The European Commission has approved, under EU State aid rules, a €3.1 billion Spanish scheme to support the production of electricity from new or substantially refurbished highly efficient combined heat and power (‘CHP') plants. The measure will contribute to the implementation of Spain's National Energy and Climate Plan, the Clean Industrial Deal and the EU's energy efficiency targets.

Spain notified to the Commission its intention to support the production of electricity in highly efficient CHP plants. The scheme has a budget of €3.1 billion and will run for 10 years. The beneficiaries are operators of new or substantially refurbished CHP installations that meet the definition of high-efficiency cogeneration as set out in the Energy Efficiency Directive and are located in Spain. The scheme will support technologies and projects that enable the production of electricity from high-efficiency CHP installations powered by natural gas, bioliquids, biogas and solid biomass. Projects involving natural gas will be required to include the necessary elements and equipment that enable them to use at least 10% renewable hydrogen in volume, to avoid the lock-in of natural gas.

Under the scheme, the aid will take the form of a remuneration premium that consists of two components: (i) compensation for investments, which is determined through competitive auctions; and (ii) compensation for operations, which is calculated and updated quarterly based on market variables (electricity prices, fuel costs, CO₂ prices) according to a transparent methodology.