Czechia Biomethane Support Scheme 2026-2030 Approved

Brussels, 14.4.2026 C(2026) 2346 final

Subject: State Aid SA.119368 (2026/N) - Czechia CISAF - Support scheme for biomethane 2026 - 2030 Excellency,

1. PROCEDURE (1) By electronic notification of 2 February 2026, Czechia notified aid for accelerating the rollout of renewable energy, aimed at supporting production of

biomethane (CISAF: 'Support scheme for biomethane 2026 - 2030', the 'scheme' or the 'measure'), under the State aid framework to support the Clean Industrial Deal ('the Clean Industrial Deal Framework' or 'CISAF') ( ). 1

(2) Czechia exceptionally agrees to waive its rights deriving from Article 342 of the

Treaty on the Functioning of the European Union ('TFEU'), in conjunction with

Article 3 of Regulation 1/1958 ( ) and to have this Decision adopted and notified 2in English.

() Communication from the Commission on the Framework for State aid measures to support the 1 Clean Industrial Deal adopted on 25 June 2025 (OJ C, C/2025/3602, 4.07.2025). () Regulation No 1 determining the languages to be used by the European Economic Community (OJ 2 17, 6.10.1958, p. 385).

Petr Macinka Ministr zahraničních věcí

Ministerstvo zahraničních věcí České republiky Loretánské náměstí 5 118 00 Praha 1 PUBLIC VERSION ČESKO

EUROPEAN COMMISSION This document is made available for information purposes only.

1. DETAILED DESCRIPTION OF THE MEASURE 2.1. Background and objective of the measure (3) The EU has set an ambitious climate protection target of reducing greenhouse gas emissions by at least 55 % by 2030, with a view to becoming climate neutral by 2050 ( ). In order to achieve this target, far-reaching changes are required in all 3 sectors of the economy. (4) As outlined in the Commission's REPowerEU Plan ( ), increasing biomethane 4 production in the EU is a cost-efficient path to achieve the EU ambition to reduce imports of natural gas from Russia. The REPowerEU Plan thus sets up the objective to increase sustainable biomethane production to 35 billion cubic meters

('bcm') per year by 2030 ( ). The revised Renewable Energy Directive ( ) ('RED 5 6III'), in particular its Article 3(2) and Article 25(1), provides that Member States should set renewable energy sources ('RES') targets and sub-objectives in the

transport sector, including a minimum target for the so-called advanced biofuels and biogas ('biomethane'). (5) In line with the EU objectives, Czechia's updated National Energy and Climate

Plan ('the Czech NECP') ( ) sets the target for the share of RES in gross final 7energy consumption in 2030 at 30 %. Biomethane plays an important role in the

decarbonisation of the heating sector and especially, in the area of reducing emissions in transport, where Czechia has chosen a target of reducing greenhouse gas emissions by 14.5 % by 2030, in line with Article 25(a)ii) RED III. The Czech NECP assumes a biomethane output of 500 million Nm3 ( ) (5 terawatt-hours or 8TWh) in 2030, which will represent about 250 - 300 small and medium-sized biomethane stations. The demand for this biomethane is expected in the transport sector (approximately 1 TWh of gas (CNG) consumed in 2024), the freight transport segment (1 TWh replacing LNG with bioLNG) as well as the heating segment, industry and other final consumption (70 - 80 TWh annual consumption of natural gas in Czechia). (6) The measure notified by Czechia aims at accelerating the deployment of biomethane stations and supporting the achievement of these objectives by providing producers of biomethane with a direct price support and an off-taker for the renewable gas they produce. The Czech authorities consider that without this measure, the creation of the biomethane market in Czechia would not take place to the extent necessary to meet the energy targets.

() Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 3 establishing the framework for achieving climate neutrality and amending Regulations (EC) No

401/2009 and (EU) 2018/1999 ('European Climate Law'), OJ L 243, 9.7.2021, p. 1.

() Communication from the Commission to the European Parliament, the European Council, the 4 Council, the European Economic and Social Committee and the Committee of the Regions, COM/2022/230 final of 18 May 2022 - REPowerEU Plan. () Ibid., p. 8. 5() Directive (EU) 2018/2001 ('RED II') of the European Parliament and of the Council of 11 6 December 2018 on the promotion of the use of energy from renewable sources (OJ L 328,

21.12.2018, p. 82) revised by Directive (EU) 2023/2413 ('RED III') of the European Parliament

and of the Council of 18 October 2023 amending Directive (EU) 2018/2001, Regulation (EU) 2018/1999 and Directive 98/70/EC as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652 (OJ L, 2023/2413, 31.10.2023, p.1)). () https://commission.europa.eu/publications/czechia-final-updated-necp-2021-2030-submitted-72024_en () Nm3 means standard cubic meters, i.e. a cubic meter of gas at a standard set of conditions defined 8as 0°C (273.15 K) and 1 atm (101.325 kPa).

