29.12.2022
EN
Official Journal of the European Union
C 495/17
The host and the off-taking Member States sign a cooperation agreement for the joint project.
The high-level political agreement states that each of them shall be allocated the amount of RES statistics from the project that corresponds to the amount of electricity supported by that country.
Since the offshore wind farm is located in the EEZ of the host country, it will by default be allocated the RES statistics which would then need to be redistributed according to the agreement.
The host and the off-taking country conduct a cost-benefit analysis, identifying the most relevant cost and benefit items and their effects.
In their cost-benefit analysis, they decide to focus on costs of energy generation, system integration costs, GHG emissions, air and other local pollution, security of supply and innovation effects.
To determine their effects for the costbenefit sharing, they also include and assess support costs as well as effects on RES statistics.
Member State A (host)
Member State B (off-taker)
Member State C (statistical transfer)
Renewable energy generated
40 %
60 %
N/A
RES statistics
40 %
50 %
10 %
40 %
60 %
N/A
System integration costs ( )
100 %
N/A
N/A
GHG Emissions savings
40 %
60 %
N/A
Air and other local pollution
40 %
60 %
N/A
Security of supply
40 %
60 %
N/A
Support costs 1
( ) Borne by TSO.
1
The two cooperating parties agree to focus on support costs, RES statistics and system integration costs solely for the costbenefit sharing and discard all other cost and benefit elements.
In the next step, the host and the off-taking country proceed to sum up all costs and benefits for each of them, leading to a total net benefit/cost per Member State.
As the host country bears the entirety of system integration costs, it incurs a net cost and demands for system integration costs to be factored into the transfer price.
In general, the negotiation space for the transfer price is determined by the relative contribution of the cooperating Member States to the support costs.
Depending on whether support costs are higher in the off-taking or host Member State relative to one another, either one or the other will have a benefit from the cooperation with regards to the support payments.
In general, the floor for the transfer price is determined by the additional support costs incurred by either Member State A or B, the cap is the total support cost savings.
Let us assume that technology-specific support costs are higher in the off-taking Member State compared to the host Member State.
Cooperation thus leads to cost savings in the off-taking Member State, while the support costs in the host Member State might increase (as compared to the non-cooperation case).
However, the cooperation leads to a net cost saving as the total support costs are lower in the cooperation case as compared to the non-cooperation case.
In the example, the host Member State incurs higher support costs than it would have in the case of non-cooperation which would result in a financial compensation in the form of a transfer to the host Member State.
The level of the transfer price will be determined by negotiation, but it should be set in such a way that it provides sufficient incentives for both countries to deem the cooperation beneficial, i.e. for the host Member State it needs to be at least as high, ideally higher, as the additional support costs incurred, and for the off-taking Member State it needs to be lower than its total cost savings.
Of course, countries might also have non-financial motives to pursue the cooperation which might influence their willingness to accept a lower/higher transfer price.
Departing from the total volume of prospective renewable energy generated and the costs incurred by both countries, they calculate a transfer price (EUR/kWh) that also takes into account an equal split of system integration costs.