UPDATE 2-EU reaches deal with Germany on green energy law

Wed Jul 9, 2014 12:02pm EDT

Related Topics

* Almunia signals open questions have been answered

* Deal on industry to repay some discounts on green support

* Imported power issue clarified via auctions from 2017

* Discounts allowed for industry's co-generation plants (Dual dateline, adds details on repayments by German industry, imports, on-site production)

By Foo Yun Chee and Vera Eckert

BRUSSELS/FRANKFURT, July 9 (Reuters) - European Union authorities have reached a deal with Germany on how to make its proposed green energy law compatible with EU state aid rules, the bloc's antitrust chief said on Wednesday.

The European Commission has been examining Germany's revamped renewables legislation (EEG), which protects heavy industry from the cost of funding green energy, on concerns that this may give some companies an unfair advantage.

Germany's deputy economy minister confirmed that under the agreement with Brussels, some 350 German companies will have to pay back a total of 30 million euros ($41 million) to cover discounts on green support payments previously granted to German industry.

European Competition Commissioner Joaquin Almunia said German authorities had now allayed concerns about an unfair advantage following talks.

"We have reached a definitive final agreement on this," Almunia told journalists at a press conference, when asked about talks concerning Germany's green energy law.

"We have started the procedure to respond with a positive decision to the notification of the new EEG sent out by the German government," he said.

The Commission can ask EU governments to recover funds granted to companies if these are found to breach EU rules.

The EU also accepted a German pledge that it will bring foreign renewable power producers into planned auctions for green energy from 2017. This is so that certain imported volumes can benefit from prices paid in the German market, but under competitive rules.

The Commission had argued that green energy support in Germany currently only benefits domestic producers and that it is funded by levying charges on customers' final bill, which would represent unfair taxation.

Germany, a net power exporter, held out against widening support payments for domestic green power producers to include foreign green power producers because that could have resulted in opening the floodgates to more imports and even higher energy prices for its citizens, if they have to cover subsidies to a greater number of producers.

The EU also agreed with Germany's plan to continue allowing industrial companies, if they produce their own power, discounts of up to 40 percent on renewable surcharges up to the end of 2017.

The Commission had argued this could give unfair advantage to German industry. But Germany said it needed to encourage producers operating combined heat and power plants in particular, because that process limits damage to the environment.

($1 = 0.7331 euros) (Reporting by Foo Yun Chee, Madeline Chambers in Berlin and Vera Eckert in Frankfurt,; Editing by John O'Donnell, Mark Potter and Susan Fenton)

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