The European Commission has initiated a detailed investigation to determine whether Belgium’s proposed public support for extending the operational life of two nuclear reactors, Doel 4 and Tihange 3, aligns with EU State aid regulations.
Overview of the Investigation
Belgium has informed the Commission of its intention to extend the operation of the Doel 4 and Tihange 3 nuclear reactors by ten years. These reactors, with a combined capacity of 2 GW, are predominantly owned by Electrabel, a subsidiary of Engie S.A., which holds an 89.8% stake, and Luminus, a subsidiary of EDF, which holds the remaining 10.2%.
The primary goal of this initiative is to maintain a secure electricity supply in Belgium and its neighboring countries while minimizing the carbon intensity of Belgium’s electricity mix. This plan is intended to complement Belgium’s existing capacity mechanism, which ensures adequate electricity production capacity to meet anticipated demand.
Components of the Notified Measure
Belgium’s strategy to support the reactor life extension involves a partnership with Engie, featuring several key components:
- Financial and Structural Arrangements:
- Establishing a 50-50 joint venture between the Belgian State and Electrabel, which, along with Luminus, would own and operate the reactors.
- Issuing shareholder loans and an equity injection by the Belgian State and Electrabel, totaling approximately €2 billion, to fund the necessary capital expenditure.
- Providing financial support mechanisms from the Belgian State, including:
- Prefunding Electrabel’s development costs and expenses.
- A contract-for-difference (CfD) for the extension period.
- A loan of around €580 million.
- An operating cash flow guarantee.
- Transfer of Liabilities:
- Transferring long-term storage and final disposal liabilities for nuclear waste and spent fuel from Electrabel to the Belgian State, in exchange for a lump-sum payment of €15 billion.
- Risk-sharing and Legal Protections:
- Implementing protections against future legislative changes impacting nuclear operators in Belgium or Electrabel’s nuclear activities.
Focus of the Commission’s Investigation
The Commission has identified several areas for further scrutiny to ensure compliance with EU State aid rules:
- Necessity of Additional Financial Support:
- Assessing whether the financial support mechanisms, beyond the CfD, including the joint venture’s creation and financing, the operating cash flow guarantee, and the €580 million loan, are necessary.
- Appropriateness of the CfD Design:
- Evaluating if the CfD design and the financial and structural arrangements disproportionately relieve the beneficiaries from market and operational risks.
- Proportionality of Financial Arrangements:
- Investigating whether the combined financial and structural arrangements and the €15 billion lump-sum payment are proportionate.
- Compliance with EU Sectoral Legislation:
- Ensuring that the design of the CfD mechanism adheres to relevant EU sectoral legislation.
- Market Impact:
- Analyzing the impact on the market, particularly concerning the CfD design and the selection and independence of the agent selling the nuclear electricity.
Next Steps
The initiation of this in-depth investigation allows Belgium and interested third parties to present their comments. This step does not predetermine the investigation’s outcome but seeks to ensure that all aspects of the proposed aid measure are thoroughly examined to verify compliance with EU rules.
