Two-thirds of NER300 projects behind schedule as some ask for early cash, EU documents show

Published 01:06 on October 20, 2015  /  Last updated at 16:58 on May 16, 2017  /  EMEA, EU ETS  /  No Comments

Two-thirds of the carbon-cutting projects awarded more than €2 billion in EU funding under the bloc’s NER300 programme have requested extensions to their operational deadlines, a document seen by Carbon Pulse showed, with the average delay to those installations starting estimated at 27 months.

Two-thirds of the carbon-cutting projects awarded more than €2 billion in EU funding under the bloc’s NER300 programme have requested extensions to their operational deadlines, a document seen by Carbon Pulse showed, with the average delay to those installations starting estimated at 27 months.

According to the European Commission’s response to an ‘access to documents’ request filed by Greg Arrowsmith, a consultant who covers the EU scheme, just three of the 39 renewable energy and carbon capture and storage projects that remain in the process, which split the cash raised through the sale of 300 million EUAs between 2011 and 2014, were operational as of this spring.

Some 25 of the 38 renewable energy projects that were selected during the NER300 programme’s two funding calls have requested a later ‘date to entry into operation’, ranging from 12 to 54 months beyond the timeframes originally proposed in their applications.

This excludes extensions granted in Jan. 2014 to projects approved in the NER300’s first funding tranche.

See a copy of the Commission’s response annotated by Arrowsmith here.

No reason was given as to why so many projects had requested extensions, but it was likely due to factors including the EU’s uncertain regulatory landscape and slow technological progress – two reasons cited by installations that had previously withdrawn from various stages of the process.

“This means that now 17 projects, which is 45% of all projects, are right up against the latest possible date of entry into operation according to current NER300 rules,” Arrowsmith said, referring to the end-2020 deadline for all approved projects to start.

“This compares to 13% in 2012 and 34-36% 2014. All French, Spanish, Cypriot and Greek projects are in this position.”

The NER300’s operational deadline for all projects had previously been Dec. 31, 2016 for the first call projects and Dec. 31, 2018 for the second call, but seven countries lobbied to have both pushed back by two years.

The extension requests as well as other changes to some of the projects’ names and funding terms, were approved, according to a separate Commission document.

A total 41 projects had been awarded funding through the NER300 scheme’s two application periods, but two have withdrawn.

Britain’s White Rose CCS project was awarded €300 million in the second tranche, making it the only such project to win NER300 funding, but its main backer utility Drax last month pulled out of the initiative citing “critical reversals” in the UK Conservative government’s green policies and concerns over future support.

White Rose, which is also competing for domestic cash under a separate UK government competition, did not apply for an extension or upfront cash under the NER300 but remains in the programme.

CASH UPFRONT

Five of the 39 remaining projects have also requested to receive 60% of their funding upfront, the Commission document showed. The early cash would amount to nearly €100 million, based on the total €165.4 million awarded to the five installations.

Projects that request upfront funding are liable to pay it back if the installation underperforms.

Another two projects were approved for upfront funding in Jan. 2014, while the total cash awarded to the installations left in the programme has been reduced by €1.64 million since then.

The Commission said the deadline and funding changes don’t affect the scope of the projects or the results of the selection procedure, nor do they increase the maximum amount of funding required.

Arrowsmith, who runs NER300.com, said the latest information reflects the wishes of the project sponsors and their host member states as of late spring, when the Commission initiated this year’s annual process to amend the programme award decisions.

Under the NER300, 300 million EUAs that had been held for new entrants to the EU ETS were sold into the market by the EIB, raising €2.157 billion. According to the Commission documents, some €2.105 billion of that had been allocated to the 39 projects.

The Commission has proposed to scale up the initiative in Phase 4 (2021-2030), aiming to sell around 400 million allowances to raise cash for an innovation fund.

By Mike Szabo – mike@carbon-pulse.com

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