SMRs could potentially transform Belgian energy landscape, although obstacles remain
A clear regulatory framework and appropriate funding mechanisms that extend beyond a reliance on free market dynamics could be crucial for supporting nuclear power to meet Belgium’s energy needs, an event in Brussels heard.
Strong collaboration between the industry, the energy sector and the Belgian government will be essential for the nuclear sector, said the Belgian Nuclear Forum (BNF), which co-organised the event together with global consulting firm KPMG.
One role for nuclear power in the Belgian energy mix is to ensure the security of supply of low-carbon energy at a competitive cost, said the BNF.
Belgium faces an increase in energy requirements driven by electrification trends such as electric vehicles and heat pumps, alongside exponential growth of data centres and artificial intelligence technologies, said the forum.
But while energy demand increases, consecutive governments have drawn up plans to reduce nuclear power based on a 2003 law and later amendments foreseeing a partial nuclear phaseout in 2025.
Out of Belgium’s seven commercial reactors, two – Doel-3 and Tihange 2 – were shut down in 2022 and 2023. The country currently operates a fleet of five reactor units at Doel and Tihange.
BNF data shows that in 2023 the nuclear fleet provided about 40% of the country’s electricity generation, despite the closure of Doel-3 and Tihange-2.
Under current regulations, Tihange-1, Doel-1 and Doel-2 will remain operational until 2025, while Doel-4 and Tihange-3 will receive operational extensions until around 2035.
Both units were scheduled to be shut down in 2025, but in December 2023 the Belgian government signed an agreement with French utility company Engie to extend the life of two of the two units in the aftermath of the war in Ukraine and ensuing energy security concerns.
Financial support mechanisms provided by the Belgian state for the life extensions would include the “prefunding” of Electrabel’s costs and expenses for development activities, a contract-for-difference (CfD) for the duration of the extension, a loan of approximately €580m ($610m) and an operating cashflow guarantee.
In July 2024, the European Commission began an assessment of the CfD plans with design principles set out in the EU’s new electricity market design rules.
Relying On Free Market ‘Is Not Enough’
“Simply relying on the free market isn’t enough,” said Magali Vercammen, energy lead at KPMG in Belgium.
“In an electricity market largely driven by renewable energy, power prices often drop to low or even negative levels. This situation makes it impossible for new nuclear power plants to recover their significant investment costs.”
KPMG estimates that for Belgium to reach 8 GW of nuclear capacity by 2050 – an increase from less than 4 GW today – will require over €50bn in investments over the next 25 years.
Vercammen stressed the need for a clear regulatory framework and appropriate funding mechanisms. No new nuclear facility has been built anywhere in the world based only on market forces because high risks, she said.
Existing nuclear plants were built in regulated environments which “effectively managed” those risks, she said.
Belgian and European industry is struggling because of relatively high energy prices and tighter climate policies, especially compared to the US, the BNF warned.
“We must urgently take the necessary measures and help the next government to draw up a realistic action plan to decarbonise our industry in the medium and long term,” said BNF director Serge Dauby.
His position was welcomed by Denis Dumont, chief global nuclear officer at Belgian engineering firm Tractebel, who said: “To ensure the successful revival of nuclear energy in Belgium, we must adopt a comprehensive industrial vision that unites all stakeholders – industrials, policymakers, investors, supply chain and safety authorities.”
Small Modular Reactors On Agenda
Small modular reactors (SMRs) have also become part of the debate on the future of nuclear power in Belgium. In 2022, the then government said it would invest €100m in nuclear power research, including SMRs.
In November 2023, a consortium was formed by Belgium’s SCK CEN, Italy’s Enea and Romania’s Raten with US company Westinghouse Electric for the development of lead-cooled SMRs.
KPMG said in a report earlier this year that SMRs could potentially transform the Belgian landscape by addressing “some of the toughest challenges” of the 21st century including security of energy supply, sustainability, and energy affordability.
But the company identified three potential pitfalls related to financing: financing project development, developing appropriate funding mechanisms and financing project delivery.
“To unlock private sector involvement, project developers will require appropriate remuneration for the risk taken, and the presence of a robust regulatory environment to derisk this critical phase,” said the report.
According to KPMG, the investment cost per MW for SMR is estimated between €6.5m to €7.5m, with figures expected to drop as the technology gets deployed and the SMRs begin to be mass-produced.
The earliest commercial deployments of western SMR designs are scheduled for 2028-2029, with most developers aiming for timeframes around the mid-2030s.
