The European Commission has approved €2.04 billion over 20 years to support Belgium’s next offshore wind farm in the North Sea’s Princess Elisabeth Zone, a project delayed by rising infrastructure costs. The tender is expected to be awarded in Q4 2027, with electricity generation unlikely before 2031.

The wind farm, with a maximum capacity of 735 megawatts, is expected to generate up to 2.6 terawatt-hours of renewable energy annually, representing about 3.2% of Belgium’s annual electricity consumption, or the equivalent of around 740,000 households consuming 3,500 kWh annually.

Lower energy bills?

Additional offshore capacity reduces dependence on imported energy – locally generated energy is energy that does not need to be imported – but does not eliminate the need for nuclear power, gas plants, storage, flexible demand, and cross-border electricity trading.

The question remains whether more domestic renewable electricity will ultimately lower Belgian energy bills, or whether consumers will pay for increasingly expensive offshore and onshore infrastructure.

New mechanism

The new mechanism replaces an earlier arrangement that expired after Belgium suspended the original tender. The EU had already approved €682 million in state aid for 2024, but the funds could not be disbursed before the 31 December 2025 deadline.

The Belgian government suspended the tender – citing a sharp rise in infrastructure costs and legal risks – to limit the impact on grid tariffs.

Princess Elisabeth energy island

Belgium currently has 2,261 MW of operational offshore wind capacity. The new wind farm would increase this by almost one-third, to approximately 3,000 MW. The complete Princess Elisabeth Zone is intended to add another 3.15-3.5 GW, bringing total Belgian offshore capacity to around 5.4-5.8 GW.

Elia’s Princess Elisabeth energy island, about 45 km offshore, is intended to collect electricity from the new wind farms and transmit it to the Belgian mainland. It was also conceived as an international electricity hub, potentially linking Belgium with the UK through the Nautilus interconnector.

The new wind farm and the energy island are directly connected projects but have separate financing. The EU’s €2.04 billion approval supports the offshore wind developer, not Elia’s island construction. Grid infrastructure costs are financed separately and can ultimately affect network tariffs.

Two-way contract

The support takes the form of a two-way contract, under which the government compensates the producer for losses if market prices fall below an agreed-upon rate, while also recouping excess profits if those prices surge.

A distinctive feature of this system is that support is calculated based on the facility’s theoretical capacity, rather than the actual volumes delivered to the grid. This prevents subsidizing production during periods when electricity prices are negative.

According to current Minister of Energy Mathieu Bihet (MR), the European green light is “an important step that demonstrates the quality of the work delivered and the robustness of the legal framework.”

Not automatically cheaper

More domestically produced electricity reduces exposure to foreign energy suppliers. Additional low-carbon electricity could support industrial electrification, electric vehicle charging, and greater price stability. Consumers, however, will not automatically benefit financially. Benefits are possible but far from guaranteed.

More offshore wind should help reduce wholesale electricity prices during windy periods and limit exposure to imported fossil fuels. However, consumers must also bear, directly or indirectly, the costs of generating, transporting, and balancing that electricity. The energy island, subsea cables, and inland grid investments represent several billion euros in additional infrastructure.