Offshore wind energy law and regulation in Belgium

Belgium chapter: June 2017

Despite a relative limited marine territory, Belgium has over the last decade been one of the most active European countries in the field of offshore wind projects. Some 238 km², i.e. 7 % of the Belgian North Sea are devoted to the production of renewable energy under the Marine Spatial Plan of March 2014. Up to 433 turbines could be installed and operated by 2020, with a total capacity up to 2,280 MW (i.e. about 10 % of the Belgian installed generation capacity). To date, three of the nine licensed wind farms are already operational, i.e. C-Power, Belwind and Northwind. Six other projects were licensed in 2014 – 2015 and should be operational by 2020 (Norther, Rentel, Mermaid, Northwester 2, Nobelwind, Seastar).

Under the Belgian federal system, each of the three regions (Flanders, Wallonia and Brussels) has jurisdiction on its territory in various fields, including energy policy, with the exception of nuclear plants and transmission network regulation (> 70 kV).

While the jurisdiction of the regions is territorial, the Federal State remains in charge of offshore activities. This explains why the legal framework for the development of offshore wind parks in Belgium is settled under Articles 6 and 7 of the Federal Act of 12 April 1999 organizing the Electricity Market (the Electricity Act).

All tender procedures are currently closed, and the Federal Government has not planned to devote additional zones to offshore wind so far. Nevertheless, due to low prices awarded to offshore wind farms in the Netherlands (Borssele) and in Germany, the Secretary of State in charge of offshore wind projects recently announced that he is considering the recall of the concessions granted to Northwester II, Mermaid and Seastar.

Renewable energy projects in Belgium are generally supported by the granting of Green Certificates (GCs), which support the production of a certain amount of electricity from a renewable energy source. A Green Certificate is issued by market regulators (in the case of offshore wind farms, the federal market regulator CREG) for each 1,000 kWh net electricity produced from renewable resources. Producers may either sell these Green Certificates to electricity suppliers, or offer them for sale to Elia, the Belgian transmission system operator (TSO), in which case Elia is obliged to purchase such Green Certificates at a guaranteed (minimum) price determined by the Federal Government.

The Electricity Act initially enabled the Federal Government to create a specific support scheme for offshore wind projects, based on two instruments:

• a Green Certificates scheme with a purchase obligation for the TSO for a period of 20 years (19 years for projects with financial close after 1 May 2016) at a minimum fixed price;
• a levy on transmission tariffs to be charged by the TSO to the distribution system operators (DSO’s) and holders of Access Contracts (non-technical take-off and injection agreement), ensuring the pass-through of the costs of the Green Certificates scheme to the end consumer. 1 Reductions apply to large consumers who entered into Environmental Agreements with the authorities that aim to achieve specific environmental targets, such as waste production, emissions, etc.

In relation to aforementioned minimum fixed GC price a distinction is made between offshore wind farms that reached financial close before 1 May 2014 and offshore wind farms that reached financial close thereafter. Offshore wind farms with financial close prior to 1 May 2014 can sell their Green Certificates to the TSO at a fixed minimum price of EUR 107 per MWh for the electricity that is generated from the first 216 MW of the installed capacity, and EUR 90 MWh for the electricity generated from any additional installed capacity. Offshore wind farms that reached financial close after 1 May 2014 can however sell their Green Certificates to the TSO at a fixed minimum price based on a Levelised Cost of Energy (LCOE), that aims to reflect the total annual costs, calculated over a period of 20 years, based on the generally applicable technological reference framework required to generate 1 MWh (CAPEX, OPEX, 12 % ROI). The LCOE is fixed by the Minister of Energy, based on a proposition by the Federal Regulator following discussion with the holder of the domain concession. It shall take into account the need to avoid over-subsidisation and the interest of the end consumer (e.g. for offshore wind farms RENTEL and NORTHER, respectively EUR 129.80 per MWh and EUR 124 per MWh). The minimum GC-price payable by the TSO to such offshore wind farms is the difference between the LCOE and:

1. (i.) the reference electricity market price (with application of a correction factor), which is determined annually by the Federal Regulator based on the nominations of the ICE Endex Power Baseload Futures;
2. (ii.) the value of generated Guarantees of Origin;
3. (iii.) a (monthly settled) correction factor for grid losses.

