"NER300" is a financing instrument managed jointly by the European Commission, European Investment Bank and Member States, so-called because Article 10(a) 8 of the revised Emissions Trading Directive 2009/29/EC contains the provision to set aside 300 million allowances (rights to emit one tonne of carbon dioxide) in the New Entrants’ Reserve of the European Emissions Trading Scheme for subsidising installations of innovative renewable energy technology and carbon capture and storage (CCS). The allowances have been sold on the carbon market and the money raised — 2.1 bn EUR — will be made available to projects as they operate. More information is available under the tab Basics. Official information is available on the Commission website here.

NER300.com is an unofficial, independent portal dedicated to renewable energy and grid integration projects wishing to access this instrument, providing

• News
  ...to keep you up to date with the latest developments, key dates and deadlines
• Analysis
  ...understand the NER300 instrument and how to use it for your project
• Access to consultancy
  ...for specific guidance for your proposal.

At the conference European leadership in renewables — funding innovation on 22 June 2017, the EC confirmed that “on 19 May 2017 Member States approved, in the Climate Change Committee, a relevant amendment to the NER300 Decision, which is now subject to a three-month scrutiny period by the European Parliament and Council.” The scrutiny period has now ended and the amendment is adopted.

The amendment concerned NER300 awards made to projects that, because of project withdrawal or underperformance, will remain unspent. The money committed to them will be re-allocated to two schemes. It “should become available under InnovFin EDP towards the end of 2017,” confirmed (now ex-) DG CLIMA Policy Officer Kerstin Lichtenvort. The negotiations for channelling funding to “CEF Debt” should begin in H2 2017, she continued, with new money available under that facility “towards next year.”

A part of the transferred funds may be used as grants. A source has said these will be for project development assistance akin to the services already available from Innovfin Advisory. The cost of in-depth front-end engineering designs (which can be in the tens of millions for large projects) will be eligible.

Blended instruments

The Commission was also asked at the conference about NER300’s relationship between another important funding programme for energy, Horizon 2020. Lichtenvort suggested that “about a third of NER300” projects had their origins in a project funded by the European Commission’s Framework Programme for Research and Innovation. EIB representative Inocencio Figaredo Pire acknowledged that “Innovfin falls under Horizon 2020, the EU framework for research and innovation.”

DG Research Head of Unit G.2 Piotr Tulej, who is one of several people closely involved with Innovfin EDP, discussed its future at the RHC-ETIP Annual Event Innovation in the renewable heating and cooling sector on 20 June: “We want to complement that financial instrument with the option of a grant that might come from Horizon 2020, in other words to blend the financial instrument with grants from our programme,” he said. A source said DG Research’s contribution to Innovfin EDP would be flexible in the kind of costs it could cover, including, for example, costs incurred the operational phase. The idea is “revolutionary” said another EC source, “For the time being it is too early to say anything else regarding whether in the end we will have this blending, and when, and what form it will take.”

The EC does not refer to blending in the Horizon 2020 spending plan for 2018-2020, but it is being discussed intensely. One sign of this is in the wording of the section on Innovfin EDP in the spending plan. Referring to two headings in the overall Horizon 2020 budget, Access to Risk Finance and Societal Challenge Energy, it says, “European Commission has decided to double the financial support to this facility from EUR 150 million to EUR 300 million (with EUR 250 million channelled from Horizon 2020 Access to Risk Finance and EUR 50 million from the 2016 budget of this Societal Challenge).” Later, however, it indicates that the Societal Challenge will also provide 50 M EUR funding to Innovfin EDP in both 2019 and 2020. This would therefore be more than a doubling. Details are in the table below.

The suggestion is that it is this 100 M EUR that could, following deliberations in 2018, be re-routed to a grant scheme that complements Innovfin EDP loans. Provisions for 2019 and 2020 in the 2018 version of the three-year spending plan are not set in stone.

Doubling Innovfin EDP is a pledge made in this EC policy document. The fact that the doubling will be achieved even without the supplement from NER300 adds to the impression that ample resources will be available and that the Societal Challenge Energy money can be used to try something new and daring.

Easier for EC to offer grant + debt support than equity + debt

Equity + debt blended finance is also under consideration, but the obstacles are greater. “The Commission cannot provide direct equity,” said a source, due to legal reasons. So far, EU-sponsored equity support has been at arm’s length, via endowments to the European Investment Fund.

