Order;Information — ECLI:EU:C:2024:450
Date: 2024-05-29
Language of the case: Estonian
Court formation: Sixth Chamber
Subject matter: State aids;Competition
Procedure: Reference for a preliminary ruling
Origin: Estonia

Summary C-446/23 – 1 
Case C-446/23 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
17 July 2023 
Referring court: 
Tallinna Halduskohus (Estonia) 
Date of the decision to refer: 
15 July 2023 
Applicant: 
Warmeston OÜ 
Defendant:  
AS Elering 
  
Subject matter of the main proceedings 
Action by Warmeston OÜ for the annulment of the decision of 13 September 
2021 and of the decision on appeal of 24 November 2021 adopted by Elering AS 
and for an order requiring Elering AS to reconsider the application made by 
Warmeston OÜ. 
Subject matter and legal basis of the request for a preliminary ruling  
This request for a preliminary ruling, made on the basis of Article 267(2) TFEU, 
seeks an interpretation of the European Union’s provisions on State aid, in 
particular paragraph 19(44) of the Communication from the Commission – 
Guidelines on State aid for environmental protection and energy 2014–2020 and 
of recitals 42 to 43 of the Commission Decision of 6 December 2017 on State Aid 
SA.47354 (2017/NN). 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-446/23 
 
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Questions referred for a preliminary ruling 
1. How is the concept of (investment) project to be interpreted for the purposes 
of recitals 42 to 43 of European Commission Decision SA.47354 of 
6 December 2017? How should it be determined which costs are associated 
with the project and could potentially have led to the project being 
considered, on 31 December 2016, to be in such state of development that it 
would very likely be completed (this project concerns the start of works)? 
a. In particular, can an installation that does not produce energy (such as 
a wood pellet plant) also form part of a project relating to an electricity 
production installation? 
b. Does the answer to the foregoing question depend on: 
i. whether the installation that does not produce energy is 
economically linked to the electricity production installation; 
ii. whether the installation that does not produce energy must be 
technically (energetically) linked to the electricity production 
installation; in other words, whether the operation, supplying or 
such like of the electricity production installation must be 
dependent on the other installation; 
iii. whether the construction of the installation that does not produce 
energy was in itself economically viable and technologically 
sound (in that, for example, it has been in operation for more 
than ten years and the project developer has not taken any steps 
to construct the electricity production installation in that time)? 
c. In particular, can an installation that does not produce energy form part 
of a project relating to an electricity production installation on the sole 
ground that it is economically more profitable to operate it in 
conjunction with the electricity production installation? 
d. In particular, must it be examined whether the installation that does not 
produce energy forms part of a project relating to an electricity 
production installation (in other words, whether the project developer 
would have constructed the installation that does not produce energy if 
it had not planned to build an electricity production installation) – or 
vice versa? 
2. Should the assessment as to whether the works may be regarded as having 
started for the purposes of recital 42 of European Commission Decision 
SA.47354 of 6 December 2017 be based solely on the formal acceptance of 
unconditional and binding commitments (by way of a signature to that 
effect, for example), or is it also necessary to conduct a substantive 
examination each time to determine whether the project was in such state of 
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development that it would very likely be completed, and whether 
abandoning the project would also have had substantive adverse 
consequences for the undertaking? 
a. In particular, must the state of development of the project be assessed 
in respect of all variants of the start of works, including the start of 
construction works? 
b. In particular, how must the substance of the commitments entered into 
be assessed? Can the ratio of the investments made/commitments 
entered into/construction works undertaken/costs incurred to the total 
value of the project be taken into account? Is it also relevant whether 
the commitments entered into relate to the electricity production 
installation or the infrastructure of the project? 
c. In particular, can the works be considered to have started in the case 
where, prior to 31 December 2016, the undertaking entered into 
commitments/made investments/started construction works/procured 
equipment, but the costs are so small in relation to the size of the 
overall project that the project cannot be regarded as having been in 
such state of development that it would very likely be completed? 
