4. Details on Conference Programme, panelists and main topics discussed may be found at Conference website www.emi-bulgaria.com, all presentations delivered may also be retrieved there, as well as a full live record of the discussions held.
5. All participants in the forum pointed out that contemporary European requirements in the context of the Green Deal, impacting the energy sector and engaging country’s commitments, along with the national specifics and challenges, were all accounted for. Discussions showed a clear understanding that the energy sector including the overly sensitive subject of coal mining future imposes an unconditional need for reforms that come at a price, mostly from a social and economic perspective. In that sense, the change in the electricity sector, as well as the competition that no longer was among individual energy sources alone but also among countries within a huge internal market with common rules, required realistic considerations.
6. One of the main messages conveyed was that delaying these reforms because of short-term political reasons might have serious implications, including missing on real opportunities to transform not only the energy sector but the country’s economy as a whole. It was recalled that the Green Deal objectives were backed by large-scale European funding options, which, however, were not guaranteed, but bound by both preparedness for concrete reforms and the rule of law being a core European value.
7. It was highlighted that the Green Deal objectives by 2030 were growing more and more ambitious. The discussed at present EC and EP proposals for greenhouse gas emission reduction, respectively, 55% and 60% against 1990 levels, would necessitate a revision of also RES and energy efficiency objectives towards higher targets. In turn, this would increase the requirements for national contributions of each Member State, defined in the National Energy and Climate Plans. The Member States would need to mobilize more efforts in order to make sure the higher common European objectives would be met. This finding in principle could also be drawn from EC assessment of the Bulgarian National Energy and Climate Plan (NECP) published on 14 Oct 2020. The assessment contained several substantial critiques on the document presented, by keywords (e.g. energy poverty, the future of coal mining, economic policy for regions, etc.).
8. Against the background of politicians’ and government institutions’ broadly proclaimed idea to have a dialog, Conference participants shared the view that a structured dialog was in fact absent at the national level. In this context it was noted, for instance, that the Advisory Council instituted about five months ago to serve as a discussion platform for the Green Deal issues was non-operational as yet; it had just a single session dedicated mostly to its structure.
9. Furthermore, the lack of clearly defined and objectively defendable priorities at the national level appeared to be the main issue of advancing the effective work on the Green Deal. NECP submitted to EC and the draft of the new Energy Strategy of Bulgaria by 2030 with a vision for 2050 contained controversial and undefendable arguments and rationale (e.g. on the development of coal mining sector, nuclear energy, and on the objectives set forth). Some aspects of these documents pointed to political rather than expert domination in position substantiations. It was noted that sometimes these positions materialized inactions on the part of the executive and legislative powers that collided with both the law and the Green Deal priorities (e.g. National Assembly decisions regarding coal mining, draft laws such as the one on industrial parks, etc.).
10. The issues mentioned above affected and would affect overall investment process fosterage. A factor in that respect would be an adequate policy on qualification and requalification of personnel, which, however, especially in the coal mining regions, was a function of the approach taken towards reforms in the sector.
11. Against the background of all of the above, local authorities and businesses, supported actively by the non-governmental sector, took a much more active stance and formulated some very specific ideas in the context of the Green Deal, but the absence of a national platform to communicate these ideas, their implementation was obstructed. This applied in particular to the coal mining regions (Maritsa coal basin, Kyustendil, Pernik), though the viewpoints were linked to not only the coal mining but also to a more comprehensive approach to local problems (including gasification, requalification, energy efficiency, etc.). That is why the support stated by the executive power representatives for strengthening the regional approach to the Green Deal sounded rather declarative than delineating some practical dimensions.
12. With respect to the aspects discussed, participants indicated the need to have more specifics, transparency, and realism at the national level when planning and undertaking the steps required, and adequate substantiations. Underlined were explicit expectations for a detailed discussion of these steps, with the leading role of expert rationale taking over short-term political considerations.