	Societal Challenge Energy / M EUR	Access to Risk Finance / M EUR
2016	50	50
2017	0	50
2018	0	30
2019	50	60
2020	50	60

Table: Endowments to Innovfin EDP from the Horizon 2020 budget. To reconcile this table with the line in the Horizon 2018 spending plan that the Innovfin EDP budget will be doubled to 300 M EUR, the money from Societal Challenge Energy in 2019 and 2020 must be neglected. Possibly it will be put towards complementary grants or, conceivably, complementary direct equity support.

New information

In Q2 2017, the European Commission published one-page factsheets on many NER300 projects (see article). They revealed for the first time the name of the Project Sponsor (the company behind the project) and the date, or expected date, of the Final Investment Decision on the project by the Project Sponsor. Often they contained a line or two on the status of the project. The factsheets stick closely to the text supplied by Project Sponsors as part of their 2016 reporting obligation to the EC.

Click inside the table below to see a sortable table summarising the essential points from those factsheets.

Flexible FIDs?

All projects from Call 1 (with five exceptions) claim to have reached Final Investment Decision by the EC’s deadline of December 2016. The EC understands Final Investment Decision as “the ultimate financial close on the proposed investment program, including a life cycle program baseline that establishes cost, schedule, performance, benefits, and risk-management boundaries for program execution” (FAQ 250). But the factsheets show that three CSP (concentrating solar power) projects spread over Greece and Cyprus intend to “complete financing”, “sign power purchase agreements” or reach “financing closure” only in 2017. Two wind projects also have work to do. One reports, “Financial close is expected for the middle of 2017;” the other that “definition of the detailed contractual framework and financing” is planned for this year. Confusing statements have been made concerning the FID of the Finnish Ajos BTL project.

All but two projects from Call 2 expect to reach FID on the last allowable date, June 2018.

Probability

NER300.com has included a column called “Probability” in the table. This contains a score from 1-5 (1 low; 5 high) for the likelihood that a project will enter into operation. The score is based in part on the info in the factsheet.

Missing data

Projects that are in operation are obliged to put certain specific datasets related to their operation into the public domain. This has not happened. Two of the three projects in this position also have no factsheet.

1. NER300.com’s comment

   The EC has not imposed its definition of “Final Investment Decision” too rigidly, relying mainly on the host Member State’s word that it has been reached. A Project Sponsor that claimed to have reached Final Investment Decision in December in 2016 has even used an EC-hosted and -chaired conference to say, “Our objective is to reach financial close by the end of September 2017” (see Windfloat in the table below). Although in a paper circulated to NER300 NCPs on 3 Feb 2017 the Commission wrote, “The full scale of NER300 undisbursed funds” was “expected to be known by the end of February 2017”, only in July did the Commission put pressure on companies to confirm whether they had complied with the Dec 2016 deadlines.

   Member States individually have little incentive to be strict on FID for their projects, although it might be in their common interest if they were. A stricter approach would likely allow more money to be recycled to more mature projects.

   Project Sponsors from Call 2 will take note of the EC’s leniency. They have an interest in making a premature declaration of Final Investment Decision if it allows them to present higher “relevant cost” than if they waited. “Relevant cost” has little meaning in real life, although it is derived from some of the quantities used in a project’s financial model. An NER300 award is capped at 50% of relevant cost. It may be revised down (but never up) if the relevant cost changes, but only up to the point that the FID is taken.

   Concerning the timing of the release of these factsheets, it is rather remarkable that it has taken 3-5 years, depending on the call, for the names of the companies behind the projects to be officially communicated. In other EU programmes for energy technology demonstration, such as FP7 or Horizon 2020, the names of beneficiaries are published as soon as grants are awarded.

The European Commission has released a few paragraphs of information on the status of eleven NER300 projects. These are projects that have not yet entered into operation. Every year they must report on their progress towards operation as per the Annual Reporting Template downloadable from this page. The paragraphs are contained in one-page “public fact sheets” here.

Projects that have entered operation must share knowledge with other NER300 projects and with the public according to a different template (the ‘relevant knowledge collection forms’ here). Bioenergy projects, for example, are prompted for “Average monthly performance (e.g. in MWh) compared to target, including reliability and causes of downtime plus impacts of any changes to operating conditions and/or product(s) made (litres, tonnes, MJ and cubic metres)”. By now, DE BIOh Verbiostraw should have reported three years’ worth of data, IT BIOg BEST three and a half years’ worth and the wind project SE WINf Windpark Blaiken two years’ worth, but this information has not been published by the EC. No explanation has been given.

