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    Belgium Wants to Support Gas-Fired Power Plants with Nuclear Money



Belgium to launch call for tenders for construction of new gas power plants that Energy Minister is convinced will provide supply security and increase competition in the market.

by: Koen Mortelmans

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Natural Gas & LNG News, News By Country, , Belgium, Gas to Power, Top Stories

Belgium Wants to Support Gas-Fired Power Plants with Nuclear Money

The Belgian federal government has approved the energy plan put forward by secretary of state (deputy minister) for energy Melchior Wathelet (CDH). A main subject in this plan is the support of existing and new gas-fired power plants, mainly with money from the nuclear sector. Until now, investors were not eager to invest in new gas-powered plants, because of the cheap nuclear production and the priority of renewable in case of abundant production.

The government will launch this summer a call for tenders for the construction new gas power plants, whit a total capacity of 800 MW. Whatelet is convinced that the new plants should not only provide supply security but also increase competition in the market. The government promises a guaranteed return of 30 million euro for the period 2016-2022. After that period, the dismantlement closure of the nuclear reactors should enable gas-fired plants to be profitable without subsidies. Power plants with natural gas as fuel will also be exempt from the federal charge on gas used for the production of electricity, with a compensation system for high-volume users. 

Strategic reserve 

The plan also provides for the establishment of a ‘strategic reserve’ which can be activated at times when the market is unable to provide supply security. Under the plan temporally closed p “outside the market" plants can participate in building up this reserve,. Other possible parties to the plan are aggregators and large industrial companies, by offering planned temporary interruptions of their supply.

Belgium has seven nuclear reactors for electricity production, in Doel and Tihange, dating from 1975 to 1985, with a planned life span of forty years. Normally the reactors Doel 1 + 2 and Tihange 1 should shut down in 2015. The government now as agreed to expend the life span of Tihange 1 to 2025. In the Wathelet-plan one third of the profits from the extended lifespan will be used to support old and new gas-fired plants and two-thirds will go towards offshore wind farms.

No encrypted nationalization 

Initially, the government foresaw that the owners of Tihange 1, Electrabel –also the plant operator– and EDF, would be paid a fixed price for the produced electricity. This was the calculated sum of payments towards the production costs, new investments and a so-called equitable margin. This margin was based on the cost of financing the investments needed to extend the lifespan of the plant. If the market price would rise above the fixed price, the Belgian state and the state would share the additional amount in a 70/30 ratio. The government wanted to realize the plan by auctioning the electricity, produced by reactor Tihange 1, to other electricity suppliers than Electrabel and EDF. This was seen as a encouragement for more competition on the Belgian energy market. But (probably after discussions with the nuclear plant owners) finally she decided that the Tihange 1 electricity will be marketed and sold by the plant owners. "Legal problems" was the official motivation for this change in policy. But it also seemed that there was no large bearing surface for an encrypted nationalization. Furthermore, Electrabel and EDF were not limited to neither principal nor juridical arguments to keep the electricity sale in their own hands. If Tihange has to exist then years longer than foreseen, it not only needs an experienced operator, but also investments, by the owners, in maintenance and upgrading, estimated at about 600 million euro.

So the government will try to simply cream the nuclear profit. One option to do is to increase the existing, but also disputed –by the nuclear operators– nuclear taxes. In the original plan the existing nuclear tax would decrease, by the volume of Tihange 1. At the moment it remains unclear yet if and in what amount the prolongation of the Tihange 1 lifespan will increase the tax. Another option is to maintain the 70/30 ratio to divide the profit of Tihange 1. But opinions about the calculation of this profit vary in a wide range. And during the last decade, the (several) Belgian governments didn't show a strong coherency and transparency in their nuclear politics.

Large consumers unhappy

Febeliec, the Federation of Belgian large industrial energy consumers, doesn't show happy with the Wathelet-plan. The federation believes that subsidizing gas-fired plants will make electricity in Belgium even more expensive than in neighboring countries and will discourage spontaneous investments. This reaction surprises the government. "Because the preparation process took place in consultation with the large users and all their questions have been incorporated in the plan," says Isabel Casteleyn, spokeswoman for Wathelet. 

Fluxys abandons new pipeline

Meanwhile, gas transporter Fluxys abandoned its plan to build a gas 18 km long pipeline between Herentals and Ham. This plan was based on the construction of new, gas-fired electricity plants in this zone. Fluxys thinks it is highly unlikely that these plants will be built. Fluxys took this decision regardless of the Wathelet-plan, because this plan only offers a legal and financial frame. It isn't sure it will lead to the construction of gas-fired power plants. Alternatively, Fluxys will widen the diameter of an almost parallel line Diest-Tessenderlo, planned somewhat more southward. Without Herentals-Ham this becomes a necessity, due to the growing number of households using gas.

Koen Mortelmans