The CRM auctions, this mechanism supposed to remunerate electricity producers putting their capacity at the disposal of the network after the nuclear phase-out, are about to start. The key is the long-awaited conclusion of the extension of the power plants.
Eighteen years after the passage of the law providing for the phasing out of nuclear power, Belgium is preparing to enter the last chapter of the atom and gradually shut down its seven reactors. Finally, at least five of the seven. Between 2022 and 2025, the Doel and Tihange units will currently close their doors to make way for renewables and, at least initially, gas. For the two most recent (Tihange 3 and Doel 4), a final decision will be taken next November, the government will then assess whether the electricity production mix can do without it, in the era of energy transition.
Because it is more easily “controllable” than other means of production, it is the gas that will mainly serve as a transition fuel.
To compensate for the shutdown of nuclear reactors – five or seven -, the government voted to set up a mechanism to remunerate the production capacity made available to the market by electricity producers. This CRM (capacity remuneration mechanism), after a course strewn with pitfalls, obtained the green light from the European Commission, which was trying to assess that it did not consist of illegally disguised State aid.
Concretely, it is this mechanism that will determine which means of production will assist renewables in electricity production at times when the wind is not blowing enough and the sun is not shining.. Because it is more easily “controllable” than other means of production, it is the gas that will mainly serve as a transition fuel.
The CRM will ultimately allow electricity producers entering the Belgian market to make profitable the times when they do not produce and is intended, in principle, to be technologically neutral. To participate in this new market, energy companies have until Thursday, September 30 at 5 p.m. to submit their projects. It is then that the first CRM auction will begin, which is decisive for the rest of the events.
Auctions and selection of candidates
“The first auction is a competitive bidding process open to all types of electrical capacity.”
Before the launch of the CRM in 2025, two key stages must take place in order to allow the country to verify the volume necessary to compensate for the closure of the reactors. The first, which will take place during this month of October, consists of an auction organized by Elia, the operator of the electricity transmission network, the outcome of which will determine which production units will be able to participate in the CRM, as well as the new projects (gas-fired power plants) to come into being. The second auction will be held in 2024 and will provide additional information on the volume required. It will correct the results of the first and integrate foreign capacities (German, Dutch and French) into the market. We are talking about an adjustment capacity of 1.5 GW.
But first, the year 2021 must end. “The first auction is a call for tenders procedure open to all types of electricity capacity (technological, existing or planned, production, storage or demand management)”, explains Elia. Thanks to an algorithm (“auction clearing”), Elia will therefore select the most profitable projects and cause the least costs and will submit its choice to the regulator, Creg, then to the government, which will take the decision.. After the auction, on October 31, the selected producers will be required to sign a “capacity contract”, formalizing their entry into the Belgian energy system.
For this first stage, producers are competing for 7.3 GW of capacity, including 2.3 GW of “new capacity” (to be built). And all modes of production are welcome, provided that they do not already benefit from subsidies or that their facilities are not considered too small. Mainly, this first auction targets gas production, for which it is estimated that between two and three new units must be built.
Among the known projects, five have already obtained their permits. Enough already, a priori, enough to fill the additional 2.3 GW needed but the shadow of local remedies still looms. Indeed, while the Flemish Minister of Energy, Zuhal Demir (N-VA), has just broken the Dilsen-Stokkem project, the five most advanced projects are all the subject of appeals and their permits are not, for the moment, considered as “final”. Note that in Wallonia, unlike in the north of the country, filing and receiving an appeal does not lead to a suspension of the project.
At the end of the first auction, on October 31, therefore, the government has all the elements necessary for the ultimate decision price on whether or not to extend two reactors.
It should be noted here that Elia will be responsible for continuously monitoring the progress of the projects selected by the auction. In the event of cancellation of a current project, due for example to an inability to obtain a permit, the office of the Minister of Energy, Tinne Van der Straeten, indicates that the “CRM task force has planned measurements”. A laconic answer which may pose a question in view of the reluctance of the local populations to welcome a gas plant in their neighborhood.
And in the event of nuclear extension?
At the end of the first auction, on October 31, therefore, the government has all the elements necessary for the ultimate decision on whether or not to extend two reactors. In November, an assessment on security of supply and price levels will be carried out in order to judge whether the country can switch from atoms for good.
If Belgium were to extend, for lack of sufficient laudable projects, for example, the volumes coming into play in the second auction of 2024 would then have been revised downwards. Whatever happens, the CRM is doomed to come into action and its cost, for the moment estimated between 238 and 253 million per year (the exact amount will not be known until after the auction), will have to be included. to the state budget. The Minister Van der Straeten has indeed promised, the CRM will not increase the bill of consumers, already taken by storm by soaring energy prices.
- To compensate for the exit from nuclear power, Belgium has chosen CRM, a capacity remuneration mechanism, favoring, among other things, gas-fired power stations.
- The first CRM auction will allow Elia to decide on the production capacities that can benefit from the mechanism (and gas plants to be built).
- The multiplication of local appeals against gas power plant projects sows doubt as to their outcome.
- The final decision on the extension of two nuclear reactors will depend on this auction.