Day and night electricity tariffs – are there any defects? Borislav Kolev in front of FACTS

The current division of electricity into day and night tariffs is increasingly difficult to reflect the reality of the modern energy system. The rapid penetration of solar power, changes in consumption and the dynamics of the free market have led to a paradox - households often pay the most expensive electricity precisely during the hours when it is cheapest on the exchange. Against this background, the question of whether the outdated model should not be replaced with a more flexible system that would encourage more reasonable consumption and reduce people's bills is becoming increasingly relevant. Dr. Borislav Kolev spoke on the topic in front of FACTS – an expert with many years of experience in energy and a participant in the development of modern energy policies.

- Mr. Kolev, day and night tariff – is such a distribution currently relevant?
- Unfortunately, no. Since they were introduced in their current form, both production and consumption have undergone enormous changes. However, the tariffs were not updated and today they are seriously out of touch with reality. It's like trying to navigate the city with a map from the 1980s — you will probably get to your destination, but it will not be easy, nor by the fastest route.

- How did we get to a situation where consumers pay the most expensive electricity precisely during the hours when electricity is the cheapest on the exchange?
- By 2026, the installed solar capacity is approximately 6 GW - or 3 times more than our nuclear capacity. Days when solar power is the main source of energy during the daylight hours are no longer a precedent. Since the electricity market is fully interconnected, the development of this type of capacity in the region will irreversibly continue to deepen this trend. This leads to oversupply and very low prices around lunchtime, but the lack of tariff updates prevents consumers from taking advantage of this. Thus, they continue to pay higher daily rates even when exchange prices are negative.

- What are the main defects of the current tariff model and how do they affect household bills?
- The main flaw of the current tariffs is the inability of consumers to use cheap energy during lunchtime. Stimulating consumption during this interval would bring a double benefit - lower bills for households and lower costs for suppliers, who buy electricity at minimal or even negative prices during these hours. This is a win-win situation.

- How exactly would a new system with three tariff zones work and what would change for consumers?
- It is proposed to maintain low prices at night, and the interval between 10 am and 4 pm (11 am-5 pm in summer) to also have a low price. For the morning hours between 6 am and 10 am, a reduction is planned compared to the current tariffs, and only energy in the range between 4 pm and 10 pm remains expensive. Even people who do not change their habits in any way will feel a reduction in their bills, albeit a small one. This is because the increase in the evening hours is offset by the significantly larger number of cheap hours during the rest of the day.

- Is it realistic for people to reduce their bills just by changing their consumption habits, without additional investments?
- Yes, absolutely. When calculating the new tariffs, two main effects were sought - easy-to-remember schedules and no increase in price even without changing behavior. At the same time, at noon, a more than two-fold reduction in current prices is expected. This means that small businesses, pensioners, housewives and people who work from home will be able to realize significant savings. These savings will be compensated in the system by redirecting part of the consumption to the middle of the day.

- What would be the effect on the electricity system if more consumption was redirected to the lunchtime hours?
- Any specialist or layperson you ask about the state of the distribution network will tell you that it is old and overloaded. In fact, capacity problems only occur at peak times, and the rest of the time the network is relatively unloaded. This problem is successfully solved both by batteries “behind the meter“ and by redirecting consumption - which is the intended effect here. The other positive effect is on the price of electricity. On certain days at noon it is negative - producers pay to have their production bought back - while in the evening it reaches hundreds of euros. It is precisely these accumulated inefficiencies in the system that allow the change in tariffs to save money for both consumers and suppliers.

- Why do you think KEVR is still not taking action, even though the technical possibilities for change already exist?
- KEVR has strictly defined functions and has good experts to implement them. However, there, as in many other places, there is narrow specialization and it is difficult to maintain a comprehensive view of the energy sector as a whole. That is why the commission sometimes needs external expert assistance and specific proposals for changes. And not only in energy - good changes often start “from the bottom up“. This is the so-called grass-roots approach to lawmaking, which the literature evaluates as the most successful and sustainable.

- Is there a risk that the new tariff structure will lead to an increase in the price of evening electricity and social tension among consumers?
- Every change brings a certain uncertainty among consumers. Human psychology is designed to seek comfort in the familiar and experience a slight fear of the uncertain future. Within the first few months, however, it will be seen that a large number of people will have lower bills and will be satisfied with the new conditions. The most serious effect will be felt by pensioners, people without permanent employment and those who are actively trying to optimize their expenses. It is there that the need to reduce bills is greatest, which is the main plus of such a reform.

- To what extent can such a reform prepare households for future full liberalization of the electricity market?
- We must accept the reality that full liberalization of the market will happen sooner or later. It is not necessarily a bad thing, but at the moment the market is too dynamic and complex, and communication between suppliers and consumers is practically absent. If right now we “throw the boats“ with household consumers into a sea full of energy corsairs and pirates, this will be a serious shock for them. In order to prepare them, we need to solve two basic problems. The first is relatively easy and free - building a better understanding of when electricity is expensive and when it is cheap, as well as a consumption culture that corresponds to real pricing. The second will be very expensive - replacing all household electricity meters with ones that measure consumption at 15-minute intervals. The currently proposed reform addresses the first problem and somewhat "repairs" the second, without requiring the replacement of appliances. When one day liberalization becomes a fact, consumers will be much better prepared.

- Daytime and nighttime electricity tariffs: is it time for a change?
- It is long overdue for such a change, but better late than never.
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Borislav Kolev is a doctor of nuclear physics from the Institute for Nuclear Research and Nuclear Energy at the Bulgarian Academy of Sciences. He has 20 years of experience in energy at all levels, including as a production manager for one of the largest energy companies in our country. He leads trading trainings and participates in international working groups within the framework of the pan-European electricity exchange market. He has participated in the development of many of the modern proposals for local energy policies. He is currently an expert in the “Bulgarian Independent Energy Exchange” and in the commission for “Engineering Infrastructure and Energy Planning” at the Sofia Municipal Council. Author in Klimateka.