While most of Europe has been contemplating the potential impacts of the UK's withdrawal from the EU, Belgium has been quietly remodeling its energy market. 

The low country has changed tack on how it awards subsidies to renewable energy developments, which is likely to have a significant impact on Belgium's pipeline of projects. Some developments have been shelved and others have had their financing delayed, while some sponsors have changed their project pipeline completely. 

Subsidy subsidence

The Belgium government has come under increasing criticism due to the cost of energy subsidies, which has led it to reassess how it provides support to developers.

The government support for renewable energy developments are generally issued via a green certificate scheme. The terms are decided between the sponsor and the state on a project-by-project basis pre-construction, sometimes years before any deal reaches financial close. This inevitably has led to the government being tied to subsidies that now look overly costly, due to the falling cost of renewables generation globally. 

Former Belgian energy minister Annemie Turtelboom resigned in May amidst a row surrounding the cost of energy subsidies. A surcharge on consumer's electricity bills designed to recoup the costs of the support has been dubbed the ‘Turteltax’ and was widely criticised. 

New energy minister Bart Tommelein has since scrutinised a number of existing green certificate agreements. Some energy projects have also been subjected to state investigations over their projected costs.

Biomass blues

Sponsor Belgian Eco Energy (Bee) has recently put the financing of its €300 million ($338.8 million), 215MW Bee Power Ghent biomass plant at the Port of Ghent on hold indefinitely. A report by the Flemish energy agency had questioned the economics and elements of the contractor agreements for the project, and both Turtelboom and Tommelein withdrew their support for the plant.

The project was at the final stage of the approval process for subsidy support, Bee told IJGlobal. Others that received the rubber stamp for support before the energy ministry was shaken up have been more lucky.

Earlier this month Estonian investor Graanul bought the 656MW Langerlo coal-fired plant in the Flanders region of the country from German Pellets. A plan to convert the plant to biomass has been ongoing, and the project has already signed its support agreement with the Belgian government.

Winds of change 

There are two offshore wind projects in the country that are in active financing, the €1.25 billion, 300MW Rentel and the €1.3 billion, 370MW Norther developments. As a result of the energy policy changes, this month both have had a year lopped off their power purchase agreements, from 20 years to 19 years.

Rentel was due to reach financial close in June. With one day to go until the end of the month, it appears this will not happen. The delays have been attributed in part to the renegotiated PPA structure and the fresh talks developers had to have with the Belgian government. As IJGlobal exclusively reported, Norther's debt financing launched in May and is expected to close later this year. 

Plenty in the pipeline

Despite the upheaval Belgium has a number of active energy deals in the market. As IJGlobal exclusively reported last week, the owners of Belgium’s €1.02 billion, 325.3MW Thornton Bank offshore wind farm are set to sell an equity stake in the operational asset.

The sale is for a stake that could be from 20-39% of the total shareholding, based on demand, a source told IJGlobal. The sale is at an early stage, with non-binding offers due at the beginning of July.

After its Ghent biomass disappointment, Bee Energy told IJGlobal it is changing its tack and is instead targeting a smaller upcoming 100MW biomass tender in the Liege region. The developer may consider launching a legal claim against the state over the Ghent decsion, Bee chief executive officer Michaël Corten said.

The head of energy project finance at one European bank told IJGlobal on 28 July that the bank forsees a busier than usual late summer period for Northern European countries, as delays caused by Brexit uncertainties lead to later than anticipated financial closes. Combining Brexit with an internal shakeup of its own, Belgium looks set to be one of those countries.