New state aid rules for investments in clean tech

The new framework supports the roll-out of renewable energy, promotes industrial decarbonization, provides support to high-intensity users, and should ensure sufficient manufacturing capacity for clean technology

The CISAF itself builds on the TCTF (Temporary Crisis and Transition Legislation), a response to the COVID-19 crisis and Russia's aggression against Ukraine, aimed at combating supply chain disruptions and high energy prices. However, the TCTF regime is temporary and will expire in December 2025.

The CISAF is complementary to various other frameworks such as the Climate, Environmental, Energy Aid Guidelines (CEEAG) and the regional investment aid guidelines. The introduction of the CISAF is also instrumental for the Net Zero Industry Act. This Act aims to enhance the European manufacturing capacity for net-zero technologies and their key components.

The CISAF reflects the EU's intention that companies should have access to public funding, with clear rules and simplified procedures, when investing in new clean tech and/or decarbonization projects. The simplified procedures should result in most key decisions being assessed and approved at the national level.

The framework provides simplified State aid rules in five main areas:

The roll-out of renewable and low-carbon fuels.
Temporary electricity price relief for energy-intensive users (EIU's) to ensure the transition to low-cost clean electricity,
Decarbonization of existing production facilities.
The development of clean tech manufacturing capacity in the EU.
The de-risking of investments in the points mentioned above.

We envision that points 2, 3 and 4 will be the most frequently used options in Slovakia. Therefore, we provide some additional details regarding both options.

Author

Branislav Kajánek
Manager, EU & Public

The companies should have access to public funding, with clear rules and simplified procedures, when investing in new clean tech and/or decarbonization projects.

Temporary electricity price relief

EU member states may provide electricity price support to companies (energy-intensive users) operating in sectors particularly exposed to international trade and heavily dependent on electricity for their production. Similar arrangements already existed, but CISAF added some additional conditions. A new element is that the aid is proportionate if the aid does not exceed 50% of the annual average wholesale market price in the bidding zone where the energy-intensive user is connected, for no more than 50% of its annual electricity consumption. Additionally, the reduced price must be at least EUR 50 per MWh.

Another new requirement is that the aid beneficiary must allocate at least 50% of the aid amount under this arrangement to investments in new or modernized assets. Eligible investment activities can include, for example, the development of renewable energy generation capacities or storage solutions, measures to increase demand-side flexibility, energy efficiency improvements that impact electricity demand, and the development of electrolysers for the production of renewable or low-carbon hydrogen. Investments aimed at electrification are also eligible. Member states may establish a more limited list of eligible assets, but investments aimed at increasing demand-side flexibility are eligible. These investments must not benefit from any other aid measure. The investments may be made on the side of the aid beneficiary or delegated to third parties. In the latter case the beneficiary remains responsible for the implementation of the investments.

Aid under this section can be provided to beneficiaries for a maximum duration of three years. Payments must not occur after 31 December 2030.

Decarbonisation of Industry

Aid for the decarbonization of industry is another major category that will be supported by the CISAF. The investments should significantly contribute to the reduction of greenhouse gas emissions from industrial activities to achieve the climate ambitions of the EU. Alternatively, aid will also be provided to investments that substantially reduce energy consumption.

Minimum decarbonization or energy efficiency effects are introduced. The investment must deliver a reduction in direct greenhouse gas emissions, which would not take place without the aid, considering policy measures and mechanisms already introduced to remedy the same market failure, including the ETS system, which is consistent with the EU Climate law targets.

Any investment in the reduction of energy consumption should be compared (in units of output) to the situation without aid and have a payback period of 5 years or more. The reduction per output or unit must be equal to at least 10% for already carbonized processes and 20% in all other cases. Some additional safe harbor options may apply.

For aid amounts up to EUR 200 million, the aid amount will be determined based on a percentage of the eligible costs of the aid, ranging from 30% to 60% of the investments. However, Member States can choose to determine the maximum aid amount under an aid scheme as the funding gap of eligible investment.

In that case, the applicant will be required to use a template for calculating the funding gap. Member States need to establish a methodology to verify that the cash flow projections underpinning NPV calculations are credible and coherent with the decarbonisation project. The template must align with the principles and main features of the model that the Commission will publish.

