On 7 May 2014, the European Commission approved, under the EU State aid rules, a series of measures by the Dublin local authorities to participate in the “Waste-to-Energy” project in Poolbeg in Dublin.
The Commission said that as the project would be carried out on market terms, it did not involve any State aid. The Commission found that following a public tender, the Dublin local authorities entered into negotiations with Dublin Waste to Energy Limited (“DWTEL”) on the construction, maintenance and operation of a large-scale Waste-to-Energy plant located in Poolbeg. The facility would be a combined heat and power system (“CHP”) that would use municipal solid waste as fuel to generate electricity for the general public. The Dublin authorities would participate, the Commission found, in the project through a series of measures, such as a waste revenue guarantee, a waste and electricity revenue sharing mechanism and a profit sharing schedule.
The Commission said in its press release that its “investigation demonstrated that the project will be carried out on terms that a private investor operating in a market economy would have accepted. Indeed, the Dublin local authorities see in the project a business opportunity with a fair return on investment.”
The key point arising from this case, according to A&L Goodbody’s Dr Vincent Power, is “for public authorities (and commercial entities dealing with such authorities) to ensure that arrangements and practices by the public authorities are in line with the “market economy investor principle” - one can reduce the State aid risk if one does what a commercial operator in the market place would do in the same circumstances so the public sector official should ask “what would the private sector do in this scenario?” and they won’t go too far wrong.”