We pay dearly, our energy-intensive industries are being exported, and at the same time we do not have the desired result for the climate, said energy expert Boyan Rashev. He is one of the leading specialists in Bulgaria in environmental, resource and energy management. Since 2007, he has been a managing partner in a consulting company in Bulgaria on ESG, decarbonization, impact reports and assessments, and circular economy. His personal mission is for policies in the energy and environmental sectors to be implemented in a way that benefits the national interest and leads to increased well-being of people and business success.
– Mr. Rashev, people are worried about the high prices of oil, and therefore of fuels. What are your predictions and how can they be counteracted?
– Oil and fuel prices are highly dependent on the geopolitical situation. While the wars in the Persian Gulf and Ukraine are going on, prices will be relatively high. If there is peace, the market will calm down very quickly and prices will fall. It is very difficult to predict. Europe can ensure stable prices by investing in the revival of oil production and refining and/or by importing less and mainly from regions that it can control, and/or by reducing fuel taxation. Fuels in Europe are generally expensive due to high excise taxes.
– How would you comment on the actions of the Bulgarian government with the proposals for the temporary cancellation of the excise duty on propane-butane and natural gas, as well as the 50 euro aid for the socially disadvantaged?
– The Bulgarian government is trying to take steps to protect the most vulnerable consumers, which is logical. If we want cheaper gas in the long term, however, we must first think about our own production.
– These days you posted an interview of yours from 2021 on social networks that governments in Europe will fall like pears. Are you hinting?
– I did not post this interview – probably someone else did. But the situation, unfortunately, is very similar to the end of 2021. The biggest pear is emerging as the Merz government in Germany.
– And while people are focused on whether they will be able to drive their cars, you focus and predict an energy crisis and high electricity prices in the winter. You see the reason in natural gas, even though it provides only 16 percent of August's electricity consumption. Why?
– In Europe, we have been in a constant energy crisis – in terms of gas and electricity prices – since mid-2021 until today. From time to time, fuels also join it. The current price of natural gas in the Dutch hub fluctuates around 70-80 euros/MWh. Since gas-fired power plants are the ones that de facto determine the price of electricity in most EU countries, including Bulgaria's neighbors such as Greece and Romania, the price of gas also determines the average prices of electricity.
At 80 euros per megawatt-hour and 80 euros per ton for carbon quotas, gas-fired power plants cannot generate a profit below 180 euros per megawatt-hour of electricity sales price. If we see higher gas prices in the winter, which is increasingly likely with these low levels of filling of gas storage facilities, electricity will become even more expensive. In addition, the production of gas and coal-fired power plants usually increases significantly in the winter.
– Do you expect a gas crisis in Europe? And if the answer is “yes”, how can we protect ourselves from critically high prices? We do not have gas-fired power plants in our country, but this affects district heating.
– I don't expect it - the gas crisis is happening. In Bulgaria, we can protect ourselves to some extent from high prices by ensuring the necessary conditions for our coal-fired power plants to operate. The most adequate approach at the European level is to eliminate or limit the prices of carbon quotas. This would immediately return coal-fired power plants to the mix and reduce the participation of gas-fired power plants in the formation of electricity prices. Batteries and wind turbines also have a role in limiting prices during peak hours, but the former must be able to charge cheap electricity from somewhere. District heating companies must invest in alternatives - waste, biomass, geothermal energy, if they do not want to fall into crisis every time gas prices are raised.
– Is Bulgaria not doing well with its gas pipelines, with access to liquefied gas terminals, with its contract for Azerbaijani gas?
– Bulgaria is generally doing well, but it is not taking full advantage of its situation. A lot of gas passes through here, and we use a tiny part of it. The country's gasification level is well below the EU average. The contract for Azerbaijani gas gives us advantages, but they will last until a certain point.
– The strange thing is that despite the many installed photovoltaics, which are already in second place in electricity production after nuclear power plants, and expectations for close to zero and negative electricity prices this summer, they are maintaining high levels. And consumption has not increased significantly. How is this explained?
– Bulgaria has over 7 GW of installed photovoltaic capacity and about 6GW/20GWh of batteries. Thanks to large grant schemes, we are a world champion in batteries. Nevertheless, electricity prices on the “Day Ahead” market this summer were the highest in history (excluding 2022). It is due to expensive gas, expensive emission quotas and the crisis with nuclear power plants in nearby countries (Romania, Hungary) due to the low level of the Danube River. The factors are all external. Bulgaria is well connected to the EU market, which in this case raises prices in our country as well. With cheap gas, the effect is the opposite - prices in our country fall.
- Does the drive for electrification and the abandonment of fossil fuels have a role in this?
- Yes. First, the reckless drive for complete and rapid electrification greatly increases consumption. In Bulgaria, this is especially visible in winter, when our consumption jumps 1.5 to 2 times due to the increasingly widespread use of electricity for heating. The desire to quickly abandon fossil fuels in Europe has led, above all, to a rapid reduction in oil, gas and coal production and a limitation on the work of local coal-fired power plants. However, this is happening without us being ready with sources and capacities that can replace them in real conditions. The result is that we pay much more, our energy-intensive industries are being exported, and at the same time we do not have the desired result for the climate.
– Can't renewable energy sources and their energy storage in batteries cover the evening peaks and not rely on gas-fired power plants to provide consumption after sunset?
– Renewable energy sources have their place in the system, and batteries allow us to use most of their energy. In Bulgaria, this works especially well in the summer, when photovoltaics produce a lot. However, we still have expensive electricity and a lot of work for the “Maritsa-Iztok 2” thermal power plant. Unfortunately, the situation will be far worse in the winter, when both consumption is higher and the sun rarely shines. A battery cannot replace dispatchable gas or coal power in full.
– What optimal mix would make electricity and heating prices bearable?
– If we are looking for the lowest energy price, the entire market should be oriented towards this and we should rely on sources that we have and that are reliable enough under all conditions. Carbon quotas, for example, were invented to remove fossil fuels from the mix – they do not aim to achieve abundant, reliable and cheap energy. It is all a matter of political priorities. If we want cheap energy in Europe, we should let the market find its own way to it. It will do it very quickly.
Source: glasove.com