Electricity law and regulation in Belgium

1. Overview

1.1 Introduction

1.1.1 The Belgian electricity sector is fully liberalised, allowing for competition in both the generation and supply segments of the sector. The system is based on regulated access to networks, with tariffs approved by the federal energy regulator.

1.1.2 In light of the Third Energy Package, Belgium has opted for the ownership unbundling model, completely separating the Transmission System Operator (TSO) from generation or supply activities through independence requirements implemented in Belgian law. However, the Belgian Act dated 8 January 2012 1 Loi du 8 janvier 2012 portant modifications de la loi du 29 avril 1999 relative à l’organisation du marché de l’électricité et de la loi du 12 avril 1965 relative au transport de produits gazeux et autres par canalisations, 2012 (accessed on 24 July 2013)
www.juridat.be
(2012 Act), which aims to transpose the Third Energy Package into national law, had been challenged before the Constitutional Court. In handing down its judgment on 9 July 2013, the court annulled a number of changes introduced.

1.2 Structure of electricity market

1.2.1 Due to the Belgian federal state structure, the regional governments of Flanders, Wallonia and Brussels Capital are principally responsible for designing and implementing policies for energy efficiency, renewables, non-nuclear energy research and development and market regulation.

1.2.2 Belgium has four energy regulators:

  • the federal regulator, the Commission for Electricity and Gas Regulation (CREG);
  • the Flemish regulator, the Flemish Regulator of the Electricity and Gas market (VREG);
  • the Walloon regulator, the Walloon Energy Commission (CWaPE); and
  • the Brussels regulator, Brussels Gas Electricity (BRUGEL).

1.2.3 The federal authorities are responsible for “matters which, on account of their technical and economic indivisibility, must be dealt with on an equal basis at national level”, i.e. matters that need a coordinated approach at national level.

1.2.4 The 150kV to 380kV high-voltage transmission network is operated by Elia, the TSO. Elia has a legal monopoly as Belgium’s sole electricity TSO; its license is valid for 20 years and can be renewed. The Flemish, Walloon and Brussels-Capital Region
(Regions)
are responsible for distributing electricity with a nominal voltage of 70kV or less.

1.2.5 A distinction is made between operating systems with a voltage of 70kV and those with a lower voltage. The networks with a voltage of 70kV, operated by Elia, are the local transmission network in Wallonia; the local transmission network in Flanders; and the regional transmission network in the Brussels-Capital Region.

1.2.6 Those with a lower voltage are the distribution networks, which are operated by the distribution system operators (DSOs).

1.2.7 The three Regions are also responsible for renewable energy generation (excluding federally governed electricity generation from offshore renewable sources in the North Sea) and the rational use of energy.

1.3 Key player

1.3.1 The Belgian electricity market is still dominated to a high extent by Electrabel (GDF Suez) for both generation and supply. However, its market position for supply has fallen recently, in particular in Flanders.

1.3.2 Other key generating companies operating in Belgium include EDF and E.ON.

1.3.3 As referred to in paragraph 1.2.4 above, the TSO is Elia. The DSOs are generally part of an operating company such as Eandis or Ores.

1.3.4 In the supply sector, in addition to Electrabel, some of the large players include EDF, Eni and Lampiris.

1.4 Current issues and drivers

1.4.1 In order to ascertain Belgium’s security of supply, the federal State Secretary for Energy established a (political) plan in June 2012 for developing new generation capacity (Wathelet Plan). 2 Melchior Wathelet (Secrétaire d’Etat à l’Energie), Le système électrique belge à la croisée des chemins: une nouvelle politique énergétique pour réussir la transition, June 2012 [Plan-Wathelet-pour-lélectricité.pdf] (accessed on 24 July 2013 (only available in French or Dutch).

1.4.2 The Wathelet Plan identifies the two main issues that threaten Belgium’s short term security of supply, namely the shortage of electricity supplied to the grid during peak demand and the excess supply during minimal demand.

