Statement on the Strategy for Sustainable energy development of the Republic of Bulgaria until 2030 with horizon to 2050

The National Energy Chamber, in line with the structure of the Strategy, proposes the following comments:

Еnergy security and sustainable energy development

The efficient use of the local resources by existing lignite producers is defined in the Strategy as a national goal of ensuring security of electricity supply.  We believe that the use of local lignite resources in compliance with applicable legislation does not run counter to the long-term European goal of decarbonisation, as the transition should be smooth and take into account local geographical, technological and economic specificities.

In order to maintain the significant role of the conventional producers, without neglecting the principle of sustainable development for clean energy, the Strategy should contain a clear plan for ensuring the operation of existing conventional facilities, taking account of the following:

  • the rising prices of greenhouse gas emission allowances;
  • the stricter requirements of Directive 2010/75/EU of the European Parliament and the Council on industrial emissions;

The introduction of a market capacity mechanism no later than July 1st , 2021, should be highlighted more prominently in the text of the strategic document. We would like to point out that the details of the capacity mechanism should be agreed with the stakeholders in advance and the legitimate interests of investors should be taken into consideration. We consider that the foreseen deadline is unrealistic and does not allow for the implementation of reforms that would enable the effective functioning of the electricity market prior to introducing a capacity mechanism. It would be useful to ensure an orderly transition by allowing for a transition period to avoid having a disruptive effect which could undermine security of supply.

Development of integrated and competitive energy market

 The strategy would benefit from further details on the specifics on the future functioning of the balancing market and the electricity market, which are broadly mentioned in the section regarding the security of the electricity system. In this context, we propose the following measures aiming at improving the balancing market, which could be included conceptually in the document:

  • Replacement of the existing balancing system of two prices (surplus and shortage) with a system of one price – a requirement laid down in Regulation 2017/2195 on establishing guidelines for electricity balancing.
  • Alignment of the Electricity Trading Rules with Regulation 2017/2195 on the information publishing practices, imposing on ESO obligations to publish information about the functioning of the balancing market;
  • Ensuring increased competition in the system services market by introducing opportunities and incentives for RES producers and consumers to participate in it;
  • Development and publication of a roadmap for Bulgaria’s participation in the European balancing energy platforms

We believe that IBEX should become a party to all transactions on all platforms, as currently IBEX is not a party to the transactions on the ”Auctions” and ”Continuous Trading” platforms. As an alternative solution could be the introduction of the role of a clearing house for the traded dals.  It is a core prerequisite for increasing market liquidity.

Energy efficiency

The strategy does address the issue of systemic shortcomings of the current scheme of mandatory energy savings, and namely the lack of a financial mechanism available for obliged persons to implement energy efficiency measures and meet their individual goals.

The practice in recent years shows that the national scheme for energy savings is inefficient due to the lack of a financial mechanism for ensuring energy efficiency measures and accounting for energy savings.

The goals of the obliged persons are a reflection of the national goal that the state should fulfill and a significant part of it is allocated for fulfillment by the energy traders. Energy traders do not have the necessary market, technical and financial mechanisms to achieve it. We consider it necessary that a new working scheme and implementation roadmap should be included in the long-term development strategy of the sector. 

Sustainable energy development for clean energy and decarbonisation of economy

The long-term strategy for the development of the energy sector should take into account the role of renewable energy for sustainable development and achieving the decarbonisation targets. We believe that the defined national target of 27.09% share of renewable sources energy in gross final energy consumption by 2030 is not ambitious enough. We also propose the forecast for installed capacity of new wind, solar and hydro installations to be revised and increased. In parallel with traditional RES technologies, and given the growing importance of offshore wind energy on a European level and the declining global average prices of the technology, we believe that the Strategy should create a basic framework for the development of the significant wind resources in the Black Sea.

The Strategy should outline the needed specific legislative and regulatory steps to make the introduction and market integration of new renewables possible and competitive. At the same time, an appropriate environment should be ensured to protect and ensure fair treatment of existing investments.

We believe that the long-term strategy for the development of the sector should give greater consideration to energy storage systems and identify the steps for their introduction and implementation in the electricity system.

Development of transmission and distribution networks

The strategy does not go further into the issues related to the growing need for investments for the development and territorial deployment of electricity distribution networks and technologies, which are the unifying link in the energy chain. Accordingly, no guidelines and policies are envisaged to amend the regulatory framework in order to encourage investments in electricity distribution networks.

An analysis and assessment of the investment costs for connection to the distribution and transmission system should be prepared. In view of the targets for new RES deployment these costs are supposed to increase.

Specific proposals of the Chamber in this direction are:

  • for putting into operation RES projects over 200 kW, national strategy by regions and types of renewable source, corresponding to the planned development of the transmission and distribution networks, should be prepared. This strategy should link the construction of RES power plants with investments in the electricity transmission and distribution networks. They, in turn, will lead to the creation of infrastructural conditions for the RES projects development, as well as, if necessary, provide for the construction of energy storage facilities;
  • to draw up a specific timetable for the implementation of the listed measures and to give further details about the financial instruments that could be used.