EU greenlights subsidies for gas-powered generation stations

EU greenlights subsidies for gas-powered generation stations
Doel power station, one of Belgium's nuclear plants. © Trougnouf/Wikimedia

The European Commission has given its approval to Belgium’s proposed system to subsidise the construction of electricity generation plants that run on gas.

The approval is seen as essential to plans to decommission the country’s nuclear power plants.

The Belgian plan involved the introduction this year of a Capacity Remuneration Mechanism (CRM) to ensure security of electricity supply after the planned closure of all its nuclear power plants. This mechanism will grant support from 2021 through annual auctions to units that can supply or save electricity from 2025.

The problem, however, is that such a subsidy system could be seen as illegal state aid to industry. The EU’s announcement has swept away that potential obstacle.

As a result, an auction can now take place in October as planned, calling for bids from investors whose plans include the construction of gas-fired power plants to be ready in 2025 to take over when the nuclear plants are decommissioned.

Capacity mechanisms can help to safeguard security of electricity supply to the extent that they are designed in a way that avoids distortions of competition in energy markets,” said Commission vice-president Margrethe Vestager, in charge of competition policy.

Following close and constructive cooperation with the Belgian authorities throughout the process, we have approved a well-designed capacity mechanism that will contribute to ensuring security of electricity supply in Belgium, in particular in view of the upcoming phasing out of all nuclear capacity by 2025, while ensuring that possible distortions of competition are kept to a minimum.”

She also welcomed Belgium’s decision to introduce sustainability requirements for new fossil fuel installations.

This is a positive development towards the achievement of the important objectives set out in the European Green Deal,” she said.

The job now falls to federal energy minister Tinne Van der Straeten (Groen) to carry out the auction starting in October for the creation of 2.3 gigawatts of new energy generation capacity, equivalent to two or three major gas plants.

So far, four projects in Wallonia have been granted licences, while awaiting the EU’s decision. In Flanders, the tally stands at zero, after local government refused permits in Vilvoorde outside Brussels and in Dilsen-Stokkem in Limburg.

Those decisions have still to be reviewed by Flemish energy minister Zuhal Demir (N-VA).

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