Opinion of Advocate General Rantos delivered on 23 March 2023

The 2014 Guidelines

4. Paragraph 19(44) of the 2014 Guidelines contains the following definition:

‘“start of works” means either the start of construction works on the investment or the first firm commitment to order equipment or other commitment that makes the investment irreversible, whichever is the first in time. Buying of land and preparatory works such as obtaining permits and conducting preliminary feasibility studies are not considered as start of works …’

5. Paragraph 50 of the 2014 Guidelines states:

‘The Commission considers that aid does not present an incentive effect for the beneficiary in all cases where work on the project had already started prior to the aid application by the beneficiary to the national authorities. In such cases, where the beneficiary starts implementing a project before applying for aid, any aid granted in respect of that project will not be considered compatible with the internal market.’

6. Paragraph 126 of the 2014 Guidelines provides, in particular:

‘…

From 1 January 2017, the following requirements apply:

Aid is granted in a competitive bidding process on the basis of clear, transparent and non-discriminatory criteria …’

7. In accordance with footnote 66 to paragraph 126 of the 2014 Guidelines:

‘Installations that started works before 1 January 2017 and had received a confirmation of the aid by the Member State before such date can be granted aid on the basis of the scheme in force at the time of confirmation.’

The 2017 Decision

8. Recitals 42 to 44 of the 2017 Decision are worded as follows:

‘(42) Footnote 66 [of the 2014 Guidelines] might be read as a transposition of the legal principle of “legitimate expectations” and is closely linked to the State aid requirement of “incentive effect”. In practice, this means that the granting authorities should consider as “existing producer” those producers whose project on 1 January 2017 was in such state of development that it would very likely be completed so that they should receive support under the existing support scheme (legitimate expectations). This requires as a minimum that the project developers had obtained the necessary state authorisation for constructing the project, and that they had the legal title to the land on which the project would be developed.

(43) The “start of works” definition in paragraph [19(44) of the 2014 Guidelines] provides more details in this respect. Footnote [66 of the 2014 Guidelines] should thus be read and interpreted by the granting authorities against this background. The Commission notes in this respect that the responsibility for the correct implementation of aid measures remains with the Member States via its relevant authorities.

(44) In the event that the granting authority would consider that works on a certain project have been started, within the meaning of paragraph [19(44) of the 2014 Guidelines], prior to 1 January 2017, the Commission is of the opinion that such consideration relates to the project as such.’

Preliminary observations

24. By its eight questions referred for a preliminary ruling, the referring court asks the Court to interpret the 2014 Guidelines with a view to determining whether the competent national authority – namely the transmission system operator Elering – was right to refuse to consider EWP as an existing producer on 31 December 2016, a status that would have enabled it to benefit from aid under an old aid scheme which was replaced on 1 January 2017.

25. It should be borne in mind, in that regard, that the 2017 Decision provided that, as from 1 January 2017, aid for producers of energy from renewable sources in Estonia is granted through a competitive bidding process. A derogation was, however, provided for by the Estonian scheme, in so far as the obligation to conduct a public procurement procedure to grant such aid does not apply as regards ‘the installations which have started works before 1 January 2017 and which have received confirmation of the aid by the Member State before that date’.

26. By its questions, the referring court seeks precisely to clarify the scope of that derogation.

27. Before commencing the analysis, I consider it necessary, in view of its relevance to the questions which the Court will be required to settle, to adopt a position on the question concerning the scope of the 2014 Guidelines and their obligatory character in the context of the present case, which was debated at the hearing.

28. It should be borne in mind, in that regard, that, according to the Court’s settled case-law, the assessment of the compatibility of aid measures with the internal market, under Article 107(3) TFEU, falls within the exclusive competence of the Commission, subject to review by the Courts of the European Union. In that regard, the Commission enjoys wide discretion, the exercise of which involves complex economic and social assessments. In the exercise of that discretion, the Commission may adopt guidelines in order to establish the criteria on the basis of which it proposes to assess the compatibility, with the internal market, of aid measures envisaged by the Member States.⁽⁵⁾

29. In accordance with equally settled case-law, the guidelines adopted by the Commission through communications are limited, in principle, solely to binding that institution in the exercise of its discretionary powers and are not capable of imposing independent obligations on the Member States.⁽⁶⁾ Thus, in matters of State aid, only decisions adopted by the Commission are binding on the Member States, which must ensure compliance with them.

