AS Veejaam and OÜ Espo v AS Elering.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2022:981
• Date: 15 December 2022
• Docket Number: C-470/20
• Celex Number: 62020CJ0470
• Court: Court of Justice (European Union)

Provisional text

JUDGMENT OF THE COURT (First Chamber)

15 December 2022 (*)

(Reference for a preliminary ruling – State aid – Renewable energy subsidy – Guidelines on State aid for environmental protection and energy 2014-2020 – Incentive effect of aid applied for after work has started on the project concerned – Article 108(3) TFEU – Obligation to notify – Consequences of breach of the obligation to notify)

In Case C‑470/20,

REQUEST for a preliminary ruling under Article 267 TFEU from the Riigikohus (Supreme Court, Estonia), made by decision of 28 September 2020, received at the Court on 29 September 2020, in the proceedings

AS Veejaam,

OÜ Espo

v

AS Elering,

THE COURT (First Chamber),

composed of A. Arabadjiev (Rapporteur), President of the Chamber, L. Bay Larsen, Vice-President of the Court, acting as Judge of the First Chamber, P.G. Xuereb, A. Kumin and I. Ziemele, Judges,

Advocate General: A. Rantos,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 16 March 2022,

after considering the observations submitted on behalf of:

– OÜ Espo, by H. Jürimäe and T. Laasik, vandeadvokaadid,

– AS Elering, by K. Laidvee and A. Sigal, vandeadvokaadid,

– the Estonian Government, by N. Grünberg and M. Kriisa, acting as Agents,

– the European Commission, by A. Bouchagiar, G. Braga da Cruz and E. Randvere, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 2 June 2022,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 108(3) TFEU, Article 1(c) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ 2015 L 248, p. 9) and paragraph 50 of the Guidelines on State aid for environmental protection and energy 2014-2020 (OJ 2014 C 200, p. 1; ‘the 2014 Guidelines’).

2 The request has been made in two sets of proceedings between (i) AS Veejaam and AS Elering, the Estonian authority responsible for granting renewable energy subsidies, and (ii) OÜ Espo and Elering, concerning the receipt of those subsidies by Veejaam and Espo.

Legal context

European Union law

Directive 2015/1589

3 Under Article 1(b) and (c) of Regulation No 2015/1589:

‘For the purposes of this Regulation, the following definitions shall apply:

…

(b) “existing aid” means:

(i) without prejudice to Articles 144 and 172 of the Act [concerning the conditions of accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which the European Union is founded (OJ 1994 C 241, p. 21 and OJ 1995 L 1, p. 1)], to point 3, and the Appendix of Annex IV to the Act [concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded (OJ 2003 L 236, p. 33)], to points 2 and 3(b) and the Appendix of Annex V to the Act [concerning the conditions of accession of the Republic of Bulgaria and Romania and the adjustments to the Treaties on which the European Union is founded (OJ 2005 L 157, p. 203)], and to points 2 and 3(b) and the Appendix of Annex IV to the Act [concerning the conditions of accession of the Republic of Croatia and the adjustments to the Treaty on European Union, the Treaty on the Functioning of the European Union and the Treaty establishing the European Atomic Energy Community (OJ 2012 L 112, p. 21)], all aid which existed prior to the entry into force of the [FEU Treaty] in the respective Member States, that is to say, aid schemes and individual aid which were put into effect before, and are still applicable after, the entry into force of the [FEU Treaty] in the respective Member States;

(ii) authorised aid, that is to say, aid schemes and individual aid which have been authorised by the [European] Commission or by the Council [of the European Union];

(iii) aid which is deemed to have been authorised pursuant to Article 4(6) of [Council] Regulation (EC) No 659/1999 [of 22 March 1999 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ 1999 L 83, p. 1)] or to Article 4(6) of this Regulation, or prior to Regulation [No 659/1999] but in accordance with this procedure;

…

(c) “new aid” means all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid;

…’

The 2014 Guidelines

4 Paragraphs 49 to 52 of the 2014 Guidelines state:

‘(49) Environmental and energy aid can only be found compatible with the internal market if it has an incentive effect. An incentive effect occurs when the aid induces the beneficiary to change its behaviour to increase the level of environmental protection or to improve the functioning of a secure, affordable and sustainable energy market, a change in behaviour which it would not undertake without the aid. The aid must not subsidise the costs of an activity that an undertaking would anyhow incur and must not compensate for the normal business risk of an economic activity.

