The European Commission has authorised Swedish plans to grant SEK139 million (ca. € 15 million) towards the development of a wave energy production demonstration plant by Seabased Industry AB.
The production of energy from sea waves has been in development for some years, but has still not reached the commercial stage. The Commission’s decision finds that the public funding towards the project is compatible with the EU Framework for State aid for research, development and innovation (R&D&I).
Joaquín Almunia, Vice-President of the Commission in charge of competition policy, said: “If successful, the project will bring a currently immature green energy technology closer to the market without unduly distorting competition. It will contribute to reaching the EU objectives for R&D, climate change and energy.”
The Commission assessed the project under the EU framework for R&D&I aid (see IP/06/1600), which allows aid that is well designed, alleviatesa market failure and results in benefits that outweigh potential distortions of competition brought about by the aid.
The Commission agrees that the research project could not attract sufficient financing from the financial market due to its significant risks and complexity. It also agrees that it is likely to generate important positive externalities in the EU in terms of knowledge transfer, environmental protection and security of energy supply. The project is expected to bring valuable information regarding the design, functioning and viability of wave energy technology systems. Although there are many different on-going and planned wave energy technology projects in Europe, as well as in other parts of the world, there is currently no commercial application in permanent operation at significant power levels.
The distortion of competition stemming from the public support is also limited, in particular in view of the limited expected market shares of the aid beneficiary, the presence of several competing European projects and the expected growth of the markets concerned.
The Commission, therefore, concluded that the benefits of the project clearly outweigh potential distortions of competition brought about by the aid.
The project to be developed by Seabased is estimated at a total R&D cost of SEK344 million (€37.5 million), of which SEK139 million will be covered by the Swedish government. The project will be carried out in cooperation with energy company Fortum Oy.
Background
In April 2011, Sweden notified aid for a wave energy technology project, based on an existing support scheme approved by the Commission in 2008 (case N561/2007). Due to the significant amount of the aid, the file had to be notified to the Commission for a detailed assessment. The R&D activities to be carried out within the project aim at developing a demonstration plant for the production of electricity from wave energy. The foreseen duration of the project is 7-8 years.
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Source: europa, November 11, 2011; Image: seabased