Engie SA plans to build an 870-MW gas-fired power station at Vilvoorde near Brussels after an agreement with EM Generation Brussels to buy the existing gas plant site, the French utility said April 9.
The plan is conditional on Belgium bringing into force a capacity mechanism, for which a first auction is planned for October 2021. "This new gas-fired power plant will in [the] future be an essential element in the country's security of supply," Engie said.
The 30-hectare Vilvoorde site has been used to generate electricity since the 1960s. Engie is to acquire the existing 255-MW gas plant from EM Generation Brussels, adding to land it already owns at the site. No price was put on the deal, which is expected to be completed over the summer.
A request for connection of an 870-MW gas turbine plant to the grid has already been submitted to system operator Elia System Operator SA, Engie said. However, the project would only proceed "on condition that the capacity compensation mechanism comes into force," it added.
The combined cycle plant would meet "all emission standards and achieve an efficiency of over 63%," Engie said. The existing gas plant would continue to operate as a peaking unit until the new unit was operational.
Engie subsidiary Electrabel SA is Belgium's incumbent generator, with 9,667 MW of capacity installed and 2.5 million customers.
"We want to play a pioneering role in the energy transition and eventually move towards 100% CO2-neutral energy production," said Cedric Osterrieth, Engie's CEO of thermal generation assets. "Whatever the future scenario, it will require the construction of new efficient, flexible and available gas-fired plants which will contribute to the security of supply of the country."
Capacity market tussle
Development of a capacity market in Belgium has been fraught with difficulty, not least because of a difference of opinion between energy regulator CREG and system operator Elia on the extent of the mechanism. The mechanism is to be based on four-year ahead, or T-4, and one-year ahead auctions.
The delivery date of a first October 2021 T-4 auction coincides broadly with the end of the phaseout of Belgian nuclear generation. Elia has repeatedly said that nuclear phaseout poses tough questions for Belgian system security.
The transmission system operator's plan for the period 2020 to 2030 is based on a complete phaseout of nuclear by 2025, removing 5.7 GW of capacity. That will be balanced to some extent by 2.3 GW of new gas-fired capacity in 2025 and 2030, assuming stable cogeneration, waste-to-energy and biomass capacity and additions of offshore wind.
In a recent response to comments from Elia, however, CREG said it wanted "to correct the perception that there is a consensus on the fact that Belgium will be faced with a problem of security of supply in 2025," quoting studies in support of the thesis that there will not be a problem.
In the meantime, CREG's proposal published last week on how to calculate the volume needed for a capacity mechanism has been swiftly overtaken by events.
On March 23, the Belgian economy ministry launched a five-day consultation on its own proposal. The results have yet to be published, but it appeared clear the parameters the ministry will advocate are closer to those suggested by Elia. The ministry said the CREG methodology "does not offer sufficient guarantees" that the goal of security of supply would be met.
Under Belgium's capacity mechanism legislation, it is up to Elia to define the methodology, but this is not compatible with EU Regulation 2019/943, which took effect Jan. 1. The regulation assigns this role to the regulator.
Any methodology that Belgium adopts is likely to be provisional, if it is used at all. The European Network of Transmission System Operators for Electricity, or ENTSO-E, is due to propose a methodology under Regulation 2019/943.
Originally due to come out in January for approval by pan-European regulatory body ACER three months later, the proposal has been delayed until this month at ENTSO-E's request.
The CREG has said the timetable "will still be enough to determine the volume to purchase for the October 2021 auction."
Henry Edwardes-Evans and Marion Bywater are reporters with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.