Belgium's transmission operator (TSO) Elia has temporarily postponed the signing of high-voltage direct current (HVDC) contracts for ‘the world’s first’ artificial energy island, due to the price increase for HVDC infrastructure, causing a three-year delay for the delivery of Princess Elisabeth project.
Elia said the postponement of HVDC contracts signing will be used to weigh multiple options with government in changing market context, with current designs up for a review against alternative concepts.
These alternatives are also feasible but require a joint action plan with all the parties involved, as there are currently too many uncertainties both in policy and regulation.
“Given the strategic importance of the Belgian energy island and its crucial role in the country’s electricity supply in the coming decades, Elia wishes to keep all options open by postponing the signing. The government bodies involved now have more time to make a final decision and possibly take additional measures,” the TSO said.
Princess Elisabeth Island is one of the most important projects in the Federal Development Plan for the Belgian high-voltage grid, which was approved by the federal government in 2023.
'Overheated' HVDC Supply Chain with Significant Price Increases
The construction of the artificial island (foundations) and the implementation of the already-signed alternating current (HVAC) contracts remain on track.
This ensures the realization of two (700 MW + 1400 MW) of the three future offshore wind farms. Thus, 60% of the new Princess Elisabeth wind zone is already being implemented.
To connect the third wind farm (1,400 MW), Elia is currently negotiating for two HVDC converters, one on the island and one on the Belgian coast. These converters must, in addition to connecting this wind farm, also enable the development of a hybrid interconnector to the U.K. as part of Nautilus project.
The international tender that Elia has set up for these direct current components shows an overheated supply chain with significant price increases. Although the terms from the supplier involved are comparable to those of other European grid operators, they are - despite our efforts - much higher than our initial estimates.
This significant cost increase - specific to HVDC - is due to scarcity, combined with the rise in material costs and inflation.
To realize the HVDC contracts within the set timeframe by 2032, the chosen supplier has given the TSO a deadline to award the proposed contract by mid-February 2025 at the latest.
“Since Elia, as a grid operator, implements decided policies, it seems inappropriate to us, in the current exceptional market conditions, to make a unilateral decision without further political support.
“To keep all options open, Elia has analyzed various alternatives over the past few weeks, weighing the pros and cons and taking a range of uncertainties into account. These are complex analyses that require considerable expertise and are currently being discussed calmly with all stakeholders, “ Elisa said.
As choosing between the reference scenario and alternatives takes time, Elia said it will not sign the HVDC contracts for the Belgian energy island for the time being, giving the authorities more time to weigh the different options and take additional measures.
As Elia will not be awarding the negotiated HVDC contract in February 2025, the HVDC converters will not be built to the original schedule.
It will be up to the government to confirm or revise the reference concept.
“This is a strategic decision regarding Belgium's electricity supply for the coming decades.
If the reference concept is chosen, the construction of the HVDC converters will be postponed to a date to be determined with the equipment manufacturers. The project’s overall lead time is estimated at around three years,” Elia said.