(7) Czechia confirms that the aid granted under the measure cannot be made conditional on the relocation of an activity, as this would be detrimental to the internal market. 2.2. Nature and form of aid (8) The measure provides aid on the basis of a direct price support scheme, in the form of a two-way contract for difference. (9) The support will be paid over a period of 15 years starting from the date of commissioning of an installation. 2.3. Legal basis (10) The legal basis of the measure under national law are as follows: (a) Act No. 165/2012 Coll., on Supported Energy Sources, as amended by Act No. 87/2025 Coll.; (b) Act No. 458/2000 Coll., on the Conditions of Business in the Energy Sectors, as amended by Act No. 87/2025 Coll., Energy Act; (c) Government Decree No. 189/2022 Coll., as amended by No. 459/2024 Coll., on the definition of the development of supported energy sources; (d) Decree No. 489/2022 Coll., registration decree; (e) Decree No. 79/2022 Coll., on technical-economic parameters; (f) Decree No. 166/2022 Coll., on reporting of energy from supported sources; (g) Decree No. 110/2022 Coll., on the determination of the types and parameters of supported renewable sources and criteria for sustainability and greenhouse gas emission savings for bioliquids and biomass fuels; (h) Decree No. 72/2022 Coll., on ensuring the adequacy of the operational support provided to energy sources; (i) Decree No. 328/2022 Coll. on guarantees of origin of energy. (11) Aid may be granted under the measure as from the notification to Czechia of the

Commission's decision approving the measure. The selection of beneficiaries will

therefore take place after the approval of the measure by the Commission. 2.4. Administration of the measure (12) The Ministry of Industry and Trade ('MIT') is the coordinator of the auctions and the granting authority. It announces the individual calls, evaluates them and issues a decision on the allocation of the right to support to selected beneficiaries. It also determines the maximum auction price for individual calls and it may determine the method of year-on-year adjustment (valorisation) of the tendered reference auction price (RAC) (see recital (40)). (13) The Energy Regulatory Office (Energetický regulační úřad, 'ERO') cooperates with MIT on determining the maximum auction price and the procedure for its year-on-year adjustment for individual calls. (14) The Czech Electricity and Gas Market Operator - OTE a.s. ('OTE') - is the authorised administrator who pays out the support to beneficiaries. OTE is a State- owned joint-stock company performing the obligations and duties of the market

operator, as stipulated by the Energy Act, including organisation of short-term gas markets. (15) For three to five years, the Czech authorities will select in a competitive bidding

process a mandatory gas buyer ('PVP'), a gas trader who will manage on behalf

of the Czech authorities the physical flows of gas and the corresponding part of the financial flows derived from the implementation of the measure. (16) Czechia indicates that the selected aid beneficiaries under the measure will enter into a standardised contract with PVP, and the relation between PVP and the beneficiaries will be established under the conditions set by MIT. Under this contract, the beneficiary undertakes to produce biomethane and inject it into the Czech gas system, selling it to PVP. For its part, PVP undertakes to purchase the

biomethane at the monthly unit price of gas ('the market price of gas') ( ), for its 9own portfolio or to further trade this gas on the wholesale market. PVP will be

obliged to take responsibility for deviations at the point of connection of

beneficiaries' plants to the distribution network.

(17) All holders of a gas trading license in Czechia can participate in the process of PVP selection. The detailed conditions for this selection will be indicated by MIT in individual calls. The subject of the competition will be the amount of the coefficient to the reference monthly product on the gas market ( ), on the basis 10 of which the unit monthly price at which PVP will buy gas from biomethane producers (the market price of gas) will be calculated. The gas trader who offers the most advantageous coefficient to the reference market product of gas will be selected. Within this coefficient, PVP must cover all costs related to the purchase of gas, including costs of assuming responsibility for the deviation at the transfer point of the biomethane plant, and will not be reimbursed by the State. (18) The Czech authorities confirm that this method of PVP selection ensures that the costs of managing the scheme are minimised. In addition, the Czech authorities confirm that PVP acts as a mere intermediary and that it is financially neutral to the measure, meaning that PVP does not receive any remuneration under the measure itself. The Czech authorities explain that the scheme therefore grants aid only to the biomethane producers selected in the tender procedure. The amount of aid granted to the producer under the measure is the difference between the price per MWh of renewable gas produced requested by the producer in the tender (i.e. the strike price or RAC) and the market price of gas (i.e. monthly unit price of gas at which gas will be purchased from the beneficiary by PVP) (see recital (42)) ( ). On this basis, Czechia argues the scheme is designed in such a way as to 11 avoid undue distortion of the efficient functioning of the markets.

() PVP acquires only the gas commodity itself without the right to guarantees of origin and proof of 9 sustainability certificates. Also, the supported producer loses the right to issue guarantees of origin. All these renewable attributes related to the production of 1 MWh of biomethane injected into the

Czech gas system will be recorded in the OTE's system, merged into a single certificate the so- called "Guarantee of Origin+" and traced within the gas system in the Guarantee of Origin Register

administered by OTE. OTE organises auctions of Guarantees of Origin+, and the proceeds are used to finance operating aid for the production of biomethane (the measure at hand) and its injection into the gas system. () It can be assumed that the reference product will be a short-term product based on the day-ahead or 10intraday gas market, traded in the OTE system. () Note that under the measure, neither the supported producer nor PVP are entitled to the guarantees 11of origin for the volume of biomethane supported.

2.5. Budget and duration of the measure (19) The Czech authorities indicate that duration of the measure is from 1 January 2026 to 31 December 2030. (20) The estimated budget of the measure is CZ 90 billion (approx. EUR 3.7 billion ( )) for the entire duration of the scheme. 12 (21) The total volume of biomethane procured under the measure will be 350 million Nm3 of biomethane through two auction calls held annually in 2026, 2027 and

2028.

