Powering competitiveness: what CISAF brings to the table

On Wednesday, the European Commission adopted the final State Aid Framework to support the Clean Industrial Deal (CISAF). The initiative marks an important step in redefining how Member States can use public funding to accelerate clean technology deployment and strengthen industrial competitiveness. Eurelectric, as the association of the European electricity industry, participated in the consultation on this framework earlier this year.

Today, we take a closer look: what is state aid in this context, what did we call for in our consultation contribution and what has the Commission now proposed?

State aid: let’s rewind. What are we talking about?

In the EU, state aid refers to any advantage in the form of public funding or other economic support granted by national or local governments to selected companies or sectors. This includes direct grants, tax exemptions, loans on favourable terms, or guarantees. Because such measures can distort competition and trade between Member States by favouring certain firms over others, they are generally prohibited under EU law unless explicitly approved.

However, in exceptional circumstances - such as the COVID-19 pandemic or the 2022 energy crisis - the Commission has adopted temporary frameworks to give Member States more flexibility in supporting their economies.  One example of this is the Temporary Crisis and Transition Framework (TCTF) adopted in March 2023, which allowed targeted support for clean tech and decarbonisation to accelerate the energy transition and respond to geopolitical pressures.

With the TCTF set to expire at the end of 2025, the Commission is now proposing a permanent successor: the Clean Industrial Deal State Aid Framework (CISAF). This State Aid Framework that opened for consultation on 11 March 2025, outlines how Member States will be able to design state aid schemes that align with the EU’s long-term industrial and climate objectives. In doing so, CISAF is intended to support the implementation of the Clean Industrial Deal - by enabling faster and more targeted public support for the rollout of clean technologies, industrial electrification, and domestic manufacturing capacity. By providing a more stable regulatory environment, it will offer greater predictability and investment security for both Member States and businesses.

What did we add in the consultation? 

As said above, Eurelectric actively contributed to the Commission’s consultation on the draft CISAF earlier this year. Representing the interests of the European electricity industry, we proposed a series of targeted improvements to ensure the framework fully enables industrial decarbonisation - particularly through electrification- and supports investment in clean, flexible technologies.

We focused on five main areas:

1. Industrial electrification: We called the Commission to allow the use of (carbon) Contracts for Difference (cCfDs) to support companies that switch from fossil fuels to electricity. Contracts for Difference are financial tools that help reduce investment risk by providing long term certainty on ETS or gas prices, thereby protecting against market volatility. We also recommended increasing the level of public support for upfront costs (CAPEX) to up to 50% and asked for more realistic rules - like factoring in delays in connecting to the grid or allowing companies to buy clean electricity from the market rather than forcing them to produce it all on-site.

2. Capacity mechanisms: In our consultation response, we welcomed the inclusion of capacity mechanisms under CISAF and the push for more harmonised designs across Member States. We also made several recommendations to ensure these tools are effective, fair, and adapted to national realities.

a. First, we argued that national resource adequacy assessments - alongside the ERAA - should be considered when Member States design their capacity mechanisms. While ERAA provides a Europe-wide view of supply and demand, it doesn’t always reflect local conditions precisely, and many national authorities feel that EU-level modelling does not fully capture their specific needs.  

b. Second, we insisted that Member States must retain the freedom to design capacity and flexibility mechanisms separately - rather than being forced into a one-size-fits-all model. This is key to ensuring that flexibility solutions like demand-side response or storage are not sidelined by rigid system designs.

If you want to know more about capacity mechanisms and their workings: click here.

3. Flexibility support schemes : Third, to keep the power system stable as we bring in more renewables, we’ll need more flexible solutions like demand-side response or storage. This is why in the consultation we supported the idea of public support for these tools, not only in the acquiring of new ones but also in the upgrading of existing ones. We also suggested longer support contracts for capital-intensive technologies like pumped hydro storage and stressed that all technologies should be treated equally under the rules.

4. Support for renewables: Fourth, we asked the Commission to give developers more flexibility in meeting project deadlines, especially when delays are caused by issues like slow permitting or grid connection bottlenecks. We also recommended allowing hybrid renewable projects - such as solar panels combined with batteries - to access financial support directly.

5. Technology neutrality: Finally, we advocated for fair treatment of low-carbon hydrogen and asked that rules be consistent with existing EU guidelines when it comes to investments involving natural gas and other transitional technologies.

If you want more detail about our contribution to the consultation, check out our amendments here

What made it into the final framework?  

So now that the Commission has published the final version of the CISAF (full version here), we can assess how it aligns with the recommendations we submitted earlier this year.

Here are three main points that stand out:

1. Capacity Mechanisms As we had hoped to see, the Clean Industrial State Aid Framework provides more visibility for Member States about the optimal design of capacity mechanisms. This is good news and can accelerate the scrutiny process of DG COMP . The drive for convergence has the potential to facilitate cross-border exchanges and lower system costs in the long run. However, we don't see any clearer role for national adequacy assessments complementing the European Resource Adequacy Assessment (ERAA).

"We welcome CISAF’s push for greater convergence and visibility on Capacity Mechanisms design, a move that can streamline approval processes and reduce costs over time. However, the framework should also have recognised national adequacy assessments as a complement to the European Resource Adequacy Assessment (ERAA) to better reflect country-specific needs and ensure a more accurate picture.” - Kristian Ruby, Secretary General of Eurelectric

2. Industrial electricity price relief The CISAF creates a channel for governments to provide temporary electricity price relief for industrials minimising market distortions. We understand the significant challenges currently facing energy-intensive industries and fully recognise their importance to Europe’s industrial fabric. This is why we have been actively engaged in the Antwerp Dialogue discussions since last year and continue to explore balanced solutions.

However, since the framework leaves a lot of liberty to Member States as to the shape this price relief may take, we have put forward three key design recommendations for Member States going forward:

a. Providing the aid in the form of a lump sum. This would provide relief for industry while minimising market distortions. Beneficiaries would still respond to price signals and maintain incentives for efficiency, hedging, and contracting with a retailer.

b. Promote clean flexible storage and consumption: The price relief scheme should maintain a focus on system integration. Ideally, the required decarbonisation investments should include electrification projects, combination of renewables or flexible assets like hybrid PPAs or demand response.

c.  Aid allocation: Rather than administrative payments, we recommend allocating aid via competitive auctions to promote cost efficiency in public budgets.

3. Aid for electrification projects Lastly, under the CISAF, national governments will be able to use state aid to help cover upfront investment costs (CAPEX) for industrial decarbonisation - a necessary first step to enable electrification.

However, the framework does not include support for operating costs (OPEX), which we believe is a missed opportunity. In countries like the Netherlands and Germany, Carbon Contracts for Difference already provide this kind of support to early movers - and we believe this model deserves broader recognition across the EU.

What now?

The CISAF sets a new course for how Europe backs its clean industrial future. It brings welcome clarity and coordination – but the real impact will come down to how Member States put it into practice. As electrification takes centre stage in industrial decarbonisation, the focus now must be on making the most of the tools available. Eurelectric will stay closely engaged to ensure the framework drives investment, delivers results, and powers up Europe’s energy transition.

This week’s edition’s written by:

Leoni Schmitz, Trainee - Strategic Communications -  Eurelectric

With technical input from:

Aida García , Senior Advisor - Wholesale Markets- Eurelectric

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Clean Industry: the EU’s Newest Deal

Disclaimer: This article is for communication purposes only and may not reflect Eurelectric positions. Any positions taken in this article shall not be attributable to Eurelectric’s official positioning. Official Eurelectric positions are reflected only in position papers published here.