the project (Points 10/100) (c) the extent to which the project would improve or increase the scale of installations and infrastructures that had already been under construction, or were in the planning phase; Applicants needed to describe the technical and economic impact of the proposal specificities subject to funding5 on the up-scaling and/or the upgrading of the project (Points 10/100) see Annex 5, section 3.2 of the application form for OWE in Annex of the call for proposals see Annex 5, section 1.2.5 of the application form for OWE in Annex of the call for proposals see Annex of the application form for OWE in Annex of the call for proposals (d) the extent to which the project included the construction of full-size and industrial-scale installations and infrastructures, and the extent to which it addressed in particular: (Points 20/100) i balancing the variability of wind electricity through integrative systems; ii large-scale storage systems; iii management of wind farms as virtual power plants (more than GW); iv turbines placed further from the shore or in deeper waters (20 to 50 m) than is currently standard; v vi novel sub-structure designs; or processes for assembly, installation, operation and decommissioning and testing of these processes in life-size projects; (e) the innovative features of the proposal and the extent to which it would demonstrate the implementation of such features The applicants needed to include a technical description and a cost description of the innovative or upgraded components of the project as well as all necessary milestones to achieve their installation and operation For each proposal, only the costs relating to innovative items and components identified in the call6 could be subject to funding The innovative character of items and components was to be assessed on the basis of a comparative analysis with the state-of-the art of the relevant technology that the applicants needed to provide (Points 15/100) (f) the impact of the proposal and its contribution to the Union's offshore wind grid system, including its replication potential The applicants needed to explain in detail the contribution of the proposal to large scale penetration of wind farms into electricity networks (Points 15/100) (g) the commitment demonstrated by the beneficiaries to diffuse the results of technological advances made by the project to other European operators in a manner compatible with Union law and in particular with the objectives and structures outlined in the Strategic Energy Technology Plan for Europe The applicants needed to list and describe the measures for the dissemination of project results as well as the target audience (Points 5/100) h) soundness and adequacy of the management plan (Points 5/100) Carbon capture and storage projects Eligibility criteria Proposals, submitted in writing, were eligible for EEPR assistance only if they implemented the projects listed in the Annex, Part C of the EEPR Regulation, did not exceed the maximum amount of EEPR assistance laid down there and fulfilled the selection and award criteria under the specific sub-programme of the EEPR Regulation In addition, proposals had to comply with the following conditions: (a) projects had to demonstrate that they had the ability to capture at least 80% of CO produced in the industrial operation and the ability to transport and geologically store this CO safely underground; (b) in power installations, CO2 capture had to be demonstrated on an installation of at least 250 MW electrical output or equivalent (the full amount of flue gas emitted by this installation had to be treated by the capture installation); (c) project promoters had to make a binding declaration that the generic knowledge generated by the demonstration plant would be made available to the wider industry and to the Commission to contribute to the implementation of the Strategic Energy Technology Plan for Europe Proposals had to be submitted by one or several undertakings, acting jointly Proposals submitted by natural persons were not eligible Annex of the application form for OWE in Annex of the call for proposals