Brussels, 22 July 2024
The European Commission has opened an in-depth investigation to assess whether public support that Belgium plans to grant for the lifetime extension of two nuclear reactors (Doel 4 and Tihange 3) is in line with EU State aid rules.
The EU Commission’s investigation
Belgium notified the Commission of its plan to extend the lifetime of the Doel 4 and Tihange 3 nuclear reactors for ten years, with an aggregate capacity of 2 GW. The reactors are co-owned by Electrabel, a subsidiary of Engie S.A, with a 89.8% share, and Luminus, a subsidiary of EDF, with a 10.2% share.
The measure aims at preserving the security of electricity supply in Belgium and neighbouring countries, while keeping the carbon intensity of the Belgian electricitymix as low as possible. It complements the existing Belgian capacity mechanism which aims to ensure that there is sufficient capacity to produce electricity and that such production meets the expected demand.
Under the notified measure, Belgium plans to support the extension of the lifetime of the two nuclear reactors through a partnership with Engie, which includes the following components:
- Financial and structural arrangements including: (i) 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; (ii) the issuance of shareholder loans and an equity injection by the Belgian State and Electrabel for a total amount of around €2 billion to cover the capital expenditure necessary for the lifetime extension; and (iii) financial support mechanisms provided by the Belgian State, including 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 €580 million and an operating cashflow guarantee;
- Transfer of liabilities from Electrabel to the Belgian State concerning long-term storage and final disposal of nuclear waste and spent fuel, against the payment of a lumpsum of €15 billion; 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 considers that these components should be examined together as one single intervention and involve State aid. While the Belgian measure appears justified, at this stage, the Commission has doubts as to its compatibility with EU State aid rules and has therefore decided to open an in-depth investigation. In particular, the Commission will further investigate:
- The necessity of the additional financial support mechanisms on top of the CfD, in particular the creation of the joint-venture and its financing, as well as of the operating cashflow guarantee and the €580 million loan;
- The appropriateness of the CfD design and the combination of financial and structural arrangements as they may unduly relieve the beneficiaries from too big a share of the market and operational risks;
- The proportionality of the combination of financial and structural arrangements and of the €15 billion lumpsum;
- Compliance with relevant EU sectoral legislation, in particular concerning the design of the CfD mechanism; and
- The impact of the measure on the market in light of the CfD design and the selection and independence of the agent selling the nuclear electricity.
The opening of the in-depth investigation gives Belgium and interested third parties an opportunity to submit comments. It does not prejudge the outcome of the investigation.
Background
Under the Treaty on the Functioning of the EU (TFEU), Member States are free to determine their energy mix, the conditions for exploiting their energy resources, and the general structure of their energy supply. The decision to promote nuclear energy is a national competence.
State aid for nuclear energy can be assessed and approved directly under Article 107(3)(c) TFEU, which enables Member States to support the development of certain economic activities under certain conditions. The support should remain necessary and proportionate and not adversely affect trading conditions to an extent contrary to the common interest.
Following the entry into force of the new electricity market design rules in July 2024, the Commission also assesses compliance with the CfD design principles set out in Regulation 2024/1747.
The non-confidential version of the decision will be made available under the case number SA.106107 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.
Source – EU Commission