French power group Engie and the Belgian federal government have signed an intermediate agreement defining the terms for extending the operation of unit 4 at Doel NPP and unit 3 at Tihange NPP. The agreement aims to ensure a balanced distribution of risks between the two parties and will also remove uncertainties about future changes in provisions related to the treatment of nuclear waste.

Belgium has seven nuclear power reactors – three at Tihange near Liege and four at Doel near Antwerp. All seven units are pressurised water reactors operated by Electrabel, part of Engie. Apart from Doel 1&2, which are 430 MWe plants, the others have a capacity of approximately 1000 MWe. In March, Belgium's Federal Agency for Nuclear Control (FANC) ruled out extension of the three oldest nuclear plants – Doel 1&2 and Tihange 1. Instead FANC advises depending on Doel 4 and Tihange 3 to avoid power shortages.

Tihange 2 was shut down in January, and Doel 1&2 are due to be disconnected from the grid by 2025 in line with the 2003 nuclear phase-out law. Tihange 2 was the second reactor to close under the phase-out law after Doel 3 closed in September 2022. In January, Engie-Electrabel reluctantly agreed to extend the operating lives of Doel 4 and Tihange 3 by 10 years from 2026 in face of the current energy crisis.

Prime Minister Alexander de Croo said in a statement that the new agreement “strengthens our electricity supply, reduces our country's energy dependence and guarantees the production in Belgium of low-carbon, low-cost electricity”. That agreement envisages establishment of a 50:50 joint venture to manage the two units.

The new agreement builds on a non-binding agreement in principle signed in January and includes the following terms:

The commitment from both parties to use their best efforts to restart Doel 4 and Tihange 3 as early as November 2026, or, subject to the effective implementation of an announced relaxation of regulations, by November 2025, in order to strengthen the security of supply in Belgium;The establishment of a legal structure dedicated to the two extended nuclear units, equally owned by the Belgian State and Engie, aligning the interests of the two parties and ensuring the sustainability of their commitments;A business model of the extension with balanced risk allocation, notably through a contract for difference mechanism with incentives for the operator to achieve favourable technical and economic performance at the plants;An agreement on the fixed amount of future costs related to the treatment of nuclear waste. This will be based on a new scenario defined by waste management agency ONDRAF, covering all of Engie's reactors in Belgium, for a total amount of €15bn ($16bn) to be paid in two instalments.

As a result of the transfer of all nuclear waste liabilities to the Belgian government, Engie will no longer be exposed to changes in future costs related to waste treatment, which is reviewed every three years, by the Nuclear Provisions Commission. In return, Engie will recognise the increase in its commitments under this agreement as an expense impacting non-recurring income for the 2023 fiscal year, after nuclear provisions adjustment, for an amount of around €4.5bn before tax. The Group anticipates an increase in economic net debt of the same order of magnitude. Engie's total nuclear liabilities to Belgium now amount to at least €23bn.

The signature of the definitive agreements is expected at the end of July. Engie CEO Catherine MacGregor said: "After several months of intense and constructive dialogue with the Belgian government, we are pleased with the signing of this balanced agreement for both parties. It provides Engie with the necessary visibility on the total amount related to nuclear waste management and significantly reduces the risks linked to the extension of the two units."

Energy minister Tinne Van der Straeten said the deal allows Belgium to secure the financing of nuclear waste management for future generations.

Image: The Tihange nuclear power plant in Belgium (courtesy of Electrabel)

Date: Wednesday, 05 July 2023
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