30. It should, however, be noted that the 2017 Decision is based on the 2014 Guidelines and, expressly refers to them, thus making them binding. The conditions listed in the 2014 Guidelines which are reproduced and retained as compatibility criteria in the 2017 Decision, are therefore an integral part of the latter such that the Commission requires compliance with them on the part of the Republic of Estonia.⁽⁷⁾

31. Furthermore, it is clear both from the 2017 Decisions and from the observations submitted by the Republic of Estonia that the latter aligned its State aid scheme with the framework provided for by the 2014 Guidelines so that the conditions for granting the aid in question are, if not identical, at least in line with the 2014 Guidelines.⁽⁸⁾ Thus, by notifying proposed State aid in accordance with the guidelines, a Member State aims to ‘ensure’ that the Commission will declare the notified aid compatible with Article 107(3) TFEU, in so far as the effect of the guidelines is equivalent to a limitation imposed by the Commission on itself in the exercise of its discretion.⁽⁹⁾

32. To consider, moreover, in the present case that the provisions of the guidelines identified by the Commission in the 2017 Decision as criteria for authorising the aid granted are not binding on the Republic of Estonia would, in this case, be tantamount to considering that the latter is not bound by the 2017 Decision and could therefore avoid the obligations arising therefrom, a solution which is clearly inconsistent with the Court’s settled case-law set out in point 29 of this Opinion.

33. I also consider that the fact that, in the wording of the questions referred for a preliminary ruling, the referring court did not refer (directly) to the recitals of the 2017 Decision which refer to the provisions of the 2014 Guidelines, but rather to the latter, is not such as to call into question the above findings or to raise any doubts as to the admissibility of the questions referred for a preliminary ruling by the national court.

The first question referred

34. By its first question, the referring court asks how to interpret the first alternative of the concept ‘start of works’ in paragraph 19(44) of the 2014 Guidelines, namely the ‘start of construction works on the investment’.

35. More specifically, taking into account the fact that EWP had already erected wind measurement masts and established the necessary connection points, the first question asks whether such works constitute the ‘start of construction works on the investment’ within the meaning of the aforementioned provision, as EWP maintains, or whether that concept covers only the start of construction works on the installations generating energy from renewable sources and therefore, in the present case, wind turbines, as Elering and the Estonian Government argue.⁽¹⁰⁾

36. It should be noted at the outset that it is not possible from the definition provided in the first sentence of paragraph 19(44) of the 2014 Guidelines and which was reiterated in recital 36 of the 2017 Decision to identify the type of works covered by the term ‘start of construction works on the investment’, or to establish a threshold, with regard to the costs, above which the works started should be regarded as fulfilling the conditions in order to be eligible for the aid.

37. It should nevertheless be borne in mind that the concept of ‘start of works’, as set out in recital 42 of the 2017 Decision, makes it possible to establish whether or not on 1 January 2017 the developer may be considered as an ‘existing producer’ of energy from renewable sources. Thus, according to that recital, in order for the developer to be considered as an ‘existing producer’, on that date the project must be ‘at a stage of development at which the project is highly likely⁽¹¹⁾ to be completed’. In accordance with that recital, an investor fulfilling the conditions to be considered as an ‘existing producer’ should be granted aid under the existing aid scheme in particular in the light of the ‘principle of legitimate expectations’.⁽¹²⁾

38. It should also be pointed out that the Estonian aid scheme seeks to guarantee that only a specific category of producers may be considered as ‘existing producers’ in order to benefit, by way of derogation, from aid under the old scheme, without being subject to the new competitive bidding process. Such a derogation serves, moreover, to facilitate the transition from the old to the new aid scheme.⁽¹³⁾

39. It is also apparent from recital 42 of the 2017 Decision that the purpose of the amendments made by the Republic of Estonia to its State aid scheme (which were approved by the Commission in that decision), including the changes relating to the concept of ‘existing producer’, was specifically to treat producers of energy from renewable sources already active on the market in the same way as a specific category of producers whose entry on the market was very likely having regard to the progress of the works (already carried out) and the guarantees already obtained by the national authorities in that regard.

