There are a number subsidies and tax incentives which encourage Belgian companies to invest in wind or solar energy. Some of these incentives also apply where the energy generated renewable energy plants is used by third parties. As a result, there has been considerable investment in wind and solar energy farms in Belgium.
The available subsidies and incentives include the following:
- Green certificates (or renewable energy certificates) are tradable certificates which represent the environmental value of renewable energy generated. These certificates are issued by regional authorities to energy producers to demonstrate that electricity is generated using renewable energy sources. There is no uniform certificate system across Belgium as regional authorities have their own schemes. In Flanders, the green certificates are issued per 1.000 kWh and are worth 300€ (for the second half of this financial year; this will decrease in future years), while in Wallonia, the value of the certificates depends on the source of renewable energy (varying generally from 65€ to 150€, with an average around 90€).
- An increased tax deduction is available for energy-saving investments. This is a one-off additional deduction of 13.5%, or 20.5% of the value of the investment for depreciation purposes. This is in addition to the standard deduction for such expenses resulting in a total deduction of 120.5% of the value of capital assets for depreciation. Excess deductions may be carried forward indefinitely or converted into a tax credit that is refundable after 5 years.
- Subsidies to install (largely modest scale) wind or solar energy plants are granted at communal, regional, and/or federal level.
- Additional tax cuts are available at up to 40% of the investments made (although restrictions apply so this only benefits companies producing renewable energy for their own needs).
- Green loans to cover the costs of renewable energy investment and the Belgian government pay the first 1.5% of interest.
The result of these incentives is that there are a number of renewable energy financial products have been developed, and that both Belgian and foreign private equity investors are showing a keen interest in Belgian renewables. However, this has meant that the green certificates have been hugely oversubscribed which has caused a problem for energy producers who are obliged to buy the certificates at an agreed rate.