1.4.3 These issues are to be countered on three fronts. First, the closure of electricity generation installations will be subject to increased regulation. Second, the nuclear phase-out, pursuant to a Belgium Act dated 31 January 2003 3 Loi du 31 janvier 2003 sur la sortie progressive de l’énergie nucléaire à des fins de production industrielle d’électricité, 2003 (accessed on 24 July 2013)
www.juridat.be
, will be adapted; one proposal for such adaptation is to delay the closure of one ‘nuclear entity’ for a period of 10 years whilst keeping the objective of a complete nuclear phase-out by 2025. Third, a support mechanism for new gas-based generation capacity will be established to ensure the profitability of installations.

1.4.4 In the longer term, the objective is to develop interconnections (including Project Nemo, an electricity interconnection between Belgium and England), improve demand management, increase efforts regarding electricity storage, improve the integration of renewables units into the grid, find a structural solution for the management of ancillary services, develop real monitoring of the market and simplify administrative procedures.

1.4.5 Important investments in the TSO’s infrastructure are also expected. The TSO’s latest federal development plan 4 See ELIA, Plan de développement fédéral 2010-2020,1 September 2011 (accessed on 23 July 2013) (only available in French or Dutch)         focuses on the establishment of new international interconnections, the hosting of new centralised generation units, the integration of generation units that are decentralised or based on renewable energy sources and the reinforcement of the grid, to be able to respond to the evolution of electricity consumption.

1.4.6 The federal and regional strategies aim to develop renewable energy and increase energy efficiency.

1.4.7 As part of this, the CREG appears to be promoting the use of smart meters. In a series of recent decisions affecting Flemish generators, the CREG introduced a controversial ‘grid use compensation levy’, to be paid by electricity generators with decentralised generation installations of 10kW or less equipped with revolving meters. The underlying reasoning for the levy appears to be that small generators, although using the distribution grid, pay little or no distribution grid tariffs when equipped with a revolving meter. Smart meters allow the separate measuring of injection and off-take of electricity and thus a correct application of distribution grid tariffs. Generators with smart meters are exempted from the levy.

2. Sector Analysis

2.1 Generation

Structure of generation sector

2.1.1 Generators fall into two primary categories, generating power either in traditional ways (e.g. nuclear generating stations, combined-cycle gas turbine facilities or combined heat and power generating stations) or using renewable energy sources (e.g. wind, solar, thermal or hydroelectric generating stations).

2.1.2 The generation market has been liberalised; any company may build and operate a generation plant provided that it obtains the required authorisations, including environmental and planning permits.

2.1.3 For example, the construction of new electricity generation installations is usually subject to obtaining an individual permit, granted by the federal minister in charge of energy (see paragraph 3.3.5 below).

2.1.4 Electrabel is the main electricity generator in Belgium, followed by EDF Luminus.

Energy mix

2.1.5 Belgium has two nuclear power plants, Doel and Tihange. Nuclear power contributes around 50% to 60% of the electricity generated domestically.

2.1.6 Belgium’s national renewable energy action plan 5 See the European Commission’s website for all the national renewable energy action plans on (accessed 24 July 2013)
ec.europa.eu/energy/renewables/action_plan_en.htm
indicates that the share of energy from renewable sources in gross final consumption of energy in 2005 was 2.2%. It sets the target of energy from renewable sources in gross final consumption of energy in 2020 at 13%.

2.2 Transmission

Structure of transmission sector

2.2.1 Pursuant to the 2012 Act, the CREG certified Elia as an electricity TSO in accordance with the ownership unbundling model 6 See CREG, Décision finale (B)121206-CDC-1178 relative à “la demande de certification de la S.A. Elia System Operator”, 6 December 2012 (only available in French or Dutch) and the joint press release on 2013 (both accessed 24 July 2013)
http://www.creg.info/pdf/Decisions/B1178FR.pdf
.  The certification procedure is connected with the Third Energy Package and is designed to strengthen the independence requirements imposed on TSOs with respect to unbundling the electricity generators and suppliers.

