Investment Yield Parameter Reduced For Renewable Energy Projects

The draft Order alters a key parameter in the formula used to calculate the "banding factor". The banding factor sets the number of Renewable Energy Certificates ("RECs") a renewable energy project receives for each kWh of electricity generated from renewable energy sources. Each REC can be sold at a guaranteed price of EUR 93/REC. The banding factor thus effectively determines the subsidy level.

The proposed amendment reduces the parameter reflecting the yield of the investment, namely "parameter R".

The proposed reduction applies to all green electricity projects, regardless of size or technology, though with different effective dates. For projects requiring an individual application for a project-specific banding factor, the reduced parameter R applies to projects for which that individual application occurred as of 1 January 2020. For other projects, the reduced parameter R applies for those projects having a starting date as of 1 April 2020.

The reduced yield parameter is 6,5% instead of 7,5% (for wind), 4,75% instead of 5% (for PV installations) and 10,5% instead of 12% (for biomass and combined head projects). The change has no (quasi-)retroactive effect: projects which received a banding factor with the current (higher) parameter R will not see this reduced.

The reduction of factor R for future projects does not entirely come as a surprise. In the coalition agreement of 30 September 2019 ("regeerakkoord"), the Flemish government expressed the intention to reconsider the...