Bulgaria is faced with the urgent task of liberalizing its electricity market

The closure of coal-fired power plants before 2030. and redirecting financial support from the coal industry to initiatives to reduce energy poverty and transform the national economy is the only way to achieve sustainable economic development

In contrast to the EU's strategic framework for achieving climate neutrality by 2050, Bulgaria's energy transition policy is still limited to increasing the share of renewable energy sources (RES) in final energy consumption and the construction of new nuclear capacities, which to simply replace coal-fired power plants without rethinking the production and consumption of energy in all economic sectors.

Although the implementation of innovative low-carbon technologies holds huge economic potential for the country, Bulgaria has not committed itself to ambitious decarbonization goals for 15 years, including by not setting a clear timetable for phasing out the use of coal and natural gas, postponing the full liberalization of energy markets and not eases the political and regulatory framework for RES deployment. Our country has the historic opportunity to accelerate its energy transformation by updating the Integrated Energy and Climate Plan, which aims to outline the strategic framework for decision-making to facilitate investments in low-emission technologies, improving energy security and increasing energy efficiency.

On April 25, 2024, during a round table on the topic "Exiting the vicious circle: a long-term vision for decarbonization and economic transformation of Bulgaria", the Center for the Study of Democracy presented an in-depth analysis of three scenarios for achieving full decarbonization of the Bulgarian economy until 2050. Leading experts in the field participated in the discussion, including Alexander Davidov, director of the "Energy balances, sector policies, strategies and markets" department, Ivaylo Alexiev, executive director of the Agency for Sustainable Energy Development, Maria Trifonova, lecturer at Stopanski Faculty of Sofia University, Dragomir Tsanev, Executive Director of the Center for Energy Efficiency "EnEfect", and Radostina Slavkova, Coordinator "Energy and Climate" from the Environmental Association "For the Earth".

To clarify Bulgaria's vision for energy and climate transition, the Center creates three specific scenarios, two of which are based on the current set of sectoral policies (WEM) and the draft version of the updated INPEC (NECP – revised). The third scenario for economic development is based on a long-term strategy for full decarbonisation by 2050.

The scenario analysis seeks to assist the Bulgarian government in the process of updating NECP by creating sectoral policies to accelerate the decarbonization process, increase energy security and energy efficiency, and reduce energy poverty.

Decarbonization scenarios and their contribution to achieving carbon neutrality: Total greenhouse gas emissions for all economic sectors (Million tons of CO2 equivalent)

The scenarios show that the current policy framework and the updated draft version of NECP do not achieve a complete elimination of greenhouse gas emissions by 2050. Furthermore, the energy consumption assumptions are unrealistically high, politically motivated, and intended to justify huge public costs for large-scale energy projects that are not commercially viable. The best example of such a project is the construction of two new reactors at the Kozloduy NPP. Achieving full decarbonization of the Bulgarian economy will depend both on structural changes in individual and collective behavior, and on the mass implementation of the most innovative low-carbon technologies.

The construction of new nuclear capacities at the Kozloduy NPP should be postponed at least until after 2040, when they can replace units 5 and 6, and only if the consumption forecasts require it, and the already installed low-carbon capacities do not can satisfy the demand.

All three scenarios considered in the analysis foresee a drop in electricity demand by 2030 of about 5%, and the main prerequisite for reducing greenhouse gas emissions is to stop burning coal and natural gas for electricity production, combined with an increase in energy efficiency and the electrification of industries that are not included in the European Emissions Trading Scheme.

In order to speed up the energy transition, all coal plants should be closed by 2030, while making the most of all financial mechanisms to restructure the economy of coal regions, the retraining of workers and the implementation of green innovations.

The realization of this scenario also requires the priority connection of energy storage systems with at least 2 GW of power, the unlocking of the potential for wind energy in marine spaces and the implementation of green hydrogen and synthetic fuels in industry. In order to realize the investments in offshore wind, Bulgaria should create a favorable regulatory framework and marine spatial plans to ensure predictability for large investors.

In view of the upcoming, albeit again delayed, liberalization of energy markets, the government should formulate policies and measures aimed at reducing energy poverty to below 10% of households by 2030 and eliminating it by 2050 by targeting social transfers to the most vulnerable users. Support programs should be based on a clear program to improve energy efficiency, electrify heating and change consumer habits of households and businesses.

Installed power generation capacity in Bulgaria until 2050 (MW), according to the scenario based on the updated NECP

Alexander Davidov stated that the final version of the Plan will be published for public discussion in May 2024, to be submitted to the European Commission by the end of June this year. He emphasized the active dialogue with stakeholders involved in the overall process of defining modeling assumptions and policies to achieve sectoral decarbonisation targets.

Maria Trifonova emphasized the need for scientifically based sector analyses, which lead to the lowest system costs and increased competitiveness of the Bulgarian economy, as well as public support for the development and implementation of cutting-edge technologies in the field of energy.

Ivaylo Alexiev noted that the policies related to the building stock are an intersection between measures to increase energy efficiency and the production of energy from RES for own consumption.

Dragomir Tsanev expressed the opinion that ambitious goals in the field of energy efficiency should be tied to the necessary financial resources and a working mechanism for policy implementation.

Radostina Slavkova presented an in-depth analysis of the project version of the updated NECP, focusing on the need for specific data and parameters for the development of decentralized RES capacities, the decommissioning of natural gas for heating and the promotion of the use of public transport.

All participants in the discussion united around the thesis that Bulgaria should also take ambitious steps to increase energy efficiency, such as the promotion of a change in the energy habits of citizens, the introduction of mechanisms for effective management of energy consumption among households and businesses, as well as democratization of electricity production through the more active involvement of citizens in the energy system…

They emphasized the need to increase investment in low-carbon infrastructure, electrify production processes and develop a comprehensive energy strategy based on facts and a comprehensive process of engagement of all stakeholders. Overcoming the risks to energy and climate security requires political will, a significant change in the management of the Bulgarian energy sector, as well as a renewed overall strategy covering the introduction of specific measures in all the main sectors of the economy.