Regulation of electricity utilities – power generation

Authorisation to construct and operate generation facilities

What authorisations are required to construct and operate generation facilities?

A federal production licence must be issued by the federal Energy Minister, subject to a prior opinion from the federal Commission for the Regulation of Electricity and Gas (CREG), for each construction of a new generation facility, as well as the reconstruction or modification of an existing facility not subject to an individual licence resulting in an increase of the net capacity by more than 25 megawatts electrical (MWe).

Nuclear generation units and installations for the production of electricity from renewables and hydro storage that are the subject of an offshore concession, are excluded from this requirement. The former can no longer be the subject of any permit or licence in Belgium (ie, subject to a change in law, no new nuclear generation units can be constructed in Belgium). The latter installations are subject to specific procedures for obtaining the relevant offshore concessions. A recent law change enables the federal government to set up a competitive tender procedure for the issuance of new offshore concessions by the relevant ministers, for a maximum duration of 30 years (including construction, operation and decommissioning phase), for the production of electricity from renewable sources, on the lots that have been reserved for that purpose in the new marine spatial plan covering the period from 2020 until 2026.

The construction and operation of generation facilities on land is subject to regional land planning and environmental law and regulations, and may therefore require a building and/or a (combined) environmental permit, depending on the nature of the installations. For offshore constructions (including cables for connection to the onshore transmission system), additional permits and authorisations may be required under federal law.

Grid connection policies

What are the policies with respect to connection of generation to the transmission grid?

In accordance with EU law, grid users (including generators) have a right to non-discriminatory grid access, subject to their compliance with the applicable (technical) requirements, payment of the applicable, pre-approved tariffs, and entering into industry standard regulated contracts with the relevant network operator(s) (see question 10). A new technical regulation for the operation of and access to the transmission system has entered into force on 27 April 2019, which replaces the previous one dating from 2002 (as amended from time to time).

Besides the tariffs and contractual framework, grid connection and access are covered by several grid codes at national and EU level.

Priority grid access may apply in certain cases for certain types of (renewable) generation. Under future EU legislation (the Clean Energy Package), the possibilities of priority grid access will be reduced for new installations.

The network operators are required to keep commercially sensitive information obtained from grid users confidential.

Specific permits may be required and compensation can be obtained for costs incurred for the connection of offshore (wind) generation units to the transmission grid. New offshore production installations will need to connect to the modular offshore grid (MOG), from where they will be connected to the onshore grid, at the connection point determined by the TSO and in accordance with the applicable technical requirements. The federal government will also establish the latest dates by which each required extension of the MOG will need to have entered into service, and a compensation mechanism in case of its delay or unavailability.

Specific rules also apply to private and direct lines, as well as closed industrial networks and closed distribution systems to which generators may connect, in order to ensure the viability of the public grid as well as the users’ right to grid access.

Grid connection and access can be refused by the network operators in accordance with the applicable network codes if technically unfeasible or economically unviable, or to ensure the secure operation and integrity of the grid.

Alternative energy sources

Does government policy or legislation encourage power generation based on alternative energy sources such as renewable energies or combined heat and power?

Except for power production and storage in the North Sea, renewable energy sources are a regional competence. Government policy and legislation encouraging the use of alternative energy sources are therefore decided on a federal (offshore) and a regional level and may differ between the three Belgian regions.

As a general rule, all three regions as well as the federal state (regarding offshore) have policies and a legal framework in place to support renewable energy generation. All of these include a system of guarantees of origin and green certificates (either federal or regional) that are issued for each kilowatt-hour of power produced, which can subsequently be sold either on the market (demand for certificates is driven by quota obligations for suppliers or grid users) or to the TSO or DSO at a certain minimum price.

Offshore renewable generation is supported through the federal system of green certificates. Brussels promotes the use of renewable energy sources by assimilating the federal system of green certificates combined with a quota obligation, as well as through net-metering for small producers and investment aid for certain companies and projects. Flanders has its own system of green certificates and combined heat and power (CHP) certificates combined with quota obligations in place, together with net-metering for small-scale generation and ecological premiums for environmentally friendly investments. Wallonia promotes renewable generation though various means, including the federal system of green certificates and quota obligations, investment aid and specific support schemes for certain technologies.

Climate change

What impact will government policy on climate change have on the types of resources that are used to meet electricity demand and on the cost and amount of power that is consumed?

Belgium is committed to the Paris climate agreement. In 2015, during the Paris negotiations, the different regions and the federal state reached a Belgian internal climate agreement, allocating the efforts to be made by each region and the federal state towards reaching Belgium’s overall climate targets.

Despite these commitments and in line with public opinion, policy has recently seen a shift towards reducing subsidies for renewable power generation (eg, cutting subsidies for biomass, photovoltaic generation, and offshore wind). Moreover, security of supply and generation adequacy measures such as the already existing strategic reserve and the contemplated new capacity remuneration mechanism are likely to target mainly (new and existing) gas-fuelled power plant, both during a transitory period and after 2025, to compensate for the closure of nuclear power plant in Belgium. These policy options may render the achievement of the Belgian climate targets more challenging.

In view of the climate targets, nuclear power, despite its gradual phase-out, will continue to play an important role in the Belgian energy mix at least until 2025. Some factions already argue today that climate policy will make the extension of the life duration of the nuclear units beyond 2025 inevitable.

