# 62020CJ0470

JUDGMENT OF THE COURT (First Chamber)

15 December 2022 (
  *1
  )

*1

(Reference for a preliminary ruling – State aid – Renewable energy subsidy – Guidelines on State aid for environmental protection and energy 2014-2020 – Incentive effect of aid applied for after work has started on the project concerned – Article 108(3) TFEU – Obligation to notify – Consequences of breach of the obligation to notify)

In Case C‐470/20,

REQUEST for a preliminary ruling under Article 267 TFEU from the Riigikohus (Supreme Court, Estonia), made by decision of 28 September 2020, received at the Court on 29 September 2020, in the proceedings

AS Veejaam,

AS Veejaam,

OÜ Espo

OÜ Espo

v

AS Elering,

AS Elering,

THE COURT (First Chamber),

composed of A. Arabadjiev (Rapporteur), President of the Chamber, L. Bay Larsen, Vice-President of the Court, acting as Judge of the First Chamber, P.G. Xuereb, A. Kumin and I. Ziemele, Judges,

Advocate General: A. Rantos,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 16 March 2022,

after considering the observations submitted on behalf of:

| – | OÜ Espo, by H. Jürimäe and T. Laasik, vandeadvokaadid, |
| --- | --- |

–

OÜ Espo, by H. Jürimäe and T. Laasik, vandeadvokaadid,

| – | AS Elering, by K. Laidvee and A. Sigal, vandeadvokaadid, |
| --- | --- |

–

AS Elering, by K. Laidvee and A. Sigal, vandeadvokaadid,

| – | the Estonian Government, by N. Grünberg and M. Kriisa, acting as Agents, |
| --- | --- |

–

the Estonian Government, by N. Grünberg and M. Kriisa, acting as Agents,

| – | the European Commission, by A. Bouchagiar, G. Braga da Cruz and E. Randvere, acting as Agents, |
| --- | --- |

–

the European Commission, by A. Bouchagiar, G. Braga da Cruz and E. Randvere, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 2 June 2022,

gives the following

Judgment

Judgment

| 1 | This request for a preliminary ruling concerns the interpretation of Article 108(3) TFEU, Article 1(c) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ 2015 L 248, p. 9) and paragraph 50 of the Guidelines on State aid for environmental protection and energy 2014-2020 (OJ 2014 C 200, p. 1; ‘the 2014 Guidelines’). |
| --- | --- |

1

This request for a preliminary ruling concerns the interpretation of Article 108(3) TFEU, Article 1(c) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ 2015 L 248, p. 9) and paragraph 50 of the Guidelines on State aid for environmental protection and energy 2014-2020 (OJ 2014 C 200, p. 1; ‘the 2014 Guidelines’).

| 2 | The request has been made in two sets of proceedings between (i) AS Veejaam and AS Elering, the Estonian authority responsible for granting renewable energy subsidies, and (ii) OÜ Espo and Elering, concerning the receipt of those subsidies by Veejaam and Espo. |
| --- | --- |

2

The request has been made in two sets of proceedings between (i) AS Veejaam and AS Elering, the Estonian authority responsible for granting renewable energy subsidies, and (ii) OÜ Espo and Elering, concerning the receipt of those subsidies by Veejaam and Espo.

Legal context

Legal context

European Union law

European Union law

Directive 2015/1589

Directive 2015/1589

| 3 | Under Article 1(b) and (c) of Regulation No 2015/1589:
  ‘For the purposes of this Regulation, the following definitions shall apply:
  ...





  (b) | “existing aid” means:





  (i) | without prejudice to Articles 144 and 172 of the Act [concerning the conditions of accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which the European Union is founded (OJ 1994 C 241, p. 21 and OJ 1995 L 1, p. 1)], to point 3, and the Appendix of Annex IV to the Act [concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded (OJ 2003 L 236, p. 33)], to points 2 and 3(b) and the Appendix of Annex V to the Act [concerning the conditions of accession of the Republic of Bulgaria and Romania and the adjustments to the Treaties on which the European Union is founded (OJ 2005 L 157, p. 203)], and to points 2 and 3(b) and the Appendix of Annex IV to the Act [concerning the conditions of accession of the Republic of Croatia and the adjustments to the Treaty on European Union, the Treaty on the Functioning of the European Union and the Treaty establishing the European Atomic Energy Community (OJ 2012 L 112, p. 21)], all aid which existed prior to the entry into force of the [FEU Treaty] in the respective Member States, that is to say, aid schemes and individual aid which were put into effect before, and are still applicable after, the entry into force of the [FEU Treaty] in the respective Member States; |
| --- | --- | --- | --- |

3

Under Article 1(b) and (c) of Regulation No 2015/1589:

‘For the purposes of this Regulation, the following definitions shall apply:

...

(b)

“existing aid” means:

(i)

without prejudice to Articles 144 and 172 of the Act [concerning the conditions of accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which the European Union is founded (OJ 1994 C 241, p. 21 and OJ 1995 L 1, p. 1)], to point 3, and the Appendix of Annex IV to the Act [concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded (OJ 2003 L 236, p. 33)], to points 2 and 3(b) and the Appendix of Annex V to the Act [concerning the conditions of accession of the Republic of Bulgaria and Romania and the adjustments to the Treaties on which the European Union is founded (OJ 2005 L 157, p. 203)], and to points 2 and 3(b) and the Appendix of Annex IV to the Act [concerning the conditions of accession of the Republic of Croatia and the adjustments to the Treaty on European Union, the Treaty on the Functioning of the European Union and the Treaty establishing the European Atomic Energy Community (OJ 2012 L 112, p. 21)], all aid which existed prior to the entry into force of the [FEU Treaty] in the respective Member States, that is to say, aid schemes and individual aid which were put into effect before, and are still applicable after, the entry into force of the [FEU Treaty] in the respective Member States;

| (ii) | authorised aid, that is to say, aid schemes and individual aid which have been authorised by the [European] Commission or by the Council [of the European Union]; |
| --- | --- |

(ii)

authorised aid, that is to say, aid schemes and individual aid which have been authorised by the [European] Commission or by the Council [of the European Union];

| (iii) | aid which is deemed to have been authorised pursuant to Article 4(6) of [Council] Regulation (EC) No 659/1999 [of 22 March 1999 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ 1999 L 83, p. 1)] or to Article 4(6) of this Regulation, or prior to Regulation [No 659/1999] but in accordance with this procedure; |
| --- | --- |

(iii)

aid which is deemed to have been authorised pursuant to Article 4(6) of [Council] Regulation (EC) No 659/1999 [of 22 March 1999 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ 1999 L 83, p. 1)] or to Article 4(6) of this Regulation, or prior to Regulation [No 659/1999] but in accordance with this procedure;

...

| (c) | “new aid” means all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid; |
| --- | --- |

(c)

“new aid” means all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid;

...’

The 2014 Guidelines

The 2014 Guidelines

| 4 | Paragraphs 49 to 52 of the 2014 Guidelines state:





  ‘(49) | Environmental and energy aid can only be found compatible with the internal market if it has an incentive effect. An incentive effect occurs when the aid induces the beneficiary to change its behaviour to increase the level of environmental protection or to improve the functioning of a secure, affordable and sustainable energy market, a change in behaviour which it would not undertake without the aid. The aid must not subsidise the costs of an activity that an undertaking would anyhow incur and must not compensate for the normal business risk of an economic activity. |
| --- | --- | --- |

4

Paragraphs 49 to 52 of the 2014 Guidelines state:

‘(49)

Environmental and energy aid can only be found compatible with the internal market if it has an incentive effect. An incentive effect occurs when the aid induces the beneficiary to change its behaviour to increase the level of environmental protection or to improve the functioning of a secure, affordable and sustainable energy market, a change in behaviour which it would not undertake without the aid. The aid must not subsidise the costs of an activity that an undertaking would anyhow incur and must not compensate for the normal business risk of an economic activity.

| (50) | The Commission considers that aid does not present an incentive effect for the beneficiary in all cases where work on the project had already started prior to the aid application by the beneficiary to the national authorities. In such cases, where the beneficiary starts implementing a project before applying for aid, any aid granted in respect of that project will not be considered compatible with the internal market. |
| --- | --- |

(50)

The Commission considers that aid does not present an incentive effect for the beneficiary in all cases where work on the project had already started prior to the aid application by the beneficiary to the national authorities. In such cases, where the beneficiary starts implementing a project before applying for aid, any aid granted in respect of that project will not be considered compatible with the internal market.

| (51) | Member States must introduce and use an application form for aid. The application form includes at least the applicant’s name and the size of the undertaking, a description of the project, including its location and start and end dates, the amount of aid needed to carry it out and the eligible costs. In the application form, beneficiaries must describe the situation without the aid, i.e., a situation that is referred to as the counterfactual scenario, or the alternative scenario or project. ... |
| --- | --- |

(51)

Member States must introduce and use an application form for aid. The application form includes at least the applicant’s name and the size of the undertaking, a description of the project, including its location and start and end dates, the amount of aid needed to carry it out and the eligible costs. In the application form, beneficiaries must describe the situation without the aid, i.e., a situation that is referred to as the counterfactual scenario, or the alternative scenario or project. ...

| (52) | When receiving an application form, the granting authority must carry out a credibility check of the counterfactual scenario and confirm that the aid has the required incentive effect. A counterfactual scenario is credible if it is genuine and relates to the decision-making factors prevalent at the time of the decision by the beneficiary regarding the investment. ...’ |
| --- | --- |

(52)

When receiving an application form, the granting authority must carry out a credibility check of the counterfactual scenario and confirm that the aid has the required incentive effect. A counterfactual scenario is credible if it is genuine and relates to the decision-making factors prevalent at the time of the decision by the beneficiary regarding the investment. ...’