2.2.2 TSOs are responsible for reliably and efficiently operating high voltage transmission systems.

2.2.3 Since Elia has a legal monopoly, it is subject to a special legal framework and to the authority of regulators responsible for checking and approving the way in which it operates, for example, with respect to tariffs.

2.2.4 The transmission tariffs that Elia applies are regulated. They are typically established for a period of four years, based on Elia’s proposals and approved by the CREG.

2.2.5 These tariffs comprise of tariffs for connection to the grid; tariffs for grid usage, including the imbalance tariff; and tariffs for ancillary services.

Cross border issues

2.2.6 EU Regulation 714/2009 (conditions for access to the network for cross-border exchanges in electricity) has been applicable in Belgium since 3 March 2011.

2.2.7 Belgium has electricity interconnections with France and the Netherlands. The industrial transmission grid of the Grand Duchy of Luxemburg is also connected to the Belgian grid. There are plans for new interconnections with the UK (Project Nemo) and Germany (the Alegro project).

2.3 Distribution

Structure of distribution sector

2.3.1 In Belgium, DSOs are mainly grouped together in organisations like ORES in Wallonia and Eandis in Flanders. Such companies ensure the operation of their member’s distribution grids.

2.3.2 For example, Eandis is comprised of seven Flemish electricity and gas distribution system operators, which are also its shareholders. These are Gaselwest, IMEA, Imewo, Intergem, Iveka, Iverlek and Sibelgas. There is a board of directors, who are responsible for general management, a management committee, which handles daily management, and a strategic committee.

2.4 Supply

Structure of supply sector

2.4.1 The supply sector is fully liberalised in Belgium, giving a competitive supply market. Key players include Electrabel, EDF, Eni and Lampiris.

Key issues

2.4.2 The Belgian supply market has recently seen significant developments in an attempt by the federal government to address the high prices. Major price control measures were introduced at the federal level in 2012, affecting household consumers and SMEs. The measures established a quantitative limitation and qualitative control of indexation in supply contracts, a qualitative control of other price increases and a temporary (until December 2012) freeze of the indexation of variable prices in supply contracts. Another measure, aimed at protecting households and SMEs, is the newly granted right to terminate supply contracts without penalty.

2.5 Energy exchange / trading

Structure of trading market

2.5.1 Belpex is the Belgian power exchange. It is a short-term, physical power exchange for the delivery and off-take of electricity on the Belgian hub. Belpex facilitates anonymous, cleared trading in two different market segments; a day-ahead market (DAM) and a continuous intraday market (CIM). It also provides trading services in green certificates and combined heat and power certificates. Belpex provides the market with a transparent reference price.

2.5.2 In 2011, volumes of electricity on the Belpex DAM were 3.1% (imports) and 2.1% (exports). 7 CREG, Etude relative au fonctionnement et á l’évolution des prix du marché de gros belge pour l’électricité – rapport de suivi 2011, 31 May 2012 [F1153FR.pdf] (accessed on 24 July 2013), p. 46. Note, this document is only available in French and Dutch.

2.5.3 APX, a large energy exchange that operates the Netherlands, UK and Belgium spot markets for electricity, owns 100% of the shares in Belpex. APX also owns APX Power NL (a power exchange for anonymous, cleared trading in day-ahead electricity, Intraday markets and Strips markets) and APX Power UK (the integrated trading, clearing and notification service for UK spot and prompt power contracts).

2.5.4 According to article 23(2)(5) of the Act dated 29 April 1999 on the organisation of the electricity market 8 Loi du 29 avril 1999 relative à l’organisation du marché de l’électricité, 1999 (accessed on 24 July 2013)
www.juridat.be
, the CREG oversees the degree of transparency of the market, including wholesale electricity prices. The Belpex market regulation dated 6 August 2010 9 Belpex règlement de marché du 6 août 2010, 2010 (accessed on 23 July 2013)
www.juridat.be
details the CREG’s role as market regulator, as well as the role of the Financial Services and Markets Authority (FSMA).