When the aid calculated on the basis of the project’s funding gap exceeds the highest of EUR 200 million or 10 % of the scheme’s budget per undertaking per project, the funding gap must be assessed by the Commission following a separate notification.

Alternatively, member states have the option to set the maximum aid amount through a competitive bidding process. It has not been decided yet which option will be incorporated in the state aid scheme in Slovakia.

Aid to ensure sufficient manufacturing capacity in clean technologies

A similar scheme was introduced under the TCTF in 2021. Aid will be provided to investment projects that add manufacturing capacity for:

the production of batteries, solar panels, wind turbines, heat pumps, electrolysers, and equipment for carbon capture, usage, and storage (including related secondary raw materials).
the production of key components designed and primarily used as direct input for the production of equipment defined in the first point (including secondary raw materials).
The production recovery of related critical raw materials necessary for the manufacturing of the products, defined in points 1 and 2 (for example, aluminum).

The aid can be provided under a national aid scheme or as ad-hoc aid. The conditions under both options vary significantly from each other.

An aid scheme is a national act that includes a set of transparent rules under which companies can apply for the aid in question. These aid measures do not have to be notified and approved by the European Commission. The CISAF provides a minimum set of rules that should form part of such an aid scheme.

The rules in the aid scheme are similar to those applicable under the EU regional aid rules. This means that the investment project cannot start before submission of an aid request, and the assets must be maintained for a minimum period (five years for large enterprises and three years for SME’s).

The aid intensity under the aid scheme cannot exceed 15% of the eligible (investment) costs in the wider Bratislava region and 35% in the remaining regions in Slovakia. The aid amount in the Bratislava region cannot exceed EUR 150 million, whereas in the other regions, the aid amount cannot go beyond the EUR 350 million threshold. These limits apply only under national aid scheme; individually notified aid may follow different rules, including claw-back mechanisms.

The EC can also approve individually notified aid. However, the aid cannot exceed the lower of (i) the aid that the aid beneficiary could demonstrably receive for an equivalent investment in a country outside the EEA (e.g., the USA or China) and (ii) the minimum amount needed to realise the investment in the EU rather than outside the EEA. The CISAF also introduces a claw-back mechanism to ensure a fair distribution of gains that were not envisaged in the analysis.

The CISAF will also introduce an accelerated depreciation mechanism to support demand for clean technology equipment. This mechanism must be granted in the form of aid schemes up to full and immediate depreciation of investments incurred for the acquisition or lease of clean tech assets. The assets should be new, used primarily for the activities of the aid beneficiary, must be a depreciable asset, purchased or leased under market conditions, and must be included in the assets of the beneficiary.

Observations

Note that all aid to be granted under CISAF should be funded by the state budget of the individual member states. Several member states (for example, Poland and the Czech Republic) have voiced their concerns about the growing reliance on national subsidies (state aid) and the potential negative impact on the single EU market. Some of these member states are advocating for the creation of a unified funding mechanism from the EU budget. This option aims to create fair competition and equal opportunities across the EU. National funding may be particularly advantageous for companies in member states with large economies, such as Germany, France, and Italy.

Further, the CISAF entails many conditions and cannot be considered as a mere simplification of the former TCTF regime. The conditions, exceptions, and overlap with other EU state aid regimes require detailed assessment and may create confusion.

In this respect, we must wait to see to what extent the EC will further clarify and enforce the rules of the CISAF. If the rules are applied effectively, we envisage that the CISAF will play an essential role in the transformation into a green economy and in reaching its ambitious neutrality goal in 2050.

The CISAF is binding upon each member state but leaves the member states the choice between various options provided in the CISAF. For example, the aid for decarbonization of industry can be calculated via a mechanism to be selected by the member state. However, the Slovak authorities have not published any aid scheme yet and the actual mechanism should be assessed following issuance of the corresponding Slovak aid schemes.

The CISAF applies as of 25 June 2025 and remains in force until 31 December 2030. However, many member states, including Slovakia, are still drafting the national (CISAF) legislation (aid schemes) under which companies can apply for aid. A new aid scheme for the granting of aid to ensure sufficient manufacturing capacity in clean technologies will only apply as of 1 January 2026. All aid requests that will be approved before 1 January 2026 will fall under the TCTF regime. Therefore, proper timing is essential.

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