A case study of Belgium

Abstract

In the aftermath of the Fukushima Daiichi nuclear disaster in 2011, several countries have decided to rethink their energy policies and subjected their nuclear reactors to stress tests. According to national law drafted in 2003, Belgium must have phased out all seven nuclear reactors by 2015-2025. However, to date Belgium still has not presented a clear plan how to replace their nuclear power climate-friendly and securely while maintaining an acceptable electricity price. According to the Belgian energy development plan, renewable energy sources will play an important role in power generation in the coming decade, but the uncertain investment environment undermines the confidence of energy investors. Belgium will not reach its 2020 EU target and even suffer from power shortages if it maintains the status quo. This paper aims to give new insights into the assessment of RES-E policy instruments and provide possible solutions to improve the RES-E promotion system in Belgium. To realize these objectives, the paper mainly uses the multi-system framework, neoclassical economics and new institution economics throughout the study. To be specific, the research firstly uses the multi-system framework to clarify the RES-E investment environment, and then based on economics theories and existing experiences, defines six policy assessment criteria to evaluate the policy instruments. In the case study of Belgium, the current Belgian power market situation is presented following an adapted multi-system scheme. Furthermore, the history of Belgian RES-E policy instruments are shown as well. With six defined policy assessment criteria, this paper evaluates policy performances of four main RES-E policy schemes in the case of Belgium. Based on the evaluation results, we find that Belgium is most in need of improving the policy performances on cost effectiveness, transaction and administration cost efficiency and compatibility. To improve this situation, three policy options have been listed for Belgium, two of which are recommended in light of the specific characteristics of the Belgian case. Specifically, we suggest Belgium improve its current TGC system and investment subsidies on the one side, and try to implement a tendering scheme on the other side. In the research, some scientific contribution and practical contribution is recognized as follows. Firstly, an adapted multi-system framework for power generation is established, which could simplify the investment environment and make it possible to get a quick overview of one country’s power sector. Secondly, applying new institutional economics in the study is a meaningful step in the field of policy assessment. Most existing studies evaluate the policy scheme only on effectiveness and cost efficiency, but this paper not only summarize and define six policy assessment criteria but also make explanation on each of them based on economic theories and practical experiences. Finally, other countries besides Belgium could also evaluate their RES-E policy schemes in a more comprehensive and accurate manner with six policy assessment criteria and find the right improving direction for the RES-E promotion system. It is certain that there are limitations in this research. For instance, there might be other investment determinants which I have ignored; the policy assessment criteria are defined only based on certain theories and limited experiences; this paper only focuses on four main RES-E policy instruments and one case study, etc. All of these should be improved by future studies.