Cooperation with other exchanges

2.5.5 An important feature of the Belpex is its coupling with neighbouring power exchanges: APX-ENDEX, EPEX Spot FR, EPEX Spot DE and EMCC. Since 17 January 2011, this pent-lateral coupling has been extended to NorNed.

3. Regulation

3.1 Authorities

3.1.1 As stated above, Belgium has one federal regulator, the CREG, and three regional regulators: CWaPE, BRUGEL and VREG.

3.1.2 Pursuant to article 24 of the Act of 29 April 1999 10 Loi du 29 avril 1999 relative à l’organisation du marché de l’électricité, 1999 (accessed on 24 July 2013)
www.juridat.be
, the CREG consists of a committee of independent directors (responsible for operational management), a general council (composed of representatives from the government and electricity sector) and a dispute settlement body.

3.1.3 The CWaPE and BRUGEL are governed by boards of directors and have dispute settlement bodies. The VREG is also governed by a board of directors but its daily management is overseen by a managing director, appointed by the Flemish government. 11 Articles 3.1.9 and 3.1.10 Decreet van 8 mei 2009 houdende algemene bepalingen betreffende het energiebeleid (aangehaald als het Energiedecreet), 2009 (accessed on 24 July 2013)
www.juridat.be
     

3.1.4 The objectives of the regulators include giving advice on energy issues to the authorities, monitoring the energy market, ensuring compliance with legislation, settling disputes and imposing sanctions.

3.1.5 Other than the energy regulators, it is important to note that some activities remain within the competence of the federal and regional ministers in charge of energy.

3.2 Essential legislation

3.2.1 Key legislation includes the following:
The Act of 29 April 1999 on the organisation of the electricity market. This is the main federal act with regard to electricity, containing rules on the generation, operation of, and access to, the transmission grid and the federal regulator;

  • The Decree of 8 May 2009 containing general provisions on energy policy. This is the main Flemish act with regard to electricity, containing rules on the operation of, and access to, distribution grids, support mechanisms for electricity from renewable energy sources and the Flemish regulator;
  • The Decree of 12 April 2001 regarding the organisation of the regional electricity market. This is the main Walloon act with regard to electricity, containing rules on the operation of, and access to, distribution grids, support mechanisms for electricity from renewable energy sources and the Walloon regulator; and
  • The Ordinance of 19 July 2001 regarding the organisation of the electricity market in the Brussels-Capital Region. This is the main Brussels-Capital act with regard to electricity, containing rules on the operation of, and access to, distribution grids, support mechanisms for electricity from renewable energy sources and the Brussels-Capital regulator.

3.3 Regulatory Framework

Regulators

3.3.1 In an environment where a number of players have a legal monopoly, the four regulators effectively ‘police’ the energy sector.

3.3.2 The CREG has a large number of objectives, including controlling the TSO’s compliance with the market rules; establishing a grid tariff methodology; approving tariff propositions by grid operators; contributing to guaranteeing consumer protection; and controlling the absence of cross-subsidies between the activities of transmission, distribution and supply.

3.3.3 The CREG is also responsible for monitoring anti-competitive behaviour and unfair trade practices. Such issues must be reported to the minister in charge of energy and the Belgian Competition Authority (Conseil de la concurrence).

3.3.4 The regional regulators also have a large number of objectives, including monitoring compliance with regional Acts, granting supply licences and green certificates and advising authorities on energy issues.

Authorisation to operate a power plant

3.3.5 The construction of a new installation for electricity generation with a net generating capacity of more than 25MW is subject to the prior grant of an individual permit. It is given by the federal minister in charge of energy, upon the CREG’s advice.

