Policy brief: Turmoil in Belgium and elsewhere…
By on 6 octobre 2016
Even though the British Prime Minister gave the go-ahead to the construction of a nuclear plant in September, thus condemning tax-payers on both sides of the Channel to watch passively how public money will be used to shore up a centralised system, poorly adapted to the future, favourable winds are also blowing on the energy sector. We are definitely at a crossroads as testify the following examples, a few among many illustrating the powers at work and the role played by the various stakeholders.
Let’s start with a Belgian story, but highly representative of the complexity local authorities have to deal with when they have to take important decisions that affect the future of the energy system. In Flanders, 17 local companies share decision-making regarding the distribution network managed by Eandis. The main political parties have been working for months on an agreement preparing a merger not only to improve efficiency, but also to attract external investors and find a substitute to Electrabel (which, according to the European Directive on the opening-up of the market, cannot be involved in both energy production and distribution). An open call for capital was launched to attract major international pension funds. But “State Grid China”, a Chinese state-controlled company, made the best offer by far - one no mayor could turn down - with 100-year investment clauses (the call was for 14% of the capital).
The Greens, and especially civil society, were fiercely against this take-over, arguing that the capital required could have easily been raised through crowdfunding, thus giving citizens an opportunity to take ownership of the networks and to gain a better understanding of the challenges of energy transition. Local financing would also preclude further centralisation of the networks at a time when devolution is on everyone’s lips, with the local business model being already well tried and proven (in German-speaking and Scandinavian countries). Many legal challenges were considered, all very imaginative, such as using the Directive on the opening-up of the market to block State Grid China, a company involved in the production, distribution and transmission of energy (How ironic !). But it was finally the Flemish energy regulator which provided the solution, just before the vote of 3rd October, by reminding the city of Antwerp that, contrary to their request, they would no longer be able to offer reduced rates, since centralisation of the distribution networks would impose a single tariff on the whole area. This was politically unacceptable for Antwerp which currently offers a service to households which is 100 euros cheaper annually. But without Antwerp, “State Grid China” was no longer interested.
An accelerator for a bottom-up transition ?
Will this happy-ending help speed up the transition by and for citizens, will it trigger a reflexion on what investment is really necessary and will it help the region regain control of the tools it needs to use local resources (including financial ones) ?
In Spain, a campaign has been launched by those cities run by citizens’ coalitions with three demands : “reclaim competencies, reclaim financing and municipalise utilities” as a reaction to a national government law that appears to severely restrict local action.
In Germany, the State of Schleswig-Holstein has announced its ambition to become 100% renewable by 2035 by relying on regional industries and local SMEs, like many local authorities across Europe engaged in an ambitious transition process, as detailed in our latest publication (English version to come !) : www.energy-cities.eu/Vers-des-villes-100-energies-renouvelables.
In France, Nantes has just launched its Debate on the energy transition under the slogan : “The energy transition is about us” - another example of a decentralised approach aimed at liberating …local energy… and new public policies….
This is why, despite the signing of the Hinkley Point agreement, I would say that the keyword for this month is D… for Devolution…..