In a significant move towards accelerating Lithuania's transition to a net-zero economy, the European Commission has given its nod to a €193 million funding scheme designed to bolster an offshore wind project in the Baltic nation.
The approved project, set to benefit from this scheme, will be chosen through a rigorous competitive bidding process, focusing on a designated area in the Baltic Sea with a substantial capacity of 700MW.
Under the proposed initiative, financial support will take the form of a variable premium structured within a two-way contract for difference (CfD), spanning a 15-year duration. This premium will be calculated by comparing a reference price, determined during the beneficiary's tender offer, with the prevailing market price for electricity.
Participation in this groundbreaking endeavor will be open to companies operating within Lithuania as well as other European Union Member States. These companies will be invited to take part in a tender process for authorization to develop and operate the 700MW offshore wind farm.
The beneficiary of this support scheme will receive aid equivalent to the difference between the strike price and the market prices for electricity when the latter falls below the strike price. Conversely, when the market price surpasses the strike price, the beneficiary will be required to remit the difference back to the state.
Aligned with the Green Deal Industrial Plan, this initiative falls under the State aid Temporary Crisis and Transition Framework, introduced by the European Commission on 9th March 2023. This framework is tailored to support strategic measures aimed at expediting the green transition and diminishing reliance on traditional fuel sources.
This updated framework builds upon and extends certain aspects of the Temporary Crisis Framework, originally established on 23rd March 2022, to enable Member States to provide economic support amid the ongoing geopolitical challenges. It has since been further revised on 20th July 2022 and 28th October 2022.