III. ON SOME SPECIFIC DIMENSIONS RELATED TO THE GREEN DEAL
FOR ELECTRICITY NETWORKS
13. The key conclusion in this area was that if the network continued its development on inertia, with no change in the political vision and the regulatory approach, if the electricity distribution network was not perceived as the transition backbone, the overall outcomes of the Green Deal implementation in Bulgaria would be unsatisfactory from the perspective of time, price, achievements, and benefits for the consumers.
14. The electricity distribution network stood in the epicenter of the energy transition by 2030. Electricity system development plans meeting European policy objectives could not start without policies and adaptation of regulatory principles targeting the evolution of electricity distribution networks as the first step. Without an adequate network, it would be impossible to have RES-electricity generation, especially in small RES-facilities, which could make even households become independent energy producers. Having modern, digital, and capable of rapid data exchange distribution networks was a precondition for the forthcoming full liberalization of the electricity market that would enable a facilitated and accelerated switch of electricity supplier at the discretion of the customer.
15. Due to the fact that electricity distribution networks were an activity of a natural monopoly nature, their revenues were set by the national regulatory body, Energy and Water Regulatory Commission, in line with the respective applicable legal requirements. For this reason, the development of these networks and respectively, whether they would facilitate or obstruct the energy transition, would depend not on the network companies, but on the Member States (via the national energy policy) and the regulatory bodies (via regulatory approaches applied). Therefore, the regulatory institutions would be expected to be proactive, to have a vision for the future, and to set objectives for the network companies, paving the way towards 2030 with relevant regulatory tools and financial mechanisms that foster innovations and cost-efficiency. It would be only in this manner that all stakeholders, including consumers, would become directly involved in the process and would be able to take advantage of the energy transition towards a cleaner and energy-efficient economy.
16. The analysis of electricity price evolution in Bulgarian since 2007 led to the conclusion that the regulated component of the network price had dropped down by 25% at the account of a significant increase in the energy component share, reaching the lowest EU level regarding both percentage rate and absolute value, according to EC latest report on the State of the Energy Union. The main contributing factor was perceived to be the improved efficiency of the electricity distribution activity, achieved by a considerable drop in energy costs to cover the share of eligible loss, approved by EWRC, paid by consumers via the electricity bills. However, aiming towards this objective could not be sufficient any longer, bearing in mind that in the new environment, options for improvement were limited. Further advancements in network efficiency and security would require a new approach where everyone paid for the costs one caused to the system, and capital costs were adequately distributed among current and future network consumers.
17. Against the background of the abovementioned, it was rather odd to find that the integrated National Energy and Climate Plan, which had to lay the foundation of energy development by 2030, treated distribution networks rather inconsequentially and somehow from a blanket perspective. A particular concern raised the minor share of network investments (for transmission and distribution) – about 10% of the total, namely EUR 1.5 billion out of the total of EUR 15.3 billion. Even more, calculation indicated that average annual investments in distribution network development were less than the investments made so far, namely, EUR 92 million annual investments for 2021-2030 against EUR 108 million reported annual investments in 2015-2017.
18. This came to tell that the national political framework underestimated the importance of the distribution network as a factor for the success of the forthcoming energy transition by 2030. The upcoming next regulatory period for the electricity distribution companies in the country was an excellent opportunity to reconsider and propose new solutions that reflected the new political and economic environment.
KEY FOCUS BY SECTORAL POLICIES IN THE CONTEXT OF THE GREEN DEAL
19. From an institutional perspective, the state was still in debt to the people and the business when it came to bringing clarity on the issue of coal mining region development in the short- and long-term. An objective and straightforward reassessment and structuring of the respective approach at the national level where needed.
20. The timelines for the use of coal in electricity generation laid down in the Energy Strategy draft and NECP looked absolutely unrealistic because of the economic pressure imposed and also because of the requirements set forth in the European legislation. It seemed obvious that political declarations diverged from the market conditions and respectively, the reforms were in delay. Consequences from such an approach at the political level, involving the absence of realism in assessments, would shape massive social dimensions if an adjustment to both the viewpoints expressed in the political documents and the approach taken to coal mining was not urgently introduced.