1. NER300.com’s comment

   ***UPDATE 2 Aug 2017: Now the factsheet belonging to one operating project, Windpark Blaiken, has been put up, but it contains no information on the project’s performance.***

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   ***UPDATE 28 June 2017: Many more public fact sheets have now been posted on the webpage, but still none pertaining to projects in operation.***

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   Only eleven projects on the webpage?! Excluding those of withdrawn projects and of projects that are already operating, there should be 32 factsheets posted up.

   These reports were a long time coming. For years the EC received filled-in Annual Reporting Templates, but never found a way to summarise them for public consumption.

The European Court of Auditors has confirmed that NER300 will be in the scope of a report it expects to publish in summer 2018 on the management of EU instruments supporting the large-scale demonstration of innovative renewable energy and carbon capture and storage technologies.

This report is a “priority audit task”, which it started this year. It and other such tasks are presented in its 2017 Work Programme.

Earlier this year it approached stakeholders to help define the scope of its work.

The ECA will not give any details of the content of its report until it has been published.

***UPDATE 9 June 2017: The EC now says 16 projects have reached FID across both calls (presentation 31 May 2017).***

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The Commission informed the Climate Change Committee on 27 April that the following projects from the first call of NER300 (which closed in 2011) “have been officially withdrawn by Member States”:

Country	Project name	Technology subcategory	Award /EUR
FR	UPM Stracel	BIOd	169 960 000
NL	Woodspirit	BIOd	199 000 000
SE	Gobigas phase 2	BIOc	58 797 168

They join a Belgian project known to have been formally withdrawn in October and an Irish project re-submitted to the second call. The awards made to the Belgian project and the three in the table above add up to 436 M EUR.

Zombie projects out there

A total of 23 projects were awarded in the first call including the five referred to above and two more (Pyrogrot, PTC50-Alvarado) withdrawn to make way for two substitute projects in the second call. But the EC says that Final Investment Decisions have been reached by only 14 projects across both calls. That means there are at least two projects that the EC has chosen not to identify that did not reach FID by the December 2016 deadline. NER300 rules state that even if they have not been “officially withdrawn” by the Member States behind them, those projects’ awards are revoked.

553 M EUR of unspent awards?

“Approximately € 553 million” was the EC’s estimate in September 2016 of the total awards from the first call that could go unused (article). This is half of the value of all the first-call awards.

New lease of life for Ajos BTL; EOS apparently on-course, too

One award that has been saved is Finland’s ‘Ajos BTL’ (award: 88.5 M EUR). A new owner, Kaidi took over the project and reached FID in the second half of 2016. Another project presumed to be in rude health because its backers will present it publicly on 8 June in Cyprus is “EOS GREEN ENERGY”, a concentrating solar power plant.

After eight months of discussions, EC and Member States are close to agreeing an amendment to the NER300 Decision that would allow money that had been awarded to failed projects to be reallocated. It contains the following elements:

Cash for the “Innovfin Facility”

The EC proposes that, “as a priority” the money goes here. A memo accompanying the draft shows that the EIB Group and EC intend the “EDP Innovfin” facility specifically to receive the money. This particular facility “is designed to support first-of-a-kind renewable energy demonstration projects, via 95% first-loss risk coverage of EIB financing for selected projects.” The memo lists five ways in which EDP Innovfin’s rules need to be changed to bring it into line with NER300’s scope. This alignment exercise is planned for June.

Cash for “CEF Debt”

“CEF Debt” is an instrument within the Cleaner Transport Facility (set up in Dec 2016) that provides loans and guarantees. Extra money will “support the demonstration and roll out of innovative renewable energy technologies in the transport sector, which is a key priority for low-carbon innovation,” says the EC.

Grants

The memo says that undisbursed NER300 money could contribute to project development assistance “for projects falling under the NER300 scope”. It goes on, “PDA would (among other services) cover the costs related to the preparation of:

• Technical preparatory studies;
• Business plans;
• Front-end engineering studies;
• Training courses for relevant personnel;
• Development of procurement documents until projects’ launch.”

But this rather limited interpretation of grants didn’t satisfy the Member States. To try to win them round, shortly before the CCC meeting, the EC added a recital to its text saying, “Considering the specific situation of highly innovative low-carbon projects, a part of financing should be provided in the form of grants.” The vehicle for providing these grants is not specified (and is very unlikely to be described in the amendment to be adopted on 19 May) but one source said it might be a new instrument created within Horizon 2020 that blends loans and grants.

Why no decision already?

The Climate Change Committee had been meant to vote through the amendment to the Decision on 27 April. This is was “essential”, the EC said, “to allow for related Innovfin Delegation agreement amendment in June 2017 and CEF Debt Delegation agreement amendment in the second half of 2017.” But the EC and Member States felt they needed more time to consider some last-minute ideas, so they decided not to risk a vote that day. To meet the June deadline, an extraordinary CCC meeting has been called for 19 May where NER300 is the only topic on the agenda.

