The EU court has issued a landmark ruling in a case between Ålands Vindkraft and the Swedish Energy Agency in relation to the compatibility of the Swedish Electricity System with EU law. The Swedish Energy Agency is very pleased with the outcome, where the Court decided in line with the position of the Swedish Energy Agency.
Ålands Vindkraft, which operates a wind farm in Finland, had applied for Swedish green certificates, and was refused on the grounds that green certificates were available only for wind farms based in Sweden.
Ålands Vindkraft appealed to the court, which referred a series of questions to the European Court of Justice. Advocate General Bot had expressed the view that while the Renewables Directive permits national-only support mechanisms, Article 34 TFEU (which takes precedence over the Directive) prohibits national rules that exclude producers whose plants are situated in other Member States. In particular, he expressed the opinion that Article 3(3) of the Renewables Directive is invalid to the extent that it permits Member States to deny or restrict access to their support regimes to renewable energy from sources situated in other Member States.
If the EU Court had followed this opinion, its judgment would potentially have had far-reaching consequences for national renewables subsidy mechanisms in the EU.
In short, this recent ruling in the SEA's favour means that the EU Court considers that a support scheme promoting green electricity such as the Swedish Electricity Certificate System is allowed under the EU Renewables Directive. The Court first determined that legislation such as Sweden's is in principle capable of impeding imports of electricity, especially green electricity, from other Member States. As a consequence, it constitutes a measure with an equivalent effect to a quantitative restriction on imports. In principle, this is incompatible with the obligations under EU law resulting from Article 34 TFEU, unless that legislation can be objectively justified.
However, the Court found that the Swedish restriction is justified by the public interest objective of promoting the use of renewable energy sources in order to protect the environment and to combat climate change.
In particular, the Court states that the territorial restriction in the Swedish legislation does not go beyond what is necessary to attain the objective of increasing the production of green electricity, provided that there is a market for green certificates on which able to obtain certificates under fair terms.
The case was decided by the Court Grand Chamber.