What ratio of costs to the overall value of the project can reasonably be 
regarded as being sufficient to support the assumption that the project 
is in such stage of development that that it will very likely be 
completed? 
d. In particular, must the Member State, when assessing whether the 
works may be regarded as having started, establish the presence of an 
incentive effect, or must that effect be taken as read, in accordance 
with European Commission Decision SA.47354 of 6 December 2017? 
Provisions of European Union law relied on 
Communication from the Commission – Guidelines on State aid for 
environmental protection and energy 2014–2020 (OJ 2014 C 200, p. 1, ‘the 
Guidelines’), paragraph 19(44), paragraph 126 and footnote 66 
Commission Decision C(2017) 8456 final of 6 December 2017 ‘Subject: State Aid 
SA.47354 (2017/NN) – Amendments to Estonian RES and CHP support scheme’ 
(OJ 2018 C 121, p. 7, ‘Decision on State aid SA.47354’), in particular recitals 41 
to 43 
Provisions of national law relied on  
Elektrituruseadus (Law on the electricity market, ‘the ELTS’), paragraphs 3 and 
59 
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Succinct presentation of the facts and procedure in the main proceedings 
1 In 2010, Warmeston OÜ (applicant) acquired a plot of land on which it planned to 
construct a wood pellet plant and a combined heat and power installation (‘CHP 
installation’). Between 2010 and 2015, the applicant made investments and 
entered into contracts with a view to the construction of the wood pellet plant. On 
4 February 2015, the applicant concluded with Elektrilevi OÜ a contract to 
increase the interconnection point from 2.5 MW to 5 MW. The Municipality of 
Sauga issued planning conditions on 28 April 2015 and granted planning 
permission for the CHP installation on 27 May 2015. On 20 May 2015, the 
applicant concluded a contract for the construction of a substation. In 2016, the 
applicant constructed a fuel storage building, roads and squares which, according 
to the construction project, are associated with the wood pellet plant. 
2 On 30 June 2020, the applicant asked Elering AS (defendant), the transmission 
system operator responsible for granting renewable energy support, on the basis of 
Paragraph 59(23) of the ELTS, to examine whether the investment project relating 
to the Sauga CHP installation met the conditions of eligibility for support under 
Paragraph 59(22) of the ELTS. The purpose of the project is to construct a biofuel-
fired CHP installation. All of the heat and electricity generated is to be used as an 
input to product manufacturing in the wood pellet plant. The remaining electricity 
from direct current lines is to be fed into the distribution grid in order to increase 
local energy security. The investment project has a budget of EUR 30 million. The 
production installation will have an electrical capacity of 5 megawatts (MW) and 
a thermal capacity of 15 MW, which will cover all of the energy which the wood 
pellet plant needs to produce 180 000 tonnes of wood pellets per year. The 
infrastructure for consumption of the energy produced by the planned installation 
(electrical installations and pellet plant), including an increased-capacity 
interconnection to the grid managed by the distribution grid operator, was 
completed during the first stage. Construction of the wood pellet plant was 
essential to the construction of the CHP installation, since the former ensures that 
the heat produced by the latter is usefully used. The CHP plant will be completed 
during final stage of the investment project. Completion of the investment project 
was halted for lack of the necessary funds. To date, the applicant has incurred 
costs in the amount of EUR 9.5 million on construction works necessarily 
associated with the investment project. In addition, it has concluded a 
corresponding contract with the distribution grid operator for the provision of grid 
services. The applicant has accordingly fulfilled the conditions laid down in 
Paragraph 59(22), points 2 and 4, of the ELTS and meets the definition of ‘existing 
producer’. 