The 2014 and 2017 Decisions

The 2014 and 2017 Decisions

| 5 | By its decision of 28 October 2014, relating to a support scheme for electricity produced from renewable sources and efficient cogeneration (State aid SA.36023) (OJ 2015 C 44, p. 2; ‘the 2014 Decision’), the Commission found that the Estonian aid scheme, while infringing the obligation laid down in Article 108(3) TFEU, fulfilled the conditions laid down in the Community guidelines on State aid for environmental protection (OJ 2001 C 37, p. 3), in the Community guidelines on State aid for environmental protection (OJ 2008 C 82, p. 1) and in the 2014 Guidelines, with the result that that scheme was compatible with Article 107(3)(c) TFEU. |
| --- | --- |

5

By its decision of 28 October 2014, relating to a support scheme for electricity produced from renewable sources and efficient cogeneration (State aid SA.36023) (OJ 2015 C 44, p. 2; ‘the 2014 Decision’), the Commission found that the Estonian aid scheme, while infringing the obligation laid down in Article 108(3) TFEU, fulfilled the conditions laid down in the Community guidelines on State aid for environmental protection (OJ 2001 C 37, p. 3), in the Community guidelines on State aid for environmental protection (OJ 2008 C 82, p. 1) and in the 2014 Guidelines, with the result that that scheme was compatible with Article 107(3)(c) TFEU.

| 6 | By its decision of 6 December 2017 relating to amendments to the Estonian support scheme for electricity produced from renewable sources and efficient cogeneration (State aid SA.47354) (OJ 2018 C 121, p. 7; ‘the 2017 Decision’), the Commission, while finding that the Republic of Estonia had implemented the amendments made to the aid scheme which was the subject of the 2014 Decision in breach of Article 108(3) TFEU, decided that the aid scheme resulting from those amendments was compatible with the internal market, within the meaning of Article 107(3) TFEU. |
| --- | --- |

6

By its decision of 6 December 2017 relating to amendments to the Estonian support scheme for electricity produced from renewable sources and efficient cogeneration (State aid SA.47354) (OJ 2018 C 121, p. 7; ‘the 2017 Decision’), the Commission, while finding that the Republic of Estonia had implemented the amendments made to the aid scheme which was the subject of the 2014 Decision in breach of Article 108(3) TFEU, decided that the aid scheme resulting from those amendments was compatible with the internal market, within the meaning of Article 107(3) TFEU.

Estonian law

Estonian law

| 7 | Paragraphs 59, 591 and 108 of the elektrituruseadus (Law on the electricity market) (RT I 2015, 43; ‘the ELTS’) provide:
  ‘Paragraph 59. Subsidy
  (1)   A producer is entitled to claim from the transmission system operator a subsidy:





  (1) | for the production of electricity from a renewable energy source, using a generating unit with net output of no more than 100 [megawatts (MW)]; |
| --- | --- | --- |

7

Paragraphs 59, 591 and 108 of the elektrituruseadus (Law on the electricity market) (RT I 2015, 43; ‘the ELTS’) provide:

1

‘Paragraph 59. Subsidy

(1)   A producer is entitled to claim from the transmission system operator a subsidy:

(1)

for the production of electricity from a renewable energy source, using a generating unit with net output of no more than 100 [megawatts (MW)];

| (2) | for the production of electricity, as from 1 July 2010, provided that it used biomass cogeneration for that purpose, unless the electricity was produced from biomass in the condensation process, in which case the subsidy is not granted. On a proposal from the competent minister, the Government of the Republic of Estonia shall lay down, by regulation, detailed rules on cogeneration. The competent minister shall submit his or her proposal to the Government of the Republic of Estonia concerning detailed rules on cogeneration based on the proposal made by the Estonian competition authority; |
| --- | --- |

(2)

for the production of electricity, as from 1 July 2010, provided that it used biomass cogeneration for that purpose, unless the electricity was produced from biomass in the condensation process, in which case the subsidy is not granted. On a proposal from the competent minister, the Government of the Republic of Estonia shall lay down, by regulation, detailed rules on cogeneration. The competent minister shall submit his or her proposal to the Government of the Republic of Estonia concerning detailed rules on cogeneration based on the proposal made by the Estonian competition authority;

...

| (4) | for the production of electricity, provided that it has used for that purpose, in an efficient cogeneration process, a generating unit with an electrical output not exceeding 10 MW; |
| --- | --- |

(4)

for the production of electricity, provided that it has used for that purpose, in an efficient cogeneration process, a generating unit with an electrical output not exceeding 10 MW;

...

Paragraph 591. Conditions under which the subsidy may be granted

1

(1)   Grant of the subsidy referred to in Paragraph 59 of the present law shall be subject to the following conditions:

| (1) | the electricity must be generated by a generating unit meeting the requirements of the present law and of the network code; |
| --- | --- |

(1)

the electricity must be generated by a generating unit meeting the requirements of the present law and of the network code;

| (2) | the producer shall fulfil the obligations laid down in Chapter 4 and Paragraph 58 of the present law. |
| --- | --- |

(2)

the producer shall fulfil the obligations laid down in Chapter 4 and Paragraph 58 of the present law.

(2)   A producer shall not be entitled to the subsidy:

| (1) | under the conditions referred to in Paragraph 59(1), point [(5)] of the present law, if the price of greenhouse gas emission allowances is less than EUR [10] per tonne of [carbon dioxide (CO2)]; |
| --- | --- |

(1)

under the conditions referred to in Paragraph 59(1), point [(5)] of the present law, if the price of greenhouse gas emission allowances is less than EUR [10] per tonne of [carbon dioxide (CO2)];

2

| (2) | under Paragraph 59(2), point [(1)], of the present law, in respect of electricity produced by a generating unit whose output that is made available makes it possible for the producer to receive a subsidy under Paragraph 59(2)[points (4), (5) or (6)]; |
| --- | --- |

(2)

under Paragraph 59(2), point [(1)], of the present law, in respect of electricity produced by a generating unit whose output that is made available makes it possible for the producer to receive a subsidy under Paragraph 59(2)[points (4), (5) or (6)];

| (3) | if the State has paid the wind energy producer the investment aid in respect of the same generating unit; |
| --- | --- |

(3)

if the State has paid the wind energy producer the investment aid in respect of the same generating unit;

| (4) | if the producer does not have the necessary environmental approvals to generate electricity or fails to comply with the conditions attaching to such approvals; |
| --- | --- |

(4)

if the producer does not have the necessary environmental approvals to generate electricity or fails to comply with the conditions attaching to such approvals;

| (5) | in respect of the electricity produced for the purposes of supplying the power plant itself. |
| --- | --- |

(5)

in respect of the electricity produced for the purposes of supplying the power plant itself.

(3)   An application referred to in Paragraph 59(2) of the present law shall include data on the generating units, the details required by legislation for the grant of a subsidy and the information required by the transmission system operator to trace the origin of the electricity in cases where it is impossible to determine unambiguously that origin and the quantity of electricity.

...

Paragraph 108. Period of eligibility for the subsidy

(1)   The subsidy referred to in Paragraph 59(1), points [(1) to (4)], of the present law can be paid for a period of 12 years from the start of production and the subsidy referred to in point [(5)] may be paid for a period of 20 years. The subsidy, referred to in Paragraph 59, for electricity produced from renewable energy sources by a generating unit put into service before 1 January 2002 may be paid up to 31 December 2012.

...

(3)   The date of the start of production referred to above is the day on which a generating unit that fulfils the requirements first delivers electricity to the system or a direct line.

...’

The disputes in the main proceedings and the questions referred for a preliminary ruling

The disputes in the main proceedings and the questions referred for a preliminary ruling

| 8 | Veejaam produced electricity at the hydroelectric power plant at Joaveski (Estonia) between 2001 and 2015, using two generating units with outputs of 100 kilowatts (kW) and 200 kW, respectively. Between 2001 and 2012, Veejaam received the renewable energy subsidy under the Estonian aid scheme at issue. In 2015, that company replaced those existing generating units with a new turbine generator with an output of 200 kW, installed on the power plant’s old dam, with the result that only a single measuring point remained of the previous units. On 21 January 2016, Veejaam provided Elering with the data on the new generating unit in order to apply for the renewable energy subsidy. That application was rejected on the ground that the aid in question could be paid only, first, in respect of electricity produced by a completely new generating unit and, secondly, in order to promote the entry onto the market of new operators, and not to support electricity producers on a permanent basis. |
| --- | --- |

8

Veejaam produced electricity at the hydroelectric power plant at Joaveski (Estonia) between 2001 and 2015, using two generating units with outputs of 100 kilowatts (kW) and 200 kW, respectively. Between 2001 and 2012, Veejaam received the renewable energy subsidy under the Estonian aid scheme at issue. In 2015, that company replaced those existing generating units with a new turbine generator with an output of 200 kW, installed on the power plant’s old dam, with the result that only a single measuring point remained of the previous units. On 21 January 2016, Veejaam provided Elering with the data on the new generating unit in order to apply for the renewable energy subsidy. That application was rejected on the ground that the aid in question could be paid only, first, in respect of electricity produced by a completely new generating unit and, secondly, in order to promote the entry onto the market of new operators, and not to support electricity producers on a permanent basis.

| 9 | Between 2004 and 2009, Espo produced electricity, at the hydroelectric power plant at Pikru (Estonia), using a 15 kW turbine. With effect from 2009, a new 45 kW turbine was put into operation. Espo received the renewable energy subsidy for the period from 2004 to 2015. The application for the renewable energy subsidy, submitted by Espo to Elering in 2016, relating to energy produced with the new turbine, was rejected, in essence, for the same reasons as those set out by that authority in relation to Veejaam’s application. |
| --- | --- |

9

Between 2004 and 2009, Espo produced electricity, at the hydroelectric power plant at Pikru (Estonia), using a 15 kW turbine. With effect from 2009, a new 45 kW turbine was put into operation. Espo received the renewable energy subsidy for the period from 2004 to 2015. The application for the renewable energy subsidy, submitted by Espo to Elering in 2016, relating to energy produced with the new turbine, was rejected, in essence, for the same reasons as those set out by that authority in relation to Veejaam’s application.

| 10 | Veejaam and Espo each brought an action against Elering’s decisions refusing to grant them renewable energy subsidies, before the Tallinna Halduskohus (Administrative Court, Tallinn, Estonia). Following the decisions of 10 October 2017 and 27 October 2017, by which that court dismissed those actions, Veejaam and Espo appealed against those decisions to the Tallinna Ringkonnakohus (Court of Appeal, Tallinn, Estonia). Following the dismissal of those appeals, Veejaam and Espo brought an appeal on a point of law before the Riigikohus (Supreme Court, Estonia), the referring court. |
| --- | --- |

10

Veejaam and Espo each brought an action against Elering’s decisions refusing to grant them renewable energy subsidies, before the Tallinna Halduskohus (Administrative Court, Tallinn, Estonia). Following the decisions of 10 October 2017 and 27 October 2017, by which that court dismissed those actions, Veejaam and Espo appealed against those decisions to the Tallinna Ringkonnakohus (Court of Appeal, Tallinn, Estonia). Following the dismissal of those appeals, Veejaam and Espo brought an appeal on a point of law before the Riigikohus (Supreme Court, Estonia), the referring court.