3.3.6 Such a permit is also required for refurbishments or other adaptations of installations for which there is no existing permit if the works result in an electricity increase of more than 25MW or 10% of the installation’s net generating capacity.

3.3.7 For modifications to installations where there is an existing permit, an application must be made for a review of that permit if the modification concerns a change in the primary energy that is used, an increase by more than 25MW or 10% of the net generating capacity or a significant change in the generation technology.

3.3.8 Applications for individual permits must be addressed to the CREG and must include a technical note, detailing the net generating capacity, cooling methods and number of generators. 12 Articles 3-4 Arrêté royal du 11 octobre 2000 relatif à l’octroi des autorisations individuelles couvrant l’établissement d’installations de production d’électricité, 2000 [www.juridat.be] (accessed on 24 July 2013).

3.3.9 The CREG then sends the information to the minister in charge of energy and a proposal to grant, or refuse, the permit. The minister gives a decision on the application within 60 working days after receiving the CREG’s proposal.

3.3.10 If the security of supply is insufficiently guaranteed, the minister in charge of energy may, under certain conditions, organise a tender for the construction of new electricity generation installations.

3.4 Support Schemes

Renewable Energy

3.4.1 The regions are in charge of the protection of the environment and, accordingly, of the promotion of renewable energy sources.

3.4.2 However, the federal state, having authority over the energy generated offshore in, and from, the North Sea, has implemented its own scheme.

Tradable Green Certificates (TGC)

3.4.3 The European Union Emission Trading Scheme (EU ETS), set up by EU Directive 2003/87, is in force in Belgium. Pursuant to their Phase III rules (2013-2020), Belgium has carried out a preliminary calculation on the number of free allowances to be allocated to installations on its territory.

3.4.4 Belgium is a signatory of the Kyoto protocol that has set a reduction target of 7.5% of greenhouse gas emissions (as compared to 1990). The EU ETS is a strong driver to reach this goal and aims to ensure that Belgium plays a significant role in the ambitious European climate and energy targets for 2020 (EU Directive 2009/28).

3.4.5 The regions and federal state have developed a Green Certificate Mechanism, built on the following principles:

  • the regional or federal regulation authority issues a certain amount of TGCs to green producers, based on the quantity of electricity generated from renewable energy sources. In Brussels and Wallonia, the issuing of TGCs is conditional on the saving of a certain quantity of CO2 emissions in comparison with the level for conventional generation in a modern facility;
  • regional legislation has fixed annual quotas applicable to suppliers (in 2013 these were 19.4% in Wallonia, 3.5% in Brussels and variable in Flanders, dependent on the electricity generation and consumption). This means that each supplier must give the regulator the number of TGCs corresponding to the number of MWh supplied to its end users, multiplied by the quota. If the supplier does not adhere to the quota, it receives a penalty for each missing TGC, creating a market for green certificates. The market price of TGCs is therefore intended to be less than that of the penalty. To sustain the security of investments, legislation provides that the TSO and/or DSOs must purchase TGCs at a fixed price, dependent on energy source;
  • the support mechanism (issuing of TGCs) is valid for a set period of time, as stipulated by the region and renewable energy source; and
  • the price of TGCs is passed on to the customers.

Installation premiums

3.4.6 There are a large number of installation premiums to promote the generation of electricity from renewable sources. Such premiums can be awarded directly to the generator or to the installer of the electricity generating station, provided the installer reduces his bill by the amount of the premium. The premiums are set according to the following:

  • the granting public authority;
  • the renewable energy source; and
  • the nature of the producer.

Offshore wind

3.4.7 The federal state has established a specific support mechanism for the generation of electricity from offshore wind farms:
within the mechanism of TGCs, the TSO has an obligation to purchase green certificates issued to the generator at the amount of EUR 107 per MWh for the first 216MW generated and EUR 90 per MWh for the remainder. This obligation applies for a duration of 20 years; and
for each concession, one third of the cost of the cable connecting the wind farm to the transmission grid is financed by the grid operator, up to a maximum amount of EUR 25m for a minimum 216MW installation.