(22) Czechia explains that the measure will be financed by State resources, as it will be funded from revenues from the sale of guarantees of origin ( ) and from 13 revenues from emission allowance auctions ( ), which are collected by OTE and 14 constitute State resources, as well as through the general State budget (if revenues from the sales of guarantees of origin and emission allowance auctions are not sufficient). 2.6. Beneficiaries (23) The beneficiaries of the measure will be biomethane producers selected in the tender (see recital (28)) who hold a gas production licence in the territory of the Czech Republic. The requirements for granting a licence for gas production are set out in the provisions of Sections 4 to 8 of the Energy Act and in the implementing Decree No. 8/2016 Coll. on the details of the granting of licenses for business in the energy sectors, as amended. (24) Only biomethane injected into the Czech gas system is entitled to support under the measure. (25) All technologies and projects that enable the production of biomethane are eligible (including agricultural and waste stations and their combinations, projects using sludge and landfill gas). (26) Credit institutions or other financial institutions shall not be eligible for the measure as final recipients. (27) The Czech authorities confirmed that no aid can be granted to undertakings in difficulty or to undertakings subject to an outstanding recovery order following a previous Commission decision declaring an aid illegal and incompatible with the internal market. 2.7. Basic elements of the measure (28) Czechia confirms that the aid amount will be determined by means of an open, clear, transparent, non-discriminatory and competitive bidding process, based on

() In the decision, CZK is converted into EUR at the average exchange rate of the Czech National 12 Bank of 2 February 2026 of EUR 1 = CZK 24.3, available at: https://www.cnb.cz/en/financial- markets/foreign-exchange-market/central-bank-exchange-rate-fixing/central-bank-exchange-rate- fixing/index.html?date=02.02.2026. () The State-owned company OTE issues guarantees of origin based on Act No. 165/2012 Coll., on 13 Supported Energy Sources and Decree No. 328/2022 Coll. on guarantees of origin of energy. Pursuant to §28(1)(g) of Act No. 165/2012 Coll., the scheme at hand is financed from the funds generated from the revenues from the sale of guarantees of origin issued on behalf of the Czech Republic. () The revenues from emission allowance auctions constitute income of the State budget. 14

objective criteria that are defined in advance which reduce the risks of strategic bidding and undersubscription (see recitals (29) to (44)).

2.7.1. Eligible projects

(29) Czechia explains that the scheme is open to all technologies for the production of biomethane, without restrictions on the size of projects or their location. Eligible projects are so-called agricultural and waste stations and their combinations as well as projects using sludge and landfill gas. (30) The Czech authorities confirm that the aid will be granted only with respect to newly installed capacities either in newly built biomethane stations or existing biogas stations (currently generating electricity) converted into biomethane stations. (31) Only installations for which the start of works will be after the deadline for the submission of bids will be able to participate in the competitive bidding procedure. (32) In addition, in the competitive bidding procedure, projects where works started during the preceding biomethane support scheme and are not in operation at the

time of the launch of the bidding procedure under this measure ("the ongoing projects") can also participate ( ). 15

(33) Czechia also confirms it will ensure that support will be granted for the production of biomethane that complies with the sustainability and greenhouse gases emissions savings criteria of Directive (EU) 2018/2001 ( ) and its implementing 16 or delegated acts. In particular, Czechia explains that biomethane support will be provided exclusively for biomethane which will be certified through the required certification schemes verifying such compliance. (34) For each relevant auction call, Czechia will also determine the required composition of feedstocks, i.e., the minimum share of advanced biomethane in the total amount of biomethane produced during the reporting period and the maximum resulting amount of greenhouse gas emissions (gCO2eq/MJ) and other criteria for participation. (35) The maximum deadline by which projects supported under the measure must be completed and operational will be, as will be stated in announced auction calls, within 48 months after the date of aid granting. Applicants must also provide a financial security for the timely implementation. Projects for which the deadline is not respected will lose the deposited financial security ( ) and subsequently 17 also the right to support.

() The preceding biomethane support scheme was approved by the Commission Decision in State aid 15 case SA.104686 (2023/N) "Support for biomethane", OJ C/2024/1024, 21.01.2024. The Czech

authorities submit that a limited number of projects (maximum five) have not managed to fulfil all requirements to receive aid under the Support for biomethane scheme by the deadline of 31 December 2025. These installations will be able to participate in the auctions of the scheme at hand, given that these projects would not have started without the expectation to receive aid in view of the funding gap proven in the context of the Support for biomethane scheme. () See footnote (6). 16() Except for situations due to force majeur, or beyond the control of the aid beneficiary where the 17delay could not reasonably have been foreseen at the moment of the aid application.

(36) Czechia confirms that support under the measure shall be granted only to projects

that comply with the 'do no significant harm' ('DNSH') principle ( ).

(37) Czechia submits that, apart from the eligibility criteria mentioned above, the scheme does not include any artificial limitations or discrimination (including in the award of licenses, permits or concessions when they are required).

