The prospects of Belgium's security of supply
After last weeks' turmoil in the parliamentary Commission's debates on the extension of nuclear plants, the Parliament's vote scheduled for today must be considered in the following context:
- since 2007, the federal regulator CREG has warned for structural shortage of generation capacities as from 2015 in Belgium. These concerns have been confirmed since by various authorities including the European's Commission DG Energy.
- various initiatives and measures have been initiated in the summer of 2013 by the previous federal Government, with relative success:
- creation of a strategic reserve, composed of base-load generation capacities with announced outage (forced to continued production under regulated tariffs) and increasingly of demand-side measures. For the winter 2015/16, the minister had decided on 15 January 2015 to increase the volumes by 2.750 MW in addition to the 1.200 MW already existing last winter. Considering the current structure of the market, these total volumes seem ambitious to say the least…
- launching of a call for tender for new gas-fired capacities. This measure has however been considered as an illegal State aid by the European Commission (DG Comp) earlier this year and has been abandoned by ministerial decision of 27 March 2015. It is unclear today how the current government intends to substitute for this aborted measure.
- life extension of the nuclear plants: according to agenda of the phasing-out act of 31 January 2003, three plants have been scheduled for outage this year (Doel 1 on 15 February, Tihange 1 on 1 October and Doel 2 on 1 December). Tihange 1 operational life having been extended under questionable circumstances (ia accompanied by an undisclosed convention with the operator) for ten years by law of 18 December 2013, the sake of Doel 1 and 2 are now addressed in the Parliament. Various instances such as the Federal Agency for Nuclear Control and the Council of State have expressed substantial concerns with the method used in this respect by the Government.
It is still unclear whether the Parliament will adopt today the life extension of the two oldest Doel tranches as proposed by the Government, although the logics of a majority vs opposition vote is expected to prevail.
What is certain however, in particular in the context of its new sector investigation and considering its attitude in recent past, the European Commission will scrutinise this measure under state aid rules as it has done it with the aborted CCGT-call for tender, as well as all new measures that will be further adopted to address the security of supply and generation shortage issues. In line with last year's Guidelines on State Aid in the energy and environmental sectors, specific attention should be given to the technology-neutrality of measures as well as their integration in the (regional) energy markets.
Hopefully, since this is what market players expect whether they are producers, traders, suppliers, aggregators or consumers, the Government will effectively take this future scrutiny into account and develop market-efficient and legally robust measures. To be continued…