Flanders requires all electricity retailers to meet a renewables portfolio obligation of 1.4% this year, climbing to 3% in 2004 and reaching 7% in 2010. "These targets may be a bit ambitious," says Van Craenenbroeck. They may be lowered when the obligation is applied to the transmission net as well as the distribution net.
Under the Flemish system, renewable energy producers are issued with green certificates by VREG for every 1 MWh delivered to the network. Producers can trade their certificates separately from the physical power on a market driven by the renewables obligation and also by consumer demand for green electricity. From March 31, 2003, retailers face fines of EUR 75 for every MWh they fall below their obligation target. Certificates sold as green electricity cannot be set against targets, and are thus removed from the system, further intensifying pressure for renewables investment.
The federal government guarantees Flemish wind producers EUR 50/MWh for onshore wind and EUR 90/MWh for offshore. "Consequently we expect the average wind-certificate price to lie between EUR 50 and EUR 75 when the market eventually takes off," says Van Craenenbroeck. The average monthly prices made will be made public.
While Flemish consumers are technically free to buy green electricity from a retailer of their own choice, none of Flanders' 14 licensed power retailers are offering green power. "We expect that market to take off in the very near future but it is complicated by the fact that green power is currently exempt from transmission costs," says Van Craenenbroeck.
Apart from the targets, there are also uncertainties about imports of green power into Flanders. At present, green certificate imports must be bound to physical power from a country which also operates a renewables obligation, such as Britain. Van Craenenbroeck notes that some market players are looking at importing power from the Netherlands and certificates from the UK. "How it will be resolved in practice will only become apparent as we go along," he adds.
Regional trade between Flanders and Wallonia is impossible because Flanders, unlike Wallonia, does not certify combined heat and power (CHP) generation as green. But it will be introducing CHP certificates in 2003, says Van Craenenbroeck. How offshore wind will be integrated into the system is also uncertain. Technically it is under the jurisdiction of the federal government rather than the regional authorities.
The third regional authority, the government of the Brussels-Capital region, has yet to implement its green credit system.