New EU Financing Mechanism for Renewable Energy Projects

The European Commission has set up a new mechanism for renewable energy projects to help EU countries meet their renewable energy targets more efficiently. The new mechanism will enable EU Member States to pay voluntary financial contributions into a central scheme for application towards the development of renewable energy projects in other EU Member States.

This allows for the more efficient allocation of resources between EU Member States: it enables those countries with limited capacity to produce renewable energy, to contribute to the development of projects in those countries with abundant renewable energy sources. The host country gains the local investment benefits of developing projects in its territory and the funding country benefits from counting its contributions towards its own renewable energy targets.

This is a useful addition to the EU’s toolkit for meeting its cumulative renewable energy targets.

The European Commission will operate the scheme and there is therefore no direct link between the contributing and hosting Member States. The new mechanism will come into effect from January 2021.