| 11 | That court considers that the resolution of the disputes in the main proceedings depends on whether, for the purposes of granting subsidies for renewable energies, it is necessary to take into account as the ‘date of the start of production’, within the meaning of Paragraph 108(3) of ELTS, only the date of the initial start of production in the power plant concerned or whether the mere replacement of an existing generating unit by a new generating unit permits the inference that production has been started afresh. |
| --- | --- |

11

That court considers that the resolution of the disputes in the main proceedings depends on whether, for the purposes of granting subsidies for renewable energies, it is necessary to take into account as the ‘date of the start of production’, within the meaning of Paragraph 108(3) of ELTS, only the date of the initial start of production in the power plant concerned or whether the mere replacement of an existing generating unit by a new generating unit permits the inference that production has been started afresh.

| 12 | The referring court also considers that, for the purposes of resolving the disputes in the main proceedings, it is necessary to take into account the EU rules on State aid. |
| --- | --- |

12

The referring court also considers that, for the purposes of resolving the disputes in the main proceedings, it is necessary to take into account the EU rules on State aid.

| 13 | In that regard, the Riigikohus (Supreme Court) observes, in the first place, that Paragraphs 59 and 591 of the ELTS are based on the principle that a subsidy application must be submitted after the installation of the generating unit to which the subsidy relates and that operators are entitled to receive the subsidy as soon as they fulfil the conditions laid down by the Estonian legislation, the national authorities having no discretion in that respect. The referring court states that such legislation was considered to be compatible with the internal market by the Commission, which, by its 2014 Decision and its 2017 Decision, approved the various Estonian renewable energy support schemes implemented since 2003. |
| --- | --- |

13

In that regard, the Riigikohus (Supreme Court) observes, in the first place, that Paragraphs 59 and 591 of the ELTS are based on the principle that a subsidy application must be submitted after the installation of the generating unit to which the subsidy relates and that operators are entitled to receive the subsidy as soon as they fulfil the conditions laid down by the Estonian legislation, the national authorities having no discretion in that respect. The referring court states that such legislation was considered to be compatible with the internal market by the Commission, which, by its 2014 Decision and its 2017 Decision, approved the various Estonian renewable energy support schemes implemented since 2003.

1

| 14 | That said, the referring court notes that, in accordance with paragraph 50 of the 2014 Guidelines, aid does not present an incentive effect – that effect being one of the conditions for finding that the aid is compatible with the internal market – in all cases where work on the project concerned had already started prior to the submission of the aid application by the beneficiary to the national authorities. The question therefore arises of possible tension between the 2014 Decision and the 2017 Decision, on the one hand, and the 2014 Guidelines, on the other, as regards the assessment of the incentive effect of the renewable energy subsidy provided for by the Estonian aid scheme. In those decisions, the Commission effectively acknowledged that a subsidy application could also be submitted after the new generating units at issue had been installed. |
| --- | --- |

14

That said, the referring court notes that, in accordance with paragraph 50 of the 2014 Guidelines, aid does not present an incentive effect – that effect being one of the conditions for finding that the aid is compatible with the internal market – in all cases where work on the project concerned had already started prior to the submission of the aid application by the beneficiary to the national authorities. The question therefore arises of possible tension between the 2014 Decision and the 2017 Decision, on the one hand, and the 2014 Guidelines, on the other, as regards the assessment of the incentive effect of the renewable energy subsidy provided for by the Estonian aid scheme. In those decisions, the Commission effectively acknowledged that a subsidy application could also be submitted after the new generating units at issue had been installed.

| 15 | Furthermore, the referring court points out that, during the main proceedings, it sought an opinion from the Commission, within the meaning of Article 29(1) of Regulation 2015/1589, which was provided by that institution in 2020, concerning, inter alia, whether a subsidy for which the application was submitted in 2016 could be regarded as having an incentive effect even where the generating unit linked to the subsidy application was installed and put into service before the subsidy application was submitted. In that opinion, the Commission confirmed that Veejaam and Espo could not receive the subsidy at issue in the light of the 2014 Guidelines, since those companies had submitted the subsidy application after the new generating units had been installed, which showed that they were ready to carry out the project concerned even in the absence of the subsidy in question. |
| --- | --- |

15

Furthermore, the referring court points out that, during the main proceedings, it sought an opinion from the Commission, within the meaning of Article 29(1) of Regulation 2015/1589, which was provided by that institution in 2020, concerning, inter alia, whether a subsidy for which the application was submitted in 2016 could be regarded as having an incentive effect even where the generating unit linked to the subsidy application was installed and put into service before the subsidy application was submitted. In that opinion, the Commission confirmed that Veejaam and Espo could not receive the subsidy at issue in the light of the 2014 Guidelines, since those companies had submitted the subsidy application after the new generating units had been installed, which showed that they were ready to carry out the project concerned even in the absence of the subsidy in question.

| 16 | In the second place, the referring court notes that, in the opinion in question, the Commission stated that a company in the same situation as Veejaam, which had undertaken the work to install new generating units in order to meet the changes in the terms for obtaining the environmental approval necessary for electricity production, was not entitled to receive renewable energy subsidies. In any event, those works would have had to have been carried out since they were required by the legislation of the Member State concerned, with the result that the aid did not present any incentive effect. |
| --- | --- |

16

In the second place, the referring court notes that, in the opinion in question, the Commission stated that a company in the same situation as Veejaam, which had undertaken the work to install new generating units in order to meet the changes in the terms for obtaining the environmental approval necessary for electricity production, was not entitled to receive renewable energy subsidies. In any event, those works would have had to have been carried out since they were required by the legislation of the Member State concerned, with the result that the aid did not present any incentive effect.

| 17 | However, the referring court considers that, without the prospect of obtaining the renewable energy subsidy, Veejaam would have been forced to stop electricity production on account of the changes in the terms for obtaining the environmental approval necessary for electricity production and that, consequently, that subsidy, which enabled that company to replace its generating unit, did indeed have an incentive effect. In that regard, the referring court observes that, since the ELTS provides that any applicant who fulfils the conditions laid down by law may claim the subsidy, the reason which led the producer to install a new generating unit cannot be relevant for the purposes of granting the subsidy. |
| --- | --- |

17

However, the referring court considers that, without the prospect of obtaining the renewable energy subsidy, Veejaam would have been forced to stop electricity production on account of the changes in the terms for obtaining the environmental approval necessary for electricity production and that, consequently, that subsidy, which enabled that company to replace its generating unit, did indeed have an incentive effect. In that regard, the referring court observes that, since the ELTS provides that any applicant who fulfils the conditions laid down by law may claim the subsidy, the reason which led the producer to install a new generating unit cannot be relevant for the purposes of granting the subsidy.

| 18 | In the third place, the referring court observes, as is apparent from the 2014 Decision, that the Republic of Estonia had provided for two renewable energy support schemes. Under the first scheme (‘the old scheme’), only existing producers who had started electricity production by no later than 1 March 2013 were eligible to receive the subsidy, which was granted automatically where the conditions laid down by law were met. The referring court states that that scheme should have been applied until 31 December 2014. The second scheme (‘the new scheme’) provided that, as from 1 January 2015, producers who had started production after 1 March 2013 could obtain a subsidy only under a competitive bidding procedure. |
| --- | --- |

18

In the third place, the referring court observes, as is apparent from the 2014 Decision, that the Republic of Estonia had provided for two renewable energy support schemes. Under the first scheme (‘the old scheme’), only existing producers who had started electricity production by no later than 1 March 2013 were eligible to receive the subsidy, which was granted automatically where the conditions laid down by law were met. The referring court states that that scheme should have been applied until 31 December 2014. The second scheme (‘the new scheme’) provided that, as from 1 January 2015, producers who had started production after 1 March 2013 could obtain a subsidy only under a competitive bidding procedure.

| 19 | However, the Republic of Estonia did not adopt the legislative measures needed in order for the new scheme to be implemented and continued to apply the old scheme until 2017, thereby enabling producers who had started production after 1 March 2013 to receive the subsidy also. The Commission therefore correctly found, in its 2017 Decision, that the Republic of Estonia had infringed the prohibition on implementing State aid, laid down in Article 108(3) TFEU. |
| --- | --- |

19

However, the Republic of Estonia did not adopt the legislative measures needed in order for the new scheme to be implemented and continued to apply the old scheme until 2017, thereby enabling producers who had started production after 1 March 2013 to receive the subsidy also. The Commission therefore correctly found, in its 2017 Decision, that the Republic of Estonia had infringed the prohibition on implementing State aid, laid down in Article 108(3) TFEU.

| 20 | In the present case, the question therefore arises whether, having regard to the distinction between ‘existing aid’ and ‘new aid’, established by Regulation 2015/1589, if the Commission has declared both an existing aid scheme – that is, the old scheme – and its proposed amendments – that is, the new scheme – compatible with the internal market and the Member State has continued to apply the old scheme after the date indicated by that Member State to the Commission, the aid in question must be classified as ‘existing aid’ or ‘new aid’. |
| --- | --- |

20

In the present case, the question therefore arises whether, having regard to the distinction between ‘existing aid’ and ‘new aid’, established by Regulation 2015/1589, if the Commission has declared both an existing aid scheme – that is, the old scheme – and its proposed amendments – that is, the new scheme – compatible with the internal market and the Member State has continued to apply the old scheme after the date indicated by that Member State to the Commission, the aid in question must be classified as ‘existing aid’ or ‘new aid’.

| 21 | In the fourth place, the referring court observes that, if the Court were to find that the old scheme could be considered lawful, after 31 December 2014, only by reason of the adoption of the 2017 Decision, the question would arise as to whether Veejaam and Espo could receive the subsidy as early as 2016, that is to say, from the time when those companies applied for it. Specifically, the referring court asks the Court whether, in the event that the Commission decided ex post facto not to raise any objections to an aid scheme implemented in breach of Article 108(3) TFEU, companies with a claim to operating aid are entitled to apply for payment of the aid for the period prior to the Commission’s decision, if the national rules so permit. |
| --- | --- |

21

In the fourth place, the referring court observes that, if the Court were to find that the old scheme could be considered lawful, after 31 December 2014, only by reason of the adoption of the 2017 Decision, the question would arise as to whether Veejaam and Espo could receive the subsidy as early as 2016, that is to say, from the time when those companies applied for it. Specifically, the referring court asks the Court whether, in the event that the Commission decided ex post facto not to raise any objections to an aid scheme implemented in breach of Article 108(3) TFEU, companies with a claim to operating aid are entitled to apply for payment of the aid for the period prior to the Commission’s decision, if the national rules so permit.