3 In its decision of 13 September 2021, the defendant found that, as an investment 
project, the Sauga CHP installation did not fulfil the conditions set out in 
Paragraph 59(22) of the ELTS, for the following reasons. The wood pellet plant 
cannot be regarded as forming part of the CHP installation project for the 
purposes of Paragraph 59(22) of the ELTS. As at 31 December 2016, the applicant 
had not entered into any commitments which would render the CHP installation 
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investment project irreversible within the meaning of Paragraph 59(22), point 4, of 
the ELTS. Taken as a whole, the costs incurred by the applicant did not represent 
an investment of sufficient scale to support the conclusion that, after the applicant 
had incurred those costs, its investment project in the form of the CHP installation 
was in such state of development that it would very likely be completed and give 
rise to a legitimate expectation on the part of the applicant. 
4 On 13 October 2021, the applicant lodged an appeal against the defendant’s 
decision of 13 September 2021, which the defendant dismissed by decision of 
24 November 2021. 
5 On 27 December 2021, the applicant brought before the Tallinna Halduskohus 
(Administrative Court, Tallinn) an action seeking the annulment of the 
defendant’s decision of 13 September 2021 and its decision on appeal of 
24 November 2021, and an order requiring the defendant to reconsider the 
applicant’s application. The defendant contended that the action should be 
dismissed. 
The essential arguments of the parties in the main proceedings 
6 The applicant submits that it started the Sauga CHP installation investment project 
in 2010, when it acquired the Graanuli plot of land. Its aim was to complete the 
investment project by 2025. The support referred to in Paragraph 59(2) of the 
ELTS having been factored into the construction of the CHP installation, 
Paragraph 59(22) of the ELTS caused the project to be significantly delayed. 
There was a risk that the applicant would not qualify for any support and that the 
profitability and financing of the investment project would have to be reassessed. 
7 The applicant’s investment project fulfils the conditions laid down in 
Paragraph 59(22), points 2 and 4, of the ELTS and is in keeping with the objective 
of expanding renewable energy. The applicant carried out the construction work 
relating to the investment project and entered into other commitments making that 
project irreversible. The fact that the wood pellet plant and the CHP installation 
could physically exist completely separately from each other does not refute the 
conclusion that they are a single investment project. Construction of the CHP 
installation was from the outset planned in conjunction with the wood pellet plant 
as part of a single investment project. The fact that the investment project 
achieved its profitability potential before the planned project was fully completed 
cannot serve as a basis for excluding the works forming part of its final stages 
from that project and treating them as a separate investment project. If the CHP 
installation had not formed part of the investment project from the outset, the 
works would never have been carried out to the extent that they already had been 
by 31 December 2016. The costs would have been EUR 4 442 373 lower. Since 
the wood pellet plant forms part of the investment project relating to the CHP 
installation, the construction work on the wood pellet plant must be regarded as 
work on the investment project relating to the CHP installation. The costs of at 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-446/23 
 
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least EUR 230 930.40 incurred on increasing the capacity of the interconnection 
point and building the substation constituted firm commitments within the 
meaning of Paragraph 59(22), point 4, of the ELTS. If the CHP installation and the 
wood pellet plant were treated as a single investment project, the costs incurred by 
the applicant on the investment project as at 31 December 2016 would amount to 
EUR 10.5 million. The larger the investment project, the more certain it is that 
even 1% of the total costs can itself be regarded as a significant amount and 
entering into a commitment on that scale makes the project irreversible for the 
undertaking in question. The applicant had a legitimate expectation that it would 
qualify for the support referred to in Paragraph 59(2) of the ELTS. 
8 The defendant submits that, under the new support scheme, no producer has a 
legally guaranteed right to a certain level of support. Only producers who have 
successfully participated in an invitation to tender are eligible for support. 
Paragraph 59(22) of the ELTS contained a transitional provision to protect the 
legitimate expectations of producers who had made a substantial investment in the 
construction of a production installation prior to the change to the support scheme 
but had not yet been able to complete the project. That provision is intended to 
ensure that no support is granted to a project which, on 31 December 2016, 
existed only on paper or for which only preparatory work or work of little 
financial value – in relation to the total investment in the project – had been 
started. 
