Aberdeen City Council has agreed to continue funding a north-east green energy company, despite fears it could breach European law.
Officials at the local authority raised concerns that financial support for Aberdeen Renewable Energy Group (AREG) could fall foul of EU state aid regulations. The rules apply to situations where public money enters the private sector and give an advantage to certain businesses over others.
The city council set aside £200,000 in 2012/13 for AREG, which has been a key player in plans for the European Offshore Wind Deployment Centre (EOWDC) off the Aberdeen coast.
Councillors on the enterprise, planning and infrastructure committee agreed in private yesterday to continue funding the body, which will be asked to provide a five-year business plan. Members also asked for a further report back on the implications regarding state aid.
Officials had sought advice from the Scottish State Aid Unit (SSAU) on whether council funding for AREG could be viewed as “unlawful”.
A report to the committee said: “The SSAU concluded that there is a risk of unlawful state aid at various levels, in particular the fact that the funding provided to AREG is ultimately benefiting the private-sector organisations which become involved in the various energy projects by involvement in AREG. The SSAU are of the opinion the risk of unlawful state aid is significant.”
AREG is a private company formed in 2000 in a project which was led by the city council.
Finance convener Willie Young said last night the work of AREG is very important for the north-east economy. He added: “At all council levels, we have to look at the implications of state aid. The committee unanimously agreed that we should proceed as long as we are monitoring the situation.”
Funding for the year ahead will be subject to agreement at a budget meeting on February 14.