News excerpt – “Electricity imports for the first 26 days of this year increased by 86.92%; exports decreased by 34.39%. Compared to the same period last year, electricity consumption dropped by 4.67%. The production, consumption, export of electricity, and the share of baseload power plants since the beginning of the year till the 26th of January track the same negative trend”.”
From one of the major exporters of electric power, Bulgaria has turned into a major importer. The main reason for Bulgaria’s energy sector’s current freefall – are EU climate change policies, which expose domestic policy and management deficits. No one has calculated the costs and impact of these forced policies. What might seem doable in technologically advanced and prosperous Germany and other countries of Western Europe, looks masochistic in lagging Bulgaria.
Bulgarian based energy companies are losing ground to competitors in Turkey, Greece, and the region in general. One of the explanations is that Bulgaria does not have a significant share of its generation in gas-fired power plants. Natural gas prices elsewhere in the EU and the region have plunged, making gas generated power more competitive, compared to Bulgaria’s coal-fired generation, which has been hit by emission permit skyrocketing prices. The situation looks bleak, and the authorities seem to have given up any hope of redressing the case or at least dampening the adverse effects. Gas generation covers peak demand and mitigates price extremes, making it indispensable for balancing the energy system.
Bulgaria seems doomed to import more power and to shut down power generation assets, unable or unwilling to resist or adapt to EU’s climate policies.
Vice PM Dontchev suggested the country will need to invest more than Euro 20 billion to accomplish carbon neutrality by 2050, with most of the investment allocated to NPP Belene. This is hardly the final tally – as the net effect will have to account for the destructed value on the way to the carbon neutrality, initially all coal-based TPPs, then gas-fired CC plants and the end of the fossil fuel-based transportation. The final costs will be substantially higher – at least 3-4 times more, direct costs only. For an economy of Euro 53 billion GDP, this might seem too much, too soon. If indirect costs and other collateral damage are included (GDP not produced, goods and services not sold or exported due to lack of competitiveness to other companies and states that have not fallen prey to the climate change folly) the end result might qualify for a national catastrophe of unknown proportions in Bulgaria’s history. Adding this to the demographic one sounds are writing an orbituary to a 1300-old state.
The gap that the transition process to decarbonization goals will need to cover is mind-boggling. A glance at the Energy System Operator’s daily infographics could give an idea of the pending shock – in midday, the share of the power generated in the RES sector at its peak is below 15%. At 8 pm, when consumption peaks occurs – it dips below 4%. When are most needed, renewables leave the room. For the new decarbonized state of the energy sector to be sustainable, the range of the transition has to cover the distance between that 4 % and 50% as the 2030 target!?
Note that the Bulgarian Government has intentionally failed to file for an exemption and 15 years more of transition for its coal-fired energy generation, just to open space for a new nuclear power plan, which puts the TPPs in a terminal state.
These articles analyses and comments are made possible thanks to your empathy and contributions, which are the only guarantors of independence and objectivity in our work. The Alternatives and Analysis team.
The worst part of this story is that the Government seems to accept this freefall state as a divine act, laying all the blame on the EU.
Due to the oligarchic capture of the energy sector – balancing the RES via hydropower is a fiction. The get-rich-quick businessmen focus only on the subsidies and leave the less lucrative and loss-generating elements in the energy value chain to the state. The water resources are mismanaged, coupling drinking water shortage with lower water flows to the HPPs. Most of the time – hydropower plants are idling. Water resources are slow to recover – dry seasons result in dipping shares of hydropower in the energy sectors mix – leading to more imports and higher prices for peak power. The TPP Maritza-East – 2 does most of the energy system balancing, yet it has been denied cold reserve funds, which have ended with the oligarchs – Kovachki, Dogan, and Domuschiev, champions of inefficiencies and mismanagement.
The “American” TPPs in the Maritza-East area are asked to leave, with the government aware that if this happens this will mean a downspiral and the end.
Electric power is prohibitively expensive, due to BGN 500+ million payments for emission allowances. None of these shocks are market-driven, all are the result of oversized climate change ambitions by politicians at the EU level, using kids like Greta Thunberg as their salespersons.
While it is true that electricity producers in Turkey enjoy the privilege of not being an EU member, thereby in no need to comply with EU climate change policies, Greece is a full member of the EU. Yet, its energy sector is in much better shape due to the cheap gas and more relevant policies.
Bulgarians politicians seem helpless watching the demise of the energy sector – awed by climate policies extremities, waiting for the ‘inevitable’ gloom to happen.
Brussels-based bureaucrats have forced through a Green Deal, which leaves no chance for the less privileged in the EU to offset the impact of the energy transition shocks by balancing gains and losses.
The climate change diktat, driven by political expediency, instead of market and competition, results in unmatched value destruction and damages to individuals and companies.
Compensation funds are a laughing stock. Under the Green Deal related compensation funds, Bulgaria will be eligible to Euro 400 million. The sum roughly equals direct and indirect losses the country suffers each year on this illegitimate (not voted by anyone) climate change policies – emission quotas and other direct or indirect charges. Should the price of emission permits jump to 40 Euro per tonne – bankruptcies will follow immediately, sending the country’s energy system into a coma.
The main reason for the downward trend of the Bulgarian energy sectors is the inadequate and passive government policy that makes worst-case scenarios look like basic.
Gas prices on the local market remain high, 60 percent over gas markets in the EU. Bulgargaz’s contract with Gazprom denies Bulgarian consumers and industry the chance for low gas prices and a softer transition to carbon neutrality using gas-fired generation.
In their present form, EU climate change policies and the Greed Deal have a particularly destructive potential in less wealthy EU member states. This implies a relatively higher cost of the change per GDP unit, fewer options for funding transition, and less optimal technology mix. In their entirety, such combined shock effects would disbalance current accounts, increase debt levels, lower economic growth, fuel inflation and destroy living standards, shattering the hope of convergence in the EU.
Brussels’ pious green policies leave no chance for catching up economies and countries to both grow and remain green. Instead of letting the managers and the stakeholders in the Maritza-East conglomerate pick the best way to cope with the climate change challenges – politicians in Brussels and Sofia order them to shut down and leave.
While in non-EU member countries, energy companies enjoy the full range of options for an energy transition from coal-to-gas (hydrogen and methane) to natural gas and renewables, the EU’s Green Deal simultaneously discourages coal, nuclear and natural gas use? Such a shock therapy is bound to downgrade competitiveness in the EU versus non-EU economies. The end effect will be mass impoverishment, structural disbalances, fueling centrifugal forces in the EU.
In the theory of change, if on its way from state A to state B, a system – a company or an economy – loses more than it gains – the change/transition matrix is considered flawed, and the transition itself becomes a bane.
At the final destination – the ‘patient’ arrives “green” but “dead.”
Mass emigration of skills and labor will follow, this time not only from Bulgaria to other parts of the EU but from Europe to other parts of the world, fleeing from this “collective Climate Change folly.” and the failure of Europe’s democracy to contain egoistic dedicated group interests.
Countries and people will start looking for more competitive global alternatives to the EU project.
Thank you for your donnations via PayPal and bank transfers to IBAN BG58UBBS80021090022940
the Alternatives and Analyses NGO.