The troubled “green” energy island that Belgium is building in the North Sea has been left facing strong headwinds as costs spiral out of control – and a new study showed the island would adversely effect energy production.
Faced with criticism over costs and effectiveness, Elia, Belgium’s grid operator, announced on January 24 it was considering postponing the final phase of the Belgian Princess Elisabeth energy hub’s construction.
Febeliec, the country’s federation of large energy consumers, has been particularly critical of the energy project in a new report, seen by Belgian business newspaper De Tijd and public news broadcaster VRTNWS, on January 22.
The federation lambasted choices regarding the construction of the sea hub, stressing they inflated costs and had negative effects on wind farms.
On January 24, Bernard Gustin, CEO of Elia, said he thought it was better not to sign the contracts with suppliers just yet.
VRTNWS quoted sources at Elia as saying the mid-February deadline to do so was unfeasible, given the current high electricity prices and the lack of clarity about the next federal government.
It also appeared that, in any case, the construction of the hub would face serious delays.
Gustin’s opinion counted as advice but ultimately, the board of directors of Elia and the federal government will make the final decision.
According to Febeliec, Elia opted for two different technologies to transfer power from the hub in the North Sea to the mainland.
First, two new wind farms would be connected by alternating current (AC) cables, the standard also used at previous offshore parks. Orders for those cables and associated infrastructure have already been signed.
A third offshore park was set to use direct current (DC) technology.
Wind farms generate alternating current, which is also the type of electricity used in Belgian homes. Direct current cables are more efficient for longer distances, as they experience less power loss.
Andreas Tirez, Febeliec energy specialist and former director of energy watchdog CREG, said the latter “is technically unnecessary and will cost an estimated €4 billion. We call for this tender to be stopped”.
He claimed more than €2 billion could be saved if operations switched to cheaper AC technology for the third offshore park.
“The project is unaffordable and will weigh too heavily on the energy costs of industries that are already suffering,” Tirez said.
Costs for an energy island in the North Sea, connecting offshore wind farms, have turned out to be more than three times as high as expected. https://t.co/jdc3ohnLuY
— Brussels Signal (@brusselssignal) October 25, 2024
In late October last year, the project had already faced criticism after it was more than three times as costly as initially stated.
Instead of the planned €2.2 billion, the price was expected to be €7 billion, with a major part of the extra spending due to the planned direct current cable.
Such a steep increase in costs for the green flagship project would impact families and industry for years, experts said.
Dredging companies have still been busy constructing the artificial energy island that was designed serve as the energy hub at sea. It was intended to connect three offshore wind farms with nearby countries in the North Sea via undersea cables.
The wave of criticism caused Elia to suspend a part of the project, waiting for the results of a new study by the energy regulator, but also for “a political signal”.
Elia was previously blasted by the industry for sharp increases in high-voltage grid tariffs.
The grid operator also opted for the more expensive DC technology because it allowed the same cable to be used for trading electricity from the UK, a key feature to achieve its goals of connecting European grids.
Outgoing Green federal energy minister Tinne Van der Straeten has long defended the “innovative hybrid interconnector” because it could be used both to bring offshore wind energy ashore and to exchange electricity with neighbouring countries.
According to the director of Febeliec, Peter Claes, this had inherent unwanted issues.
“When the wind blows hard, you cannot produce offshore wind and import cheap UK power at the same time, because they both have to go through the same cable,” he said.
This meant that in future, a choice would have to be made between stopping Belgian wind turbines or stopping British imports.
According to studies and simulations from the British energy watchdog Ofgem, it was most likely that Belgian wind farms would be shut down in that case.
Such a situation would have major implications for the third new wind farm, which the Belgian Government had said it aimed to subsidise by 2030.
“Typically, an offshore wind farm operates at 42 per cent of its maximum capacity but frequent shutdowns will reduce this to 30 per cent or less, completely undermining its business model,” Tirez said.
“With high connection costs, electricity from this offshore farm will even be more expensive than power from new nuclear plants.”
To fix the issue, Febeliec suggested that the third wind farm used the cheaper alternating current and maybe a separate, direct cable to connect with the UK, thus splitting the bill.
Tirez said in his opinion the hoped-for interconnectivity with other countries was not for the near future and pointed out the Netherlands and Denmark had already cancelled their projects.
According to Elia, the two current systems could work because if wind farms generated energy for 42 per cent of the time, the remaining capacity could be used to transfer British electricity.
Moreover, customers purchasing electricity via the cable would always opt for the cheapest source. If the Belgian wind farm offered the lowest-cost power, it would take priority on the cable.
If British electricity was cheaper, it would be prioritised, forcing the Belgian wind farms to stand down.
Ofgem calculated that the British consumer would gain the most and that the Belgian wind park would deliver a quarter to half of the energy of other parks, contradicting Elia’s claims.
CREG said it would release a review of the energy island by the end of January.
According to Ofgem a letter from CREG had expressed concerns about potential legal action.
The regulator apparently feared Elia might sue if “too much” confidential commercial information was shared.
Van der Straeten said in a reaction to VRTNWS: “The supplier is applying ‘an excessive and unacceptable risk premium.'”
She noted that “more than €1 billion in the offer received by Elia for the direct current section cannot be justified transparently”.
Van der Straeten demanded that Elia restarted the tendering process “to ensure effective competition and cost efficiency.”
She has also called on the European Commission to launch an investigation into suppliers who, in her view, were disrupting the market.
“Nonetheless, the strategic importance of the project and the ambition to make the North Sea a major energy hub remain fully intact,” she said.
“The energy island will play a key role in ensuring energy security, strengthening the competitiveness of businesses, and achieving climate goals.”
