After the Energy and Water Regulatory Commission (EWRC) proposed an average increase in the price of electricity by nearly 3%, the questions of who pays the price of the energy transition, why household bills continue to grow and who benefits from the boom in renewable energy sources are back on the agenda. What are the reasons for the increase in the price of electricity, who benefits from battery projects, is Bulgaria ready for a liberalized electricity market and how the state can protect consumers from new price shocks. The topic was commented on by Dr. Eng. Rosen Tsvetkov, energy expert and former deputy regional governor of Gabrovo (2017-2021).
- Mr. Tsvetkov, why the price of electricity is constantly growing and is it possible to control this growth?
- The increase in the price of electricity directly affects our standard of living and deepens energy poverty in the country. In recent years, we have witnessed a massive penetration of the so-called “green“ sources. They came with the promise of cheap electricity, since their “fuel” - the sun and the wind - is practically free. However, the reality turned out to be completely different. Instead of cheap energy, they brought enormous instability to the energy system. Their unpredictable production disrupts the physical parameters of the network and creates a constant need for costly balancing. Unfortunately, in recent years, the uncontrolled construction of huge photovoltaic power plants (PVPPs), controlled by green lobbies, has been allowed. This is exactly what has turned the normal functioning and balancing of our energy system into an extremely expensive pleasure, which we all end up paying for.
- What is happening with the grants under the PSU given to several companies to build huge batteries?
- The initial idea under the Recovery and Sustainability Plan (PSU) was to build a mega-project for state-owned batteries that would remain in the patrimony of the Bulgarian state and serve the public interest. However, this intention underwent a serious transformation. Instead of a unified state system, the funds were redirected to market procedures in the form of grants for private projects. Thus, over 1.3 billion leva of public resources were directed to a handful of companies owned by the so-called “green oligarchs“. While they publicly claim that storage systems will lower the price of electricity for consumers, practice shows something completely different.
- What is the real model of the huge profits?
- During the day, the battery complexes are charged with cheap energy from photovoltaics at prices of just 2-3 euros per MWh, and in the evening this same cheap energy is sold back to the grid at prices over 130 euros per MWh.
The result? Private investors are making colossal excess profits, using fully subsidized facilities, paid for with the money that was intended for the benefit of the whole society.
- What needs to be done so that the Bulgarian consumer can use more affordable electricity?
- The role of the state here is not just to regulate prices, but to intervene with all its legislative power. The energy sector is currently in the grip of “green“ lobbies, whose sole goal is to maximize their personal profits. This state regulation can be achieved by imposing a ceiling or limit on the excess profits generated by the huge battery complexes under the PVU, built with grants. It is high time the billions that Bulgaria received under a number of conditions, to start working for the benefit of society. And this should be expressed in one thing only - a real reduction in the price of electricity for people and businesses.
- Years ago, you defined the moratorium on electricity prices as unfair. Do you think that today the state has a more effective mechanism for protecting vulnerable consumers?
- The moratorium was a temporary administrative decision that simply postponed the problems instead of solving them. Now the state has much more precise tools, based on the definition of “energy poverty“, which allows support to go specifically to those most in need, and not to be wasted. However, effectiveness depends on the speed of the administration and the accurate identification of vulnerable households.
- After the successive increases in the price of electricity, what should be the role of the state - to compensate consumers or to stimulate more energy production?
- The role of the state should not be limited to regulatory activities. The state must seek solutions that will provide households and businesses with energy at affordable prices. State policy requires long-term planning of the energy mix and achieving a balance that does not allow harm to some at the expense of others, accumulating the above-mentioned excess profits.
- Bulgaria remains a net producer of electricity, but prices for household consumers continue to grow. Where is the main problem - in regulation, in the market or in political decisions?
- The main problem is the lack of consistent political decisions and delayed reforms, which distort the work of both the regulator and the market. The fact that we are an exporter, but citizens pay increasingly expensive bills, shows that market mechanisms in our country do not work in the interests of Bulgarian society. A bold state policy is needed to protect the national interest and stop speculative processes along the chain.
- What should the balance between RES, nuclear energy and traditional capacities look like in Bulgaria?
- The balance requires nuclear energy to remain the backbone of our system as a predictable base source. It must be supplemented by thermal power plants, as they provide the critical physical characteristics and balance of the network, and last but not least, they operate with a completely Bulgarian resource. The RES sector also has its important place, but there must be work towards building small power plants for the benefit of households, so that energy is produced where it is consumed.
- The full liberalization of the market for household consumers is imminent. Are households ready for a free electricity market and what risks do you see for prices in the next few years?
- Bulgarian households are not yet prepared for the free market due to the lack of a large-scale information campaign and clear rules for protection. The main risk in the coming years is associated with unpredictable price spikes, which, against the backdrop of uncontrollable stimulation of the RES sector, could throw thousands of families into energy poverty. The state must take on its role as a true regulator and guarantee a transitional period with clear ceilings and mechanisms to soften this blow.