9 The defendant is authorised to determine the size of the Sauga CHP installation in 
accordance with the relevant legislation and the documents gathered in this matter. 
It is not bound by how the applicant itself classified its project. The evidence 
presented by the applicant does not show that it has started to implement the 
investment project or has a firm intention to do so. In 2015, the applicant received 
from the Foundation for the Development of Entrepreneurship a large investor 
grant for the production of wood pellets, but did not mention the CHP installation 
in its application for that grant. 
10 The wood pellet plant is not a facility on which the operation or supplying of the 
CHP installation would be directly dependent, but an independent operation. The 
evidence presented by the applicant shows that the CHP installation will not be 
built if the wood pellet plant does not reach a production capacity of 175 000 
tonnes, since there would not then be any case for building it. According to the 
applicant’s business plan, a wood pellet plant is more profitable with a CHP plant 
than without one, and it makes economic sense to source the heat needed to dry 
the wood pellets from a dedicated boiler. However, those circumstances are not 
decisive, since the purpose of supporting renewable energy cannot be simply to 
increase the profitability of other commercial projects. Economic viability does 
not prove that this is a single investment project and that the applicant has indeed 
started work on the CHP installation. 
11 The applicant started from the wrong premiss in its classification of the 
investment project. The renewable energy production installation is the essential 
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component of the investment project and, therefore, the planned CHP installation 
necessarily forms part of the investment project. What falls to be examined is 
whether the wood pellet plant forms part of the investment project relating to the 
CHP installation, not whether the CHP installation forms part of the investment 
project relating to the wood pellet plant. The question, therefore, is whether the 
applicant would have built the wood pellet plant if it had not planned to build the 
CHP installation, not whether the applicant would have built the CHP installation 
if it had not planned to build the wood pellet plant. The fact that the CHP 
installation would not perform any useful function on its own is immaterial. Since 
the purpose of promoting renewable energy is to support the production of 
electricity, not the consumption of it, the consumer behind the production 
installation (the wood pellet plant) is irrelevant. The investment project is 
confined to the CHP installation and the infrastructure serving it. 
12 The defendant must comply not only with Paragraph 59(22) of the ELTS but also 
with the Guidelines and the Decision on State Aid SA.47354. A restrictive 
interpretation must be adopted in this regard, since, under the current conditions, 
the payment of renewable energy subsidies places an undue burden on consumers 
and is therefore contrary not only to the public interest but also to the fundamental 
rights of consumers. There is no incentive effect if the undertaking is legally 
obliged to fulfil certain requirements. The costs incurred on roads and squares and 
on the fuel storage building cannot be regarded as irreversible since it is 
associated with the wood pellet plant. It is not credible that a reasonable operator 
would start by creating the infrastructure to serve a CHP installation and then let 
several years go by without taking any steps to construct the CHP installation. In 
any event, the costs incurred on building roads and squares is to be treated as 
preliminary work. The costs incurred on increasing the capacity of the 
interconnection point and building the substation, amounting to EUR 230 930.40 
in total, may be regarded as a commitment to the CHP installation, whereas the 
costs incurred on increasing the capacity of the interconnection point, in the 
amount of EUR 122 929.57, is to be regarded rather as being linked to the wood 
pellet plant, since it is the consumption capacity that was increased, not the 
production capacity. The European Court of Justice – in its judgment of 
13 December 2013, Fri-El Acerra v Commission (T-55/10) – and the Riigikohus 
(Supreme Court) – in its judgment of 9 June 2016 in case 3-3-1-8-16 – did not 
regard commitments representing an even higher percentage [of the total cost of 
the investment project] – of 10% and 5.7% respectively – as being irreversible. In 
the exchange of correspondence with the Ministry of Economic Affairs and 
Communications, the Commission mentioned a range of 10% to 15%. The 
application of an absolute level of commitment is unjustified, since a legitimate 
expectation of qualifying for a large subsidy might otherwise be created by costs 
which are insignificant by comparison with the total cost of the investment 
project. An absolute amount does not in itself allow any conclusion to be drawn as 
to whether the amount in question is significant enough to create a legitimate 
expectation. This approach should also exclude the risk of abuse. The time spent 
on an investment project is not an appropriate assessment criterion. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-446/23 
 
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13 Since the applicant does not fulfil the criteria for classification as an existing 
producer, no legitimate expectation has accrued to its benefit. The applicant hopes 
to qualify for renewable energy support in the amount of EUR 19.8 million 
through a simplified procedure. The applicant’s argument that the amendment to 
the ELTS which entered into force on 9 July 2018 compelled it to postpone the 
CHP installation investment project is untenable. At the time when the applicant 
alleges that it started the works, the Commission Decision of 28 October 2014 on 
State Aid SA.36023 was in force. According to this, only producers which had 
embarked upon the activities upon which eligibility for support was conditional by 
1 March 2023 at the latest were entitled to aid. The applicant had not fulfilled the 
relevant conditions by that date. It did not, for example, have a building permit. 
