European Commission Approves €2.6 Billion Compensation to RWE for Early Coal Phase-Out

European Commission Approves €2.6 Billion Compensation to RWE for Early Coal Phase-Out

(IN BRIEF) The European Commission has given its approval for RWE to receive €2.6 billion in compensation for the early phase-out of its lignite-fired power plants, as mandated by the German Act to Reduce and End Coal-Fired Power Generation passed in 2020. This compensation, previously agreed upon in accordance with German legislation and a public-law contract between RWE and the Federal Republic of Germany, will help mitigate the significant financial burdens placed on RWE due to the coal phase-out. RWE has already taken steps to shut down coal operations and incurred costs associated with the phase-out. The acceleration of the coal phase-out to 2030, as agreed in a political agreement, will also be covered by this compensation without the need for additional funding.

(PRESS RELEASE) ESSEN, 12-Dec-2023 — /EuropaWire/ — RWE welcomes the decision by the European Commission published in a press release to approve the compensation agreed upon three years ago for the early phase-out of its lignite-fired power plants in accordance with the German Act to Reduce and End Coal-Fired Power Generation passed in July 2020.

An amount of €2.6 billion had been determined as compensation for the significant financial burdens RWE has to bear as a result of this Act being passed. The funds are to be paid out in installments by 2030. The compensation, which had been agreed upon in accordance with the Act to Reduce and End Coal-Fired Power Generation and a public-law contract between the Federal Republic of Germany and RWE, has been subject to review by the European Commission under state aid law until today.

Since the end of 2020, RWE has already shut down five lignite-fired power plant units as well as its briquette production in Frechen in accordance with the coal phase-out timeline. In addition, the company bore considerable costs due to the early termination of production at the Hambach open-cast mine as well as the political decision to preserve Hambach Forest.

The phase-out of coal in the Rhenish mining district was brought forward to 2030 in a political agreement reached last year between the German Federal Ministry for Economic Affairs and Climate Action, the Ministry of Economic Affairs, Industry, Climate Action and Energy of the State of North Rhine-Westphalia and RWE. The 2022 amendment to the Act to Reduce and End Coal-Fired Power Generation has been taken into consideration for RWE in the European Commission’s compensation decision under state aid law. The further acceleration of the coal phase-out will take place without any additional compensation as it will also be covered by the €2.6 billion already agreed upon.

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SOURCE: RWE AG