Belgium’s Flanders region wants to retroactively cancel green certificates for large PV systems

The retroactive measure should affect PV systems totaling more than 500 MW. The Flemish government claims the cancellation of the green certificates may help save up to €1.2 million, while the local renewable energy association ODE Vlaanderen is ready to question the legal underpinning of the draft law.

The energy minister of the Belgian macro-region of Flanders, Zuhal Demir, has recently revealed a plan to stop granting green certificates to some renewable energy installations deployed between 2009 and 2013 under the region’s green certificate scheme.

Demir’s proposal is intended at saving around €1.2 billion and should affect approximately 1,200 PV system owners, which would not receive the green certificates they should be awarded for the next 10 years. “These are large installations that reached their payback time a long time ago,” the minister said in a statement. “The European rules on state aid speak in our favor, and there is no such thing as a right to over-subsidization.”

“The draft law proposes that all emission of Green Certificates (GC) to larger PV-systems installed between 2009 and 2013 would be stopped starting from January 1, 2024,” Dirk Van Evercooren, managing director of Flemish renewable energy association Organisatie voor Duurzame Energie (ODE) Vlaanderen, told pv magazine. “This would apply to all PV systems operated by companies, local authorities, organizations, and cooperatives that exceed the so-called ‘de-minimis’ threshold defined by the European state aid regulations, which means all installations that received €200.000 in subsidies over the previous three years. 

According to Van Evercooren, it is very hard to estimate the impact accurately, both in terms of which installations will be impacted and their size, as well as the number of owners that might suffer a cut in their cashflows. “About 500 MW of capacity could be affected, although this might still be an optimistic figure,” he said. “The minister herself spoke about 200 companies that would be impacted, but this is most likely an underestimation.”

The claims of the Flemish government are based on a report by UK consultancy firm Oxera, which reportedly confirmed the high level of subsidization granted to these projects. “The study seems to be based on theoretical models only, with no consideration for the real energy market,” Van Evercooren added.

According to him, the study takes into account unrealistically high levels of self-consumption, which would be the most lucrative option, although self-consumption remains still very limited among the targeted Flemish PV system owners. Furthermore, the study assumes unrealistic price levels. “The report overestimates the revenues of the affected projects by a factor of three,” Van Evercooren went on to say. “Moreover, about half of the installations potentially affected by the proposed measure were deployed through leasing. This business model was needed in the years in which the green certificate scheme was in place, as PV was not a very well-known technology and many industrial rooftop owners were reluctant to invest themselves. The study neglects this investment model completely.”

Our detailed analysis of over 1,200 installations potentially affected by this measure shows that it will lead to bankruptcies of pretty much all the special purpose vehicles (SPVs) owning the leased installations and in general, this action would have a negative impact also on municipalities, cooperatives and public entities,” Van Evercooren stated. “The overall balance of pros and cons would be very negative for the Flemish economy, in our opinion.”

The association ODE Vlaanderen is also questioning the legal underpinning of the draft law and said the European Commission’s Directorate-General for Competition may confirm that the new guidelines on state aid do not force the Flemish government to intervene in ongoing GC-schemes, only to avoid overcompensation for future investments.

Under Flanders’ green certificate scheme, PV system owners were entitled to receive and sell green certificates with a validity of 20 years. Around 1 GW of commercial and industrial PV systems and 50o MW of residential solar arrays not exceeding 10 kW in size were installed under the scheme between 2009 and 2013.

This post appeared first on PV Magazine.

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