EU approves German state aid for closure of RWE power plants

BRUSSELS (Reuters) -The European Commission on Monday said it had approved 2.6 billion euros ($2.8 billion) of state aid granted by Germany to energy company RWE to compensate for the early closure of lignite-fired power plants.

The closure of RWE’s profitable power plants was part of Germany’s push to phase out all coal-fired electricity production by 2038.

The commission said the aid had been necessary, appropriate and proportionate to compensate RWE for the early closure of its plants and to help Germany, and the wider European Union, meet its 2030 climate goals.

“The contribution to EU environmental and climate goals of the measure outweighs any potential distortion of competition brought about by the support,” the commission said.

“On this basis, the commission approved the German measure under EU State aid rules.”

RWE, Germany’s biggest power producer, welcomed the decision and said the further acceleration of the coal phase-out would not need additional compensation as the 2.6 billion covered it.

The European Commission opened the investigation into Germany’s compensation plans for RWE and LEAG in March 2021.

The commission said at the time that Germany had notified it of 4.35 billion euros that had been earmarked for the two operators – 2.6 billion for RWE and 1.75 billion for LEAG.

Germany’s Economy Ministry said on Monday that the investigation into the amount agreed with LEAG was ongoing.

“The German government is in talks with LEAG, the affected federal states and the European Commission to conclude this process as soon as possible as well,” it said in a statement.

($1 = 0.9283 euros)

(Reporting by Bart Meijer and Miranda Murray, Editing by Rachel More and Louise Heavens)