Financing district heating networks and state aid
Across Europe, public district heating networks are financed under guarantees provided by public authorities - typically municipalities. Such guarantees not only reduce financing costs; they also make it possible to obtain long‑term fixed‑rate loans (exceeding 30 years). Nevertheless, when Dutch municipalities consider issuing guarantees, the question often arises whether these guarantees could constitute unlawful State aid.
Clarity on heat companies and SGEI activities
BNG and law firm AKD have identified the key considerations that help municipalities and provinces determine under which conditions a heat concession area can be designated as a Service of General Economic Interest (SGEI). The memorandum provides clarity on the state aid framework and supports public authorities in shaping their role in the heat transition in a legally way. Key insights include:
- Heat companies may, under certain conditions, be entrusted with an SGEI, enabling the use of public financing and guarantees.
- The European SGEI Decision allows compensation for activities that serve the general interest.
- Municipal guarantees and sureties may be applied, provided that the total financial advantage remains limited to an average of EUR 20 million per year.
- For investments in capital assets, the duration of an SGEI may exceed 10 years, as long as it aligns with the depreciation period of those assets.
The memorandum clarifies how these rules can be applied in practice, including exceptions and calculation methods. Read the memorandum Financing collective heat – state aid and SGEI (in Dutch) to explore how these opportunities can be utilised.
For further information, contact terrence.roep@bngbank.nl or caspar.boendermaker@bngbank.nl.