Member States’ concerns

“first and faster”

The memo had talked of both EDP Innovfin and CEF Debt being available on a “first-come, first-served basis” but the latest version of the amendment would give “first and faster consideration” to NER300 projects “under the first or second call for proposals that have reached final investment decisions and are under implementation”. This has been pushed by a few Member States and is resisted by others.

the funding of transport projects

The Cleaner Transport Facility can fund a greater variety of transport-related projects than NER300, where support was only available for the production of biofuels. In the last eight months, the EC has suggested that the NER300 contribution to CEF Debt could fund the roll-out of “rapid-charging stations for electric vehicles along major motorways” or “alternatively fuelled buses, such as with electric and hydrogen fuel cells”. Now in this (fourth) memo it settles on “renewable energy-related e-mobility and innovative charging infrastructure in transport” as the focus. But some Member States are nervous: NER300 can only fund transport projects to the extent that they concern innovative renewable energy technology. This is hard-wired into NER300’s rules. They wonder whether, if it can’t be ensured that the infrastructure only delivers renewable electricity to the vehicles, the problem might again arise that NER300 money remains unused.

governance

One Member State wanted the EC to explain how the Climate Change Committee could intervene in the repurposed NER300. “It is foreseen to consult the CCC,” it wrote, “but it is not clear how the Commission will proceed according with the outcome of that consultation.”

tweaks

Another Member State proposed several edits for clarification, including one that would ensure that the publicity drive around the expanded EIB facilities reaches a fresh audience, not just people already connected to NER300.

1. NER300.com’s comment

   On the second paragraph of page 10, the memo insinuates that a guarantee is a grant. Nice try, Commission, but the Member States won’t fall for it. Project Development Assistance, however, is a kind of grant. If covering the cost of Front-End Engineering Design (FEED) studies is in the scope of PDA, and PDA covers a high share of the FEED costs, this will take substantial sums out of the Innovfin kitty. A FEED for a plant costing hundreds of millions is tens of millions.

***UPDATE 26 June 2017: The EC and Council have now answered the MEPs: EC’s answer; Council’s answer.***

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Three MEPs have co-signed a question to the Council and one to the European Commission on NER300. The MEPs are Tomasz Piotr Poręba (Poland ECR), Ruža Tomašić (Croatia ECR), Davor Škrlec (Croatia Verts/ALE). The questions were put on 7 April. The addressee must reply within six weeks (18 May).

To the Commission (E-002587-17):

NER 300 has awarded EUR 2.1 billion to projects, but the Commission has communicated little on how the scheme has functioned. There have been ad hoc presentations by the Commission at stakeholder conferences, as well as one before Parliament (ITRE hearing on 27 Nov 2013), and some information is made available in the impact assessment of Phase 4 of the EU Emissions Trading System (SWD(2015)0135).

Now that a successor scheme, the ETS Innovation Fund (NER 400) is being set up, likely to be even bigger and with wider scope, it is all the more important to report comprehensively on how NER 300 operated and whether it met its goal of hastening the commercialisation of innovative technology.

The Commission is therefore asked whether it is prepared to publish, at the earliest opportunity,

• a report on the lessons learned in the implementation of NER 300, disclosing which projects are not going ahead;
• the report on the verification of Eligibility Criteria Assessment, containing details of the innovative nature of the projects supported, or, if necessary to avoid the release of confidential information, a summary or redacted version of this report?

To the Council (E-002588-17):

not co-signed by Ruža Tomašić

The Climate Change Committee will soon be invited to mandate the Commission to change the NER 300 Decision. The changes aim at finding alternative uses for money that had been awarded to projects now known not to be going ahead. These are projects from the first call for NER 300 funding, launched in 2010.

In the light of the above, does the Council agree that it would be judicious to keep some of the money readily available to address possible successful challenges by project sponsors or their hosting Member States on the size of their awards, and, in consequence, that not all money should be committed to new uses?

The EC is poised to publish a report on its “outcomes of the analysis” of NER300.

In September the EC warned Member States that 553 M EUR of awards were likely to be cancelled due to projects failing to meet a major December 2016 deadline. The report will set out an alternative use that can be made of that money.

