The European Commission has granted approval for the capacity mechanism in Belgium after concluding the measure does not distort competition in the Single Market.

The scheme will contribute to ensuring the security of electricity supply, especially as Belgium has decided to phase out all nuclear capacity by 2025.

The approval follows an in-depth investigation launched by the Commission in September 2020 to assess if Belgian plans to introduce the national market-wide mechanism were in line with Eu state aid rules.

The scheme, which is intended to replace the Belgian strategic reserve, will select beneficiaries through a competitive bidding process and will be remunerated for their availability in situations where there is shortage of supply.

They will receive capacity payment for the duration of the agreement, which would range between one and 15 years, depending on the size of investment.

In exchange, the successful bidders will make their capacity available to the transmission system operator during stress events experienced by the electricity system.

Margrethe Vestager, Executive Vice President in charge of competition policy said: “Capacity mechanisms can help to safeguard security of electricity supply to the extent that they are designed in a way that avoids distortions of competition in energy markets.

“Following close and constructive co-operation with the Belgian authorities throughout the process, we have approved a well-designed capacity mechanism that will contribute to ensuring security of electricity supply in Belgium, in particular in view of the upcoming phasing out of all nuclear capacity by 2025, while ensuring that possible distortions of competition are kept to a minimum.

“We also welcome the decision by the Belgian authorities to introduce certain sustainability requirements for new fossil fuel installations. This is a positive development towards the achievement of the important objectives set out in the European Green Deal.”