At the same time, climate targets are likely to push the different Belgian governments towards policies promoting energy efficiency measures, flexibility services, distributed generation and small-scale renewable production that require fewer subsidies (such as heat boilers, which have seen prices drop drastically over recent years, and small-scale biomass, in the form of combined heat and power installations).

Storage

Does the regulatory framework support electricity storage including research and development of storage solutions?

Electricity storage is subject to the opinion of CREG and the approval of the federal Energy Minister, and the Minister responsible for the North Sea to the extent relevant to the connection of offshore generation units.

Investments into the network by the TSO are compensated through the regulated tariffs in accordance with the applicable tariff methodology and proposal, as approved by CREG (see below).

Government policy

Does government policy encourage or discourage development of new nuclear power plants? How?

Under the current state of the legislation, no new nuclear power generation units can be constructed in Belgium.

Subject to any policy changes, all seven existing nuclear units in Belgium are subject to a gradual phase-out by 2025.

Regulation of electricity utilities – transmission

Authorisations to construct and operate transmission networks

What authorisations are required to construct and operate transmission networks?

Belgium has a single TSO to operate the entire public transmission system, which is appointed for a 20-year period by the federal Energy Minister following consultation with the Council of Ministers and a prior advice from CREG, on the proposal of one or more network owners which, jointly or separately, own a part of the transmission system covering at least 75 per cent of the national territory and at least two-thirds of the territory of each region. In addition to the national transmission grid (high and very high voltage), the TSO also operates the local grids with a transmission function (ie, with a nominal voltage level equal to or below 70kV).

Elia System Operator was initially appointed as the single TSO for a 20-year period on 13 September 2002. On 6 May 2019, Elia’s TSO designation was renewed for an additional 20-year period, with effect from 17 September 2022. The network assets are owned by its wholly owned (minus one share) subsidiary, Elia Asset. In accordance with EU unbundling rules, Elia System Operator was certified as a fully ownership unbundled TSO on 6 December 2012.

Subject to certain conditions, third parties may obtain an individual licence from the federal Energy Minister to construct a direct line or may be authorised by the federal Energy Minister to operate a closed industrial network.

Much the same as for generation facilities, the construction and operation of transmission (and distribution) systems on and off shore may require certain permits and authorisations under regional and federal law, depending on the nature and the location of the installations. Public utility easements may be granted to the TSO for infrastructures crossing private land and, in certain instances, the TSO may be entitled to expropriate the property of private owners in the public interest.

Eligibility to obtain transmission services

Who is eligible to obtain transmission services and what requirements must be met to obtain access?

In principle, all grid users connected to the transmission system on 1 July 2004 or who are otherwise eligible (ie, under the laws of another EU member state) have a right of access to the grid on non-discriminatory conditions as set out in the answer to question 4.

The TSO can refuse access only if it does not have sufficient capacity available (in accordance with the applicable rules on capacity allocation and congestion management) or if the access would prevent its proper execution of a public service obligation in the general economic interest, and without breaching the rules on the exchange of energy flows in a way that would harm the European interest.

Government transmission policy

Are there any government measures to encourage or otherwise require the expansion of the transmission grid?

The TSO is required to draw up and update (every four years) a 10-year network development plan, taking into account the EU-wide 10-year network development plan determined by the European Network of TSOs for Electricity (ENTSO-E). The 10-year network development plan is subject to the advice of CREG and the approval of the federal Energy Minister, and the minister responsible for the North Sea to the extent relevant to the connection of offshore generation units.

Investments into the network by the TSO are compensated through the regulated tariffs in accordance with the applicable tariff methodology and proposal, as approved by CREG (see below).

Rates and terms for transmission services

Who determines the rates and terms for the provision of transmission services and what legal standard does that entity apply?

Grid connection, access and balancing services are subject to regulated tariffs, which are pre-approved by CREG for a four-year regulatory period, based on a proposal by the TSO. The proposal must be based on a tariff methodology established in advance by CREG, which in turn takes into account the specific tariff guidelines set out in the law. A new tariff period will run from 1 January 2020 until 31 December 2023. On 28 June 2018, the CREG approved the tariff methodology applicable in the new tariff period, which will be consistent with the methodology for the current tariff period 2016-2019 and follow the same principles (ie, a fair remuneration mechanism, combined with incentive components for certain expenses and revenues of the TSO). Once approved, the tariffs in principle remain unchanged during the entire tariff period, subject to revision that can be requested by the TSO or initiated by CREG if they are no longer proportionate owing to changed circumstances.

In addition to the regulated tariffs, transmission services are governed by industry standard regulated contracts, which are also pre-approved by CREG. For electricity transmission, the main regulated contracts are the connection contract, the access contract and the access responsible party (ie, balancing) contract.

The tariffs and regulated contracts are non-negotiable between the TSO and individual grid users. Any amendments are subject to prior CREG approval and are applied to all grid users simultaneously.

Entities responsible for grid reliability

Which entities are responsible for the reliability of the transmission grid and what are their powers and responsibilities?

The TSO is responsible for the secure and reliable operation of the grid in accordance with the law and all the applicable (national and European) grid codes. Its various tasks and roles are detailed in the law. The federal regulator, CREG, as well as the federal energy administration and the federal Energy Minister, have certain specific monitoring and supervision competencies.

In the event of a sudden crisis on the energy market or when the physical safety of persons, the safety or the reliability of equipment or installations or the integrity of the transmission system are in jeopardy, the federal government, in consultation with the TSO and following an opinion from CREG, can take emergency measures (which can temporarily deviate from the provisions of the law).