The European Fee has permitted, below EU State help guidelines, a €40 million German assist measure for the development and operation of a brand new land-based LNG terminal in Brunsbüttel. The measure will contribute to the safety and diversification of power provides in Germany and assist finish dependence on Russian fossil fuels in step with the REPowerEU Plan.
Germany notified the Fee of its plans to assist the development and operation of a brand new LNG terminal positioned in Brunsbüttel, with an annual capability of 10 billion m3. The terminal contains import, storage and distribution services, and it’s deliberate to begin working by the top of 2026.
The beneficiaries of the measure are the German power operator, RWE, and the Dutch power community operator, Gasunie. The corporate German LNG Terminal GmbH (GLNG) will construct and function the LNG terminal. GLNG could have three shareholders:
- The German authorities by way of the funding and improvement financial institution KfW with a 50% stake.
- Gasunie with a 40% stake.
- RWE with a ten% stake.
Below the measure, the help will take the type of a preferential dividend distribution mechanism: KfW will give to its co-investors a share of the dividends paid by GLNG if the undertaking’s annual return is beneath a hard and fast share of the full capital invested by all shareholders, together with KfW. If the annual return is above a hard and fast share of the full invested capital, KfW is not going to share the dividends and thus no help shall be paid below the measure. The quantity of help disbursed below the measure will rely on the annual returns however is anticipated to quantity to €40 million. KfW plans to exit the undertaking after 15 years of operation of the LNG terminal, when the preferential dividend distribution mechanism will cease.
The LNG terminal shall be constructed bearing in mind the technical specs obligatory to permit its conversion right into a terminal for the import of renewable power carriers (e.g. renewable hydrogen or renewable hydrogen derivates), thereby keep away from a lock-in of gasoline. The terminal shall be transformed after 15 years of operation, on the newest by 2043.
The terminal will profit from a partial exemption from Third Social gathering Entry and from Tariff Regulation, already permitted by the German regulatory authority (Bundesnetzagentur) and which the European Fee has discovered in step with inside market guidelines.
The Fee assessed the measure below EU State help guidelines, particularly Article 107 (3)(c) of the Treaty on the Functioning of the European Union, which allows Member States to assist the event of sure financial actions topic to sure situations, and the 2022 Pointers on State help for local weather, environmental safety and power (CEEAG).
The Fee discovered that:
- The measure facilitates the event of an financial exercise, particularly the import of gasoline. On the identical time, it helps the aims of key EU coverage initiatives, such because the European Inexperienced Deal and the REPowerEU Plan.
- The measure is critical and acceptable to enhance the safety of gasoline provide of Germany and neighbouring nations.
- The help has an ‘incentive impact’, because the non-public buyers wouldn’t have supported GLNG in finishing up the undertaking with out the general public assist.
- The measure is proportional, because the anticipated help ensuing from the preferential dividend distribution mechanism is beneath the anticipated funding hole. Furthermore, there are safeguards towards overcompensation. If the undertaking seems to generate larger worth than projected, the beneficiaries will return a part of the help acquired to KfW when it exits the undertaking (claw-back mechanism).
- The optimistic results of the measure on safety of gasoline provide outweigh the adverse results on competitors. Specifically, the exemption from Third Social gathering Entry is restricted and the measure doesn’t end in a lock-in impact of pure gasoline. It contributes to the EU’s 2030 and 2050 local weather targets, by serving to to switch Russian gasoline and by having the situations in place for the conversion of the terminal for the commerce of inexperienced power carriers.
On this foundation, the Fee permitted the German measure below EU State help guidelines.
Learn the article on-line at: https://www.lngindustry.com/liquid-natural-gas/31072023/european-commission-approves-40-million-german-support-for-onshore-lng-terminal/