2.7.2. Aid allocation procedure

(38) MIT will organise the competitive bidding procedures under the measure with the aim of procuring in total 350 million Nm3 of biomethane. To that end, Czechia plans to hold two calls for tender annually in 2026 (with 45 million Nm3 (474 683 MWh ( )) volume each), 2027 (55 million Nm3 (580 168 MWh) each) and 2028 19 (75 million Nm3 (791 139 MWh) each). (39) The Czech authorities submit that there are currently more than 500 existing biogas stations in operation in the Czech Republic, producing 1.4 billion Nm3 of biogas per year. If these stations were converted to produce biomethane, they alone would produce 700 million Nm3 of biomethane per year. According to Czechia, as confirmed also by a study by the Czech Biogas Association, market estimates suggest that around half of the existing biogas stations could be converted to biomethane production without significant challenges. This potential can be further increased by new biomethane plants. Given the size of the biogas stations, Czechia expects to see dozens of production facilities in each round. Based on this, the Czech authorities consider that the volumes of 90 to 150 million Nm3/year foreseen for the measure take into account the expected supply of projects and are set at a level that ensures that the budget constitutes a binding constraint in a competitive allocation process, so that not all tenderers will receive aid. (40) In the application form, the candidate must indicate a strike price (pay as bid), the so-called 'reference auction price' ('RAC'), measured in CZK/MWh of gross heat

calorific value ('GCV'), and an estimated annual production volume (GWh/year

or Nm3/year). RAC expresses the price at which the producer is willing to produce and inject biomethane into the gas system of Czechia in the long term without proceeds from guarantees of origin ( ). 20 (41) The applications will be assessed solely on the basis of the price per MWh of biomethane offered (RAC), and ranked in order, starting with the application offering the lowest price per MWh GCV, until the respective volumes per auction are reached. In this process, PVP is not given any role as to the selection of the aid beneficiaries. (42) In addition to the market price of gas received from PVP (see recital (17)), the aid

beneficiary will receive an "auction bonus" from OTE. The bonus will be

calculated monthly and will amount to the difference between the price per MWh GCV of biomethane produced requested by the producer in the tender (i.e. the strike price or RAC) and the market price of gas. The scheme is therefore based on the principle of a two-way contract for difference. A beneficiary will receive

() Commission Notice - Technical guidance on the application of "do no significant harm" under the 18 Recovery and Resilience Facility Regulation (OJ C 58, 18.2.2021, p.1). () Volumes in auction will be defined only in Nm3. Conversion of values from Nm3 to MWh is done 19 using the calorific conversion value of 1 m3 = 10.54 kWh. () As mentioned in footnote 11, in case of benefitting from the scheme, beneficiaries will not be 20 entitled to the issuance of guarantees of origin for the volume of biomethane supported.

the auction bonus if the market price of gas is lower than its RAC. In case the market price of gas is higher than its RAC, a beneficiary must return the difference to OTE. Therefore, in sum the beneficiary will always receive its RAC, i.e. the price which they bid in the competitive bidding procedure (the market price of gas paid by PVP +/- the auction bonus paid by/to OTE). (43) Czechia explains that a bid ceiling, i.e. maximum auction price above which offers will not be examined will be determined based on the funding gap for a reference project and will reflect current gas market conditions and evolution of other key inputs, in particular investment costs, weighted cost of capital and other operating costs. Furthermore, Czechia has confirmed that the eligible costs under the measure is the expected net cost estimated taking into account all main costs and revenues incurred over the lifetime of the project and any aid already received, discounted by the weighted average cost of capital. Czechia has also confirmed that the amount of aid resulting from the competition procedure cannot exceed 100 % of the total eligible costs of the projects supported. The bid ceiling will be subject to year-on-year adjustment. (44) In case of a repeated undersubscription of competitive bidding process, Czechia confirms that it will introduce remedial actions. Thus, auctioned volume in subsequent calls could be lowered ( ). 21 (45) Czechia confirmed that, for each of the biomethane stations to be supported under the scheme, the beneficiary would not carry out the investment and that the project would therefore not be carried out in the absence of aid due to the existence of a funding gap. 2.8. Compliance with relevant provisions of Union law (46) The Czech authorities confirm that the proposed measure does not by itself, or by the conditions attached to it or by its financing method constitute a non-severable violation of Union law. 2.9. Cumulation (47) The Czech authorities confirm that the aid granted under the measure cannot be cumulated with other operating aid in relation to the same eligible costs. In case of cumulation of operating aid and investment subsidy ( ), the provided 22 investment subsidy will be deducted from the amount of the operating aid granted under the measure. Czechia also confirmed that, if the measure was to be combined in the future with centrally managed Union funding (which is currently not the case), the same cumulation rules would apply to prevent any overcompensation.

() The auctioned volume will be automatically reduced if two consecutive auctions are 21 undersubscribed. In this case, the volume of the following auction will be reduced to the average subscription of the two last tenders minus 10 %. In the case that, after such reduction has taken place, a following auction is oversubscribed, the volume for the following auction will be raised back to the regular amount. In the case that, after such reduction has taken place, two consecutive auctions are oversubscribed, the volume for the following auction will be raised by the amount by which the volume for the proceeding auctions have been reduced, but by no more than 10 % of the regular volume. () The investment subsidy to be considered means the total nominal amount of investment support 22 provided to the biomethane producer from public funds for the construction and commissioning of the biomethane production plant.