ex post facto

| 22 | Lastly, in the fifth place, as regards, in particular, Espo’s situation, the referring court points out that, in 2009, that company installed a new generating unit and that, in 2016, it applied for the subsidy at issue for the electricity produced by that unit. If the Court’s answer to the questions referred were such that, between 2015 and 2017, the old scheme constituted an unlawful aid scheme on account of the breach of Article 108(3) TFEU, the referring court considers that it would not be appropriate, however, to reject Espo’s subsidy application, since its generating unit was installed in 2009, that is at a time when the old scheme was approved by the declaration that that scheme was compatible with the internal market, contained in the 2014 Decision. The question therefore arises whether Espo, which, first, had started to implement a project which fulfilled the criteria for compatibility with the internal market at a time when an aid scheme was lawfully put into effect, but, which, secondly, had applied for a subsidy only in 2016, was concerned by the prohibition on implementing aid laid down in Article 108(3) TFEU. |
| --- | --- |

22

Lastly, in the fifth place, as regards, in particular, Espo’s situation, the referring court points out that, in 2009, that company installed a new generating unit and that, in 2016, it applied for the subsidy at issue for the electricity produced by that unit. If the Court’s answer to the questions referred were such that, between 2015 and 2017, the old scheme constituted an unlawful aid scheme on account of the breach of Article 108(3) TFEU, the referring court considers that it would not be appropriate, however, to reject Espo’s subsidy application, since its generating unit was installed in 2009, that is at a time when the old scheme was approved by the declaration that that scheme was compatible with the internal market, contained in the 2014 Decision. The question therefore arises whether Espo, which, first, had started to implement a project which fulfilled the criteria for compatibility with the internal market at a time when an aid scheme was lawfully put into effect, but, which, secondly, had applied for a subsidy only in 2016, was concerned by the prohibition on implementing aid laid down in Article 108(3) TFEU.

| 23 | In those circumstances the Riigikohus (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:





  ‘(1) | Are EU rules on State aid, including the incentive effect required under paragraph 50 [of the 2014 Guidelines] to be interpreted as meaning that an aid scheme which allows a renewable energy producer to apply for State aid after work has started on a project is compatible with those rules where domestic legislation grants every producer which fulfils the requirements laid down by law the right to apply for the subsidy without granting the competent authorities any discretion in that regard? |
| --- | --- | --- |

23

In those circumstances the Riigikohus (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)

Are EU rules on State aid, including the incentive effect required under paragraph 50 [of the 2014 Guidelines] to be interpreted as meaning that an aid scheme which allows a renewable energy producer to apply for State aid after work has started on a project is compatible with those rules where domestic legislation grants every producer which fulfils the requirements laid down by law the right to apply for the subsidy without granting the competent authorities any discretion in that regard?

| (2) | Is the incentive effect of aid always precluded where the investment on which the aid application is based was made due to a change to the terms of environmental approval, even where, as in this case, the applicant would probably have ceased its activity due to the stricter terms of approval had it not received the State aid? |
| --- | --- |

(2)

Is the incentive effect of aid always precluded where the investment on which the aid application is based was made due to a change to the terms of environmental approval, even where, as in this case, the applicant would probably have ceased its activity due to the stricter terms of approval had it not received the State aid?

| (3) | In light, inter alia, of the findings of the Court in the case [giving rise to the judgment of 26 October 2016, DEI and Commission v Alouminion tis Ellados (C‐590/14 P, EU:C:2016:797, paragraphs 49 and 50)], where, in a case, such as this one, in which the Commission has adopted a decision on State aid finding that an existing aid scheme and planned changes are compatible with the internal market and the State has announced, inter alia, that it will only apply the existing aid scheme up to a particular cut-off date, the existing aid scheme based on the applicable provisions of law is applied beyond the cut-off date announced by the State, does it qualify as new aid within the meaning of Article 1(c) of Regulation [2015/1589]? |
| --- | --- |

(3)

In light, inter alia, of the findings of the Court in the case [giving rise to the judgment of 26 October 2016, DEI and Commission v Alouminion tis Ellados (C‐590/14 P, EU:C:2016:797, paragraphs 49 and 50)], where, in a case, such as this one, in which the Commission has adopted a decision on State aid finding that an existing aid scheme and planned changes are compatible with the internal market and the State has announced, inter alia, that it will only apply the existing aid scheme up to a particular cut-off date, the existing aid scheme based on the applicable provisions of law is applied beyond the cut-off date announced by the State, does it qualify as new aid within the meaning of Article 1(c) of Regulation [2015/1589]?

| (4) | Where the Commission decides ex post facto not to raise any objections to an aid scheme applied in breach of Article 108(3) [TFEU], are persons with a claim to operating aid entitled to apply for payment of the aid for the period prior to the Commission’s Decision, provided that domestic procedural rules so permit? |
| --- | --- |

(4)

Where the Commission decides ex post facto not to raise any objections to an aid scheme applied in breach of Article 108(3) [TFEU], are persons with a claim to operating aid entitled to apply for payment of the aid for the period prior to the Commission’s Decision, provided that domestic procedural rules so permit?

ex post facto

| (5) | Does an applicant which applied for operating aid under an aid scheme and which started to implement a project which fulfilled the criteria for compatibility with the internal market at a time when the aid scheme was lawfully applied, but applied for the State aid at a time when the aid scheme had been extended without notifying the Commission, have a claim to State aid notwithstanding the rule enacted in Article 108(3) [TFEU]?’ |
| --- | --- |

(5)

Does an applicant which applied for operating aid under an aid scheme and which started to implement a project which fulfilled the criteria for compatibility with the internal market at a time when the aid scheme was lawfully applied, but applied for the State aid at a time when the aid scheme had been extended without notifying the Commission, have a claim to State aid notwithstanding the rule enacted in Article 108(3) [TFEU]?’

Consideration of the questions referred

Consideration of the questions referred

Preliminary observations

Preliminary observations

| 24 | As the referring court states, the question whether, in the disputes in the main proceedings, Veejaam and Espo may claim the renewable energy subsidy at issue in the main proceedings depends, inter alia, on the interpretation of the concepts of ‘generating unit’ and ‘start of production’, referred to respectively in Paragraph 591 and Paragraph 108(3) of the ELTS. In particular, according to the referring court, it is for that court to determine whether only the date of the initial start of production at a hydroelectric power plant must be considered the ‘date of the start of production’, within the meaning of that provision, or whether the date on which an existing generating unit is merely replaced by a new generating unit may also be considered the ‘date of the start of production’ within the meaning of the applicable provisions. |
| --- | --- |

24

As the referring court states, the question whether, in the disputes in the main proceedings, Veejaam and Espo may claim the renewable energy subsidy at issue in the main proceedings depends, inter alia, on the interpretation of the concepts of ‘generating unit’ and ‘start of production’, referred to respectively in Paragraph 591 and Paragraph 108(3) of the ELTS. In particular, according to the referring court, it is for that court to determine whether only the date of the initial start of production at a hydroelectric power plant must be considered the ‘date of the start of production’, within the meaning of that provision, or whether the date on which an existing generating unit is merely replaced by a new generating unit may also be considered the ‘date of the start of production’ within the meaning of the applicable provisions.

1

| 25 | In that regard, it should be noted, first, as is apparent from settled case-law, that it is not for the Court to rule on the interpretation of national legislation (see, to that effect, judgment of 8 September 2022, Ametic, C‐263/21, EU:C:2022:644, paragraph 64). Secondly, it must be borne in mind that the date of the ‘start of production’ referred to in Paragraph 108(3) of the ELTS was used by the Commission in the 2014 Decision and in the 2017 Decision, adopted on the basis of the aid schemes notified by the Republic of Estonia, in order to establish the starting point for the period during which an economic operator may receive State aid under the old scheme. In particular, those decisions laid down conditions for the grant of the aid, including the condition that it could not be paid after a period of 12 years from the start of production had elapsed. |
| --- | --- |

25

In that regard, it should be noted, first, as is apparent from settled case-law, that it is not for the Court to rule on the interpretation of national legislation (see, to that effect, judgment of 8 September 2022, Ametic, C‐263/21, EU:C:2022:644, paragraph 64). Secondly, it must be borne in mind that the date of the ‘start of production’ referred to in Paragraph 108(3) of the ELTS was used by the Commission in the 2014 Decision and in the 2017 Decision, adopted on the basis of the aid schemes notified by the Republic of Estonia, in order to establish the starting point for the period during which an economic operator may receive State aid under the old scheme. In particular, those decisions laid down conditions for the grant of the aid, including the condition that it could not be paid after a period of 12 years from the start of production had elapsed.

| 26 | In those circumstances, as the Advocate General observed in point 24 of his Opinion, it is important to note that, in the exercise of its discretion, the referring court is required to comply with the 2014 Decision and the 2017 Decision. Moreover, that court will also have to take into account the case-law of the Court of Justice according to which the scope of a decision by which the Commission raises no objections to an aid scheme notified by a Member State must be determined not only by reference to the actual wording of that decision, but also by taking account of the aid scheme notified by the Member State concerned (see, to that effect, judgment of 16 December 2010, Kahla Thüringen Porzellan v Commission, C‐537/08 P, EU:C:2010:769, paragraph 44). |
| --- | --- |

26

In those circumstances, as the Advocate General observed in point 24 of his Opinion, it is important to note that, in the exercise of its discretion, the referring court is required to comply with the 2014 Decision and the 2017 Decision. Moreover, that court will also have to take into account the case-law of the Court of Justice according to which the scope of a decision by which the Commission raises no objections to an aid scheme notified by a Member State must be determined not only by reference to the actual wording of that decision, but also by taking account of the aid scheme notified by the Member State concerned (see, to that effect, judgment of 16 December 2010, Kahla Thüringen Porzellan v Commission, C‐537/08 P, EU:C:2010:769, paragraph 44).

