The Production of Electricity from Renewable Energy Sources as a Public Service Obligation

Abstract

The article analyses whether electricity production from renewable energy sources can be the object of a public service obligation. This question is of particular importance for the State aid assessment of payments to producers of electricity from renewable energy sources. Such payments typically occur under so-called feed-in tariffs, which are a regulatory mechanism used in most Member States to promote the production of electricity from renewable energy sources. The author argues that there are compelling reasons for considering that Member States can introduce public service obligations with respect to the production of electricity from renewable energy sources, and that compensation payments granted are exempted from the notification obligation under Article 88(3) EC treaty, if the beneficiary undertaking receives not more then 30 million EUR per year as compensation, and if its turnover does not exceed 100 million EUR. Should these thresholds be exceeded, the compensation payments need to be notified to the Commission. The Commission will then assess them under the Community framework for public service compensations, which has been adopted in November 2005.

Public Service Obligation Levy in the Context of Energy Sustainability and Security: The Cases of Ireland, Greece, Denmark and Lithuania

“…Around thirty sources related to each state allowed for a fairly detailed analysis. Greece showed the lowest number of relevant sources (27), indicating a lack of PSO-related research for this country. A total of 131 sources were examined and there was only one source [40] that discussed all of the four aforementioned countries.…”

“…Karova [26] examined PSO in the context of electricity. Rusche [27] analyzed electricity generation from the RES as a PSO (however, this study took a legal rather than an economic point of view). Therefore, there is still a lack of more detailed and context-specific analyses of the impact of the PSO levy on electricity tariffs and energy security.…”