2.10. Monitoring and reporting (48) The Czech authorities confirm that they will respect the monitoring and reporting obligations laid down in Section 9 CISAF, including, inter alia, the obligation to publish the relevant information on each individual aid above EUR 100 000 granted under the measure on the comprehensive State aid website or

Commission's IT ( ) tool within six months from the moment of granting the aid. 23

1. ASSESSMENT OF THE MEASURE 3.1. Presence of State aid (49) For a measure to be categorised as aid within the meaning of Article 107(1) TFEU, all the conditions set out in that provision must be fulfilled. First, the measure must be imputable to the State and financed through State resources. Second, it must confer an advantage on its recipients. Third, that advantage must be selective in nature. Fourth, the measure must distort or threaten to distort competition and affect trade between Member States. (50) The scheme is established under national law (see section 2.3). The Czech authorities determine all its elements, including its eligibility conditions and budget. In addition, the granting authority is MIT (see recital (12)). The scheme is therefore imputable to the State. (51) The measure is financed through the general State budget (see recital (22)). As regards the source of financing from the revenues from emission allowance auctions, these revenues constitute income of the State budget (see recital (22)). As to the revenues from the sale of guarantees of origin, these, pursuant to national law, are collected by the State-owned company OTE and used to finance the scheme. Therefore, the measure is financed through State resources. (52) The measure confers an advantage on its beneficiaries in the form of a two-way contract for difference where the amount of aid granted to each beneficiary is the difference between the price offered in a tender (RAC) and the market price of gas (see recitals (8) and (18)). The measure therefore confers an advantage on the beneficiaries which they would not have had under normal market conditions. (53) As stated in recital (18), the mandatory gas buyer acts as a mere intermediary. It is financially neutral with respect to its gas purchase obligation: it does not receive a remuneration under the scheme, the full compensation received is transferred to the biomethane producer at the level of the strike price (the market price of gas +/- the auction bonus, see recital (42)). The Commission therefore considers that the mandatory gas buyer does not benefit from any advantage under the measure. (54) The advantage granted by the measure is selective, since it is awarded only to certain undertakings, namely producers of biomethane, excluding the financial sector (see section 2.6), which will be winners of tendering procedures. Other undertakings in a comparable legal and factual situation in that sector will not be able to benefit from the aid and therefore will not benefit from the same advantage.

() The State aid transparency public search gives access to State aid individual award data provided 23 by Member States in compliance with the European transparency requirements for State aid and can be found at https://webgate.ec.europa.eu/competition/transparency/public?lang=en.

(55) The measure is liable to distort competition and affects trade between Member State, since it strengthens the competitive position of its beneficiaries, which are active in sectors open to trade and in which intra-Union trade exists. (56) In view of the above, the Commission concludes that the measure constitutes aid within the meaning of Article 107(1) TFEU. The Czech authorities do not contest that conclusion. 3.2. Lawfulness of the measure (57) By notifying the measure before putting it into effect and undertaking to grant aid under the measure only after the notification of the Commission's decision approving the measure (see recital (11)), the Czech authorities have respected their obligation under Article 108(3) TFEU. 3.3. Compatibility (58) Since the measure involves State aid within the meaning of Article 107(1) TFEU, it is necessary to consider whether that measure is compatible with the internal market. (59) Pursuant to Article 107(3), point (c), TFEU, the Commission may declare compatible with the internal market "aid to facilitate the development of certain

economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest".

(60) In particular, the Commission's joint roadmap for competitiveness and decarbonisation ('Clean Industrial Deal') ( ) recognises the need to accelerate the 24 deployment of renewable energy sources in a cost-effective manner, thereby contributing to global competitiveness, reducing dependencies on fossil fuel imports, accelerating the energy transition and lower, less volatile energy prices. (61) In this context, the adoption of the Clean Industrial Deal Framework demonstrates that the Commission considers that State aid is justified and can be declared compatible with the internal market on the basis of Article 107(3), point (c), TFEU when it contributes to speeding up the rollout of renewable energy. (62) In the present case, the measure provides for direct price support aid, aimed at supporting investments in biomethane production (see recital (6)) covered by point 48(b) CISAF. Therefore, the Commission assessed compliance of the measure with the conditions laid down in Sections 3 and 4.1 CISAF. (63) The Commission considers that the measure is necessary, appropriate and proportionate to accelerate the deployment of renewable energy and can be declared compatible with the internal market on the basis of Article 107(3), point (c), TFEU, in the light of the conditions set out in CISAF for the reasons set out below.

