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Commission approves French plans for combined heat and power plants

French plans to support combined heat and power plants using natural gas fall within state aid rules, the European Commission has said.10 Aug 2016

The scheme will reduce CO2 emissions and improve energy efficiency without "unduly" distorting competition, the Commission said.

The French scheme aims to support heat and power plants with a power output of up to 1 megawatt (MW) and will add around 7 MW of additional generation capacity in the country. High efficiency combined units offer energy savings of at least 10% compared to separate units, the Commission said.

The support to be provided depends on the size of the plant. Those with capacity of up to 300 kilowatts will be given a feed-in tariff, while larger plants with capacity of up to 1 MW will only be given a feed-in-premium on top of the market price.

The scheme will also support the refurbishing of existing plants, for example to increase their efficiency or extend their operational lifetime, the Commission said.

EU countries are allowed to grant state aid for high efficiency combined heat and power plants subject to certain conditions and the French scheme conforms to the guidelines, the Commission said.

"These rules are aimed at meeting the EU's ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the single market," it said.

The Commission ruled in April that governments can pay power companies to keep capacity on standby without necessarily breaking state aid rules, although it said better assessment and design of the mechanism is needed.

Under 'capacity mechanisms', power companies are paid to provide back up capacity to protect against electricity blackouts and power shortages.