The European Commission has opened an in-depth investigation into whether public support that Belgium plans to grant for the lifetime extension of two nuclear power reactors is in line with EU state aid rules.
Belgium had earlier notified the commission of its plan to extend the lifetime of the Doel-4 and Tihange-3 nuclear reactors for 10 years.
The reactors are co-owned by Electrabel, a subsidiary of France-based utility Engie, with a 89.8% share, and Luminus, a subsidiary of France’s state-owned power company and nuclear operator EDF, with a 10.2% share.
The commission said the measure aims at preserving the security of electricity supply in Belgium and neighbouring countries, while keeping the carbon intensity of the Belgian electricity mix as low as possible.
Both Doel-4 and Tihange-3 were scheduled to be shut down in 2025, but in December 2023 the Belgian government signed an agreement with Engie to extend their operating lifetimes.
According to a commission statement, Belgium plans to support the extension of the lifetime of the two reactors through a partnership with Engie, which includes the creation of a 50-50 joint-venture between the Belgian state and Electrabel which would own, together with Luminus, the plants and their production.
Belgium also plans to issue shareholder loans and an equity injection by the Belgian state and Electrabel for around €2bn ($2.1bn) to cover the capital expenditure necessary for the lifetime extension.
Financial support mechanisms provided by the Belgian state would include 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 €580m and an operating cashflow guarantee.
Plans also include the transfer of liabilities from Electrabel to the Belgian state for the long-term storage and final disposal of nuclear waste and spent fuel, against the payment of a lumpsum of €15bn, 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 said that while the Belgian measure appears justified, it has doubts as to its compatibility with EU state aid rules.
The commission said it will investigate several specific areas of the Belgian proposals, including the necessity of the additional financial support mechanisms on top of the CfD, the appropriateness of the CfD design and the combination of financial and structural arrangements, the details of the €15bn lump sum and compliance with EU legislation, in particular concerning the design of the CfD mechanism.
CfD Agreement Under Spotlight
The commission also plans to investigate the impact of the measure on the market in light of the CfD design.
The commission gave no details of the CfD agreement between the Belgian state and Electrabel, but said it assesses compliance with CfD design principles set out in new electricity market design rules published last month.
Those rules say EU member states should be able to use CfDs for new investment aiming to “substantially repower existing power-generating facilities, or to substantially increase the capacity or prolonging the lifetime of such facilities”.
But they also say the commission should check the compliance of CfDs with EU and ensure they do not lead to “undue distortions to competition and trade in the internal market”.
Under most CfD schemes, a public authority compensates an energy producer if market prices fall too steeply, but it collects payments from the producer if prices are too high. The range is defined by a “strike price” agreed between the two parties.
This strike price is not yet known. 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 opening of the in-depth investigation gives Belgium and interested third parties an opportunity to submit comments,” the commission said. “It does not prejudge the outcome of the investigation.”
Belgium now has five nuclear plants in commercial operation: Doel-1, Doel-2, Doel-4, Tihange-1 and Tihange-3. Doel-3 was shut down in September 2022 and Tihange-2 in February 2023.
A recent poll for the industry group the Belgian Nuclear Forum showed that most Belgians are in favour of maintaining the operation of existing nuclear reactors for as long possible while also calling for the construction of new plants, in particular small modular reactors.