The first question

The first question

| 27 | By its first question, the referring court asks, in essence, whether paragraphs 49 and 50 of the 2014 Guidelines must be interpreted as precluding national legislation establishing a renewable energy support scheme allowing an applicant for aid to obtain payment of that aid even if the application was submitted after work had started on the project concerned. |
| --- | --- |

27

By its first question, the referring court asks, in essence, whether paragraphs 49 and 50 of the 2014 Guidelines must be interpreted as precluding national legislation establishing a renewable energy support scheme allowing an applicant for aid to obtain payment of that aid even if the application was submitted after work had started on the project concerned.

| 28 | It is apparent from paragraph 49 of the 2014 Guidelines that aid for renewable energy can only be found compatible with the internal market if it has an incentive effect. An incentive effect occurs when the aid induces the beneficiary to change its behaviour and that change in behaviour would not be undertaken without the aid. Thus, according to paragraph 50 of those guidelines, the Commission considers that aid does not present an incentive effect for the beneficiary in all cases where work on the project concerned had already started prior to the submission of the aid application by the beneficiary to the national authorities. |
| --- | --- |

28

It is apparent from paragraph 49 of the 2014 Guidelines that aid for renewable energy can only be found compatible with the internal market if it has an incentive effect. An incentive effect occurs when the aid induces the beneficiary to change its behaviour and that change in behaviour would not be undertaken without the aid. Thus, according to paragraph 50 of those guidelines, the Commission considers that aid does not present an incentive effect for the beneficiary in all cases where work on the project concerned had already started prior to the submission of the aid application by the beneficiary to the national authorities.

| 29 | As regards the scope of an act such as the 2014 Guidelines, it must be borne in mind that, in accordance with the case-law of the Court, the assessment of the compatibility of aid measures with the internal market, under Article 107(3) TFEU, falls within the exclusive competence of the Commission, subject to review by the Courts of the European Union. In that regard, the Commission enjoys wide discretion, the exercise of which involves complex economic and social assessments. In the exercise of that discretion, the Commission may adopt guidelines in order to establish the criteria on the basis of which it proposes to assess the compatibility, with the internal market, of aid measures envisaged by the Member States (judgment of 19 July 2016, Kotnik and Others, C‐526/14, EU:C:2016:570, paragraphs 37 to 39). |
| --- | --- |

29

As regards the scope of an act such as the 2014 Guidelines, it must be borne in mind that, in accordance with the case-law of the Court, the assessment of the compatibility of aid measures with the internal market, under Article 107(3) TFEU, falls within the exclusive competence of the Commission, subject to review by the Courts of the European Union. In that regard, the Commission enjoys wide discretion, the exercise of which involves complex economic and social assessments. In the exercise of that discretion, the Commission may adopt guidelines in order to establish the criteria on the basis of which it proposes to assess the compatibility, with the internal market, of aid measures envisaged by the Member States (judgment of 19 July 2016, Kotnik and Others, C‐526/14, EU:C:2016:570, paragraphs 37 to 39).

| 30 | In adopting such guidelines and announcing by publishing them that they will apply to the cases to which they relate, the Commission imposes a limit on the exercise of that discretion and cannot, as a general rule, depart from those guidelines, at the risk of being found to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations. That said, the Commission cannot waive, by the adoption of guidelines, the exercise of the discretion that Article 107(3)(b) TFEU confers on it. The adoption of a document such as the 2014 Guidelines does not, therefore, relieve the Commission of its obligation to examine the specific exceptional circumstances relied on by a Member State, in a particular case, for the purpose of requesting the direct application of Article 107(3)(b) TFEU, and to provide reasons for its refusal to grant such an application for aid (see, by analogy, judgment of 19 July 2016, Kotnik and Others, C‐526/14, EU:C:2016:570, paragraphs 40 and 41). |
| --- | --- |

30

In adopting such guidelines and announcing by publishing them that they will apply to the cases to which they relate, the Commission imposes a limit on the exercise of that discretion and cannot, as a general rule, depart from those guidelines, at the risk of being found to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations. That said, the Commission cannot waive, by the adoption of guidelines, the exercise of the discretion that Article 107(3)(b) TFEU confers on it. The adoption of a document such as the 2014 Guidelines does not, therefore, relieve the Commission of its obligation to examine the specific exceptional circumstances relied on by a Member State, in a particular case, for the purpose of requesting the direct application of Article 107(3)(b) TFEU, and to provide reasons for its refusal to grant such an application for aid (see, by analogy, judgment of 19 July 2016, Kotnik and Others, C‐526/14, EU:C:2016:570, paragraphs 40 and 41).

| 31 | It follows from the foregoing, on the one hand, that the effect of the adoption of the guidelines contained in the 2014 Guidelines is equivalent to the effect of a limitation imposed by the Commission on itself in the exercise of its discretion, so that, if a Member State notifies the Commission of proposed State aid which complies with those guidelines, the Commission must, as a general rule, authorise that proposed aid. On the other hand, the Member States retain the right to notify the Commission of proposed State aid which does not meet the criteria laid down by those guidelines and the Commission may authorise such proposed aid in exceptional circumstances (see, by analogy, judgment of 19 July 2016, Kotnik and Others, C‐526/14, EU:C:2016:570, paragraph 43). |
| --- | --- |

31

It follows from the foregoing, on the one hand, that the effect of the adoption of the guidelines contained in the 2014 Guidelines is equivalent to the effect of a limitation imposed by the Commission on itself in the exercise of its discretion, so that, if a Member State notifies the Commission of proposed State aid which complies with those guidelines, the Commission must, as a general rule, authorise that proposed aid. On the other hand, the Member States retain the right to notify the Commission of proposed State aid which does not meet the criteria laid down by those guidelines and the Commission may authorise such proposed aid in exceptional circumstances (see, by analogy, judgment of 19 July 2016, Kotnik and Others, C‐526/14, EU:C:2016:570, paragraph 43).

| 32 | It follows that the 2014 Guidelines are not capable of imposing independent obligations on the Member States, but do no more than establish conditions, designed to ensure that aid for renewable energy is compatible with the internal market, which the Commission must take into account, in accordance with the case-law referred to in paragraphs 29 to 31 above, in the exercise of the discretion that it enjoys under Article 107(3)(b)TFEU. Accordingly, as the Advocate General observed, in essence, in point 33 of his Opinion, the Commission acts within the framework of that discretion by declaring compatible with the internal market an aid scheme in respect of which the requirement of an incentive effect is met otherwise than by submission of the aid application before the start of the work. |
| --- | --- |

32

It follows that the 2014 Guidelines are not capable of imposing independent obligations on the Member States, but do no more than establish conditions, designed to ensure that aid for renewable energy is compatible with the internal market, which the Commission must take into account, in accordance with the case-law referred to in paragraphs 29 to 31 above, in the exercise of the discretion that it enjoys under Article 107(3)(b)TFEU. Accordingly, as the Advocate General observed, in essence, in point 33 of his Opinion, the Commission acts within the framework of that discretion by declaring compatible with the internal market an aid scheme in respect of which the requirement of an incentive effect is met otherwise than by submission of the aid application before the start of the work.

| 33 | In the light of the foregoing considerations, the answer to the first question is that paragraphs 49 and 50 of the 2014 Guidelines must be interpreted as not precluding national legislation establishing a renewable energy support scheme allowing an applicant for aid to obtain payment of that aid even if the application was submitted after work had started on the project concerned. |
| --- | --- |

33

In the light of the foregoing considerations, the answer to the first question is that paragraphs 49 and 50 of the 2014 Guidelines must be interpreted as not precluding national legislation establishing a renewable energy support scheme allowing an applicant for aid to obtain payment of that aid even if the application was submitted after work had started on the project concerned.

The second question

The second question

| 34 | By its second question, the referring court asks, in essence, whether the 2014 Guidelines must be interpreted as meaning that State aid may have an incentive effect where the investment made by an economic operator in order to comply with a change to the terms of environmental approval, that approval being necessary for the operator’s activity, would probably not have been made without payment of the aid concerned. |
| --- | --- |

34

By its second question, the referring court asks, in essence, whether the 2014 Guidelines must be interpreted as meaning that State aid may have an incentive effect where the investment made by an economic operator in order to comply with a change to the terms of environmental approval, that approval being necessary for the operator’s activity, would probably not have been made without payment of the aid concerned.

| 35 | In that regard, it should be noted that, according to paragraphs 51 and 52 of the 2014 Guidelines, at the time of the aid application, applicants must describe, in the form adopted by the competent authorities, their situation without the aid, that situation constituting the counterfactual scenario. In addition, when the competent authority receives the application, it must assess the credibility of that scenario and confirm that the aid has the required incentive effect. A counterfactual scenario is credible if it is genuine and relates to the decision-making factors prevalent at the time of the decision by the beneficiary regarding the investment. |
| --- | --- |

35

In that regard, it should be noted that, according to paragraphs 51 and 52 of the 2014 Guidelines, at the time of the aid application, applicants must describe, in the form adopted by the competent authorities, their situation without the aid, that situation constituting the counterfactual scenario. In addition, when the competent authority receives the application, it must assess the credibility of that scenario and confirm that the aid has the required incentive effect. A counterfactual scenario is credible if it is genuine and relates to the decision-making factors prevalent at the time of the decision by the beneficiary regarding the investment.

| 36 | Thus, it is not apparent from the wording of those paragraphs that the aid applied for, with a view to making an investment necessary to enable an economic operator to meet the stricter terms laid down for obtaining an environmental approval, does not present an incentive effect in all cases. In those circumstances, it must be found that the change to the terms of environmental approval, in the event that the aid were not to be paid, is one of the factors which the national authorities must take into consideration when assessing the credibility of the counterfactual scenario. |
| --- | --- |

36

Thus, it is not apparent from the wording of those paragraphs that the aid applied for, with a view to making an investment necessary to enable an economic operator to meet the stricter terms laid down for obtaining an environmental approval, does not present an incentive effect in all cases. In those circumstances, it must be found that the change to the terms of environmental approval, in the event that the aid were not to be paid, is one of the factors which the national authorities must take into consideration when assessing the credibility of the counterfactual scenario.

| 37 | In the present case, it is apparent from the order for reference that Veejaam, which is the only applicant in the main proceedings concerned by the second question referred for a preliminary ruling, first, made an investment consisting in the replacement of the existing generating unit by a new generating unit in order to fulfil the new terms imposed by the Estonian legislation for obtaining the environmental approval necessary for electricity production and, secondly, claims that that investment was made possible only by the prospect of being granted the aid for renewable energy. |
| --- | --- |

37

In the present case, it is apparent from the order for reference that Veejaam, which is the only applicant in the main proceedings concerned by the second question referred for a preliminary ruling, first, made an investment consisting in the replacement of the existing generating unit by a new generating unit in order to fulfil the new terms imposed by the Estonian legislation for obtaining the environmental approval necessary for electricity production and, secondly, claims that that investment was made possible only by the prospect of being granted the aid for renewable energy.