Fiscal incentives

3.4.8 Tax legislation provides several incentives for renewable energy installations, including:

  • tax reductions for investment in energy savings or renewable energy sources; and
  • potential reduction of the real estate prepayment (precompte immobilier) for new energy-efficient homes.

3.5 Upcoming regulatory changes

3.5.1 Since March 2013, the government of the Walloon region has been reforming its green certificate system for electricity generated from solar PV panels, mainly to reduce its costs. 13 Official governmental communication [dossier-lectricit-accord-sur-le-photovolta-que] (only in French).  One of the expected changes is the replacement, for certain installations, of the green certificate system by a ‘guaranteed global support’ mechanism.

3.5.2 Authority over tariffs concerning the electricity and gas distribution grids will be regionalised 14 Belgian government, Accord de Gouvernement (Governmental agreement), 1 December 2011, (accessed 24 July 2013), p. 47 and 123. This document is only available in French and Dutch.
click here
, most likely in 2014. This does not concern the tariffs for electricity networks that fulfil a transmission function, even if they only have a nominal voltage of 70kV or less.

3.5.3 A number of changes are also expected in light of the abovementioned Wathelet Plan.

4. Country Statistics

Figure 1: Market shares of the electricity suppliers active in Belgium on the basis of supplied energy in 2011 15 CREG, CWaPE, BRUGEL, VREG, Le dévelopment des marchés de l’électricité et du gaz naturel en Belgique, 2011 (a joint report of the four regulators on the development of the electricity and gas markets in Belgium) [compress24042012fr.pdf] (accessed 24 July 2013) (only available in French and Dutch).

Table 1: Total gross electricity production in 2011 16 Federal Public Service Economy (posted reply for request for information).

 

Jan 11

Feb 11

Mar-11

Apr 11

May-11

Juni 11

Juli 11

Aug 11

Sep 11

Oct-11

Nov 11 

Dec-11

GWh

7.888,35

7.160,38

7.515,00

7.259,17

7.593,08

7.117,98

7.255,85

7.559,01

7.365,84

7.413,98

7.354,08

7.575,53

ktoe 

678,28

615,68

646,17

624,18

652,89

612,04

623,89

649,96

633,35

637,49

632,34

651,38

Table 2: Import/export of electricity in 2011 17 Federal Public Service Economy (posted reply for request for information).

  

Jan 11

 Feb 11

Mar-11

Apr 11

May -11

Juni 11

Juli 11

Aug 11

Sep 11

Oct-11

Nov 11

Dec-11

GWh 

Im

1.368,44

1.155,66

1.427,06

1.026,42

1.004,76

1.297,30

1.106,82

859,73

802,83

926,98

1.053,67

1.159,52

 

Ex

548,86

412,06

620,59

839,38

1.139,67

1.198,72

1.347,12

1.330,38

1.041,62

735,57

726,51

711,47

ktoe 

Im

117,67

99,37

122,7

88,26

86,39

111,55

95,17

73,92

69,03

79,71

90,6

99,7

 

Ex 

47,19

35,43

 53,36

72,17

97,99

103,07

115,83

114,39

89,56

63,25

62,47

61,18

Figure 3: Energy consumption in 2009 by type 18 Federal Public Service Economy, Le marche de l’energie en 2009 (accessed on 24 July 2013)
click here
 

Table 3: Gross electricity production from renewable energy 19 Federal Public Service Economy (postal reply to request for information).

  

2011

2012

GWh

Wind 

2.312,08

2.749,27

 

Solar

1.169,58

1.657,17

 

Hydro

1.425,51 

1.679,10

 

Biomass

5.764,69

6.277,71

ktoe

Wind

198,8

236,39

 

Solar

100,57

142,49

 

Hydro 

122,57

144,38

 

Biomass

495,67

539,79