Commission greenlights up to EUR 1.75 billion compensation to LEAG for early lignite plant closure
The Commission has approved a German aid measure of up to EUR 1.75 billion for Lausitz Energie Kraftwerke AG (LEAG) to compensate for the early phase-out of its lignite-fired power plants in the Lusatia mining area by 2038.
In 2020, Germany had agreed with the main lignite operators, LEAG and RWE, on the early shutdown of their plants and notified the Commission of its plan to compensate both companies with €4.35 billion (€1.75 billion for LEAG and €2.6 billion for RWE). The Commission opened an in-depth State-aid investigation in March 2021 and, in December 2023, approved the aid granted to RWE (see our PR here).
LEAG’s units will close progressively between 2028 and 2038. In the decision adopted today, the Commission approved aid to cover not only fixed extra costs linked to the early closures, such as social measures to help employees transition to new jobs but also lost profits, which will be calculated using a pre-approved formula.
The measure was approved by the Commission under the Guidelines on State aid for climate, environmental protection and energy (‘CEEAG’) following an in-depth investigation during which Germany revised the measure for LEAG and amended the legal basis accordingly. The Commission found that the aid was necessary to incentivise LEAG to close its still-profitable lignite plants, appropriate because no alternative measure would ensure an orderly and predictable phase-out and proportionate as the compensation is strictly limited to LEAG’s additional costs and future forgone profits without leading to overcompensation. As the measure’s positive contribution to environmental and climate objectives outweighs any potential distortion of competition, the Commission approved the proposed support.
For more information, see the Commission’s PR.