The Energy Chamber has criticized the Recovery Plan: there is no clear focus on energy sector

The National Energy Chamber has criticized the National Recovery and Sustainability Plan for lacking a clear focus on energy sector. This is precisely the sector that the whole of Europe is counting on so the economies can recover from the crisis and move to a net-zero emission economy. “For a successful transformation of the Bulgarian energy system, a well-functioning interplay of new emission-free generation plants with DSO and TSO networks is a necessity. We support foreseen investments in transmission network related infrastructure, equipment and digital components, but find it regrettable that no investments are envisaged in smart, digitized and digitally managed distribution grids, district heating networks and installations, promotion of investments in energy storage installations and smart metering devices or facilitation of market integration of new RES plants and refurbishment of existing RES plants providing needed flexibility to balance the electricity system.”

This is stated in an opinion of the Energy Chamber on the recovery plan. The letter was sent to Deputy Prime Minister Tomislav Donchev, Energy Minister Temenuzhka Petkova and Parliamentary Energy Committee Chairman Valentin Nikolov.

We bring to your attention the entire opinion of the Energy Chamber:

The National Energy Chamber (the „Chamber”) represents the major share of the private investors in the electricity sector in Bulgaria and it is a recognized partner of the responsible institutions in the energy policy making process. One of the main principles of the Chamber is to promote the development of a transparent and open regulatory environment, providing conditions for a level playing field for all market  participants, which in its turn will increase investment interest in the Bulgarian electricity sector.

Hereby, the Chamber expresses its opinion on the draft to the National Plan for Recovery and Resilience (NRRP), announced for public consultation on 30.10.2020. We support the main goal of the strategy paper, as in our view the economic and social recovery from the crisis caused by the COVID-19 pandemic should be a main priority.

The key role of the energy sector in the EU's economic recovery is undoubtedly recognized at European level. However, the draft of the NRRP lacks a clear focus on the energy sector – a crucial part to achieving the new ambitious climate targets set out in the Green Deal.

The energy sector is at the heart of the strategic thrust towards recovery and resilience at the European level, because

a) investments in the sector provide for rapid economic growth and job creation within the sector and beyond,

b) the sector is at the center of the energy transition, climate action and environmental sustainability policies and

c) requires an enormous digital transformation to achieve low carbon transition. Moreover, the

Bulgarian starting point with energy intensive industry and significant share of electricity and heat energy production from fossil fuels poses an additional challenge in this regard.

For a successful transformation of the Bulgarian energy system, a well-functioning interplay of new emission-free generation plants with DSO and TSO networks is a necessity. We support foreseen investments in transmission network related infrastructure, equipment and digital components, but find it regrettable that no investments are envisaged in smart, digitized and digitally managed distribution grids, district heating networks and installations, promotion of investments in energy storage installations and smart metering devices or facilitation of market integration of new RES plants and refurbishment of existing RES plants providing needed flexibility to balance the electricity system.

Green Recovery Mechanism Investments made today in reinforcing and digitizing distribution grids will guarantee the speedy electrification of Bulgarian industry and the fast penetration of e-mobility, smart services and distributed renewable energy generation at the level of end consumers without increasing the costs for grid tariffs in the challenging economic times ahead of us.

Furthermore, NRRP shall allocate funds for rehabilitation and reinforcement of the capacity of the transmission and distribution in grid in the areas known for their high renewable resource potential in order to attract RES investments in those areas. The lengthy administrative process for identifying investment needs through the 10 years investment plan of TSO shall be reconsidered in the light of the pace of energy transition and a more proactive approach adopted.

The fact that about 70% of the new RES capacities in Europe will be connected to the DSO grid and that the increasing electrification of traffic and space heating primarily affects this network level, is not taken into account by the NRRP. In order to achieve the goals regarding emission-free generation, energy efficiency and decarbonisation, and fulfil obligations such as cyber security, to which Bulgaria has committed, enormous investments are required in the electricity distribution grid. Roughly speaking, every million investments in RES generation plants require the same amount of investments in the distribution network. Extrapolated to Europe, this means around 40 billion euros investment in the DSO network per year, according to Eurelectric. The financial burden for achieving those goals will have to be borne by the end customers, many of them in difficult financial circumstances as a result of the COVID-19 crisis or even before it. It is a missed opportunity that the NRRP does not utilize financial resources to relieve these customers, but on the contrary, puts an additional burden on them by supporting a privileged customer category in industrial parks.

Moreover, we welcome the 3 billion BGN reserved for Energy Efficiency program for the renovation of the building stock, as in general we support the achievement of energy saving targets through alternative EE measures in Bulgaria. On the one hand, money can be better targeted to low-income households and inequality in the long-term effectively reduced, while comfort and well-being would substantially increase. On the other hand, the foreseen renovation of public and industrial buildings brings socio-economic as well as competitive benefits. A coordinated and systemic approach, however, will be of utmost importance to make these measures a success. The best long-term results are brought by so-called deep renovations. Where district heating grid exists, the opportunity should be used to connect buildings to the network and to swap vertical with horizontal installations in those buildings. By changing those installations, e.g. 86% energy saving of energy for losses from heating installation and a 36% decrease of energy price for 1 m3 hot water could be achieved in a pilot project in Plovdiv. Additionally, chargers for electric cars as well as future digital and smart infrastructure must be anticipated in those buildings.

The Chamber emphasizes that the draft of the plan does not provide for measures to encourage new investments in the energy sector. Meanwhile, there are no supporting measures for the existing investments, despite the effectiveness of all companies engaged in the sector and their efforts to ensure the continued operation of the energy system during the COVID-19 pandemic. Taking into account the obvious correlation between recovery and sustainable development and the proper functioning of the energy sector, the Chamber considers that the objectives and the related measures and reforms in the energy sector should be outlined in details in the pillar "Green Bulgaria" of the draft plan.

The main goals and measures for the implementation of the national energy and climate policies, in the context of the new European legislation, as well as principles and priorities of energy development are defined in the other strategic documents - Integrated National Energy and Climate Plan and Strategy for Sustainable Energy Development of the Republic of Bulgaria until 2030 with a horizon until 2050. We note that the necessary consistency and logical connection between the three documents is missing.

We remain available for a constructive dialogue on the topic.

 

Robert Dick

Co-chairman of the MB

National Energy Chamber