The European Commission has concluded that UK support for the conversion of 420MW Lynemouth power station from coal to biomass complies with EU state aid rules.
The Commission said the RWE Innogy project will further EU environmental and energy goals without unduly distorting competition.
It opened an investigation in February to assess whether the terms and conditions of the UK support, and in particular the financial calculations and estimates regarding key cost parameters, would avoid overcompensation.
The Commission said that in “light of the comments received from interested third parties as well as detailed technical information submitted by the UK, the Commission is now satisfied that the submitted parameters are robust and present no risk of overcompensation”.
The investigation also did not find any evidence of market distortion in the global wood pellets market and is satisfied that the measures will not lead to undue distortions of competition in the market for other wood-based products.
In December 2014, the UK notified plans to subsidise the conversion of the coal-fired Lynemouth power plant to biomass.
The UK Government intends to support the project through a Contract for Difference until 2027.
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