Belgian nuclear extension plans to face EU state aid investigation

23 July 2024

The European Commission has opened an in-depth investigation into whether the support for the lifetime extension of two of Belgium's nuclear power reactors is in line with its rules on acceptable state aid.

The Doel plant in Belgium (Image: Engie)

Belgium finalised plans in December to extend the lifetimes of Doel 4 and Tihange 3 by 10 years, providing capacity of 2 GWe from the reactors, which are 89.8% owned by Engie's Electrabel and 10.2% by EDF's subsidiary Luminus. The decision to extend their lifetimes was designed to boost the country's energy security while keeping carbon emissions as low as possible.

The agreement reached by the Belgian government is for the creation of a 50-50 joint venture between the state and Electrabel which would own, together with Luminus, the plants and their production. There would be the issuing of shareholder loans for about EUR2 billion (USD2.2 billion) to cover the capital expenditure necessary for the lifetime extension and, according to the EC, "financial support mechanisms provided by the Belgian State, including the prefunding of Electrabel's costs and expenses for the development activities, a contract-for-difference (CfD) for the duration of the extension, a loan of approximately EUR580 million and an operating cashflow guarantee".

The EC also says that the proposal is for the "transfer of liabilities from Electrabel to the Belgian State concerning long-term storage and final disposal of nuclear waste and spent fuel, against the payment of a lumpsum of EUR15 billion; and risk-sharing and legal protections in the event of future legislative changes, specifically concerning nuclear operators in Belgium or Electrabel's nuclear activities".

The commission says that the measures appear justified but it has "doubts as to compatibility with EU State aid rules and has therefore decided to open an in-depth investigation". The areas to face further investigation include the necessity of additional financial support beyond the CfD arrangement, the design of the CfD itself and "the proportionality of the combination of financial and structural arrangements and of the EUR15 billion lumpsum; compliance with relevant EU sectoral legislation, in particular concerning the design of the CfD mechanism and the impact of the measure on the market in light of the CfD design and the selection and independence of the agent selling the nuclear electricity".

Belgium and interested parties now have the opportunity to submit comments. European Union member states are free to decide on their energy mix and state financial support "should remain necessary and proportionate and not adversely affect trading conditions to an extent contrary to the common interest".

The background

Under a plan announced by Belgium's coalition government in December 2021, Doel 3 was shut down in September 2022, while Tihange 2 shut down at the end of January 2023. The newer Doel 4 and Tihange 3 would be shut down by 2025. However, following the start of the Russia-Ukraine conflict in February 2022 the government and Electrabel began negotiating the feasibility and terms for the operation of the reactors for a further 10 years, with a final agreement reached in December, with a balanced risk allocation

The business model agreed for the extension will have a balanced risk allocation, in particular through a Contract for Difference mechanism covering remuneration for electricity generation. The strike price is to be based on the actual cost of extending operation of the nuclear units. This cost is not yet known, but will be estimated based on the nuclear safety requirements set out by the Federal Agency for Nuclear Control. An initial price will be set in 2025 and updated in 2028 to reflect the known final cost of the extension, to cover the period up to 2035.

The final text also sets out the technical and operational conditions for restarting the two units from November 2025, with full guarantees of nuclear safety. Engie said the operation of these two reactors and the dismantling work under way of its other units will maintain around 4000 direct, indirect and induced jobs.

Researched and written by World Nuclear News