| 38 | In those circumstances, as the Advocate General observed in point 47 of his Opinion, it will be for the referring court to determine the credibility of the counterfactual scenario submitted by Veejaam and, in particular, to verify the likelihood that that company would have ceased its activity had it not obtained the aid at issue. In the context of that assessment, the referring court is required, as has been noted in paragraph 26 above, to comply with the conditions laid down in the 2014 Decision and the 2017 Decision. It is for that court, when examining the credibility of that scenario, to analyse a range of relevant factors and data such as Veejaam’s income and expenditure, in the absence of aid, in order to produce electricity in accordance with the new terms for obtaining the environmental approval at issue. |
| --- | --- |

38

In those circumstances, as the Advocate General observed in point 47 of his Opinion, it will be for the referring court to determine the credibility of the counterfactual scenario submitted by Veejaam and, in particular, to verify the likelihood that that company would have ceased its activity had it not obtained the aid at issue. In the context of that assessment, the referring court is required, as has been noted in paragraph 26 above, to comply with the conditions laid down in the 2014 Decision and the 2017 Decision. It is for that court, when examining the credibility of that scenario, to analyse a range of relevant factors and data such as Veejaam’s income and expenditure, in the absence of aid, in order to produce electricity in accordance with the new terms for obtaining the environmental approval at issue.

| 39 | In the light of those considerations, the answer to the second question is that the 2014 Guidelines must be interpreted as meaning that State aid may have an incentive effect where the investment made by an economic operator in order to comply with a change to the terms of environmental approval, that approval being necessary for the operator’s activity, would probably not have been made without payment of the aid concerned. |
| --- | --- |

39

In the light of those considerations, the answer to the second question is that the 2014 Guidelines must be interpreted as meaning that State aid may have an incentive effect where the investment made by an economic operator in order to comply with a change to the terms of environmental approval, that approval being necessary for the operator’s activity, would probably not have been made without payment of the aid concerned.

The third question

The third question

| 40 | By its third question, the referring court asks, in essence, whether Article 1(b) and (c) of Regulation 2015/1589 must be interpreted as meaning that an existing aid scheme, the compatibility of which with the internal market has been established by a Commission decision, must be classified as ‘new aid’, within the meaning of Article 1(c) of that regulation, where that scheme is applied beyond the date which the Member State concerned had indicated to the Commission, in the context of the procedure for the assessment of the aid closed by that decision, as the date on which the scheme would cease to be applied. |
| --- | --- |

40

By its third question, the referring court asks, in essence, whether Article 1(b) and (c) of Regulation 2015/1589 must be interpreted as meaning that an existing aid scheme, the compatibility of which with the internal market has been established by a Commission decision, must be classified as ‘new aid’, within the meaning of Article 1(c) of that regulation, where that scheme is applied beyond the date which the Member State concerned had indicated to the Commission, in the context of the procedure for the assessment of the aid closed by that decision, as the date on which the scheme would cease to be applied.

| 41 | It should be borne in mind that Article 1(b) of Regulation 2015/1589 lists the situations in which State aid must be classified as ‘existing aid’. In particular, it is apparent from Article 1(b)(ii) of that regulation that authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council, constitutes existing aid. In addition, Article 1(c) of that regulation defines new aid as being ‘all ... aid schemes and individual aid, which is not existing aid, including alterations to existing aid’. |
| --- | --- |

41

It should be borne in mind that Article 1(b) of Regulation 2015/1589 lists the situations in which State aid must be classified as ‘existing aid’. In particular, it is apparent from Article 1(b)(ii) of that regulation that authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council, constitutes existing aid. In addition, Article 1(c) of that regulation defines new aid as being ‘all ... aid schemes and individual aid, which is not existing aid, including alterations to existing aid’.

| 42 | In that regard, in the context of the State aid control system, established in Articles 107 and 108 TFEU, the procedure differs according to whether the aid is existing or new. Whereas existing aid may, in accordance with Article 108(1) TFEU, be lawfully implemented so long as the Commission has made no finding of incompatibility, Article 108(3) TFEU provides that plans to grant new aid or alter existing aid must be notified, in due time, to the Commission and may not be put into effect until the procedure has resulted in a final decision (judgment of 28 October 2021, Eco Fox and Others, C‐915/19 to C‐917/19, EU:C:2021:887, paragraph 36 and the case-law cited). |
| --- | --- |

42

In that regard, in the context of the State aid control system, established in Articles 107 and 108 TFEU, the procedure differs according to whether the aid is existing or new. Whereas existing aid may, in accordance with Article 108(1) TFEU, be lawfully implemented so long as the Commission has made no finding of incompatibility, Article 108(3) TFEU provides that plans to grant new aid or alter existing aid must be notified, in due time, to the Commission and may not be put into effect until the procedure has resulted in a final decision (judgment of 28 October 2021, Eco Fox and Others, C‐915/19 to C‐917/19, EU:C:2021:887, paragraph 36 and the case-law cited).

| 43 | Furthermore, as is apparent from the case-law of the Court, the evaluation, by the Commission, of the compatibility of aid with the internal market is based on the assessment of the economic data and of the circumstances on the market at issue at the date on which the Commission makes its decision and takes into account, in particular, the period over which the grant of that aid is provided for. Consequently, the period of validity of existing aid is a factor likely to influence the evaluation, by the Commission, of the compatibility of that aid with the internal market (judgment of 26 October 2016, DEI and Commission v Alouminion tis Ellados, C‐590/14 P, EU:C:2016:797, paragraph 49). |
| --- | --- |

43

Furthermore, as is apparent from the case-law of the Court, the evaluation, by the Commission, of the compatibility of aid with the internal market is based on the assessment of the economic data and of the circumstances on the market at issue at the date on which the Commission makes its decision and takes into account, in particular, the period over which the grant of that aid is provided for. Consequently, the period of validity of existing aid is a factor likely to influence the evaluation, by the Commission, of the compatibility of that aid with the internal market (judgment of 26 October 2016, DEI and Commission v Alouminion tis Ellados, C‐590/14 P, EU:C:2016:797, paragraph 49).

| 44 | Thus, extension of the duration of existing aid must be considered to be an alteration of existing aid and therefore, in accordance with Article 1(c) of Regulation No 2015/1589, constitutes new aid (see, to that effect, judgment of 26 October 2016, DEI and Commission v Alouminion tis Ellados, C‐590/14 P, EU:C:2016:797, paragraph 50 and the case-law cited). |
| --- | --- |

44

Thus, extension of the duration of existing aid must be considered to be an alteration of existing aid and therefore, in accordance with Article 1(c) of Regulation No 2015/1589, constitutes new aid (see, to that effect, judgment of 26 October 2016, DEI and Commission v Alouminion tis Ellados, C‐590/14 P, EU:C:2016:797, paragraph 50 and the case-law cited).

| 45 | In the present case, it is apparent from the information available to the Court, first, that the Republic of Estonia stated, in the context of the procedure for assessing the compatibility of the old scheme with the internal market, that that scheme was to be implemented only until 31 December 2014, secondly, that it was by taking that date into account that the Commission carried out its assessment in the 2014 Decision and, thirdly, that the Republic of Estonia maintained that scheme in force during 2015 and 2016, that is, after 31 December 2014. |
| --- | --- |

45

In the present case, it is apparent from the information available to the Court, first, that the Republic of Estonia stated, in the context of the procedure for assessing the compatibility of the old scheme with the internal market, that that scheme was to be implemented only until 31 December 2014, secondly, that it was by taking that date into account that the Commission carried out its assessment in the 2014 Decision and, thirdly, that the Republic of Estonia maintained that scheme in force during 2015 and 2016, that is, after 31 December 2014.

| 46 | Thus, in the light of the definition of the concept of existing aid, referred to in paragraph 41 above, and the case-law of the Court mentioned in paragraphs 43 and 44 above, it must be held that the old scheme could be classified, after the adoption of the 2014 Decision and until 31 December 2014, as existing aid, since it had been found by that decision to be compatible with the internal market. |
| --- | --- |

46

Thus, in the light of the definition of the concept of existing aid, referred to in paragraph 41 above, and the case-law of the Court mentioned in paragraphs 43 and 44 above, it must be held that the old scheme could be classified, after the adoption of the 2014 Decision and until 31 December 2014, as existing aid, since it had been found by that decision to be compatible with the internal market.

| 47 | By contrast, during the period between 1 January 2015 and the date of adoption of the 2017 Decision, which found that that scheme was compatible with the internal market including after its period of validity had been extended, the scheme must be classified as new aid within the meaning of Article 1(c) of Regulation 2015/1589 and ought, therefore, to have been notified to the Commission in accordance with Article 108(3) TFEU. |
| --- | --- |

47

By contrast, during the period between 1 January 2015 and the date of adoption of the 2017 Decision, which found that that scheme was compatible with the internal market including after its period of validity had been extended, the scheme must be classified as new aid within the meaning of Article 1(c) of Regulation 2015/1589 and ought, therefore, to have been notified to the Commission in accordance with Article 108(3) TFEU.

| 48 | In the light of those considerations, the answer to the third question is that Article 1(b) and (c) of Regulation 2015/1589 must be interpreted as meaning that an existing aid scheme, the compatibility of which with the internal market has been established by a Commission decision, must be classified as ‘new aid’, within the meaning of Article 1(c) of that regulation, where that scheme is applied beyond the date which the Member State concerned had indicated to the Commission, in the context of the procedure for the assessment of the aid closed by that decision, as the date on which the scheme would cease to be applied. |
| --- | --- |

48

In the light of those considerations, the answer to the third question is that Article 1(b) and (c) of Regulation 2015/1589 must be interpreted as meaning that an existing aid scheme, the compatibility of which with the internal market has been established by a Commission decision, must be classified as ‘new aid’, within the meaning of Article 1(c) of that regulation, where that scheme is applied beyond the date which the Member State concerned had indicated to the Commission, in the context of the procedure for the assessment of the aid closed by that decision, as the date on which the scheme would cease to be applied.

The fourth and fifth questions

The fourth and fifth questions

| 49 | By its fourth and fifth questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 108(3) TFEU must be interpreted as precluding the granting of an application made by an economic operator for payment of State aid, despite the breach of the obligation to notify laid down in that provision, first, in relation to the period prior to the Commission decision establishing that that aid was compatible with the internal market and, secondly, when that operator applied for the aid at a time when that aid was unlawful, since that aid had not been notified to the Commission, whereas the investment to which the aid was linked was made at a time when that scheme was lawful, since it had been found to be compatible with the internal market by a Commission decision. |
| --- | --- |

49

By its fourth and fifth questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 108(3) TFEU must be interpreted as precluding the granting of an application made by an economic operator for payment of State aid, despite the breach of the obligation to notify laid down in that provision, first, in relation to the period prior to the Commission decision establishing that that aid was compatible with the internal market and, secondly, when that operator applied for the aid at a time when that aid was unlawful, since that aid had not been notified to the Commission, whereas the investment to which the aid was linked was made at a time when that scheme was lawful, since it had been found to be compatible with the internal market by a Commission decision.

