Elia, a Belgian grid operator, announced the results of the fourth auction of Capacity compensation Mechanism (CRM, Capacity Remuneration, Mechanism) held this year. The results show that a total of 450MW battery energy storage systems have won the contract. In other words, the battery energy storage system occupies all the newly-built capacity selected in Belgium's recent capacity compensation mechanism (CRM) auction.

This is the first time that two auctions are held simultaneously, namely the last auction in the 2025-2026 delivery year (Y-1) and the first auction in the 2028-2029 delivery year (Y-4).

Elia announced that the target for the delivery year of 2025-2026 has been achieved: "Supply security is guaranteed and sufficient contracts have been signed".

It is reported that Belgium will phase out nuclear power generation before 2025 according to the policy of the previous government. In order to ensure the safety of power supply after the elimination of some nuclear energy, after consultation with European authorities, a capacity compensation mechanism beneficial to new energy was formulated. The introduction of market capacity compensation mechanism is part of the energy strategy of the Belgian federal government, which lists a series of new measures aimed at ensuring the safety of Belgium's long-term energy supply. Moreover, the Belgian government chose CRM in the whole market.

According to documents on Elia's official website, Belgium CRM currently implements a single round sealed bid auction format to ensure fair competition among market participants and limit the potential of market power abuse. The auction starts from 2021and will be held at least on October 1 every year, and the auction results will be announced on October 31. On pricing rules, the selected capacity provider (CMU) will be obtained based on its bid.Remuneration is the so-called "pay-as-you-go" principle.

CRM participation process

so far, the total number of CRM contracts awarded by the battery energy storage system has reached 1.1GW, about 13 new large-scale projects have been selected, including public utilities and independent power producers (IPP) Engie and development operators Storm and Giga Storage.

Among them, Engie's winning project is its 100MW/400MWh Kallo battery energy storage system, which is one of the three 380MW battery energy storage system projects in Belgium released in March 2023. Engie said that the capacity market contract it won will start in 2028, namely Y-4, for 15 years.

Sé bastien Arbola, vice president of flexible power generation and retail at Engie, said: "This new project is an important step for us to improve the energy storage capacity of European batteries, it also proves the effectiveness of the capacity compensation mechanism in developing these assets." It is reported that the company is currently building a 200MW/800MWh project in verford, Belgium, which is the largest of the three projects under construction and one of the largest projects under construction in Europe.

Simon De Clercq, senior Research assistant at Aurora Energy Research Research Institution, said that with the rapid growth of Energy storage market in Belgium, CRM auction is the project provides contractual income opportunities. "We do observe that the capacity compensation mechanism is injecting more vitality into Belgium's already active energy storage market. Belgium has become a hot spot for energy storage investment and there are several other factors, including eliminating the power grid cost of transmission system operators (TSO), and the high income that can be obtained in the power auxiliary service market (mainly frequency control Reserve FCR and automatic frequency response AFR)."