05.09.2019 Position regarding the ordinance prepared by the Ministry of energy for the organization and control of the implementation of the “National Investment Framework for the period 2021-2030”
In view of the procedure initiated by the Ministry of Energy for the preparation of an ordinance for the organization and control of the implementation of the National Investment Framework for the period 2021-2030 under Art. 10c regarding the possibility of free allocation of allowances for the modernization of the energy sector by Directive (EU) 2018/410 amending Directive 2003/87 / EC (the Directive), Bulgaria has the opportunity to consider the option given to beneficiary countries to redirect part of their free allowances under Art. 10c paragraph 4 to the Modernization Fund under Art. 10d. Beneficiary countries should notify the European Commission (EC) of their decision by 30 September 2019 and at the same time provide a list of specific priorities for their country in the context of projects funded under Art. 10c and 10d. In this regard, we support the draft ordinance presented for public consultation in its general plan, namely to organize the allocation of free quotas through a tender procedure for both small and large projects. We consider it necessary to provide in the Ordinance the case in which the unallocated allowances under Art. 10c, as a result of insufficient participation in the tenders announced, will be transferred to the Modernization Fund at the end of the period in order to support the preparation and implementation of projects qualifying for Modernization Fund financing, but with funding below 100%.
In parallel with the preparation of the ordinance for the implementation of Art. 10d of the same Directive and in connection with the establishment of the Modernization Fund, it is imperative in the ordinance that the priorities of our country are described in detail, based on the common topics described in the Directive. According to the information note of the European Commission on the implementation of the Directive, the beneficiary country under the Modernization Fund should hold public discussions on the operational rules, be involved in the development and adoption of the act for implementation of the Modernization Fund by the EC, including outline its national priorities and topics, to be financed by the funds earmarked for Bulgaria in the amount of 5.84% of the Fund by the end of 2019. While the permissible priorities are generally formulated in the text of the Directive (Art. 10d, paragraph 2), Bulgaria has the opportunity to bring in the specificity needed for our energy sector, which will actually lead to an increase in investments and the realization of modernization projects in the energy sector.
Members of the National Energy Chamber recognize the following priorities as sufficiently specific and motivating for the representatives of the (private) Bulgarian energy sector to be active participants in the realization of the goals and opportunities provided by the Fund.
- Energy efficiency – setting up a national fund to finance energy efficiency improvement measures
- Development and integration of renewable energy sources in the electricity system and market.
- Energy storage systems
- Development of district heating networks – financing the deployment of district heating networks and increasing their efficiency by focusing on cities with low air quality indicators; financing the modernization of fossil fuel combustion systems with those powered by alternative fuels such as hydrogen.
- Digitalization of the electricity distribution networks – a national program for the planned digitization of the electricity distribution networks and their modernization in order to adapt to the changing electricity system and to meet the needs of customers of electricity services.
NEC is ready to actively participate in public discussions on the formulation of national priorities. Official Position NEC_Modernization Fund
The National Energy Chamber is deeply concerned about the increasingly repeating attempts of business associations to subordinate the public debate to topics aimed at instilling intolerance to the operations of energy enterprises and to diminishing their importance for the national economy.
The energy sector is a key sector for the development of a predictable and secure economic environment, while ensuring its stability and reliability in compliance with the strictest international environmental standards is linked to the investment of funds that are paid back over the lifetime of the respective capacities.
The National Energy Chamber, which accounts for more than € 5.8 billion of investments and over 10 000 employed in private companies in the energy sector, considers the deliberate and persistent attempts to discredit certain economic entities, as well as the sharp interference in the sector with pressure for hasty legislative amendments to be directly aimed at worsening the investment and business environment and exposing at risk the security and reliability of the Bulgarian energy system.
Following the public announcements regarding the future of the energy sector, made yesterday directly after a meeting with employers’ organizations we express deep concern key decisions about the strategic development of the energy sector to be taken under obvious pressure and without consulting with the affected sector’s representatives.
The National Energy Chamber, although a legitimate representative of a large part of the private investments in the energy sector, wаsс not included in yesterday’s meeting and expresses serious concerns about the implementation of the agreements reached there.
We have insisted continuously that all key decisions in the energy sector are made through an open and transparent process of consultation with interested parties. The National Energy Chamber, as such a party, is a must participant in the dialogue with the Government and the Legislator in order to find the best approach for the energy sectors’ development and the most efficient steps to full market liberalization without a threat to the stability of the system and the security of supply.
We, the National Energy Chamber represent the employers – private investors in the energy sector and represent over 50% of the installed capacity and over 70% of the employed in the private energy sector. The investments made by us exceed BGN 11 billion and amount to 60% of all foreign direct investments between 2010 and 2016. Our members operate in all segments of the electricity sector – generation, trading, distribution and supply, producing energy from conventional and renewable sources. We are well aware of the energy sector’s issues, as we have repeatedly stated positions and made specific proposals for improving the investment climate, transparency, market liberalization and we have supported the financial stability of the industry.
In this respect, we support the Government’s efforts to modernize and fully liberalize the electricity market.
We believe that the controversial issues should be discussed responsibly, reasonably, and on a par with all participants in the process.
We are expecting during the Bulgarian presidency not destabilization and resignation requests, but a consistent effort to protect the interests of Bulgarian energy sector in the discussions of the Fourth Energy Package.
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1. Objectives of the National Energy Chamber
- Legitimate representation and protection of the interests of the employers in the energy sector;
- Create open environment for dialogue between energy undertakings and public institutions as well as other local and international stakeholders;
- Promote sustainable development of the liberalized energy sector in Bulgaria based on clear and transparent rules.
- Support implementation and development of best business practices and policies for management of the projects in the energy sector.
- Encourage development of clean energy technologies for electricity generation and their implementation in transportation and urban development as well as promote energy efficiency for households, companies, cities and Government;
- Advocate for consistent and predictable legal and regulatory framework through active dialog with the Government and the Regulator, allowing stable investment process in the energy sector;
- Foster integration of Bulgaria into the Energy union.
- Adopting the National Energy Strategy with 2050 horizon which should reflect the current state of the sector, the challenges ahead of it after 2020 and the priorities for development in accordance with European policies and national priorities.
2. Principles of the National Energy Chamber
- Full support for process of market liberalization, including creation of fully functional power exchange in accordance with the 3rd liberalization package of EU;
- Acceptance for implementation of legitimate market mechanisms which enable the transition of existing agreements into the liberalized market as long as the defined in the law prospective provisions preserve and guarantee the terms and the conditions of the existing power purchase agreements of renewable energy producers, as well as the ones of the producers with long-term power purchase agreements;
- Full support for a diversified electricity generation mix that contributes to the resilience of the generation sector in case of external challenges such as meteorological conditions or fuel supply disruption;
- Full support for policies ensuring continued security of supply and system stability through optimal use of indigenous resources;
- Protection of the investments of the existing investors and no further damage to projects’ economics;
- Legally guaranteed institutional and financial stability of Security of the Electricity System Fund;
- Protection of vulnerable customers though social system and not through energy prices;
- Development of the grid infrastructure aimed at reaching international quality standards of energy distribution and supply in all regions of Bulgaria;
- Support implementation of a legal framework aimed at the prevention and penalization of the energy and infrastructure thefts;
- Ensure financial stabilization throughout the sector by adopting sound long-term policies which will benefit equitably consumers, energy sector companies and ultimately the real economy.