State aid measure - funding assistance to Lee Valley Heat Network Limited

The measure supports the following project:

Lee Valley Heat Network Limited (“LVHN”) owns and operates a strategic heat network which takes waste heat from the incinerator at the Edmonton Eco Park and distributes it to homes and businesses in Enfield and potentially neighbouring local authority areas. LVHN is now looking to undertake a significant network expansion (the Expansion Project). The Expansion Project will initially provide the means to connect 4,750 homes to the Network. There is also the potential to connect to a total of 34,000 homes (including the initial 4,750) as and when housing developments are brought forward using contributions sought from developers. The production plant funded previously is sufficient to supply the homes connected through this expansion, so the funding requested for the Expansion Project will be wholly applied to the heat distribution network rather than any additional production plant.

The form of the measure

The measure is loan funding from the Enfield Council (“Council”) to LVHN.

Legal basis

The loan funding has been made under section 1 of the Localism Act 2011.

GBER provisions

The loan funding is compliant with Article 46 of Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the common market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union, as published in the Official Journal of the European Union on 26 June 2014 (the “Regulation”) as published in the official Journal of the European Union (26 June 2014 - L 187/1). Article 46 permits certain investment aid for energy efficient district heating and cooling and states:

Details of the measure and compliance with the regulation

The Council has onward lent £15 million to LVHN, which LVHN has transferred back to the Council. The Council will provide this loan to LVHN at LVHN’s request upon presentation of an acceptable business plan. LVHN will use the borrowing to fund the expenditure of eligible costs as set out in Article 46 of the Regulation. LVHN will pay back the original loan to the Council plus interest. The value of the aid to LVHN is the difference between the interest charged and the relevant proxy for the market rate of interest. The level of aid intensity to LVHN will be calculated so that it remains in compliance with Article 46 of the Regulation. Interest will be paid by LVHN at such a rate as to ensure that the aid thresholds under Article 46 of the Regulation are not exceeded. Additionally, there is a claw–back mechanism in the agreement between LVHN and the Council that can be used to recover any aid which exceeds the relevant thresholds (including the requirement for prior Commission approval where aid exceeds €45 million) and this is complemented by a mechanism for increasing the interest rate should this be required to ensure compliance with Article 46 of the Regulation.

The Regulation requires that the provision of aid has an incentive effect. In accordance with the Regulation, and as a large enterprise, LVHN has demonstrated that the aid provided will result in one or more of the following:

Exclusions from the measure

Export aid

The Regulation and accordingly this measure do not apply to:

Recovery of illegal aid/undertakings in difficulty

The Regulation does not allow and this measure does not apply to:

Cumulation of aid

Aid provided under the measure may be cumulated with other forms of aid in relation to the same eligible costs only within the aid intensity limits for this measure. De Minimis aid may not be used to add to the aid awarded under this measure in respect of the same eligible costs.

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