The postponement of the nuclear phase-out postponed

Due to the resignation of the federal government the legislative decision to amend the Act of 2003 that set the phase-out of the nuclear power plants is postponed awaiting the result of the general elections on 13 June 2010.

In October 2009, the federal government reached an agreement with GDF Suez on the postponement of the nuclear phase-out for the three eldest nuclear power plants (Doel I, Tihange I and Doel II). By way of compensation it was agreed that the nuclear operators (GDF Suez and EDF-SPE) would be a yearly contribution of 215-245 million euro until 2014. As from 2014 the yearly contribution would be set by a special follow-up committee. GDF Suez also promised to maintain employment in Belgium and to invest in renewable energy.

Earlier this year, the European Commission send a five pages long questionnaire to the Belgian government, raising substantial questions on the agreement in principle. The Belgian minister of energy responded to this questionnaire beginning of April.

Although the minister invoked a force majeure situation (insufficient production capacity if the three plants would shut down in 2015) and thus seemed to head for a prolongation of the life cycle by means of a simple royal decree, the minister clearly indicated in its response to the European Commission that the agreement in principle would have to be translated into a formal legislative text, adopted by parliament. The minister was preparing a draft text.

The resignation of the government makes that the resigning minister cannot propose such legislative text to its colleagues in the resigning government. The issue of the nuclear phase-out will be part of the negotiations in view of the formation of a new government.

Some political parties (amongst others the Flemish social-democrats and the Flemish and Walloon green parties) have indicated that they will oppose the execution of the agreement between GDF Suez and the resigning government. From their side, the nuclear sector indicated that the agreement would be binding in principle and that a new government cannot alter the principle of postponement engaged upon by the former coalation.

The postponement of the nuclear phase-out postponed

European Commission bombards Belgian government with questions on nuclear deal with GDF Suez

On 13 October 2009 the Belgian federal government decided to postpone the nuclear phase out of the three eldest nuclear plants (Doel I, Doel II and Tihange I) with 10 years. This would mean that all Belgian nuclear plants will close between 2022 and 2025.

As a favour in return, GDF Suez and Electrabel (hereinafter 'GDF Suez') would have agreed to pay between 215 and 245 M EUR per annum (until 2014). GDF Suez will also invest in R&D on CCS and nuclear waste, in renewable energy and in energy efficiency.

At the same time, a 'Follow Up Committee' will be installed. This Committee will be composed out of representatives of the nuclear producers, the government and the social partners, and of representatives of the National Bank of Belgium. The main tasks of this Committee will be to yearly evaluate the production costs of nuclear energy and to evaluate the electricity market prices. It will also have to verify that the household prices of all suppliers will in no way be higher than the average of the prices in the neighboring countries.

During a meeting in March 2010 between DG Energy's representatives and the cabinet of the Belgian minister of energy, DG Energy handed a long list of questions on the agreement between GDF Suez and the Belgian state. Amongst a lot of others, following questions appear to have been asked: Did the Belgian government contact other energy market participants? On which basis the contribution of 215 to 245 M EUR per annum was calculated? Is there a link with the profits of GDF Suez as a result of the postponement? Did the Belgian government calculate the value for GDF Suez of such a postponement? What were the results of such calculation and the eventual studies on which it was based?

The Belgian government must respond by 8 April 2010.

European Commission bombards Belgian government with questions on nuclear deal with GDF Suez

All concerned parties lodged an appeal against the 250M EUR nuclear tax

The federal minister of energy declared today that Electrabel, SPE, EDF and Synatom, have lodged an appeal with the Constitutional Court to annul the act imposing a tax on nuclear producers. This tax, voted in 2008, has a total value of 250 M EUR.

All concerned parties lodged an appeal against the 250M EUR nuclear tax

250M EUR levy on the electricity producers in Belgium

Last week, the federal Council of Ministers agreed upon an one time indirect levy on the nuclear electricity producers in Belgium (SPE and Electrabel). The federal state will charge Synatom, the company responsible for the provisions for the phase-out of nuclear installations, for 250M EUR. Within 15 days, the nuclear electricity producers are obliged to reimburse Synatom with 250 M EUR. If the companies do not reimburse Synatom, a penalty of 2% of their annual income could be imposed upon them. The act prohibits passing the charge on in higher prices for the final customers.

250M EUR levy on the electricity producers in Belgium

Nuclear phase out in Belgium

Notwithstanding the three existing studies and the alarming messages from the CREG, the federal energy regulator, on the risk of shortages in electricity production in Belgium, the federal governemental parties decided to launch another study on the nuclear phase-out, as foreseen by the Act of 2003.

In the competent commission of the Belgian parliament, representatives recently questioned the minister of Climate en Energy on his statements that the phase-out might be postponed.