On 6 December 2017, the Commission adopted the decision on State Aid 
SA.47354, which established a legitimate expectation that support could be 
granted under the former scheme. According to that decision, the undertaking had 
to have started the works by 31 December 2016 at the latest. The applicant did not 
submit the application to the defendant until 30 June 2020, that is to say two years 
after the amendment to the ELTS and the adoption of the State aid decision. The 
applicant has not explained why it did not seek certainty about the renewable 
energy support earlier if, as it alleges, this prevented it from taking forward the 
investment project. The applicant’s submissions confirm that, as at 31 December 
2016, it had not yet taken a final investment decision. Since, in order to qualify for 
support, the project had to have been in such state of development on 
31 December 2016 that it would very likely be completed, it made no sense to 
stop the project until clarity on eligibility for the support had been obtained. If a 
project has reached a stage where abandonment would bring about a significant 
economic disadvantage, a reasonable project developer would not halt or abandon 
the project. 
14 Since the defendant had a wide margin of discretion in making its decision, the 
judicial review of that decision is limited. Judicial review is limited in particular in 
the case of complex economic decisions in the area of State aid. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
15 At issue is whether the applicant is entitled to apply for renewable energy support. 
16 On 28 October 2014, the Commission adopted the Decision on State Aid 
SA.36023 (OJ 2015 C 44, p. 2), by which it held the State aid in question to be 
compatible with the internal market in accordance with Article 107(3)(c) TFEU. 
17 On 10 November 2017, the Estonian State notified the amended aid scheme to the 
Commission. In the Decision on State Aid SA.47354, the Commission found the 
aid to be compatible with the internal market in accordance with Article 107(3) 
TFEU. 
18 On the basis of the Decision on State Aid SA.47354, Estonia amended the ELTS 
by adding, inter alia, subparagraphs 21 to 22 to Paragraph 59. Under those 
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provisions, a producer qualifies for renewable energy support automatically, 
without participating in a competitive invitation to tender, if it fulfils the 
requirements laid down in that Law (Decision on State Aid SA.47354, 
paragraphs 34, 35 and 38). 
19 According to Paragraph 59(21) of the ELTS, support is to be granted on the basis 
of the Commission’s Guidelines on State aid for environmental protection and 
energy and the Commission’s State aid decision (SA.47354). The conditions 
relating to the beneficiary of the aid are laid down in Paragraph 59(22) of the 
ELTS, which is based on paragraph 19(44) of the Guidelines. In recital 37 of the 
Decision on State Aid SA.47354, the Commission confirmed that the conditions 
laid down by Estonia were compatible with the Guidelines, setting out in detail the 
conditions to be met by existing producers in paragraphs 42 to 43 of the Decision 
on State Aid SA.47354. The decision on the present dispute is therefore 
contingent upon the interpretation of the conditions set out in paragraph 19(44) of 
the Guidelines and recitals 42 to 43 of the Decision on State Aid SA.47354. 