(50) The Commission considers that aid does not present an incentive effect for the beneficiary in all cases where work on the project had already started prior to the aid application by the beneficiary to the national authorities. In such cases, where the beneficiary starts implementing a project before applying for aid, any aid granted in respect of that project will not be considered compatible with the internal market.

(51) Member States must introduce and use an application form for aid. The application form includes at least the applicant’s name and the size of the undertaking, a description of the project, including its location and start and end dates, the amount of aid needed to carry it out and the eligible costs. In the application form, beneficiaries must describe the situation without the aid, i.e., a situation that is referred to as the counterfactual scenario, or the alternative scenario or project. …

(52) When receiving an application form, the granting authority must carry out a credibility check of the counterfactual scenario and confirm that the aid has the required incentive effect. A counterfactual scenario is credible if it is genuine and relates to the decision-making factors prevalent at the time of the decision by the beneficiary regarding the investment. …’

The 2014 and 2017 Decisions

5 By its decision of 28 October 2014, relating to a support scheme for electricity produced from renewable sources and efficient cogeneration (State aid SA.36023) (OJ 2015 C 44, p. 2; ‘the 2014 Decision’), the Commission found that the Estonian aid scheme, while infringing the obligation laid down in Article 108(3) TFEU, fulfilled the conditions laid down in the Community guidelines on State aid for environmental protection (OJ 2001 C 37, p. 3), in the Community guidelines on State aid for environmental protection (OJ 2008 C 82, p. 1) and in the 2014 Guidelines, with the result that that scheme was compatible with Article 107(3)(c) TFEU.

6 By its decision of 6 December 2017 relating to amendments to the Estonian support scheme for electricity produced from renewable sources and efficient cogeneration (State aid SA.47354) (OJ 2018 C 121, p. 7; ‘the 2017 Decision’), the Commission, while finding that the Republic of Estonia had implemented the amendments made to the aid scheme which was the subject of the 2014 Decision in breach of Article 108(3) TFEU, decided that the aid scheme resulting from those amendments was compatible with the internal market, within the meaning of Article 107(3) TFEU.

Estonian law

7 Paragraphs 59, 59¹ and 108 of the elektrituruseadus (Law on the electricity market) (RT I 2015, 43; ‘the ELTS’) provide:

‘Paragraph 59. Subsidy

(1) A producer is entitled to claim from the transmission system operator a subsidy:

(1) for the production of electricity from a renewable energy source, using a generating unit with net output of no more than 100 [megawatts (MW)];

(2) for the production of electricity, as from 1 July 2010, provided that it used biomass cogeneration for that purpose, unless the electricity was produced from biomass in the condensation process, in which case the subsidy is not granted. On a proposal from the competent minister, the Government of the Republic of Estonia shall lay down, by regulation, detailed rules on cogeneration. The competent minister shall submit his or her proposal to the Government of the Republic of Estonia concerning detailed rules on cogeneration based on the proposal made by the Estonian competition authority;

…

(4) for the production of electricity, provided that it has used for that purpose, in an efficient cogeneration process, a generating unit with an electrical output not exceeding 10 MW;

…

Paragraph 59¹. Conditions under which the subsidy may be granted

(1) Grant of the subsidy referred to in Paragraph 59 of the present law shall be subject to the following conditions:

(1) the electricity must be generated by a generating unit meeting the requirements of the present law and of the network code;

(2) the producer shall fulfil the obligations laid down in Chapter 4 and Paragraph 58 of the present law.

(2) A producer shall not be entitled to the subsidy:

(1) under the conditions referred to in Paragraph 59(1), point [(5)] of the present law, if the price of greenhouse gas emission allowances is less than EUR [10] per tonne of [carbon dioxide (CO2)];

(2) under Paragraph 59(2), point [(1)], of the present law, in respect of electricity produced by a generating unit whose output that is made available makes it possible for the producer to receive a subsidy...