(72) A measure constitutes State aid within the meaning of Article 107(1) of the Treaty if it is ‘granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods […] in so far as it affects trade between Member States’.
(73) As set out in the Opening Decision, the beneficiary (Drax Power Limited) will receive operating aid in the form of a variable premium from a government-owned CfD counterparty for the electricity generated by the converted unit. The measure favours the generation of electricity from renewable energy sources (in this case biomass) by the selected beneficiary. Electricity is widely traded between Member States. The notified measure may therefore distort competition on the electricity market and affect trade between the Member States. In addition, the plant will also compete for biomass fuel in the raw material market as, due to a lack of sufficient local forestry resources, the majority of the wood pellets required to fuel the Drax unit will be imported from abroad (see recital 11 above).
(74) The Commission concludes that the notified measure constitutes State aid within the meaning of Article 107(1) of the Treaty(46).
5.1.
Legality of the aid
(75) On the basis of the information provided by the United Kingdom, the Commission notes that no final investment decision has yet been taken and that no payments will be made before State aid approval has been obtained. The Commission considers therefore that the United Kingdom has fulfilled its obligations under Article 108(3) of the Treaty.
5.2.
Compatibility of the aid
(76) The Commission notes that the notified measure aims at promoting the generation of electricity from renewable energy sources, namely from solid biomass. The notified measure falls within the scope of the Guidelines on State aid for environmental protection and energy 2014-2020 (EEAG)(47). The Commission has therefore assessed the notified measure in accordance with the general compatibility provisions, set out in Section 3.2 of the EEAG and in accordance with the specific compatibility criteria for operating aid granted for electricity from renewable energy sources, set out in Section 3.3.2.1 of the EEAG.
5.2.1.
Objective of common interest
(77) As concluded in the Opening Decision, the Commission notes that the aim of the notified aid measure is to help the United Kingdom achieve the renewable energy targets(48) and the CO
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reduction objectives set by the Union as part of its EU 2020 strategy(49). As described in recital 9, and in accordance with paragraphs 30, 31 and 33(a) of the EEAG, the United Kingdom explicitly estimated the CO
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savings and renewable electricity generation capacity expected from the notified project. The Commission concludes that the notified aid measure is aimed at an objective of common interest in accordance with Article 107(3)(c) of the Treaty.
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