3.3.1. Positive condition: the aid facilitates the development of an economic activity

3.3.1.1. Contribution to the development of an economic activity (64) Compatible aid under Article 107(3)(c) TFEU must contribute to the development of certain economic activities or of certain economic areas. In accordance with this, point 17 CISAF states that, the Commission considers that aid under this CISAF aims at incentivising investments and activities in certain sectors that

() COM(2025) 85 final. 24

contribute to the objectives defined in the Clean Industrial Deal Communication, thereby facilitating the development of specific economic activities. (65) The Commission therefore considers that the measure facilitates the development of certain economic activities as required by Article 107(3), point (c) TFEU and point 17 CISAF. 3.3.1.2. Incentive effect (66) Point 18 CISAF explains that State aid needs to have an incentive effect, meaning that it induces the beneficiary to undertake an investment or activity that is would not undertake, or would carry out in a restricted or different manner, absent the aid. As indicated in point 18 CISAF, the Commission considers that, concerning aid under the CISAF, and unless specified otherwise in the CISAF, an incentive effect is presumed when the start of the works related to the project or activity takes place only after the beneficiary has submitted a written application for aid to the competent authorities. Moreover, aid can however also be considered to have an incentive effect although the start of works took place before the submission of the aid application, where two cumulative criteria are met: (i) the aid is granted automatically in accordance with objective and non-discriminatory criteria and without further exercise of discretion by the Member State, and (ii) the measure has been adopted and is in force before work on the aided project or activity has started, except in the case of fiscal successor schemes, where the activity was already covered by the previous schemes in the form of tax advantages. (67) In the present case, Czechia has confirmed that in principle only installations for which the start of works will take place after the submission of bids will be eligible to participate in the competitive bidding procedure (see recital (31)). (68) Concerning ongoing projects (see recital (32)), the Commission notes that aid under the scheme can be granted to investors who started works on these projects during the preceding biomethane support scheme. Under the preceding biomethane scheme, the aid was granted automatically in accordance with objective and non-discriminatory criteria and without further exercise of discretion by the Member State, and the measure was adopted and already in force before any works on eligible projects under the preceding scheme started (see recital (67) of the Support for biomethane decision). On that basis, the Commission considers that the preceding scheme fulfilled the two cumulative conditions set out in point 18 CISAF. The Commission further notices in this context that Czechia confirmed that funding gaps for these projects (for which works started during the preceding biomethane support scheme) still persist and hence absent the aid they would not be undertaken ( ). The measure therefore 25 complies with point 18 CISAF. (69) According to point 19 CISAF, "for the investments and measures specified in this Communication, the Commission presumes that in the absence of the aid, beneficiaries would continue their activities without changes, provided that doing so would not entail a breach of Union law". Point 19 CISAF further provides that aid granted for investments that merely ensure compliance with Union standards that are in force at the moment of granting the aid does not have an incentive effect. The Commission notes that there are no Union standards applicable to the

() Applications for these projects can exceptionally be presumed in line with recital (66) of the Support 25 for biomethane decision.

beneficiary of the aid. Therefore, the requirements of point 19 CISAF are fulfilled. ( ) 3.3.1.3. No breach of any relevant provision of Union law (70) Point 20 CISAF explains that State aid cannot be declared compatible with the internal market if the aid measure or the conditions attached to it, including its financing method when it forms an integral part of the measure, entail a violation of relevant Union law. (71) Czechia confirms that the measure does not by itself, or by the conditions attached to it or by its financing method, constitute a non-severable violation of the relevant provisions of Union law (see recital (46)). Therefore, the measure complies with point 20 CISAF. 3.3.1.4. Conclusion (72) The Commission therefore concludes that the measure fulfils the first (positive) condition of the compatibility assessment, i.e. that the aid facilitates the development of an economic activity pursuant to the requirements set out in Section 3.1 CISAF.

3.3.2. Negative condition: the aid does not unduly affect trading conditions to an extent contrary to the common interest

3.3.2.1. Necessity of the aid (73) Point 26 CISAF provides that aid must be necessary, meaning that it must be targeted towards a situation where it can bring about a material development that the market alone cannot deliver, for example by remedying market failures in relation to the projects for which the aid is awarded. In view of the need to accelerate investments to support the achievement of the objectives of the Clean Industrial Deal, the Commission presumes that measures falling within the scope of the CISAF and complying with all conditions in the applicable sections are necessary. (74) In line with the assessment in sections 3.3.1.1, 3.3.1.2, 3.3.1.3, 3.3.2.1, 3.3.2.2, 3.3.2.3, 3.3.2.4 and 3.3.2.5, the Commission concludes that the measure notified by Czechia complies with all conditions in the applicable CISAF section and that, therefore, necessity of the aid may be presumed. 3.3.2.2. Appropriateness of the aid (75) Point 27 CISAF states that the Commission acknowledges in the Clean Industrial Deal Communication that public financial support may be required to incentivise necessary additional investments and that other policy instruments alone are not sufficient to achieve its goals. The Commission therefore presumes that State aid within the scope of the CISAF is, in principle, an appropriate measure to incentivise the investments and activities eligible for aid provided all applicable conditions in the relevant sections are complied with.

() For the sake of completeness, the Commission notes that the Czech authorities have also confirmed 26 that, in the absence of the aid, the economic activity supported by the measure (i.e. investments in biomethane stations) would not be undertaken (see recital (45)). This counterfactual scenario is considered realistic, in line with the presumption enshrined in point 19 CISAF.

