2024-03-29 02:31:00
- 24 Hours and UBB gathered top experts to look for the best model to make this happen
- A balance between demand and production to have stable prices and a capacity mix is the right recipe
The green transition in the Bulgarian energy sector is happening quickly, the production of electricity from RES capacities can already replace coal. The challenge now is to find a model that ensures system sustainability.
The participants in the conference “ESG and the production of energy from RES. Opportunities and challenges” united around this opinion. It was the next stage of the campaign “24 hours” and UBB for a sustainable future”. Top experts in the sector took part in the debate – managers of energy companies, heads of large state-owned energy companies, regulators, ministers. Everyone agreed that Bulgaria there is a need for a diverse energy mix with low-emission productions, including nuclear power, RES capacities and power storage facilities.
“Energy is the key sector that will enable us to reach the EU-wide goal of carbon neutrality in 2050. To make this possible, investments are needed to push forward the development of solar and wind plants, the electricity transmission system and energy efficiency,” said Minister of Environment and Water Julian Popov.
According to the Deputy Minister of Energy – Krasimir Nenov, the energy transition is happening faster than we expected, and we are not completely ready for it. “In this process, the government’s role is to provide an investment framework and price signals to the market, to financial institutions and investors. We are moving forward with the policies and measures to allow the decarbonization goals to be achieved with affordable and cheap energy for domestic consumers and industry.” , assured Nenov. This could be done through baseline low-emission capacities, renewable energy sources and large-scale investments in the grid that would allow the system to be more flexible.
“OBB evaluates its role in ESG policy in two directions – what carbon footprint it creates directly with its activities as a group, but more important for us is what is the indirect footprint through the industries whose projects we finance”, said Dobromir Dobrev – Executive Director of Corporate banking and markets” of UBB. He pointed out that in 2023 the new credit portfolio in support of green projects has reached over BGN 450 million. In the field of photovoltaic installations, this means assistance for just over 20% of investments in Bulgaria. Supporting this share of energy is a priority for the bank, Dobrev stressed. And he added that UBB offers products for both large businesses and small and medium-sized enterprises, including guarantee instruments under the program of the European Investment Fund InvestEU.
Dobromir Dobrev pointed out that KBC Group in Bulgaria is the first financial institution in our country to have published its “Report to Society” in line with sustainable policies for 2022, and the one for 2023 will soon be published. According to him, in Bulgaria, non-financial reports are still rare in the banking sector, but soon they will be mandatory and normal. In the report of KBC Group in Bulgaria, there are clearly measurable goals in the years to come, what exactly they plan to achieve. Dobrev pointed out that the energy sector is among the most carbon-intensive, and its development has recently been turbulent due to economic and geopolitical dimensions.
According to Dobromir Dobrev, part of the role of the financial sector is to assist clients with non-financial reports for small and medium-sized businesses.
The preparation of “White Papers” is an initiative of KBC Group, within which, for the 8 identified most carbon-intensive sectors of the economy, UBB prepares separate analyzes for Bulgaria with what is the regulatory base and what is their direct and indirect carbon footprint. what are the main issues and risks in the given industry in the field of ESG and how the bank can help the business to meet the goals and requirements for the sector. The white papers are updated every year, Dobrev explained.
A concrete picture of the challenges facing the energy system was outlined by Angelin Tsachev -. executive director of the Electricity System Operator (ESO). He pointed out that e.g. on March 22, there was a new record in the production of electricity from photovoltaic plants – at 1 p.m., 2,270 megawatts were reached, but an hour later, the electricity produced decreased to 1,700 megawatts. “Without being an energy expert, one can realize what a challenge it is to cover such a difference within 15-20 minutes. It is extremely complicated and difficult, considering that in our country the last investment in maneuverable capacities is in hydropower plants” “Tsankov kamak” of 80 megawatts, which was put into operation in 2013, said Tsachev.
ESO has invested BGN 1.2 billion in the last 6 years in the electricity transmission network. Cross-border capacity has been increased, conditions have been created for traders to be part of the common European energy market and for their customers to receive a competitive price for electricity. We have attracted serious financial resources from European programs and funds, under REpowerEU we expect another 400 million euros for capacity increase and for network reconstructions to allow the connection of new RES capacities, added Tsachev. For the last 2 years, 2,000 megawatts of renewable capacity have been introduced, preliminary contracts for more than 8,500 megawatts have been signed in ESO.
“In order to have the sustainability that ESG requires, we cannot focus only on renewables. We need signals to reach investors to encourage investment in shunt capacity as well as baseline low-emission capacity. The balance between the three technologies will lead to keeping of the adequacy of the energy system in the country,” Tsachev believes. For him, a price of BGN 10 per megawatt hour for a RES producer is not sustainable. In order for the price to balance, there must be equal positions in supply and demand. At the moment there are very low prices during the hours during the day, it should be done so that there are industries that consume the energy during these hours, said Tsachev. One solution is to use this cheap energy to produce green hydrogen.
A large part of the investments in RES were made because the business saw an opportunity to reduce their electricity bills by building their own capacities, according to Nikola Gazdov – chairman of the Association for Production, Storage and Trading of Electricity. If photovoltaics were expensive 15 years ago, today they are the ones that provide the lowest price, he pointed out. According to him, if we have better connectivity with Central Europe, the sector will be more competitive and will export and sell energy under long-term contracts.
Gazdov emphasized that the banks in our country have managed to adapt very quickly, and this should also happen with regard to the investment community.
“The market will help balance price fluctuations, but it won’t happen immediately,” he added. According to him, this year and next will be stressful for some solar plant operators. I am glad that renewable energy is increasingly playing a key role in the Bulgarian and regional energy systems, and this is less and less frightening not only the financial sector, but also state companies and organizations. This is a very positive development, Gazdov is convinced.
“I don’t know that anyone who has tried to balance the price of electricity has succeeded. It is best to let the market work, especially the Day Ahead market segment. It works and publishes prices based solely on supply and demand “, Konstantin Konstantinov – director of the Bulgarian Independent Energy Exchange, joined the debate.
The topic of guarantees of origin of green energy was raised by the director of the Agency for Sustainable Energy Development Ivaylo Alexiev. According to him, this market will have serious development. The Agency is taking steps towards joining the European Association of Issuing Authorities. We hope we are close to the finish line, he announced. It has a hub that electronically handles transfers. Alexiev specified that guarantees can be an export instrument to compensate RES producers. And at the moment guarantees of origin are being exported from Bulgaria, Bulgarian companies such as “Microsoft”, “Amazon”, “Google”, “Tesla” receive them. Together with the energy exchange, work is underway to create a trading segment with guarantees of origin.
Atanas Georgiev – dean of the Faculty of Economics of SU “Kliment Ohridski” outlined three pillars of energy in transition – security of supplies, climate policies and market liberalization. And he advocated the opinion that it is important for the hours of the day when the price of electricity tends to zero, to attract industries that use this energy. Georgiev added that the investments that will be made in the energy sector must be included in a national framework.
BGN 800 million deficit in the energy sector – this is how much the Electricity System Security Fund has covered since its creation in 2015, announced its head, Dian Chervenkondev. From next year, if there is a government decision, the fund will invest in energy efficiency by paying the interest on bank loans for such industry projects.
At the end of the discussion, all conference participants were united around the thesis that achieving a balance between consumption and production and an investment program at the national level will ensure a stable electricity price, which will lead to a sustainable energy and financial system that will continue to support decarbonisation .