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European Commission approves state aid for French gas-fired power plant

French plans to give aid to Compagnie Electrique de Bretagne (CEB) for the construction of a gas-fired power plant in Brittany are proportionate and necessary, the European Commission has said.17 May 2017

When CEB won the tender for the plant in 2012, the agreement included a subsidy of €94,000 per megawatt per year over a 20 year period in return for a commitment from the plant operators to ensure electricity generation when required by the network operator. This agreement was designed to address electricity supply security concerns in the region, the Commission said.

France has shown that the aid is needed to construct a power plant capable of ensuring sufficient voltage levels in this part of the electric network, which is more exposed to voltage control issues because it is located far from electricity generation plants, the Commission said.

France has also shown that the measure is appropriate to address the supply needs in the region, as the plant's output is flexible and can be ramped up and down at very short notice, it said.

Finally, the Commission said it considered the aid amount is proportionate given the expected rate of return to CEB.

The approval is subject to the condition that CEB will not sell output from the plant through long-term contracts to any undertaking that has a share of over 40% of the French electricity-generation capacity market. It could be harmful to competition if CEB sold electricity to the national incumbent, the Commission said.

Commissioner Margrethe Vestager, in charge of competition policy, said: "The construction of the Landivisiau power plant in Brittany will help making sure that there are no electricity blackouts in Brittany. At the same time competition on the electricity market is preserved. The Commission has worked closely with France to ensure that support for the construction of the power plant is in line with EU state aid rules."