At What Cost? Risk Allocation and Transferability in the Financing of First-of-a-Kind Energy Infrastructure: The Case of the Princess Elisabeth Island

Details

Supervisors

Olieslagers, Ruben

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

enEurope is building energy infrastructure it has never built before, and a first-of-a-kind typically costs more than those that follow. This thesis asks who pays that premium. The case is Princess Elisabeth Island, an artificial island off the Belgian coast gathering offshore wind and designed to host an interconnection to Britain, financed by the network operator on its own balance sheet rather than through a project company. Its estimated cost rose from €2.2 billion to between €7 and €8 billion before the government suspended the direct-current phase in June 2025. Using a qualitative single-case design, the study combines the regulatory and corporate record from December 2021 to June 2026 with four semi-structured interviews covering the operator, the regulator, industrial consumers and an independent expert, and reconstructs seven risk categories twice, as allocated at commitment and as realised. Drawing on project finance theory, regulatory economics and the soft budget constraint, it finds that funding was never what the island lacked. What was missing was a party willing to name a price for something nobody had built before. Without a price, no contract could transfer the risk, no comparator existed against which recovery could be tested, and nothing capped entry to the regulated asset base, so the residual reached network users through the tariff. That is why the arrangement was the only structure that closed this asset, and why closing it produced the reference points that make it unnecessary next time.