20 In this case, it is common ground that the applicant fulfilled in good time the two 
conditions referred to in recital 42 of the Decision on State Aid SA.47354. The 
building permit granted to the applicant for the CHP installation is valid – for an 
unlimited period of time. The applicant is therefore entitled to use the land in 
question and has the municipality’s authorisation to construct the production 
installation. The applicant also fulfils the condition laid down in Paragraph 59(22) 
of the ELTS, that the production installation must have an electrical output of at 
least 1 MW. 
21 What is at issue is whether the applicant can be assumed to have started work on 
the investment project relating to the production installation (Paragraph 59(22) of 
the ELTS, paragraph 19(44) of the Guidelines). The fact that the applicant 
acquired the land to build the production installation on and obtained a permit to 
build that installation is not considered to be the start of the works in this context. 
It is common ground between the parties that the applicant had not on 
31 December 2016, and has not at the present time, started to produce renewable 
energy from the planned production installation (Paragraph 59(22), point 1, of the 
ELTS). Neither has it entered into a firm commitment to order equipment for the 
construction of the production installation (Paragraph 59(22), point 3, of the 
ELTS). The parties are in dispute as to whether the applicant has started work on 
the investment project (Paragraph 59(22), point 2, of the ELTS) or has entered into 
any other commitment which would render the investment project irreversible 
(Paragraph 59(22), point 4, of the ELTS). 
22 The parties are in dispute as to what is to be regarded as constituting the 
investment project. It is clear from the applicant’s application of 30 June 2020 that 
its objective is to construct a biofuel-fired CHP installation. The applicant regards 
the industrial wood pellet plant as also forming part of the investment project. All 
of the heat and electricity generated by the production installation will be used as 
an input to product manufacturing at the pellet plant, and the remaining electricity 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-446/23 
 
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from the direct current line(s) will be fed into the distribution grid in order to 
increase local energy security. 
23 In the defendant’s contention, the CHP installation and the wood pellet plant 
cannot be regarded as a single investment project. The production installation has 
not yet been completed. The wood pellet plant has been completed and has been 
in operation and profitable, since late 2010, for more than ten years. 
Consequently, the wood pellet plant can be used separately from the production 
installation and is economically viable, and the plant and the installation are two 
separate things. The construction work on the wood pellet plant cannot therefore 
be regarded as forming part of the work on the investment project, and the 
applicant cannot be assumed to have started work on the investment project. What 
is more, the costs incurred on the wood pellet plant cannot be regarded as forming 
part of the costs incurred on construction of the production installation and cannot 
be taken into account in the assessment as to whether the commitments entered 
into by the applicant give the investment project the appearance of being 
irreversible. Since the applicant has not as yet started to construct the CHP 
installation, there is no evidence that the applicant had the firm intention of 
constructing a production installation from the outset. 
24 At the same time, this court finds the applicant’s explanations as to why it 
considers the wood pellet plant and the production installation to be a single 
investment project, and why implementation of the investment project started with 
the construction and operation of the wood pellet plant, to be equally credible. 
Even though the wood pellet plant can be operated separately from the production 
installation, the fact that the applicant would like to use the electricity and heat 
generated in the CHP installation as an input to product manufacturing in the 
wood pellet plant means that the two would be energetically linked to each other. 