21. At a strategic level, there was a dire need for the coal mining sector to be placed in the broader context of coal mining region development in light of the ample opportunities offered by the Green Deal. Also, the financial mechanisms envisaged should also be taken into account as they aimed at improving coal production and use, requalification, new technologies, a new type of economic zones, etc.
22. The state should cease with the practice of treating differently state-owned and private entities in the coal mining/coal power generation sector. Fostering state-owned entities by non-market means contrasted with the attitude towards private entities, some of which were subjected to actions that violated the law and contacts concluded with them, regardless of their significance in guaranteeing energy security and power grid stability in the country. In this context, it was pointed out that further integration of AES Bulgaria и ContourGlobal Maritsa Iztok 3 in the Maritsa Iztok complex was needed, also with respect to their role as global leaders in the energy business and in the implementation of new technologies, such as for energy storage.
B. NATURAL GAS
23. Advanced gasification was believed to hold huge though still unused potential in Bulgaria. In an effective and rapid manner, it could resolve a significant portion of the social, economic, and technological issues ensuing from coal-fired power plant closure. In that sense, it was well justified at the expert level that gasification of 1 million Bulgarian households would remove the necessity of having about 3 000 MWh generation capacity installed. Furthermore, it was emphasized that, for instance, compared to the nuclear capacities maintained at present, the gasification process was many times faster and cheaper.
C. NUCLEAR ENERGY
24. During the forum, it was recalled that the EU did not encourage nuclear energy development in the context of achieving low-carbon economy objectives.
25. Bearing this in mind and in relation to questions raised by participants, an expert opinion was expressed that the potential construction of new nuclear capacities would be part of the future, not a solution to problems of the past, associated with emission levels.
26. Participants, including representatives of government institutions, joined around the view that Bulgaria was lagging behind in the implementation of European energy policy while showing an explicit strive towards maintaining the status quo in some areas. The strategic visions expressed regarding Bulgarian energy sector development identified an essential weakness, namely, absence of security and predictability, which in turn put substantive obstacles before investors.
27. The abovementioned approach referred in full force also to actions expected on Green Deal implementation – at this stage, the anticipated steps appeared to be more political rather than in conformity with the Green Deal’s objectives and energy market development trends. This was particularly true for the coal mining sector but applied to natural gas, nuclear energy, RES, and other sectors as well.
28. More active and coordinated work on the part of the Green Deal Advisory Council and local authorities and stakeholders in the affected regions was required to draw up and defend concrete plans for regional transformation. This was the only way for Bulgaria to take advantage of the European funds allocated under various programmes in support of the transition and achieving the Green Deal objectives.
29. Even though at the government level it was acknowledged that the carbon neutrality objectives would lead to a serious disharmony in the business, and there were numerous problems, a concrete national vision for an exit from this situation through the prism of the energy sector was still missing. Such a vision had to be based also on a comprehensive and realistic reassessment of the strategic approach to the energy sector, as the objectives set forth at present and the timeframe for achieving them did not match the realities. In parallel, the serious social challenges related to avoiding unemployment, the need for qualification and requalification, etc., needed to be accounted for.
30. The need for reassessment in the main areas mentioned presupposed a radical change in the attitude of politicians and government institutions at the national level towards the role of local authorities, business, NGOs, trade unions, academia, etc. in formulating and asserting government policy on the energy sector, including the tasks ensuing from the Green Deal. This implied not only more transparency but timely consultations with all stakeholders at the expert level. An additional, though inevitable factor in that sense was strengthening administrative capacity at the government level.
31. Against this background, a principle expectation was expressed that the government via its institutions would develop a clear understanding of the Green Deal as an option offering enormous new opportunities for the comprehensive development of the Bulgarian economy, including as regards the energy sector.
Chairman of the Management Board
ENERGY MANAGEMENT INSTITUTE