(76) According to point 31 CISAF, aid can be granted in any form, including direct grants, tax advantages including tax credits and accelerated depreciation, subsidised interest rates on new loans or guarantees on new loans. (77) Aid under the measure is granted in the form of direct grants (see recital (8)). In line with the assessment in sections 3.3.1.1, 3.3.1.2, 3.3.1.3, 3.3.2.1, 3.3.2.2, 3.3.2.3, 3.3.2.4 and 3.3.2.5, the Commission concludes that the measure notified by Czechia complies with all conditions in the applicable CISAF section and that, therefore, appropriateness may be presumed. 3.3.2.3. Proportionality of the aid including cumulation (78) According to point 29 CISAF, aid is to be considered proportionate if the aid amount per beneficiary is limited to the minimum needed for carrying out the aided project or activity benefitting from the aid, and the proportionality is generally ensured if the aid amounts are determined through a competitive bidding process, in particular in the field of renewable energy production. (79) Czechia has confirmed that the aid will be granted through a competitive bidding procedure (see recital (28)). The measure is therefore in line with point 29 CISAF. (80) Pursuant to point 64 CISAF, direct price support schemes may cover investments described in point 48(b) CISAF. Point 48(b) CISAF includes aid measures to support investments in biomethane and the scheme at hand provides aid on the basis of a direct price support scheme (see recital (8)). Therefore, the measure complies with point 64 CISAF. (81) Pursuant to point 65 CISAF, Member States may provide direct price support using different instruments, including contracts for difference and feed-in premiums. (82) In the present case, aid under the measure in the form of auction bonus will be granted to the producers of biomethane through OTE. The amount of aid corresponds to the difference between the strike price (RAC) and the market price of gas. If, however, the market price of gas is higher than the strike price (RAC), the revenues generated will be returned to OTE (see recital (42)). The measure therefore takes the form of a two-way contract for difference in relation to the energy output of the installations (price per MWh of biomethane produced) granted over 15 years starting after the commissioning of the installation concerned (see recital (9)). The contract duration will therefore not exceed 25 years after the aided installation starts operation. The Commission therefore concludes that the measure is in line with point 65 CISAF. (83) Pursuant to point 67 CISAF, aid may be granted through a competitive bidding process or administratively. (84) In the present case, the aid is granted through a competitive bidding process and the Czech authorities have provided information confirming that each of these procedures will be open, clear, transparent, non-discriminatory and effectively competitive, based on objective criteria that are defined in advance in accordance with the objectives of the measure and reducing the risks of strategic bidding and undersubscription (see recitals (23) to (44)). In addition, at least 70% in the total selection criteria used for ranking bids has been defined in terms of aid per unit of energy production (CZK/MWh, see recital (41)). Czechia has demonstrated that is plausible that the volume offered corresponds to the potential supply of projects (see recital (39)). In case of repeated undersubscription of competitive

bidding process, Czechia committed to introduce remedies (see recital (44)). The measure thus complies with point 67 CISAF. (85) As the measure concerns aid for production of biomethane, point 68 CISAF does not apply. (86) Pursuant to point 69 CISAF, the eligible cost is the expected net cost estimated taking into account all main costs and revenues incurred over the lifetime of the project and any aid already received, discounted by the weighted average cost of capital (WACC). Moreover, point 70 CISAF provides that where a competitive bidding process is used to grant aid, the level of aid must correspond to the result of the competitive bidding procedure and must not exceed 100 % of the total eligible costs of supported projects. (87) In the present case, the amount of aid will be determined on the basis of the outcome of the competitive procedure, more specifically the resulting RAC (see recitals (40) and (41)). Furthermore, Czechia confirmed that the eligible costs is the expected net cost estimated taking into account all main costs and revenues incurred over the lifetime of the project and any aid already received, discounted by the weighted average cost of capital, and that the level of aid resulting from the competition procedure will not exceed 100 % of these eligible costs (see recital (43)). The measure is therefore in line with point 69 and 70 CISAF. (88) According to point 72 CISAF, aid must be designed to prevent any undue distortion to the efficient functioning of markets and, in particular, preserve efficient operating incentives and price signals. In particular, beneficiaries should not be incentivised to offer their output below their marginal costs and must not receive aid for production in any periods in which the market value of that production is negative. (89) The Commission therefore concludes that aid under the measure is proportionate. (90) Section 3.3 CISAF allows aid under the CISAF to be cumulated with: (a) any other State aid or de minimis aid or centrally managed EU funds as long as these measures concern different identifiable eligible costs; (b) any other State aid or de minimis aid or centrally managed EU funds in relation to the same identifiable eligible costs, provided that such cumulation does not lead the aid to exceed the highest support intensity or amount applicable under any of the relevant conditions; (c) any other State aid without identifiable eligible costs. (91) Czechia has confirmed that the support under the measure will not be cumulated with other aid, or with centrally managed Union funding, in relation to the same eligible costs and investment aid will be deducted from the operating aid (see recital (47)). The measure is therefore in line with Section 3.3 CISAF. 3.3.2.4. Transparency of the aid (92) The Czech authorities confirm that the monitoring and reporting requirements set out in section 9 CISAF will be respected (see recital (48)). 3.3.2.5. Compatibility with other CISAF conditions (93) Point 28 CISAF states that aid shall normally not be granted to undertakings in difficulty. Czechia confirmed that in order to be eligible, an applicant must not be an undertaking in difficulty within the meaning of the Guidelines on State aid for

