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EC set to investigate new electricity capacity scheme in Belgium [free access]

September 23, 2020

The European Commission (EC) has launched an in-depth investigation to assess whether an electricity capacity scheme in Belgium is in line with European Union (EU) state aid rules.

 

As reported, the EC has been informed by Belgium of its plans to introduce a nationwide capacity mechanism to incentivise energy providers, including generators and demand side response operators, to offer their availability to the country’s transmission system operator (TSO) Elia. This move would replace the Belgian strategic reserve that was approved by the EC in 2018.

 

The capacity mechanism supports Belgium’s ambition to ensure security of supply, particularly as it aims to phase out all nuclear power capacity by 2025. The EC is, however, concerned that Belgium has not sufficiently demonstrated, nor properly quantified, possible future issues of resource adequacy in the electricity market and could go beyond what is necessary to address the issue, possibly leading to over-procurement of capacity.

 

The EC is also concerned that the measure may discriminate against certain technologies, for example, renewable capacity, or unfairly limit participation of cross-border capacity.

 

In addition, the EC will examine whether the so-called “congestion revenues” that would be earned by Elia would be allocated in a way that effectively incentivises further interconnection between Belgium and its neighbouring countries, and does not have a negative effect on competition and trade.

 

The opening of the investigation gives Belgium and other interested parties the opportunity to submit their comments.