Four options had been on the table, including a third NER300 call, giving more money to NER300’s active projects or rolling the money over to ETS Innovation Fund (suggested by Commissioner Cañete in June). In the end the EC, with the support of most Member States, has settled on “Option 2”, which involves topping up some of the EC’s non-grant financing schemes: EDP Innovfin, EFSI and maybe the Cleaner Transport Facility. An amendment to the NER300 Decision to allow this transfer will be put before the Climate Change Committee in April.

A reference to the need for “strong linkages” between ETS Innovation Fund and two of these financing schemes was made in the Accelerating Clean Energy Innovation Communication of 30 Nov 2016 (COM(2016) 763). DG CLIMA was one of four DGs involved in a “collective exercise” to write it. A reference to “an enlarged” EDP Innovfin appears in the Horizon 2020 scoping paper for the Energy Work Programme 2018-2020.

NER300 money handed to these instruments will be tracked separately to their existing capital. This is to ensure that the Member States (represented in the Climate Change Committee) can monitor the projects selected for financing and, if the NER300 portion of the capital is not fully subscribed by the end of 2020, have this remaining amount refunded to them. Projects funded with the infused NER300 capital will need to follow NER300’s rules for being innovative renewable or CCS, knowledge-sharing (though perhaps in modified form), and others.

“With the allocation from NER300 funds, the [Cleaner Transport] Facility would support the demonstration and deployment of innovative renewable energy technologies in the transport sector (e.g. rapid charging stations for electric vehicles along major motorways, alternatively fuelled buses, such as with electric and hydrogen fuel cells),” the EC says. The infrastructural examples in that list are outside NER300’s original scope. The EC has asked Member States to comment specifically on whether they have enough innovative transport-related projects to warrant giving a boost to the CTF.

The Zero-Emissions Platform, representing the CCS community, supports the re-allocation of unspent funds to financial instruments, but suggested in a November 2016 position paper that a special instrument dedicated to CCS should be set up. Instead the EC has chosen to expand the scope of EDP Innovfin to include CCS.

“Of the projects awarded under the first call only three projects have been withdrawn,” announced the European Commission a year and a half ago, even as ever more projects were pushing back their Date of Entry into Operation to the latest possible date.

The situation was presented more soberly in September 2016, 45 months after First Call projects had been notified of their award and 3 months before their deadline to obtain all relevant permits and reach their Final Investment Decision. The EC revealed that six projects out of the 19 in the First Call had reached Final Investment Decision. By the end of November, that number had risen to 9. The deadline for first call projects has now passed. “Full clarity on the scale of unused funds from the first call will be known by the end of February 2017,” states the EC.

Roman Doubrava, deputy head of the unit responsible for NER300 in the EC, said on 30 Nov, “We have been following the projects going on facing different difficulties, and there are some lessons learned. We will be publishing some outcomes of the analysis we are currently making towards the end of the year.” He was speaking at the SET Plan conference 2016 in Bratislava. That report is still not public, but is expected to be published before DG CLIMA’s conference, “Finance for innovation: Towards the ETS Innovation Fund” on 20 Jan 2017. This is the second conference on ETS Innovation Fund (details on the first one here).

The Commission’s only regular, formal and public report on the status of NER300 projects has, since 2014, been the annual publication of the latest version of the award decision. It contains the date that each project should enter operation. Every year more and more projects have pushed their date of entry into operation to the latest allowable date (details).

The EC has published a new amended Award Decision detailing the current status of NER300 projects selected in the first and second calls.

The document shows changes to the dates that projects intend to begin operating.

The updates reflect the wishes of project sponsors and their host Member States as at late spring 2016, when the EC initiated this year’s annual process to amend the Award Decision.

Project withdrawn

One project was officially withdrawn, BE DRMc SLim. The White Rose CCS project, awarded 300 M EUR, has not been withdrawn even though the UK government scrapped its CCS demonstration programme a few months before the Award Decision amendment process began.

Delays

9 projects out of 37 have requested and been granted a later ‘date of entry into operation’ since their last opportunity to request this, in 2015. A tenth project, CY CSPe Helios Power, asked to postpone its date of entry in operation to 30 Jun 2020, but this is beyond the latest allowable date for its call of 30 Dec 2018, and the EC declined it.

6 of these 9 projects push their date of entry into operation to the latest allowable date for their respective calls, bringing to the total number of projects in this position to 23, which is 62% of all projects. This proportion has steadily increased since the first Award Decision of December 2012, when it was 13%. This compares to 34-36% in 2014 and 45% in 2015. All French, Spanish, Cypriot and Greek projects are in this position, as well as the single projects awarded to Austria, Hungary, Denmark, Latvia, Ireland and Finland.

The latest official status on all projects is available here.