The applicant submits that the wood pellet plant is more profitable with the CHP 
installation than without it, and that it makes economic sense to source the heat 
necessary to dry the wood pellets from a dedicated boiler. Since the applicant did 
not have the financial resources required to implement the project all at once, it 
was decided to put it into effect step by step. The applicant started the project by 
building the wood pellet plant precisely because it could be operated separately 
from the production installation and could be put into service immediately after its 
completion so as to generate the revenue needed to implement the subsequent 
stages of the project. It did not make economic sense to start by building the 
production installation, since, at that time, the Municipality of Sauga had neither a 
functioning district heating area nor a sufficient number of consumers to whom 
heat could have been supplied all year round from the production installation to be 
constructed pending the construction the pellet plant. Without the heat load, it is 
not possible to build a production installation, and the heat load required is 
provided by the wood pellet plant. The wood pellet plant is therefore 
indispensable to the construction of the CHP installation, since the wood pellet 
plant ensures that the heat generated is usefully consumed. 
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25 In the light of the foregoing, an interpretation is required as to what can be 
regarded as being a project within the meaning of recital 42 of the Decision on 
State Aid SA.47354 and as being an investment within the meaning of 
paragraph 19(44) of the Guidelines. Can the construction of a CHP installation for 
the production of electricity be regarded on its own as an investment project, or 
can another installation linked to the production installation, such as a wood pellet 
plant consuming the electricity and heat generated by the production installation, 
also be regarded as forming part of the project? What conditions would that other 
installation have to fulfil in order to be capable of being regarded as forming part 
of the investment project? In such a case, can the work on construction of the 
other installation (the wood pellet plant) also be regarded as being the start of 
works within the meaning of recital 43 of the Decision on State Aid SA.47354 and 
paragraph 19(44) of the Guidelines, or is it only work on construction of the CHP 
installation that is to be regarded as the start of works. Which costs can be taken 
into account in assessing whether the investment has become irreversible – can 
account be taken only of costs incurred on construction of the production 
installation or may costs incurred on construction of another installation (such as a 
wood pellet plant) also be taken into consideration? 
26 It is not clear whether the stage of development of the project referred to in 
recital 42 of the Decision on State Aid must be assessed in the case of all the 
variants of ‘start of works’ referred to in paragraph 19(44) of the Guidelines – 1) 
start of construction works on the investment, 2) first firm commitment to order 
equipment, 3) another commitment that makes the investment irreversible – or 
only in the case of the last variant (another commitment that makes the investment 
irreversible). Can the start of construction works be regarded as the start of works 
even irrespective of the costs of those works and without assessment of the state 
of development? 
27 The parties are also in dispute as to how to assess whether the project is in such 
state of development that it will very likely be completed, within the meaning of 
recital 42 of the Decision on State Aid SA.47354, or what commitment makes the 
investment irreversible within the meaning of paragraph 19(44) of the Guidelines. 
28 The defendant has relied on an assessment of costs. It has taken the stance that, if 
the costs associated with the wood pellet plant were excluded from the costs 
incurred on the investment project, the costs of EUR 230 930.40 incurred on 
increasing the capacity of the interconnection point and building the substation 
could be regarded as costs specifically associated with the production installation 
project. Without the wood pellet plant, the costs of the investment project would 
amount to EUR 18 195 850 instead of EUR 30 million. The costs incurred by the 
applicant on implementing the investment project would thus represent 1.27% of 
the entire cost of the project. The defendant does not consider such a percentage to 
be sufficient for the investment to be regarded as irreversible. Neither does the 
defendant consider there to be any justification for taking into account absolute 
costs in assessing whether the investment is irreversible. The applicant, on the 
other hand, argues that it has incurred a sufficiently high costs to render [the 
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project] irreversible and make it economically difficult [to abandon it] even if no 
account is taken of the wood pellet works. The applicant further considers that, in 
the case where construction works have started, the level of the commitments is of 
no relevance at all. 
29 Recital 42 of the Decision on State Aid SA.47354 refers to the incentive effect. It 
is not clear, however, whether the defendant, when assessing whether an existing 
producer is present, must also examine the incentive effect of the aid, or whether 
the presence of an incentive effect can be inferred from the fact that the 
Commission has declared the aid to be compatible with the internal market, 
having itself examined the presence of an incentive effect in recitals 62 to 63 of 
the Decision on State Aid.