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Published on : Feb 24, 2015

The European Union has declared that it will further investigate the subsidies being given by the U.K. towards the power plant of RWE AG’s Lynemouth. This step has been taken because of government concerns that conclude that any type of aid will give the entity a chance for conversion of this site from dealing with coal to perhaps biomass. This as a result may affect competition. A prominent feature that has been observed is that the project depends immensely on imported wood pellets. This in a way might end up having a negative impact on the competition that witnesses the biomass industry.

The commission has expressed its concerns over balancing out the negative impact on the degree of competition, and this could possibly outweigh the positive effects that are required to achieve the 2020 EU targets that pertain to renewable energy. The Lynemouth facility in Ashington is one amongst the eight projects of the U.K. which will also include Drax Group Plc’s plan for biomass conversion. This will help in generating greater amount of electricity that will be derived from non conventional sources of energy. 

However, the European Union has not till now ruled on the project of Drax in North Yorkshire, Selby. The shares of Drax fell by 3.4% in London at 10:56 am, and in Frankfurt the shares of RWE came down by 1.6%. The shares of Drax declined in 2014 at a time when the U.K. stated that it had plans of removing the subsidies for generators that convert for burning biomass. 

The regulators of the European Union should ideally approve huge government payments for companies in order to keep a check on them so that they do not in any way harm their competitors and rivals.