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Subsidies for green electricity permitted to restrict trade between EU member states — CJEU

By Adam Brown

It is normal for member states to make support for renewable generation available only to generators based in their own territory. Until recently, it was generally assumed that this was entirely consistent with EU law. Article 3(3) of the EU Renewables Directive (2009/28/EC) states that member states ‘shall have the right to decide… to which extent they support energy from renewable sources that is produced in a different member state’.

However, a case referred to the Court of Justice of the European Union (CJEU) by the Swedish courts called this into question. Ålands Vindkraft, the operator of a wind farm in the Åland Islands, applied to participate in the Swedish ‘green certificate’ scheme. Although connected to the Swedish grid, the project was in Finnish territory, and its application was refused on that ground, pursuant to the relevant Swedish law.

As well as the question whether that law was in line with the directive, the resulting appeal to the Swedish courts raised a more fundamental issue. Are schemes that restrict the availability of subsidy to home-grown renewables, and the provisions of the directive that ostensibly permit such restrictions, consistent with the EU treaties’ rules on the free movement of goods? …

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