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State aid: EU Commission approves support for electricity production in Spanish non-peninsular territories

The European Commission has approved, under EU State aid rules, the support granted by Spain to electricity generators for supplying electricity in the Spanish non-peninsular territories as a Service of General Economic Interest (SGEI). These territories include the Canary Islands, the Balearic Islands, Ceuta and Melilla.

The main objective of the scheme is to guarantee supply of electricity in these isolated territories, while keeping retail prices at the same level as those in the mainland.

The Commission assessed the measure under the EU State aid rules on services of general economic interest (SGEI), which allow Member States to compensate companies that have been entrusted with public service obligations for the extra cost of providing these services, under certain conditions.

The Commission found that the additional remuneration granted to electricity generators only covers the extra cost related to the generation of electricity in these isolated territories.

The scheme also establishes competitive procedures for the installation of new power generation in the future, allowing the entry of new market participants and increasing competition. Furthermore, to improve the security of electricity supply in the Balearic Islands in the long term and to allow for a better integration of renewable energy sources in the future, Spain has committed to build a second subsea connection between the mainland and Mallorca by 2025.

For this reason, the Commission has approved the scheme until end 2029 for the Canary Islands, Ceuta and Melilla while only until end 2025 for the Balearic Islands.

The Commission concluded that the measure is in line with EU State aid rules, as it will contribute to the decarbonisation of the energy sector in these particular areas, in line with the Clean Energy for EU Islands initiative, without unduly distorting competition.

More information will be available on the Commission’s competition website, in the State Aid Register under the case number SA.42270.

Arianna Podesta – Giulia Astuti –