EU okays Polish EUR 1.2bn state-aided energy-storage project

The European Commission (EC) has greenlit Poland’s USD 1.2bn scheme for projects to increase electricity storage capabilities to foster the transition to a net-zero economy under the Temporary Crisis and Transition Framework (TCTF).

The move, approved on October 3, 2024, will aid Poland’s shift away from fossil fuels and enhance its ability to integrate renewable energy into the national grid. The scheme will add at least 5.4 GWh of new capacity to Poland’s electricity grid as the country adapts to the fluctuating outputs associated with renewable sources such as wind and solar.

EU balances climate targets with minimising competition distortions

Executive Vice-President for Competition Policy Margrethe Vestager said “facilitating the integration of renewables into the electricity system… will make the Polish energy mix greener and reduce its reliance on imports of fossil fuels from Russia, in line with the EU climate and energy targets, while minimising any potential distortions to competition.”

Only storage facilities with at least 4 MWh capacity will qualify for the funding, which will be allocated through tenders managed by the Polish government. Projects selected for support will be connected to the national grid and play a key role in balancing supply and demand as renewable energy increasingly feeds into the system.

The financial aid will be offered in the form of grants and loans, covering up to 45% of the investment cost for approved projects, by the end of 2025. Medium-sized enterprises could receive up to 55%, and small businesses 65%. The EC called the scheme “necessary” and “proportionate”. The initiative is also crucial for the European Green Deal’s industrial strategy, as the continent seeks to reduce its dependency on Russian fossil fuels amid the war in Ukraine.

Funding to stem from multiple sources

The TCFC state aid mechanism was introduced in 2023 to facilitate economic recovery and support the green transition across Europe. The aid will be granted on the basis of TCTF regulations, with estimated volume and budget to be set by Poland, based on the investment cost of each supported project, before 31 December 2025.

The scheme will also be financed by the post-pandemic recovery Modernisation Fund and the Recovery and Resilience Facility (RRF), following the EC’s positive assessment of Poland’s RRF Plan and its subsequent adoption by the European Council.