Admissibility

Admissibility

| 50 | The Commission submits that the fourth and fifth questions are hypothetical and therefore inadmissible, since Veejaam and Espo are not entitled to any aid under the old or new regimes. Those companies had already benefited from the aid at issue over a period exceeding 12 years from the start of electricity production at their respective power plants, that period constituting, according to the Estonian legislation, the maximum period during which energy producers may receive the aid at issue. |
| --- | --- |

50

The Commission submits that the fourth and fifth questions are hypothetical and therefore inadmissible, since Veejaam and Espo are not entitled to any aid under the old or new regimes. Those companies had already benefited from the aid at issue over a period exceeding 12 years from the start of electricity production at their respective power plants, that period constituting, according to the Estonian legislation, the maximum period during which energy producers may receive the aid at issue.

| 51 | It should be borne in mind that questions on the interpretation of EU law referred by a national court in the factual and legislative context which that national court is responsible for defining, the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its object, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 2 June 2022, SR (Translation costs in civil proceedings), C‐196/21, EU:C:2022:427, paragraph 25). |
| --- | --- |

51

It should be borne in mind that questions on the interpretation of EU law referred by a national court in the factual and legislative context which that national court is responsible for defining, the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its object, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 2 June 2022, SR (Translation costs in civil proceedings), C‐196/21, EU:C:2022:427, paragraph 25).

| 52 | In the present case, it is sufficient to note that the answer to the question whether Veejaam and Espo are eligible for State aid, on the basis of the assessment of the factual context and the provisions of national law to be carried out by the national court, requires an interpretation of Article 108(3) TFEU. In addition, it is not obvious that that question bears no relation to the actual facts of the main action or its object. |
| --- | --- |

52

In the present case, it is sufficient to note that the answer to the question whether Veejaam and Espo are eligible for State aid, on the basis of the assessment of the factual context and the provisions of national law to be carried out by the national court, requires an interpretation of Article 108(3) TFEU. In addition, it is not obvious that that question bears no relation to the actual facts of the main action or its object.

| 53 | It follows that the fourth and fifth questions are admissible. |
| --- | --- |

53

It follows that the fourth and fifth questions are admissible.

Substance

Substance

| 54 | As a preliminary point, it should be noted, as is apparent from the answer to the third question, that the old scheme may be classified, between 1 January 2015 and the date of adoption of the 2017 Decision, as ‘new aid’ within the meaning of Article 1(c) of Regulation 2015/1589, and that since that aid was implemented in breach of the obligation to notify laid down in Article 108(3) TFEU, it may be considered unlawful during that period. It is only after that scheme was found compatible with the internal market by the 2017 Decision that the scheme may be classified as ‘existing aid’ within the meaning of Article 1(b) of that regulation. |
| --- | --- |

54

As a preliminary point, it should be noted, as is apparent from the answer to the third question, that the old scheme may be classified, between 1 January 2015 and the date of adoption of the 2017 Decision, as ‘new aid’ within the meaning of Article 1(c) of Regulation 2015/1589, and that since that aid was implemented in breach of the obligation to notify laid down in Article 108(3) TFEU, it may be considered unlawful during that period. It is only after that scheme was found compatible with the internal market by the 2017 Decision that the scheme may be classified as ‘existing aid’ within the meaning of Article 1(b) of that regulation.

| 55 | Next, the prohibition laid down by Article 108(3) TFEU is designed to ensure that a system of aid cannot become operational before the Commission has had a reasonable period in which to study the proposed measures in detail and, if necessary, to initiate the procedure provided for in Article 108(2) TFEU. Article 108(3) TFEU thus institutes prior control of plans to grant new aid (judgment of 12 February 2008, CELF and ministre de la Culture et de la Communication, C‐199/06, EU:C:2008:79, paragraphs 36 and 37). |
| --- | --- |

55

Next, the prohibition laid down by Article 108(3) TFEU is designed to ensure that a system of aid cannot become operational before the Commission has had a reasonable period in which to study the proposed measures in detail and, if necessary, to initiate the procedure provided for in Article 108(2) TFEU. Article 108(3) TFEU thus institutes prior control of plans to grant new aid (judgment of 12 February 2008, CELF and ministre de la Culture et de la Communication, C‐199/06, EU:C:2008:79, paragraphs 36 and 37).

| 56 | In a situation where the Commission has, in relation to aid implemented in breach of Article 108(3) TFEU, adopted a final decision finding that that aid is compatible with the internal market pursuant to Article 107 TFEU, the Court has held that the Commission’s final decision does not have the effect of regularising, retrospectively, implementing measures which were invalid because they had been taken in disregard of the prohibition on implementation laid down by the last sentence of Article 108(3) TFEU. Any other interpretation would have the effect of according a favourable outcome to the non‐observance, by the Member State concerned, of that provision and would deprive it of its effectiveness (judgment of 24 November 2020, Viasat Broadcasting UK, C‐445/19, EU:C:2020:952, paragraph 21 and the case-law cited). |
| --- | --- |

56

In a situation where the Commission has, in relation to aid implemented in breach of Article 108(3) TFEU, adopted a final decision finding that that aid is compatible with the internal market pursuant to Article 107 TFEU, the Court has held that the Commission’s final decision does not have the effect of regularising, retrospectively, implementing measures which were invalid because they had been taken in disregard of the prohibition on implementation laid down by the last sentence of Article 108(3) TFEU. Any other interpretation would have the effect of according a favourable outcome to the non‐observance, by the Member State concerned, of that provision and would deprive it of its effectiveness (judgment of 24 November 2020, Viasat Broadcasting UK, C‐445/19, EU:C:2020:952, paragraph 21 and the case-law cited).

| 57 | In such a situation, EU law requires the national courts to order the measures that are appropriate effectively to remedy the consequences of the unlawfulness. Indeed, if, for any particular proposed aid, whether compatible with the internal market or not, failure to comply with Article 108(3) TFEU carried no greater risk or penalty than compliance, the incentive for Member States to notify and await a decision on compatibility would be greatly diminished – as would, consequently, the scope of the Commission’s control (judgment of 24 November 2020, Viasat Broadcasting UK, C‐445/19, EU:C:2020:952, paragraphs 22 and 23 and the case-law cited). |
| --- | --- |

57

In such a situation, EU law requires the national courts to order the measures that are appropriate effectively to remedy the consequences of the unlawfulness. Indeed, if, for any particular proposed aid, whether compatible with the internal market or not, failure to comply with Article 108(3) TFEU carried no greater risk or penalty than compliance, the incentive for Member States to notify and await a decision on compatibility would be greatly diminished – as would, consequently, the scope of the Commission’s control (judgment of 24 November 2020, Viasat Broadcasting UK, C‐445/19, EU:C:2020:952, paragraphs 22 and 23 and the case-law cited).

| 58 | That said, a distinction is to be drawn, in terms of the effects of implementation of aid in disregard of Article 108(3) TFEU, between the recovery of unlawful aid and the payment of illegality interest in respect of that aid (judgment of 24 November 2020, Viasat Broadcasting UK, C‐445/19, EU:C:2020:952, paragraph 24 and the case-law cited). |
| --- | --- |

58

That said, a distinction is to be drawn, in terms of the effects of implementation of aid in disregard of Article 108(3) TFEU, between the recovery of unlawful aid and the payment of illegality interest in respect of that aid (judgment of 24 November 2020, Viasat Broadcasting UK, C‐445/19, EU:C:2020:952, paragraph 24 and the case-law cited).

| 59 | First, as regards the recovery of unlawful aid, premature payment of unnotified aid does not contradict the aim of ensuring that incompatible aid is never implemented, upon which Article 108(3) TFEU is based, where the Commission adopts a final decision finding that aid to be compatible with the internal market. Therefore, the national courts are not bound to order recovery of that aid (see, to that effect, judgment of 24 November 2020, Viasat Broadcasting UK, C‐445/19, EU:C:2020:952, paragraph 25 and the case-law cited). |
| --- | --- |

59

First, as regards the recovery of unlawful aid, premature payment of unnotified aid does not contradict the aim of ensuring that incompatible aid is never implemented, upon which Article 108(3) TFEU is based, where the Commission adopts a final decision finding that aid to be compatible with the internal market. Therefore, the national courts are not bound to order recovery of that aid (see, to that effect, judgment of 24 November 2020, Viasat Broadcasting UK, C‐445/19, EU:C:2020:952, paragraph 25 and the case-law cited).

| 60 | Secondly, the national courts are bound, under EU law, to order the aid recipient to pay interest in respect of the period of unlawfulness of that aid. That obligation, which is incumbent on the national courts, stems from the fact that the implementation of aid in breach of Article 108(3) TFEU gives the aid recipient an undue advantage consisting, first, in the non-payment of the interest which it would have paid on the amount in question of the compatible aid, had it had to borrow that amount on the market pending the Commission’s final decision, and, secondly, in the improvement of its competitive position as against the other operators in the market while the aid concerned is unlawful. The unlawfulness of that aid will, first, expose those operators to the risk, in the result unrealised, of the implementation of incompatible aid, and, secondly, make them suffer, earlier than they would have had to, in competition terms, the effects of compatible aid (judgment of 24 November 2020, Viasat Broadcasting UK, C‐445/19, EU:C:2020:952, paragraphs 26 and 27 and the case-law cited). |
| --- | --- |

60

Secondly, the national courts are bound, under EU law, to order the aid recipient to pay interest in respect of the period of unlawfulness of that aid. That obligation, which is incumbent on the national courts, stems from the fact that the implementation of aid in breach of Article 108(3) TFEU gives the aid recipient an undue advantage consisting, first, in the non-payment of the interest which it would have paid on the amount in question of the compatible aid, had it had to borrow that amount on the market pending the Commission’s final decision, and, secondly, in the improvement of its competitive position as against the other operators in the market while the aid concerned is unlawful. The unlawfulness of that aid will, first, expose those operators to the risk, in the result unrealised, of the implementation of incompatible aid, and, secondly, make them suffer, earlier than they would have had to, in competition terms, the effects of compatible aid (judgment of 24 November 2020, Viasat Broadcasting UK, C‐445/19, EU:C:2020:952, paragraphs 26 and 27 and the case-law cited).