The minister responded that given the variety of existing studies and the discrepancies in the conclusions, there is a need for a new, "impartial" commission to look at the nuclear question. Since most researchers in Belgium are (in)directly connected to stakeholders, the minister wants to liaise with foreign researchers.

Nuclear phase out in Belgium

Pax Electrica II Agreement between Electrabel and SPE

In the framework of the “Pax Electrica II”, Electrabel and SPE reached an agreement in principle on the conditions for the putting at the disposal of SPE of 635 MW nuclear capacity of Electrabel. The first 100 MW consists of a swap with Chooz. The next 250 MW will be sold to SPE. The last 285 MW will be object of a long term supply contract “until 2025 at the earliest”. The agreement will be submitted for approval to the Belgian and European competition authorities and must be fully implemented by the end of the Summer 2008.

It is curious to note that this agreement in principle implicitely neglects the fact that the Act of 2003 on the nuclear phase-out foresees that the last nuclear reactors (Doel 4 and Tihange 3) will have to be shut down in 2025. By stating "until 2025 at the earliest", SPE, Electrabel and Verhofstadt, the Belgian prime minister present at the signing of the agreement, confirm that the nuclear phase out will without any doubt be reviewed by the next governement.

Pax Electrica II Agreement between Electrabel and SPE

IPCC, Climate and Energy

In its Summary for Policymakers of the AR4 Synthesis Report, the Intergovernmental Panel on Climate Change proposes "a wide variety of policies and instruments available to governments to create the incentives for mitigation action". With regard to Energy Supply, the Summary mentions:

Improved supply and distribution efficiency; fuel switching from coal to gas; nuclear power; renewable heat and power (hydropower, solar, wind, geothermal and bioenergy); combined heat and power; early applications of Carbon Dioxide Capture and Storage (CCS) (e.g. storage of removed CO2 from natural gas); CCS for gas, biomass and coal-fired electricity generating facilities; advanced nuclear power; advanced renewable energy, including tidal and wave energy, concentrating solar, and solar photovoltaic.

The following policies, measures and instruments show to be environmentally effective:

• Reduction of fossil fuel subsidies; Taxes or carbon charges on fossil Fuels; and
• Feed-in tariffs for renewable energy technologies; Renewable energy obligations; Producer subsidies

The Key Constraints for these policies are:

• Resistance by vested interests may make them difficult to implement; and
• May be appropriate to create markets for low emissions technologies

IPCC, Climate and Energy

Partial governmental agreement on energy and sustainable development

The would-be federal political majority has not yet finalised the coalition agreement for the formation of a new federal government. However, a partial agreement on Energy and Sustainable Development was reached at the end of October.

"The federal government endorses the climate change goals set by the European Union (20% less emission of greenhouse gases, 20% more energy efficiency, 20% more renewable energy production). A national climate change commission will elaborate a multi annual climate plan. The Belgian government will use its international influence to have all industrialised countries participating in a reduction of greenhouse gases with 30%.

The government makes sure that the dominant player will observe nothing less than the obligations entered into vis-à-vis the previous government.

The government will closely follow the evolution of the energy prices and will create the conditions to allow an adequate competition. To that end, several additional electricity producers must be present on the Belgian market each having the possibility to acquire a considerable market share. The government will contribute to that as follows:
– To incite the dominant player to swap assets with competitors abroad; and/or
– To put at the disposal or to sell to other players, under the supervision of the CREG and against reasonable market conditions, a considerable share of the capacity (in MW) of the depreciated power stations; and/or
– To offer to other players (trough actioning or exchange) a considerable production share (in MWh) of the dominant player, under the supervision of the CREG, against a price composed of the production costs including the maintenance and replacement investments and a fair profit margin; and/or
– To create the preconditions allowing and encouraging other players to develop additional production capacity in Belgium (inter alia sites and access to natural gas and electricity grids);
– To put in all efforts to realise as soon as possible interconnectivity at the borders in order to obtain true competitive natural gas and electricity markets on a European level.

Moreover, the government encourages companies wanting to construct alone or in consortium a production unit for electricity.

The competition on the wholesale market for electricity must improve considerably. The electricity exchange BELPEX must be offered more marketable volume increasing the available liquidity for the suppliers. By analogy with the electricity market, the wholesale market for natural gas must become competitive. This will be realised by creating a gas exchange (GASPEX), on the basis of what currently exists and with safeguards for sufficient transparency, that will dispose of sufficient marketable volumes.

The government will give the federal regulator CREG the necessary independence to act against and to supervise ex ante an actual competition on the production and supply market and to monitor the price evolutions closely. It will evaluate the functioning and the tasks of the CREG. The government will grant a clear and plain strategical mandate to develop a long term vision.

The federal government will give the CREG a mission to monitor the tariffs. Moreover, the CREG will be able to propose to the government every measure contributing to the improvement of the functioning of the regulated activities and the applicable tariffs.

