EUROPEAN COMMISSION Brussels, 10.2.2020 COM(2020) 38 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL On the implementation of the European Energy Programme for Recovery and the European Energy Efficiency Fund {SWD(2020) 12 final}



REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL On the implementation of the European Energy Programme for Recovery

and the European Energy Efficiency Fund A resilient infrastructure is the backbone of the Energy Union. Last year, in 2018, important interconnection projects were put in operation and regional cooperation was considerably strengthened. In that context the EEPR played a key role in the financial support to major infrastructures of common interest for the integration of the electricity and gas markets and the reinforcement of the security of supply. I. PROGRESS IN PROGRAMME IMPLEMENTATION Energy infrastructure and innovation, the driving forces behind the European Energy Programme for Recovery (EEPR), remain as important now as they were in 2009 when the EEPR was set up. This report sets out, for each part of the EEPR, the progress made in implementing the projects and the European Energy Efficiency Fund (EEEF). It follows the report adopted in 2018 . It covers the implementation of the projects between 31 August 2016 and 31 December 2018 and the payments made during that period. II. OVERALL PROJECT IMPLEMENTATION By the end of December 2018, 43 (+6 compared to 2017) projects out of 59 have been completed and a total amount of € 2,514,424,758 (after deduction of the recovery orders for an amount of € 196,099,270.83) has been paid to the beneficiaries (see Annex). The situation for the gas and electricty infrastructures is as follows: most of the projects are completed and two projects are on going. Substantial progress was made by the promoters for the Offshore Wind Energy (OWE) integration in the grid whilst the project promoters of the last remaining Carbon Capture and Storage (CCS) project decided to stop their financial support to the project. The Commission has opted for maintaining its financial support to the investors as long as it remains clear that a Final Investment Decision (FID) is possible and the project continues to provide substantial value for society. 1. gas and electricity infrastructure The EEPR infrastructure sub-programme has supported 44 projects in three major areas of activities (Gas interconnectors, Gas reverse flow and Electricity). A total amount of € 2,267,574,462 has been committed, of which € 1,669.370.233 has been disbursed to the beneficiaries by 31 December 2018. Payments are subject to the beneficiaries' firm commitment to implement the project through a Final Investment Decision.

1.1.progress to date To date, 38 (+3 compared to 2017) out of the 44 infrastructure projects have been completed, four were terminated and two projects are on-going. In the electricity sector, all the 12 projects (+2 compared to 2017) have been completed. In the gas interconnectors area, 13 (+1 compared to 2017) out of 18 projects have been completed; two are progressing according to new rescheduling, and three have been terminated. In the area of reverse flow and interconnection projects in Central and Eastern Europe, 13 projects have been completed, and one project in Romania was terminated by the Commission in September 2014. Since the last EEPR implementation report, the following progress can be highlighted in particular : -The Interconnector Greece-Bulgaria (IGB) is a key route to carry gas from TAP and Greek LNG to the north and is an important project for the diversification of gas supply in the South-East European region. It is a project of common interest (PCI 6.8.1) and a Central and South Eastern Europe energy connectivity (CESEC) priority project. The Commission has provided political and financial support to the project since the beginning. The project has received €45 million from the European Energy Programme for Recovery and €39 million from the European Regional Development Fund. In 2018, the project made further progress. At the CESEC ministerial meeting in Sofia in June, a memorandum of understanding was signed between the Bulgarian Energy Holding and the European Investment Bank on a loan for the project. The project received exemption from EU energy law, including a partial exemption from third party access rules from the Commission in July 2018. The Commission also approved the state aid for the public support and the access to Bulgarian structural funds. Project implementation is advancing well, all procurement procedures have been finalized and construction started at the end of May 2019. -In the Republic of Cyprus, the Ministry of Energy, Commerce, Industry and Tourism is currently preparing the implementation of a natural gas receiving terminal, which will contribute to the diversification of the Cypriot energy mix and contribute to ending the energy isolation of the island, as well as facilitate competition in gas fueled power generation from independent producers. Natural gas is expected to enter the Cyprus market by 2021. To date, it is foreseen that these two on-going projects should be completed respectively by end 2021 and end 2022. 2. Offshore Wind Energy (OWE) Projects 2.1 Progress to date The Offshore Wind sub-programme consisted of 9 projects receiving € 565 million of support split between two main types of activities: - Large-scale testing, manufacturing and deployment of innovative turbines and offshore foundation structures (6 projects); and - Development of module-based solutions for the grid integration of large amounts of wind electricity transmission (3 projects). 4 of 9 projects have been completed and 2 were terminated prematurely. € 341,639,214 (after deduction of recovery orders) were paid to the projects. The three remaining projects are on-going. 2.2 Progress to date by sector 2.2.1 Progress with Innovative Turbines and Offshore Structures