In 2005, additional supporting measures were added for new projects:

• the financing by the TSO of up to one-third of the costs of the transmission cable to the onshore grid (purchase, delivery, installation, connection), with a maximum of EUR 25 million for projects of 216 MW and more (this amount in reduced proportionally for smaller projects);
• preferential balancing tariffs (plus or minus 10% of the reference market price) for variations of production up to 30% of the nominated production (positive or negative);
• an investment guarantee in case of withdrawal of one of the authorisations, permits or permissions, or cessation of the project (in the absence of any fault, breach, negligence, etc. of the project developer).

In order to finance the burden of the GC scheme, an offshore surcharge, which applies to all end consumers, was introduced in 2012, with the parallel constitution of budgetary funds (Art. 7, § 1ter of the Electricity Act), annually fed by two-thirds through the nuclear levy, in order to reduce the impact of the offshore supporting measures on end consumers.

In addition, the financial support for the transmission cable was amended in 20102, 2013, 2014 and 2016, taking into account the plans to develop a Belgian offshore grid (see section 5 below) that will reduce transmission costs for future projects.

The development of various activities in the Belgian marine areas - especially the development of offshore wind farms after the entry into force of the Electricity Law - led the Federal Parliament to adopt, by Act of 20 July 2012, a legal framework for the organisation of the planning of marine areas, and the subsequent issuance of Royal Decrees relating to:

• the modification of special areas of conservation (Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora) and special protection areas (Directive 2009/147/EC on the conservation of wild birds) (Royal Decree of 16 October 2012)
• the creation of a dedicated advisory commission and the procedure for the adoption of the Marine Areas Development Plan (Royal Decree of 13 November 2012)
• the Marine Areas Development Plan (Royal Decree of 20 March 2014).

The Marine Areas Development Plan designates the zones dedicated for the development and operation of offshore wind farms 2 Reductions apply to large consumers who entered into Environmental Agreements with the authorities that aim to achieve specific environmental targets, such as waste production, emissions, etc. , in total covering up to 240 km2 (equal to 7% of the Belgian North Sea), of which approximatively 170 km² are currently already occupied by existing projects. This means that, taking security zones into account, the entire area designated by the development plan for offshore wind farms has actually already been granted to existing projects. Further development of offshore wind would require a revised or new development plan. Such a new plan or amendment is not already (officially) being considered.

Map of the offshore wind projects in the Belgian Marine Area

Key permits and licences for the development of offshore wind farms are:

• domain concession
• marine protection permit
• cable permits

Offshore wind parks must be authorized – even in demonstration phase if necessary by the Federal Minister of Energy – within three years after the latest concession, permit or licence has been granted, and no significant part of the park may be shut down for more than one year, except in the event of lawful, thorough technical reasons or force majeure.

Below each of the aforementioned permits and licences is addressed.

Pursuant to article 6 of the Federal Electricity Act of 21 April 1999, offshore projects require a domain concession from the Federal Minister of Energy for constructing and operating a power plant using water, currents or wind energy within the designated marine areas. The concession secures the title to use such area (the occupation permission) for the development and operation of the offshore wind farm (however excluding the offshore cables).

Pursuant to the aforementioned Act domain concessions to build and operate power plants are granted for a (renewable) period of 30 years. A domain concession may be granted prior to the environmental permit, but will not come into effect until the environmental permit is in place.

The procedure and the conditions for the application of the concession and for the award of the concession are elaborated on in the Royal Decree that was adopted by the Federal Government on 20 December 2000. Pursuant to this decree a domain concession will be granted taking several criteria into account, including:

• the conformity of the installation with the technical regulations regarding the operation of, and access to, the transmission grid;
• the impact of the installation on previously authorised activities;
• the quality of the project both technically and economically (considering Best Available Techniques);
• the quality of the submitted O&M plan and, where the installation is permanent, the proposal of technical and financial provisions for the treatment and removal of the installation;
• the location of the project.

The table below provides an overview of domain concessions for offshore wind farms that have been granted to date.

In addition, offshore wind farms require an environmental permit, referred to as the “marine protection permit”, that confers on the permit holder a right to construct the installation and a licence to operate the installation. The legal framework in relation to the application procedure for this permit is set out in:

• the Law on the Protection of the Marine Environment of 20 January 1999
• the Royal Decree of 7 September 2003 concerning the procedure for licensing and authorising the activity
• the Royal Decree of 9 September 2003 concerning rules on the assessment of the environmental impact.

