Green Deal State Aid approval slips under the radar

The EU Commission formally approved the UK Government's support of its Green Deal initiative on 5 February 2013 and found that this support is in line with EU rules on state aid and will ultimately assist competition.

07/02/2013

David Hutton

David Hutton

Partner

The EU Commission formally approved the UK Government's support of its Green Deal initiative on 5 February 2013 and found that this support is in line with EU rules on state aid and will ultimately assist competition. The Government's support for the initiative is worth approximately £600m (approximately €700m) and Commission Vice President Joaquín Almunia, in charge of competition policy, commented that:
 
"The UK Green Deal allows consumers and businesses to improve the energy efficiency of their buildings without making huge upfront investments. This is another example of how our policy of state aid control can support private investment in energy saving and enhance competition at the same time."
 
The UK are not the first country to seek EU approval for an innovative energy efficiency scheme.  It is, however, reassuring that notwithstanding the recent negative publicity surrounding the formal launch of Green Deal in January 2013, the EU Commission found that the scheme is:

  • aimed at an objective of common interest (i.e. improving energy efficiency); and
  • well designed.

Crucially, as the benefits from the scheme (i.e. lower heating bills) flow through to the end-consumer, the potential distortions of the market are limited when compared to the environmental benefits the Green Deal initiative aims to deliver.  The UK Government has also addressed the Commission's concerns regarding the role of GIB in the Green Deal by committing that GIB will withdraw from the market once private investors step in.
 
Bevan Brittan contributed to the original submission regarding the pre-application notification to state aid and we responded to supplementary queries arising subsequently due to our involvement on the Birmingham Energy Savers - Delivery Partner project (which formed part of the pre-notification).  Birmingham City Council appointed its Delivery Partner, Carillion Energy Services Limited in November 2012 and the EU Commission's approval of the Green Deal initiative means that Birmingham City Council is now in position to realise the benefits of its innovative partnership - Europe's largest domestic property retrofit Project.
 
If you would like to know more about Green Deal, the wider energy agenda and key procurement issues to consider around complex and innovative schemes please contact us.

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