For the Aberdeen Offshore Wind Farm, the eleven wind turbines with the world's largest capacity started operations at Vattenfall's offshore wind farm 'Aberdeen Bay' on 1 July 2018. In September 2018 the official opening of the European Offshore Wind Deployment Centre (Aberdeen Offshore Wind Farm) took place. Last reporting for the project and final payment are expected in Quarter III 2019. 2.2.2 Progress with Wind-Grid Integration In general, the execution of the two remaining projects, Kriegers Flak and COBRAcable, progressed as expected. For Kriegers Flak, final commercial operation start was planned for end of September 2019. Despite delays and other challenges experienced during the project, the beneficiaries initiated the planning of the commissioning in the second half of July 2019. For COBRAcable, the installation of the converter stations in the Netherlands and Denmark is completed, while there is a delay for the installation of minor segments of the cable. Completion of cable installation and system testing was expected in the 2nd semester 2019; the commercial operation should start right after, at the end of 2019. The project COBRAcable includes a study aiming at identifying and describing the important design issues to be taken into account to make the HVDC link Cobracable prepared for future operation as part of multi-terminal network. For this task, new documents have been submitted. 3. Carbon Capture and Storage The EEPR sub-programme consisted of 6 projects and € 1 billion of support aiming at demonstrating the full carbon capture, transport and storage process. One project (Compostilla in Spain) was finished providing operational pilot plants for capture, transport and storage. Four projects have been terminated prematurely due to the decision of the project promoters not to invest, one project ended without being completed. € 387,211,547 (after deduction of recovery orders for a total amount of € 48,660,666.85) were paid to these projects. III. EUROPEAN ENERGY EFFICIENCY FUND (EEEF) In December 2010, € 146.3 million from the European Energy Programme for Recovery (EEPR) were allocated to a financial facility for sustainable energy projects. € 125 million were used as the EU contribution to the European Energy Efficiency Fund (EEEF). The EEEF was created in July 2011 and has reached a total volume of € 265 million , supported by a Technical Assistance Grant Facility with a budget of € 20 million and € 1.3 million for awareness-raising activities. The EEEF provides tailored financing (both debt and equity instruments) for energy efficiency, renewable energy and clean urban transport projects. Beneficiaries are local or regional public authorities or private entities acting on their behalf. 1.progress to date In 2018, three new transactions were added to the Fund’s portfolio : - The CIMAC project in Portugal consists in the upgrade of the existing street lighting luminaires from predominently high pressure sodium vapour lamps to the last generation LED (EEEF investment of EUR 12.1 million, total project size of EUR 16.6 million). The project emerges from the EEEF Technical Assistance facility and is one the largest street lighting upgrades in Portugal where EEEF has been instrumental in development and financing. - The Illuminated Cities project in Italy targets a portfolio of street lighting projects, benefitting mainly municipalities of small to medium size (EEEF investment of EUR 16 million, total project size of EUR 20 million). - The Smart Hospitals and Universities is another project in Italy, enabling a portfolio of energy efficinecy projects in the healthcare and education sectors (EEEF investment of EUR 7 million, total project size of EUR 22 million). From its creation and until 31 December 2018, the EEEF has signed contracts with 16 projects worth €170 million, and although this does not represent the maximum possible drawdown available, it has generated an estimated €301.5 million of final investment. Based on the EEEF's project assessment and reporting framework on CO2 equivalent and primary energy savings, as of the end of 2016, its investments have achieved savings of close to 388 478 tons of CO2 and Primary Energy Savings of 794 124 MWh.



2.EEEF Technical Assistance facility