Mediapool published an article titled: “No escape: Two options for the liberalization of the households electricity market from 2020”. The article follows the statements of the Deputy Energy Minister Zhecho Stankov, the chairman of the Energy and water regulatory commission Ivan Ivanov, the chairman of the parliamentary energy committee Valentin Nikolov and the former chairman of the same committee Delian Dobrev, given during the Bulgarian-Korean Energy Forum held on November 18, 2019 .
We publish the original article:
Two options for liberalizing the energy market for households were discussed by the energy ministry, the relevant parliamentary committee and business representatives. The preferred option will come into force from 1 July 2020, when the Energy and Water Regulatory Commission (EWRC) must publish the new regulated tariffs by including in them a part of the average price achieved on the liberalized market.
The first option foresees the complete liberalization of the prices for households to take three years. In the first two years 30 percent of the price will be formed by the energy exchange, and in the last – 40 percent. The second option covers five years, with price liberalization of 20% each year. It is not yet decided which of the two options will be chosen, but more importantly, the authorities have to decide on which segment of the energy exchange the companies will need to buy the additional quotas in order to avoid manipulations leading to a sharp rise in price of electricity for households.
From the words of Valentin Nikolov, it became clear that this time the complete liberalization of the electricity market, which has been talked about for years but has been postponed, is inevitable. The gradual deregulation of household prices will start from July 1, 2020. The same was said about two weeks ago by Energy Minister Temenuzhka Petkova, stressing that this is at the explicit request of the European Commission if Bulgaria wants to be granted a state aid capacity mechanism for coal power plants.
“The capacity mechanism is tied to liberalization, so we are having informal talks with business consumers to determine the model for launching liberalization from 1 July 2020 and to complete it in the short term,” the head of the parliamentary energy committee told the forum. According to him, by the end of this year the liberalization model for households should be clarified and by the end of January 2020 the amendments to the Energy Act should be adopted, with a fixed schedule for changing the regulated tariffs and including a market component in them.
The same was confirmed by regulatory chairman Ivan Ivanov, who said that “if anyone thinks that electricity will rise by 20-30 percent, to know that this is not possible and will not happen.” According to him, Bulgaria`s accession to the European energy market will provide more energy for the Bulgarian electricity exchange, which will not allow a significant price increase. The expansion of the cross-border interconnection of the transmission networks in the Balkan region is also forthcoming, which will enable electricity to be imported from Italy and the Czech Republic and Poland from the second half of 2020, said Ivan Ivanov.
So far, preliminary estimates and analyzes have been made on the effect of liberalization on household prices. EWRC expects the average market price for 2020 to be around 106 BGN/MWh. Currently the EWRC was defined the average price for 2019/2020 to be close to 90 BGN/MWh. The increase, however, will be offset by the expected decline in some of the components of the regulated tariffs, such as reduction of the “Obligation to society” fee. Therefore, the forecast is that with the addition of a market element, the price increase for households will be in the range of 2 cents per kilowatt for next year.
The other important topic of the forum was the Government`s Energy and Climate Plan, which was sharply criticized by the European Commission for setting targets below those of the EU and returned for revision and corrections.
“The National Energy and Climate Plan (NECP) is under heavy criticism, it was written just to please the unions”, commented Delyan Dobrev. The good thing is that the opposite of what is set by the Energy Ministry will happen, and renewables share will continue to expand in our country on the market basis.
Dobrev attacked the electricity distribution companies for hindering liberalization by failing to comply with their legal obligations to install smart meters on demand by business consumers. According to him, the three DSOs are not fulfilling such requests made by business customers, who are paying to receive real-time consumption data.
“Currently, all Sofiyska Voda customers can monitor their water consumption in real time, if desired. Explaining how complex the software was and difficult to read the data, the DSOs kept their monopoly and prevented the entry of new services and products into the electricity market”, says Delyan Dobrev.
The analyst from the Center for the Study of Democracy also believes that the NECP needs major changes, because coal, gas and nuclear power are being foregrounded, while renewables backed by Brussels are being left behind. Exactly the same is the criticism of Brussels, as with the EU target of reaching a share of 32.5 per cent of RES in energy consumption and a minimum requirement for countries of 27 per cent, Bulgaria has set only 25 per cent. According to Galev, a serious revision of the National Energy and Climate Plan should be undertaken and its focus should be on complete decarbonisation of the Bulgarian energy sector.
“There needs to be a clear timetable for the closure of the coal power plants and a plan for a fair transition of the coal regions”, he said. The expert believes that with the earlier closure of inefficient coal power plants, the remaining TPPs have a chance to become profitable.
“The speculation is that Bulgaria does not have the potential for RES, we just need a more integrated approach and incentives for the energy communities. Finally, there should be public funding for roof-top PV installations and financial instruments for the construction of small biomass plants in rural areas”, said Galev.
Ivan Ivanov also believes that every consumer should be given the opportunity to produce energy from renewable sources, to store it and to be able to sell it on the market. “We need a schedule to reduce energy-intensive technologies instead of constantly asking for support”, the chairman of the regulatory said. It is also about introducing smart grids and measuring consumption, which will lead to savings in energy transmission. According to him, decentralization of energy capacities is needed instead of the current centralized large generation units.
Deputy Minister Zhecho Stankov, on the other hand, saw the chance that Bulgaria`s RES targets, which would be raised to the 27% required by the EC, could be achieved with the help of companies from South Korea. “This can be done through the transfer of technology and development centers for the entry of South Korean companies into Europe,” Stankov said.
Sources: Mediapool.bg