Direct lines in Flanders: 5 points of attention

Recently, the VREG started authorizing direct lines for electricity more easily. This brings new opportunities for companies near an electricity production site, such a wind farm or solar park. However, many legal issues remain. Companies wishing to use direct lines have to keep in mind the land ownership situation, the possible need for permits, taxes and decommissioning issues.

To connect companies directly to a wind farm or a solar panel park located outside their own site via a direct line (‘directe lijn’), the authorisation of the VREG (the Flemish Energy Regulator) is required. In the past, such authorisation was rarely granted. Last year, the Flemish legislator amended the law so that the VREG would grant this authorisation more easily. This adjustment is now bearing fruit.

Since that amendment, the VREG has, in various files, given authorisation for the creation of these direct lines outside the own site. This is good news: companies can thus more easily connect directly to a nearby wind farm or a solar panel park. The electricity they buy is more eco-friendly. In addition, these companies save a great deal on their electricity bills: not only is the electricity cheaper, but the distribution and transmission costs are also eliminated.

However, there are still a few points of attention for companies in the Flemish Region who would like to quickly sign a contract with a producer of ‘green’ electricity. We list five of them below:

1. In principle, authorisation for a direct line is granted to the person or company connected to the distribution network, in other words: to the landowner. The landowner is therefore responsible for the management and maintenance of the direct line. In most cases, however, one wants the producer of ‘green’ electricity to bear the responsibility for the direct line. Consequently, one must make clear agreements in this respect.
   
2. The VREG’s authorisation for a direct line does not automatically entail any rights of way over any third party’s private property. If neighbouring plots are crossed, then agreements will have to be made about this situation (e.g. easements). Favourable rules do apply to the crossing of any public domain: the same rights apply as those of the distribution network operators.
   
3. The authorisation of a direct line on the VREG’s behalf does not constitute a single permit. There is a debate as to whether a direct line is a “normal” underground construction and would thus be exempted from obtaining a single permit. That is certainly a point of attention.
   
4. A tax on the operation of a direct line has recently been introduced. The taxpayer is the operator of the direct line. In principle, therefore, it will be the landowner, and not the ‘green’ electricity producer, who will be considered taxable. It is also important to stress that the tax is levied not only on the electricity that the landowner would purchase, but also on the electricity that would eventually be injected into the grid. Clear agreements must be made in this regard. Otherwise, the landowner would unexpectedly pay taxes on the direct line.
   
5. At the end of the process, the direct line must be decommissioned. The Flemish Materials Decree will apply to this decommissioning. Such decommissioning costs are normally borne by the direct line operator. Once again, these costs are usually passed on to the ‘green’ electricity producer.

In Flanders, direct lines for electricity clearly offer great opportunities for companies near a wind turbine or solar park. Companies and landowners must be aware of the legal issues involved.

Written by

• William Timmermans

  Partner