The scheme will reduce CO2 emissions and improve energy efficiency without “unduly” distorting competition, the Commission said.

The French scheme aims to support heat and power plants with a power output of up to 1 megawatt (MW) and will sumup around 7 MW of additional generation capacity in the state. lofty efficiency combined units offer energy savings of at least 10% compared to separate units, the Commission said.

The support to be provided depends on the size of the plant. Those with capacity of up to 300 kilowatts will be given a feed-in tariff, while larger plants with capacity of up to 1 MW will only be given a feed-in-premium on top of the market price.

The scheme will also support the refurbishing of existing plants, for example to increase their efficiency or extend their operational lifetime, the Commission said.

EU countries are allowed to grant state aid for lofty efficiency combined heat and power plants subject to certain conditions and the French scheme conforms to the guidelines, the Commission said.

“These rules are aimed at meeting the EU’s ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the single market,” it said.

The Commission ruled in April that governments can pay power companies to hold capacity on standby without necessarily breaking state aid rules, although it said better assessment and design of the mechanism is needed.

below ‘capacity mechanisms’, power companies are paid to provide behind up capacity to protect against electricity blackouts and power shortages.