IEA: ‘Belgians pay world’s highest grid network rates’

Belgian consumers pay the world’s highest transmission and distribution network rates on electricity bills. This conclusion comes from the latest International Energy Agency (IEA) report, ‘Electricity Grids and Secure Energy Transitions’, cited by Het Laatste Nieuws.

According to the IEA, in 2021, an average family in Belgium paid more than 280 euros per megawatt hour on their electricity bill. Approximately 95 euros or about one-third of the electricity bill went to transmission and distribution costs, making the so-called network rates in Belgium the highest globally.

Elia and Fluvius

The transmission and distribution costs on the electricity invoice are used for the construction, maintenance, management, and development of the electricity network. In Belgium, the electricity grid is managed by Elia and Fluvius.

The former is the high-voltage grid operator that transports power via the high-voltage grid from production plants or abroad to major industrial players and distribution grid operators. It manages the distribution network and brings electricity to homes and smaller companies. The costs for transmission and distribution of electricity are passed on to consumers via the grid rates. Other electricity bill components include energy costs, taxes, and VAT.

Stronger power grid

Network rates in Belgium are the highest in the world, followed by Ireland and Peru. They are almost twice as high as the average in developed economies. However, in 2021, the total electricity bill was higher in Germany and Denmark. According to the Flemish regulator VREG, there are even differences within national borders. Flanders, for instance, is cheaper than Brussels and Wallonia.

An explanation for the high prices in Belgium is that the power grid in Belgium is – historically – much stronger. “We have more copper in the ground and heavier transformer stations,” explains energy expert Joannes Laveyne of the University in Ghent in Het Laatste Nieuws. “We pay more but have a reliable and strong electricity network.”

Challenges

Yet we face significant challenges in the coming years, and both Fluvius and Elia have large investment plans to avoid congestion problems on the grid or blackouts. Fluvius intends to invest an additional 4 billion euros over the next ten years to replace and strengthen 36 000 kilometers of power cable and one in three electricity cabins in Flanders.

From now until 2027, Elia assumes to spend 7,2 billion euros. Elia wants to increase its energy bill costs by 80%, from about 47 euros for an average family to about 84 euros per year.

Clean energy transition

IEA’s ‘Electricity Grids and Secure Energy Transitions’ report concludes that modern, innovative, and expanded grids will be essential for successful energy transitions. The backbone of today’s electricity systems, grids, are set to become increasingly important as clean energy transitions progress, but they currently receive too little attention.

To achieve countries’ national energy and climate goals, the world’s electricity use needs to grow 20% faster in the next decade than in the previous. Reaching national goals also means adding or refurbishing a total of over 80 million kilometers of grids by 2040, the equivalent of the entire existing global grid. Modern and digital grids are vital to safeguard electricity security during clean energy transitions.