| 61 | Since, in accordance with the case-law mentioned in paragraphs 59 and 60 above, it cannot be precluded that an economic operator may benefit from the premature payment of the aid implemented in breach of the obligation to notify laid down in Article 108(3) TFEU, where the Commission adopts a final decision finding that that aid is compatible with the internal market, that provision also does not preclude that operator from obtaining that aid in respect of the period prior to such a Commission decision, as from that point at which the operator applied for the aid. |
| --- | --- |

61

Since, in accordance with the case-law mentioned in paragraphs 59 and 60 above, it cannot be precluded that an economic operator may benefit from the premature payment of the aid implemented in breach of the obligation to notify laid down in Article 108(3) TFEU, where the Commission adopts a final decision finding that that aid is compatible with the internal market, that provision also does not preclude that operator from obtaining that aid in respect of the period prior to such a Commission decision, as from that point at which the operator applied for the aid.

| 62 | Similarly, where, first, the Commission has established ex post facto that the aid is compatible with the internal market and, secondly, no aid has been paid to an economic operator during the period in which that aid had to be considered unlawful on account of the infringement of the obligation laid down in Article 108(3) TFEU, that operator cannot be required to pay interest in respect of the period of unlawfulness of that aid, as referred to in the case-law cited in paragraph 60 above. In such a situation, there would be no need to remedy the consequences of the unlawfulness, within the meaning of the case-law referred to in paragraph 57 above. |
| --- | --- |

62

Similarly, where, first, the Commission has established ex post facto that the aid is compatible with the internal market and, secondly, no aid has been paid to an economic operator during the period in which that aid had to be considered unlawful on account of the infringement of the obligation laid down in Article 108(3) TFEU, that operator cannot be required to pay interest in respect of the period of unlawfulness of that aid, as referred to in the case-law cited in paragraph 60 above. In such a situation, there would be no need to remedy the consequences of the unlawfulness, within the meaning of the case-law referred to in paragraph 57 above.

ex post facto

| 63 | In the present case, first, with regard to the situation underlying the fourth question referred for a preliminary ruling, which concerns only Veejaam, it is apparent from the order for reference that no aid was paid to that company during the period between 1 January 2015 and the date on which the 2017 Decision was adopted. |
| --- | --- |

63

In the present case, first, with regard to the situation underlying the fourth question referred for a preliminary ruling, which concerns only Veejaam, it is apparent from the order for reference that no aid was paid to that company during the period between 1 January 2015 and the date on which the 2017 Decision was adopted.

| 64 | Consequently, as regards Veejaam, it is for the referring court to draw the appropriate conclusions from the considerations set out in paragraphs 61 and 62 above as regards the possibility for that company to obtain the aid concerned under the old scheme, for the period between 1 December 2015 and the date of adoption of the 2017 Decision, as from the date of submission of the aid application. |
| --- | --- |

64

Consequently, as regards Veejaam, it is for the referring court to draw the appropriate conclusions from the considerations set out in paragraphs 61 and 62 above as regards the possibility for that company to obtain the aid concerned under the old scheme, for the period between 1 December 2015 and the date of adoption of the 2017 Decision, as from the date of submission of the aid application.

| 65 | Secondly, with regard to the fifth question referred for a preliminary ruling, which concerns Espo’s situation, having regard to the case-law mentioned in paragraph 60 above, it is for the referring court to ascertain, in particular, whether that company received aid with a view to the installation, in 2009, of the generating unit concerned, during a period in which the old scheme had not been declared compatible with the internal market by the 2014 Decision, for the purposes of the possible recovery of the interest on the sums received by that company under that aid scheme. |
| --- | --- |

65

Secondly, with regard to the fifth question referred for a preliminary ruling, which concerns Espo’s situation, having regard to the case-law mentioned in paragraph 60 above, it is for the referring court to ascertain, in particular, whether that company received aid with a view to the installation, in 2009, of the generating unit concerned, during a period in which the old scheme had not been declared compatible with the internal market by the 2014 Decision, for the purposes of the possible recovery of the interest on the sums received by that company under that aid scheme.

| 66 | In the light of all the foregoing considerations, the answer to the fourth and fifth questions is that Article 108(3) TFEU must be interpreted as not precluding the granting of an application made by an economic operator for payment of State aid, implemented in breach of the obligation to notify laid down in that provision, first, in relation to the period prior to the Commission decision establishing that that aid was compatible with the internal market and, secondly, when that operator applied for the aid at a time when that aid was unlawful, since the aid had not been notified to the Commission, whereas the investment to which the aid was linked was made at a time when that scheme was lawful, since it had been found to be compatible with the internal market by a Commission decision, provided that, in both situations, the beneficiary of the aid pays the interest on any sums received, in respect of the period in which the aid is considered unlawful. |
| --- | --- |

66

In the light of all the foregoing considerations, the answer to the fourth and fifth questions is that Article 108(3) TFEU must be interpreted as not precluding the granting of an application made by an economic operator for payment of State aid, implemented in breach of the obligation to notify laid down in that provision, first, in relation to the period prior to the Commission decision establishing that that aid was compatible with the internal market and, secondly, when that operator applied for the aid at a time when that aid was unlawful, since the aid had not been notified to the Commission, whereas the investment to which the aid was linked was made at a time when that scheme was lawful, since it had been found to be compatible with the internal market by a Commission decision, provided that, in both situations, the beneficiary of the aid pays the interest on any sums received, in respect of the period in which the aid is considered unlawful.

Costs

Costs

| 67 | Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. |
| --- | --- |

67

Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

| | On those grounds, the Court (First Chamber) hereby rules: |
| --- | --- |

On those grounds, the Court (First Chamber) hereby rules:

| | 1. | Paragraphs 49 and 50 of the Guidelines on State aid for environmental protection and energy 2014-2020


  must be interpreted as not precluding national legislation establishing a renewable energy support scheme allowing an applicant for aid to obtain payment of that aid even if the application was submitted after work had started on the project concerned. |
| --- | --- | --- |

1.

1.

Paragraphs 49 and 50 of the Guidelines on State aid for environmental protection and energy 2014-2020

Paragraphs 49 and 50 of the Guidelines on State aid for environmental protection and energy 2014-2020

must be interpreted as not precluding national legislation establishing a renewable energy support scheme allowing an applicant for aid to obtain payment of that aid even if the application was submitted after work had started on the project concerned.

must be interpreted as not precluding national legislation establishing a renewable energy support scheme allowing an applicant for aid to obtain payment of that aid even if the application was submitted after work had started on the project concerned.

| | 2. | The Guidelines on State aid for environmental protection and energy 2014-2020


  must be interpreted as meaning that State aid may have an incentive effect where the investment made by an economic operator in order to comply with a change to the terms of environmental approval, that approval being necessary for the operator’s activity, would probably not have been made without payment of the aid concerned. |
| --- | --- | --- |

2.

2.

The Guidelines on State aid for environmental protection and energy 2014-2020

The Guidelines on State aid for environmental protection and energy 2014-2020

must be interpreted as meaning that State aid may have an incentive effect where the investment made by an economic operator in order to comply with a change to the terms of environmental approval, that approval being necessary for the operator’s activity, would probably not have been made without payment of the aid concerned.

must be interpreted as meaning that State aid may have an incentive effect where the investment made by an economic operator in order to comply with a change to the terms of environmental approval, that approval being necessary for the operator’s activity, would probably not have been made without payment of the aid concerned.

| | 3. | Article 1(b) and (c) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union


  must be interpreted as meaning that an existing aid scheme, the compatibility of which with the internal market has been established by a European Commission decision, must be classified as ‘new aid’, within the meaning of Article 1(c) of that regulation, where that scheme is applied beyond the date which the Member State concerned had indicated to the Commission, in the context of the procedure for the assessment of the aid closed by that decision, as the date on which the scheme would cease to be applied. |
| --- | --- | --- |

3.

3.

Article 1(b) and (c) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union

Article 1(b) and (c) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union

must be interpreted as meaning that an existing aid scheme, the compatibility of which with the internal market has been established by a European Commission decision, must be classified as ‘new aid’, within the meaning of Article 1(c) of that regulation, where that scheme is applied beyond the date which the Member State concerned had indicated to the Commission, in the context of the procedure for the assessment of the aid closed by that decision, as the date on which the scheme would cease to be applied.

must be interpreted as meaning that an existing aid scheme, the compatibility of which with the internal market has been established by a European Commission decision, must be classified as ‘new aid’, within the meaning of Article 1(c) of that regulation, where that scheme is applied beyond the date which the Member State concerned had indicated to the Commission, in the context of the procedure for the assessment of the aid closed by that decision, as the date on which the scheme would cease to be applied.

| | 4. | Article 108(3) TFEU


  must be interpreted as not precluding the granting of an application made by an economic operator for payment of State aid, implemented in breach of the obligation to notify laid down in that provision, first, in relation to the period prior to the Commission decision establishing that that aid was compatible with the internal market and, secondly, when that operator applied for the aid at a time when that aid was unlawful, since the aid had not been notified to the Commission, whereas the investment to which the aid was linked was made at a time when that scheme was lawful, since it had been found to be compatible with the internal market by a Commission decision, provided that, in both situations, the beneficiary of the aid pays the interest on any sums received, in respect of the period in which the aid is considered unlawful. |
| --- | --- | --- |

4.

4.

Article 108(3) TFEU

Article 108(3) TFEU

must be interpreted as not precluding the granting of an application made by an economic operator for payment of State aid, implemented in breach of the obligation to notify laid down in that provision, first, in relation to the period prior to the Commission decision establishing that that aid was compatible with the internal market and, secondly, when that operator applied for the aid at a time when that aid was unlawful, since the aid had not been notified to the Commission, whereas the investment to which the aid was linked was made at a time when that scheme was lawful, since it had been found to be compatible with the internal market by a Commission decision, provided that, in both situations, the beneficiary of the aid pays the interest on any sums received, in respect of the period in which the aid is considered unlawful.

must be interpreted as not precluding the granting of an application made by an economic operator for payment of State aid, implemented in breach of the obligation to notify laid down in that provision, first, in relation to the period prior to the Commission decision establishing that that aid was compatible with the internal market and, secondly, when that operator applied for the aid at a time when that aid was unlawful, since the aid had not been notified to the Commission, whereas the investment to which the aid was linked was made at a time when that scheme was lawful, since it had been found to be compatible with the internal market by a Commission decision, provided that, in both situations, the beneficiary of the aid pays the interest on any sums received, in respect of the period in which the aid is considered unlawful.

| | [Signatures] |
| --- | --- |

[Signatures]

---

(
  *1
  )	Language of the case: Estonian.

*1