The government resolutely opts for the independence of the system operators and for an independent operation of the transport systems by reducing gradually the share of producers/suppliers under 25% and with a substantial presence of the public sector. Energy companies can obtain shares but cannot, individually or collectively, have or use a blocking minority for example through a shareholders agreement or special share related (voting) rights, nor can they appoint independent directors.

The network system operators must have disposal of sufficient financial elbow room for carrying out replacements and new investments and to carry out the necessary maintenance to the grids, inter alia to allow Belgium to continue its development as junction of the European transit and transport grid. The system operators must fully independently allow equal access to the grids to all market players.

The government will invite the regions to tune the different systems of renewable energy certificates guaranteeing at the exchangeability, inter alia to promote the lowest price for the Belgian consumers. The government will improve the fiscal measures in favour of sustainable energy, inter alia by organising a system of take-along or of tax credits for investments that encourage energy efficiency and/or sustainable energy sources (...).

The government will take care that equal access conditions exist for competitors to import, store and transport natural gas. In order to guarantee the natural gas supply, the government will see over a tariff policy by the CREG (...) allowing the transport system operators to invest in natural gas storage capacity and in interconnections. The government continues the conversion of the Zeebrugge Hub enforcing its position as international spill for the natural gas supply. In general, the government take care that the policy of the CREG allows the system operators to guarantee an optimal quality of the networks without this leading to an excessive price increase of the distribution grid tariffs.

The government will discuss with the regions the consequences of a progressive replacement of L-gas by H-gas.

The government maintains the nuclear phase out of the existing nuclear facilities as set out in the Act of 31 January 2003. In order to comply with the goals of reducing greenhouse gases and to guarantee the affordability and security of supply, it will extend the operational term of some nuclear reactors for a limited time and in safe circumstances. In dialogue with all stakeholders, the government wants to obtain a national transversal multi annual alternative for fossil energy and nuclear energy, also translating the CO2 reduction goals. In the meantime, it will have carried out all necessary investments in the electricity power stations guaranteeing a safe exploitation and it will have modernised the existing very polluting power stations in order to reduce the pollution per MWh. The revenues of the taxes on the exceptional profits of the production of the depreciated nuclear and coal power plants will partially be used in a new fund “depreciated energy production” for the production and development of alternative energy sources and energy efficiency, the roll out of decentralised grids, the decrease of the federal contribution, the technique of carbon sequestration, the support of the MYHHRA-project, a social energy policy.

In the framework of the discussions about the prolongation of some nuclear installations, the government will have thought for the problem of the final price for the consumers."

Partial governmental agreement on energy and sustainable development

The new federal government and the nuclear phase-out

According to press articles, the negotiators for the formation of a new federal government agreed upon maintaining the phase-out for Doel I (392-393 MW) and II, but decided to postpone the phase-out for the remaining nuclear reactors in Belgium (Tihange I, II and III, and Doel III and IV). The negotiators want to levy taxes on the remaining nuclear reactors and use the proceeds for investments in renewable energy.

The new federal government and the nuclear phase-out

Final report of Commission Energy 2030

The Commission 2030 set up to make a study and a report which should lead to the elaboration of the Belgian energy policy by the year 2030 has published its final report.

I tried to summarise the "Key Messages in a Nutshell":

The objective of a sound energy policy is to offer energy services for a variety of applications, based on an energy basket that guarantees a firm security of supply, at an acceptable cost for society, and in an environmentally friendly way.

The Belgian energy policy will have to consist of a balanced mixture of contributing elements. Four groups of “energy sources” [(energy savings, carbon-based resources, nuclear and renewables)] have to be considered, each having their specific merits and limitations[.] (…) Omitting one of them will likely lead to a sub-optimal solution.

On security of supply, four aspects are to be focused on as priorities: Diversity of supply of primary sources and technologies (…); a stable investment climate (…); TSOs and DSOs must be 'allowed' to invest in extensions, adaptations, and preventive maintenance (…); a comprehensive study to find the appropriate energy mix (…) must be carried out.

The liberalization process for electricity and gas in Belgium must be continued in line with the European common energy market concept. Industry has to be enabled to fully participate in the European wholesale energy market, by co-investing in generation assets, by long-term contracts, by establishing a liquid wholesale market, supported by sufficient transnational transmission capacity. Sufficient retail market access should develop over time to reach a good mix of suppliers in Belgium. Regulated capped prices at the retail level are advised against.

Strict supervision by a competent and independent Regulator is necessary while accounting for the development of a European regulatory institution. (…)

Belgium should devote much more research & development means to energy. (…)

Upon lifting the nuclear phase-out law, an agreement with the owners of the Belgian nuclear power plants is to be sought for, to establish a "correct" nuclear-extension concession fee, the revenues of which could be used for stimulating investments in energy savings & demand-side management, for development in renewable energy, for development & research in emerging energy technologies and carriers.

Final report of Commission Energy 2030