40. In the light of the foregoing observations, I take the view that it is necessary to reject the interpretation advocated by EWP according to which the mere fact of starting works related to the investment project is sufficient to be considered as an ‘existing producer’ in order to be granted aid under the 2017 Decision.

41. Although it is common ground that the works carried out by EWP constitute one of the stages necessary for the construction and operation of the proposed wind farm, the fact remains that the interpretation put forward by EWP is difficult to reconcile with the conditions for granting the aid as laid down in the 2017 Decision.

42. The interpretation advocated by EWP would amount, first, to broadening the concept of ‘existing producer’ which is not supported by that decision, since it would result in treating producers already active on the market (and those whose entry on the market is imminent) in the same way as producers whose project is at an early stage and for which there is no guarantee (as at 31 December 2016) it will be completed. The interpretation put forward by EWP would allow all producers, regardless of the nature of the works carried out and the investments already made, to be eligible for State aid.

43. Second, as stated in points 37 to 39 of this Opinion, it is not sufficient that the construction works for the wind farm have simply started, it is also necessary that their state of progress is such that the investment is irreversible and therefore the works are very likely to be completed.

44. This means, in my opinion, that the concept of ‘start of works’ presupposes not only that all preparatory works have been completed (including obtaining a construction permit), but also that there has been an economic analysis of the share of the expenditure incurred, investments made and commitments entered into, in relation to total cost of the project. Although EWP disputes the assessments made by Elering as to the share of the costs of the works that it has carried out in relation to the total cost of the project in question, it is not disputed by the parties that the construction of wind turbines (which, in the present case, has not even started yet) represents the most significant part of the total costs of the project.⁽¹⁴⁾

45. In the light of the foregoing considerations (and in particular recital 42 of the 2017 Decision), I take the view that the concept of ‘start of construction works on the investment’ must be interpreted as referring, in the present case, to the construction of generating installations.

46. It should be borne in mind, third, that ‘preparatory works such as …carrying out preliminary feasibility studies’ are expressly excluded from the definition of start of works set out in paragraph 19(44) of the 2014 Guidelines.

47. Subject to findings of fact which it is for the referring court to make in that regard, it seems that the characteristics and objectives of an installation such as the erection of wind measurement masts (and the steps undertaken by EWP to make the necessary connections) are more akin to a ‘preliminary feasibility study’ allowing the investor concerned to determine whether the selected location is suitable for the construction of a wind farm, before carrying out the works necessary for the implementation of the investment project.⁽¹⁵⁾

48. The foregoing elements therefore seem to indicate that, as at 1 January 2017, the investment project of EWP was not at a stage of development at which completion was very likely and at which it should have received aid under the existing aid scheme in accordance with recital 42 of the 2017 Decision.

49. In the light of the foregoing, I propose that the answer to the first question referred for a preliminary ruling should be that EU rules on State aid, in particular the first alternative of the term ‘start of works’ in paragraph 19(44) of the 2014 Guidelines, namely the ‘start of construction works on the investment’, must be interpreted as meaning that the expression ‘construction works’ cannot cover the start of construction works connected with any investment project, but only the start of construction works for the installation of wind turbines which produce renewable energy.

The eighth question referred

50. By its eighth question, the referring court asks, at the outset, whether the concept of ‘State authorisation for implementing the investment project’ should be interpreted in the light of national law. The referring court also requests clarification on the type of authorisation required for the construction of a wind farm. More specifically, even though paragraph 19(44) of the 2014 Guidelines does not specify the type of authorisation required, recital 42 of the 2017 Decision requires that ‘the project developers had obtained the necessary state authorisation for constructing the project’.⁽¹⁶⁾

51. It should borne in mind that the parties in the main proceedings disagree as to the definition of the concept of ‘State authorisation’. On the one hand, Elering, the Estonian Government and the Commission argue that State authorisation requires a construction permit, that it to say authorisation that directly confers the right to construct a wind farm. On the other hand, EWP considers that it does not necessarily have to be the final authorisation issued for the construction of all parts of the project and that, in the present case, the criterion relating to State authorisation has already been met on account of there being a general urban development plan, which covers the wind farm.

