ECJ ruling provides EU Member States more flexibility in designing the promotion of renewable energies.

By Jörn Kassow, Alexander Wilhelm, and Apostolos Papadimitriou 

The European Court of Justice (ECJ) recently ruled that the German Renewable Energy Act of 2012 (Erneuerbare-Energien-Gesetz – EEG 2012) did not constitute State aid (C-405/16 P). The ECJ found that the support mechanism for renewable energies in practice financed by electricity consumers paying the so-called “EEG surcharge”, and the reductions for electricity-intensive companies related to the EEG surcharge, do not constitute State aid because they do not involve State resources.

The ECJ ruling on 28 March annulled a November 2014 decision by the European Commission (EC) that approved the German support mechanism for renewable energies as compatible State aid, and for the most part the reduction of the EEG surcharge for electricity-intensive undertakings. However, in that decision the EC had also ordered Germany to recover a limited part of the reductions that was deemed incompatible.