AES Blog: AmCham Bulgaria Contributes to the Debate on the Decarbonization of the Bulgarian Energy Market

Bulgaria is the most energy and emissions intensive member state in the EU, with its energy mix still very much reliant on fossil fuels. The country needs to foster a clean and efficient energy and resource system. To tackle these challenges, Bulgaria’s Recovery and Resilience Plan (BG RRP) supports the green transition through ambitious reforms: the acceleration of the deployment of renewable energy sources, the deployment of large capacities of energy storage facilities, full liberalization of the wholesale and retail electricity markets, and a commitment to phase-out coal by 2038 along with a reduction of greenhouse gas emissions of the power sector of 40% by 2025. 

The Bulgarian Government has opened several channels of communication with energy producers, such as AES, energy consumers and NGOs to agree on the most appropriate solutions to decarbonize the energy sector and to provide a safe, affordable, and secure energy supply to Bulgarian businesses and citizens.

“Bulgaria can stay on track to decarbonize the Bulgarian power system by further developing renewable capacity combined with new flexible low carbon capacities”. This is the key message the American Chamber of Commerce in Bulgaria gives to the Bulgarian Government’s current analysis of its energy sector. It also underpins efforts to develop a strategy for a responsible transition towards decarbonization.

In this context, AmChamBG commissioned a study on “Decarbonization Options for the Bulgarian Power Sector” to assist the Bulgarian institutions in their effort to accelerate the diversification of the country’s gas supply routes and sources, and boost the share of renewables in the energy mix. The first version of the study was published in March 2022 and it was updated during the summer of 2022 to take into account the different conditions following the adoption of the BG RRP and the war in Ukraine.

This rigorous report includes a range of scenarios and sensitivity analyses. The update, which reflects the output of the modelling as of August 2022, shows that coal-fired plants play an important role in an orderly transition to decarbonization, and are essential to minimize the total cost of the energy transition. A further update of the study is being made based on refined inputs following the exchange within the Energy Transition Committee. This finetuning of the study will likely further amplify the role of the coal-fired plants during the transition in the current decade. The update also shows that the transition would require investment in increased renewable capacity combined with storage capacity and potentially in new nuclear energy production capacities:

  • The first measure to decarbonize the Bulgarian power system is to further develop renewable capacity combined with new flexible low carbon capacities: a minimum of 11GW of wind and solar and 2GW of storage developed by 2030 would lead to around 80% CO2 emission reduction in the energy sector compared to 1990.
  • Implementing the 40% emission reduction constraint by 2025 would come at an additional cost for the Bulgarian power system (estimated around 1€bn/year), delaying it to later in 2030 would mitigate the future power system cost increase associated to phasing out lignite.
  • Earlier phase-out of lignite in 2030 would come at an additional cost for the Bulgarian power system (estimated around 560m€/year).
  • Finally, timely new nuclear development around 2035 would provide much needed reliable capacity and avoid the need to build new gas-fired generation capacity.

Any solution towards decarbonization requires cooperation between authorities and business to ensure that Bulgaria is in a position to attract investment. Reforms are needed to reduce the administrative burden for renewable energy projects related to their installation, connection and operation. In particular, measures must include simplification of licensing and permitting procedures, as well as the simplification of certain technical approvals by the operators for household installations.

AES fully supports the conclusions of this study and is ready to partner with national and local Bulgarian authorities to bring our experience and readiness to support a responsible transition that guarantees security of supply to the region.

Source: AES Blog