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In a spectacular policy U-turn in Belgium, the Flemish regional government is threatening to impose full grid usage costs on both domestic and foreign green power, severely limiting its green electricity market at birth. The policy reversal follows an EU ruling that says existing legislation -- which allows free distribution of domestically produced green power, but imposes full transmission costs on imported green power -- is discriminatory.

In an instant reaction to the ruling, Flemish energy minister Gilbert Bossuyt decided to impose full transmission costs on all green power across the full voltage range of the Flemish wires. "This is the only way to end the discrimination," added the minister's spokesperson.

"The costs of transporting green power have to be recovered through higher prices on all power," explains Thierry van Craenenbroeck of the Flemish Regulatory Authority for the Electricity and Gas Market (VREG). "If foreign-generated green power is also carried free, Belgium's power prices would be far too high."

With transmission charges accounting for around 40% of the power price to the end consumer -- far more than elsewhere in Europe -- the decision will add hugely to green power prices, ending any hope of building a Belgian green electricity market. "This is a disaster," says Dirk Vansintjan of renewables co-operative Ecopower, which has developed a 4000 strong customer base for its own, predominantly wind-generated green electricity. "Selling green electricity to local consumers is our best hope for developing popular acceptance of wind power in Belgium."

Thrown in the towel

Lamenting what he calls the minister's "submissive" response to the EU ruling, Vansintjan says Bossuyt has "thrown in the towel" before consulting the sector or devising any alternative strategy. Vansintjan warns that even with a flourishing green electricity market, Flanders would be unlikely to meet its target of 6% renewables by 2010. He further points out that the cabinet had led Belgian renewables investors to believe that the previous policy exempted green power from the full force of Flanders' high grid charges with full EU approval. "This decision will drive investors out of the sector by creating a climate of uncertainty," he says.

In practical terms, the market left open to Flemish renewable energy producers is that created by a government mandate which requires all power retailers to buy green certificates demonstrating that 3% of their total power sales come from renewable energy. Under the mandate, the government buys all the green certificates at EUR 50/MWh for onshore wind and EUR 90/MWh for offshore.

But confidence in this market has been eroded too, by uncertainty about the government's commitment to the penalty rates imposed on power retailers who fail to acquire their mandated quantity of certificates. Companies must currently pay EUR 100 for each MWh of green power they fail to buy, a penalty to rise to EUR 125/MWh next year. Legislation before the Flemish regional government, however, would limit the penalty liability of large power suppliers.

Border dispute

Behind this latest renewables policy reversal lies another European green power border dispute similar to that which resulted in the recent revision of the Dutch renewables support package (“uåX˜äŠÊ˜·³Ç, April 2004). This time it is a Dutch firm which has provoked the Belgium trouble, with WattPlus, a subsidiary of Dutch utility Essent, looking to secure access to Belgium's recently liberalised green power market for its predominantly biomass generated green power.

WattPlus's initial appeal against the "discriminatory" regulation to Belgium's highest administrative court, the Raad van State, resulted in a ruling that all renewables producers in Belgium -- not just Flanders -- should be given free access to the distribution network. WattPlus then went to Brussels and secured a more satisfactory ruling, only to see the rug pulled from under its feet by Bossuyt.

WattPlus director André Jurres says the company now has no chance of reaching its target for 100,000-150,000 Belgian customers by 2004. The decision, he adds, will effectively consolidate Belgian power giant Electrabel's control over the Belgian power market. "Minister Bossuyt is throwing away the crowbar that would have truly opened up the Belgian market," says Jurres.

Vansintjan, meanwhile, believes the Flemish green power market (which currently accounts for less than 1% of all consumers) does need protection from foreign imports. "The transport charge exemption only applied to low and medium voltage distribution cables and was intended to help increase support for wind farms by allowing locally produced green power to be sold locally," he says. Ecopower is asking Bossuyt to reconsider his position and begin negotiating a solution to the problem.