52. In the absence of any detail on the type of authorisation required in the 2017 Decision or any harmonisation at EU level, it should be noted at the outset that the concept of ‘State authorisation’ must be interpreted in the light of national law. In that regard, it must be borne in mind, on the one hand, that it is settled case-law that it is not for the Court to rule on the interpretation of provisions of national law.⁽¹⁷⁾ It is important to note, on the other hand, that, in the exercise of its discretion, the referring court is required to comply with the 2017 Decision.⁽¹⁸⁾

53. It should be observed, in that regard, that obtaining State authorisation is one of the conditions for an investor to be considered as an ‘existing producer’ and to be entitled as such to aid under the old aid scheme, that authorisation is usually obtained prior to one of the three alternative events referred to in paragraph 19(44) of the 2014 Guidelines taking place.

54. More specifically, recital 42 of the 2017 Decision requires that, on 1 January 2017, the developer has obtained State authorisation to implement the project (and that he has the legal right to use the land intended for the project). It follows, moreover, from the link established in that recital with the principle of legitimate expectations that State authorisation must be obtained in such a way as to create a legitimate expectation that the investment project will be completed. In other words, the project in question must be at such a stage of development at which it is very likely to be completed, taking into account both the state of progress of the works and the guarantees obtained by the public authorities in that regard.

55. It will therefore ultimately be for the referring court to assess whether, in accordance with national law, the planning conditions required for EWP’s wind farm were met as at 31 December 2016 and, in particular, whether the urban development plan published by the Toila Municipal Council, on 19 January 2016, may be regarded as being sufficient to establish whether EWP had obtained the necessary ‘State authorisation’ within the meaning of recital 42 of the 2017 Decision.

56. It should, however, be pointed out that it is apparent from the findings made by the referring court that, although the urban development plan allowed for the project to be carried out by setting some of its parameters, that plan is merely a planning document of a general nature which does not allow, on its own, the construction of a wind farm. Additional authorisations, including a construction permit, also seem necessary for the construction of the various structures making up the wind farm including, in particular, the construction of wind turbines.⁽¹⁹⁾

57. Having regard, moreover, to the link established in recital 42 of the 2017 Decision between the principle of legitimate expectations and the State authorisation required, I share the position of Elering and the Estonian Government that no legitimate expectations as to the implementation of an investment project can be created on the part of an undertaking until all the requirements under national law have been met. Only a legally established situation is likely to fall within the scope of the principle of legitimate expectations. Consequently, that principle does not apply where the legal situation was not definitively established or where only some of the required legal conditions have been meet, while others have not. Furthermore, that principle does not protect the mere possibility of acquiring a right in the future, in particular when it remains subject to additional conditions, as appears to be the case here (given that the land use plan would subsequently make it possible, subject to obtaining additional authorisations, to be granted a construction permit).

58. The fact that, according to the information included in the order for reference, the Ministry of Defence refused, on 20 April 2016, to approve the construction plans for the wind farm and that the Toila Municipal Council refused, by order of 26 April 2016, to grant construction permits appears to indicate that all the necessary State authorisations within the meaning of recital 42 of the 2017 Decision were not available (and that they could not, in any event, be available, having regard to the aforementioned refusals) before 31 December 2016.

59. In view of the foregoing, I propose that the answer to the eighth question referred for a preliminary ruling should be that it is necessary to define the concept of ‘State authorisation for implementing the investment project’ in the light of national law. Furthermore, in the event that the implementation of an investment project involves construction works requiring a construction permit, ‘State authorisation for implementing the investment project’ can only be a construction permit, that is to say definitive authorisation on the basis of which the construction works are carried out.