rescuing and restructuring non-financial undertakings in difficulty (see recital (27)). The measure is therefore in line with point 28 CISAF. (94) According to point 33 CISAF, when assessing aid in favour of a beneficiary that is subject to an outstanding recovery order following a previous Commission decision declaring an aid illegal and incompatible with the internal market, the Commission will take account of the amount of aid still to be recovered. Czechia has confirmed that in order to be eligible, an applicant should not be subject to a recovery order following a previous Commission decision declaring an aid illegal and incompatible with the internal market (see recital (27)). The measure is therefore in line with point 33 CISAF. (95) Point 36 CISAF states that aid under CISAF cannot be conditioned on the relocation of an activity as such conditions would be harmful to the internal market, Czechia has confirmed that aid granted under the measure cannot be made conditional on the relocation of an activity, as this would harm the internal market (see recital (7)). The measure is therefore in line with point 36 CISAF. (96) Point 52 CISAF states that where the aid is granted for the production of biofuels, bioliquids, biogas (including biomethane) and biomass fuels, Member States must ensure that the aided fuels are compliant with the sustainability and greenhouse gases emissions saving criteria set out in Directive (EU) 2018/2001 and its implementing or delegated act. Czechia confirms that the aid is granted for the production of biomethane that is compliant with the sustainability and greenhouse gases emission saving criteria of Directive (EU) 2018/2001 and its implementing or delegated acts (see recital (33)). The measure therefore complies with point 52 CISAF. (97) Point 53 CISAF requires aid to be granted with respect to newly installed or repowered capacities. For the latter, only the additional costs in relation to the repowered capacity should be eligible for aid. In the present case, the aid is granted for newly installed capacity (see recital (30)). The measure therefore complies with point 53 CISAF. (98) Point 54 CISAF states that supported projects must be completed and operational within 48 months after the date of granting of the aid. The scheme under which aid is granted, should include an effective system of penalties in case this deadline is not respected. In the present case, the supported projects must be completed and operational within 48 months after the date of granting (see recital (35)). In addition, the measure includes an effective system of penalties in case this deadline is not met (see recital (35)). The measure therefore complies with point 54 CISAF. (99) Point 55 CISAF requires aid to be granted on the basis of a scheme with an estimated capacity volume and budget. According to this point, schemes can be limited to one or several technologies but must not include limitations to eligibility that would lead to disproportionate competition distortions. Point 55 CISAF also states that schemes must not result in discrimination in the award of licences, permits or concessions when they are required. (100) In the present case, aid is granted under the measure on the basis of a scheme with an estimated capacity volume and budget (see recitals (20) and (21)). In addition, the support scheme is limited to a technology referred to in point 48 (b) CISAF. Czechia confirmed that, apart from the eligibility criteria mentioned in section 2.7.1, the scheme does not represent an artificial limitation and that discrimination on this basis is excluded, including in the award of licenses, permits or

concessions when they are required (see recital (37)). In the light of the notified elements, in particular the eligibility criteria (see section 2.7.1), the Commission has not identified any artificial limitation that could constitute a source of discrimination. The measure therefore complies with point 55 CISAF. (101) Point 56 CISAF requires Member States to ensure compliance with the DNSH principle. Czechia confirmed that it will ensure compliance with the 'do no significant harm' principle (see recital (36)). The measure therefore complies with point 56 CISAF. 3.3.2.6. Avoidance of undue negative effects of the aid on competition and trade and balancing (102) As described in recital (18), the aid is designed in such a way as to prevent any undue distortion to the efficient functioning of markets and, in particular, preserve efficient operating incentives and price signals. In particular, beneficiaries are not incentivised to offer their output below their marginal costs and must not receive aid for production in any periods in which the market value of that production is negative. The measure therefore complies with point 72 CISAF. (103) In addition, according to point 35 CISAF, the Commission presumes that measures will not result in any manifestly negative effects on competition and trade in as far as they comply with all conditions in the applicable sections. In line with the conclusions in sections 3.3.1.1, 3.3.1.2, 3.3.1.3, 3.3.2.1, 3.3.2.2, 3.3.2.3, 3.3.2.4 and 3.3.2.5, the Commission considers that the notified measure will not result in any manifest negative effects on competition and trade.

3.3.3. Weighting up the positive and negative effects of the scheme

(104) Point 37 CISAF requires the Commission to balance the negative effects on competition and trading conditions of the aid with the positive effects of the planned aid on the supported economic activities, including its contribution to the clean, just and competitive transition and the Clean Industrial Deal objectives. According to this point, the Commission will find that the positive effects of the planned aid outweigh the negative effects on competition and trading conditions. On the basis of the conclusions in sections 3.3.1.1, 3.3.1.2, 3.3.1.3, 3.3.2.1, 3.3.2.2, 3.3.2.3, 3.3.2.4 and 3.3.2.5, the Commission considers that the positive effects of the measure outweigh its potential negative effects on competition and trade and it is compatible with the internal market pursuant to Article 107(3), point (c), TFEU.

3.3.4. Conclusion on the compatibility of the measure

(105) In view of the above, the Commission considers that the notified measure facilitates the development of certain economic activities without adversely affecting trading conditions to an extent contrary to the common interest. Therefore, the Commission considers the aid measure to be compatible with the internal market under Article 107(3), point (c), TFEU, in light of the conditions set out in Section 3 and 4.1 CISAF.

1. CONCLUSION The Commission has accordingly decided not to raise objections to the aid on the grounds that it is compatible with the internal market pursuant to Article 107(3), point (c) of the Treaty on the Functioning of the European Union.

Yours faithfully,

For the Commission

Teresa RIBERA

Executive Vice-President