Interview with Krassimir Nenov by dir.bg – Read the full interview in Bulgarian HERE.
On October 15th , Sofia was host of the Green Transition – Challenges and Solutions for Bulgaria international conference, organized by Dir.bg and 3eNews. The main issues surrounding the European Green Deal concern the future of coal regions. We asked Krassimir Nenov, Executive Director of Contour Global Maritsa East 3 TPP to comment on the different scenarios for a sustainable transition to low-carbon economy.
Q: Mr. Nenov, this interview happens at a time when Bulgaria, the region, Europe are facing a very complicated situation – a period of rising electricity and gas prices. How do you assess what is happening in the electricity market?
A: Today’s situation is indicative of the importance of long-term, sustainable energy policies. Decisions for building new capacities, for the provision of energy sources, whether renewable, conventional or nuclear, require a long period of planning, construction and commissioning. At the moment, on the one hand, we have increased demand because the economy is recovering from the stagnation since the beginning of the pandemic. On the other hand, there is a global increase in demand for energy products – such as natural gas – a raw material for which Europe does not have enough indigenous resources. To this we have to add the lower power generation from renewable sources, given the season and the more difficult predictability of their work.
The situation is a clear example and proof of the importance of planning and taking action to ensure the energy security and independence of the whole of Europe. Bulgaria has its own energy sources – the nuclear facilities of Kozloduy NPP, lignite mines and power plants that use coal and provide 40% of the country’s electricity. These sources are not affected by international gas prices and this allows Bulgaria (as well as Poland) to maintain relatively lower electricity prices compared to other European countries. This
again proves that decisions on the energy transition must be made very carefully and taking into account the needs of the country’s energy security.
Q: The energy transition is a very big challenge for the power plants in the Maritsa Basin, including ContourGlobal TPP Maritsa East 3 TPP. This year, the European Commission also the Fit for 55 program. What does the energy transition mean for the power plants?
A: The proposed Fir for 55 package aims to amend European Union legislation and introduce new initiatives so as to synchronize EU policies and climate targets for reducing greenhouse gas emissions by at least 55% by 2030 compared to 1990 and to achieve climate neutrality by 2050. To achieve these goals, in managing its energy sector, the EU applies economic incentives, regulatory mechanisms and financial policies that allocate private and public investment to low-carbon technologies. At the same time, the investment community and citizens expect investors to take measures to support the reduction of their carbon footprint.
Indeed, carbon-intensive electricity producers such as the power plants in the Maritsa East complex face the risk of premature decommissioning if no suitable way is found to switch to low-carbon production. Given the key role of these power plants for the security of supply and the stability of the electricity system – they provide over 40% of the country’s electricity generation, it is important to find suitable options for a sustainable transition to low-carbon electricity generation.
We are actively analyzing different scenarios for Contour Global Maritsa East 3 TPP for a sustainable transition to low-carbon production in terms of their economic viability and contribution to the decarbonization targets, while maintaining the key role of the power plant for the electricity system.
Q: In the last two months, we have witnessed record electricity prices on energy exchanges. What role did Contour Global Maritsa East 3 TPP play? Could our country have managed without the participation of the TPPs from the complex?
A: Trends in recent months demonstrate the need for base capacities to ensure the security of supply at affordable prices, when renewable energy sources are insufficient and Europe is dependent on imports for a significant part of fuels, incl. natural gas.
The power plants in the Maritsa East complex have a major contribution to our energy system through their increased and reliable electricity generation in the conditions of increased electricity demand in recent months. Contour Global Maritsa East 3 TPP is a key capacity for the country’s electricity security, contributing on average to over 10% of local electricity production, and for the period January – September 2021 the share in total production amounts to 13%. I am grateful to our team, which ensures the reliable operation of all units of the power plant during this critical period. We managed to effectively complete the scheduled maintenance of all units, and some even ahead of schedule, which allowed us to connect them to the grid at the most crucial moment.
Q: Mr. Nenov, Europe stands firmly behind the Green Deal. The decarbonization process will become increasingly relevant. An important decision is to be made about the Maritsa East complex. Is the state responsive? What are your expectations?
A: We maintain an active dialogue and cooperate with all key stakeholders on the actions needed to achieve a sustainable transition to low-carbon electricity generation. The companies from the Maritsa East complex work with scientists and experts from leading universities in Bulgaria and international technological companies to find the most appropriate solutions. We also interact with the responsible institutions, as this is an extremely important issue both for the energy security of the country and the regional economy and employment, given the important role of the Maritsa East complex.
Among the projects we are considering in the context of the transition are the diversification of the fuel base with biomass and natural gas, including a combination with modern installations for capturing and storing carbon emissions in appropriate geological formations. We are also considering options for the construction of new RES capacities, including storage systems.
Q: Mr. Nenov, as an energy expert with significant experience in the energy sector, can you share with us your vision about the future energy model of Bulgaria that would give us greatest benefit from the existing capacities the country, which are to be decommissioned and which put in operation in view of the Green Deal agenda?
A: The development of a realistic strategy for achieving a smooth low-carbon transition, while maintaining energy security and independence, must be among the main priorities in the sector. As I have already mentioned, the lignite power plants in the Maritsa East complex play a key role for the security of supply, network stability and energy independence of Bulgaria. They provide an average of about 40% of the country’s annual electricity generation using a local resource and cannot be easily and quickly replaced by other technologies. Bulgaria must uphold the protection of its energy independence when planning the transformation of the energy sector, therefore it would be appropriate to focus efforts on accelerating the potential of natural gas exploration and production in the Black Sea, as well as on the opportunities for carbon capture and storage, which will allow the continued operation of existing lignite power plants and the transition to another reliable local energy source. All this is in addition to the reliable operation of our nuclear facilities, the construction of new renewable energy sources and energy storage.
As part of the efforts of the investment community in the process of decarbonization of our economy, the American Chamber of Commerce commissioned a leading international consulting company to prepare an analysis of the possibilities for low-carbon transformation of electricity capacity in Bulgaria. The terms of reference also provide for the formulation of proposals for regulatory reforms that would create predictability and appropriate incentives for private investment. We have communicated this initiative with the institutions and we hope to continue the active dialogue in connection with the development of the analysis.
It is likely that in the future energy mix there will be many more RES, energy storage systems and low-carbon flexible technologies, which will allow balancing the system. Green hydrogen (produced using energy from renewable sources) is also a promising opportunity, especially for transport and industry.
Low carbon transformation will be a long process and will require significant investments with a long horizon of construction and operation. That is why, now it is crucial to improve the investment climate and create a predictable regulatory environment in order to attract the necessary investment. In the meantime, the existing lignite power plants will be needed at least in the medium term to ensure security of supply while the much-needed investments are being made.
Q: Was it a mistake to send the message to banks not to invest in coal-related projects? Does this stop you in any way and how do you see the future of Contour Global Maritsa East 3 TPP, and the complex as a whole?
A: The investment community is part of society and has the right to set its goals and requirements. If society aims to reduce carbon emissions in the name of limiting the harmful effects of high-carbon production, this must be done through all means. It happens both at the level of the European Union and nationally, and is valid for the requirements and expectations of investors, banks, insurance companies. This is normal.
More importantly, these expectations must be reasonable and the transition must be smooth and sustainable. At present we must not deprive ourselves of capacities that are presently needed by society and meet environmental requirements, given that we do not have any other capacities to perform these functions.