This procedure can be summarised as follows:

1. the applicant submits an environmental impact study (EIS) to the Scientific Service Management Unit of the North Sea Mathematical Models (MUMM) of the Operational Directorate Natural Environment
2. MUMM then produces an environmental impact assessment (EIA). As a part of its assessment MUMM can also carry out other studies in order to give an opinion on the acceptability of the project concerning the marine environment
3. a public inquiry, which - depending on the impact - may be cross-border, will be held within 45 days. Based on the EIA and the public inquiry, MUMM addresses recommendations (i.e. acceptability to the marine environment and related conditions) to the Federal Minister for the Marine Environment
4. the Minister takes a decision on the granting of the environmental permit.

Depending on the complexities of the case, it can take about six to eight months from the date of submission of the permit application to the final decision of the Federal Minister of Energy.

The operating licence (authorisation for construction and operation) is granted for a period of 20 years. The construction authorisation is granted for a period of five years, and can be extended once for an additional period of five years.

The marine protection permit will only enter into force after all other required permits and licences have been obtained (however with a maximum of four years after the date of issuance), and will expire if any of such permits or licences are refused.

The third key permit that is required for an offshore wind farm is a permit to lay submarine cables in the North Sea (territorial waters and the Belgian EEZ). The submarine cable permit is issued by the Federal Minister of Energy under the Federal Act of 13 June 1969 (Article 4). The permit application procedure is set out in the Royal Decree of 12 March 2002. As a general provision, this decree stipulates that the cable must be laid as close to existing installations as possible and in such a way as to minimise the impact on the sea floor. The issue criteria (listed in Article 5 of the aforementioned decree) include, inter alia, an impact study of the cable applied for on the existing grid, and proof of the applicant’s financial and technical capacity.

Applications must be submitted to the Federal Public Service for Economic Affairs together with information on the financial and technical capacity of the applicant and the evidence that the criteria listed in Article 5 are met. Applications are referred for advice to various authorities listed in another decree (the Royal Decree of 2 August 2000) and the EIS is realized by the MUMM. The entire application process may take up to 155 days, resulting in the Minister giving his substantiated decision, which shall be published in the Official Journal.

Under the current regime, each offshore wind farm operator is required to conclude an individual connection contract with the TSO, which will include a capacity reservation on the Belgian transmission grid. Concession holders may however - for cost savings or administrative or environmental purposes – make use of a shared connection cable or grid.

It was envisaged that future offshore wind farms (i.e. wind farms with an offshore domain concession granted after 1 July 2007) shall in principle connect to the proposed new Belgian Offshore Grid (BOG) 3 A derogation from the obligation to connect to the BOG may be granted by Royal Decree. .

In its development plan for the transmission of electricity 2010-2020, TSO Elia considered the possible configurations for the development of the BOG, but did so without strictly engaging itself in this project. Nevertheless, the CREG is of the opinion that it follows from the Third Electricity Directive that Elia shall become the owner of the BOG.

In April 2017, Elia announced an estimated EUR 400 million investment in a modular offshore grid (“MOG”) in the North Sea, that will connect the next four offshore wind farms (Rentel, Northwester 2, Mermaid and Seastar) to the Belgian onshore grid and will also provide opportunities for future development and interconnections with neighbouring countries. The MOG will consist of an offshore platform to which the new wind farms will connect and which will be linked to the shore through three submarines cables. Start of operation of the MOG is planned for the third quarter of 2019.

The legal framework for the MOG is currently being discussed in the Federal Parliament, and should be adopted in 2017. This legal framework will address the obligation for wind farms to connect to the MOG and penalties in case of connection interruptions.

In order to connect the existing offshore wind farms (having an aggregate capacity of approximately 900 MW) to the onshore grid, Elia has in recent years reinforced its onshore grid in the coastal areas. To allow for a further development of offshore wind farms and as a prerequisite for the MOG, it is currently upgrading the electricity grid between Zomergem and Zeebrugge (Stevin Project) and working on the construction of a new high-voltage substation in Zomergem (Horta Project).

www.creg.be
www.elia.be
http://odnature.naturalsciences.be/mumm/en/
http://www.mumm.ac.be/EN/Management/Sea-based/windmills.php