Key Energy Challenges for Bulgaria

Transcription

1 Key Energy Challenges for Bulgaria Presentation at Initiative 2020 Sofia, April 15, 2009 Hinderikus Busz Energy and Infrastructure Advisor World Bank

2 What are the Key Energy Challenges? I. Increasing Security of Energy Supply Recent Ukraine-Russia gas crisis has demonstrated the vulnerability of the Bulgarian gas sector to external shocks II. Decreasing Energy Intensity Among EU countries Bulgaria is the most energy intensive and one of the least energy efficient both on demand and supply side Low electricity prices and lack of gas penetration encourage excessive electricity usage by households for heating, and by small industry. Using electricity for heating is very inefficient.

3 I. The Bulgarian Gas Market Extensive gas pipeline infrastructure High pressure network 1,700 km Transit pipeline 950 km SERBIA CS Kardam 2 ROMANIA Kubrat CS Valchi dol Isperih Russe Montana Chiren UGS Razgrad Pleven Levski Biala CS Provadia Vratza Roman Lovech CS Polski Senovetz Turgoviste Zlatna Panega Sevlievo Sofia Botevgrad Sliven Burgas Pernik CS Lozenetz Elin Pelin Stara Zagora Debelt Iambol Rakovski Nova Zagora CS Ihtiman CS Strandja Plovdiv Pazardjik CS Kardam 1 Gen. Toshevo Dobrich Varna Parvomaj Dimitrovgrad MACEDONIA CS Petrich GREECE Asenovgrad Haskovo TURKEY Legend: Main gas pipeline Gas pipeline branch Transit gas pipeline Compressor station Gas reduction station Source:

4 The Bulgarian Gas Market Limited own gas reserves (about 6 bcm*) Domestic consumption 3.2 bcm p.a. evenly divided between district heating, the chemicals industry (principally fertilisers) and households 95 percent of gas imported from Russia 5 percent produced domestically from offshore Galata field * bcm=billion cubic meters

5 The Bulgarian Gas Market Important gas transit country 16 bcm (Turkey) 2.4 bcm (Greece) 0.1 bcm (Macedonia) Bulgartransgaz has only 0.35 bcm underground gas storage (UGS) capacity at Chiren Planned UGS Capacity Expansion: Chiren up to 0.8 bcm by 2010 Galata gas field to be converted into UGS of up to 1.8 bcm by Melrose Resources

6 How Did Gas Crisis Affect Bulgaria? SEVERELY Bulgargaz had to stop domestic gas supply on January 6 th, 2009 All gas transit to Turkey, Greece and Macedonia was interrupted Most major consumers of natural gas such as fertilizer industry had to shut down Some industries that had back-up fuel or dual fuel capacity were able to switch to HFO 240 MW gas fired power capacity was shut down

7 Other Effects of Gas Crisis in Bulgaria Household consumers were encouraged to use other sources of energy for heating and cooking (electricity, wood) Lower income households were negatively affected by sharp increases in wood and fuel prices Power exports were suspended to supply the domestic market with electricity Ministry of Economy and Energy estimated loss to the economy at more than 250M

8 Options to Improve Security of Gas Supply Short to Medium Term: Improve efficient use of gas, e.g., in district heating on both supply and demand side (home insulation) Increase underground gas storage capacity Improve interconnections with neighboring systems Romania (eg Ruse-Giurgiu, Isakcha-Negru Voda) Greece (eg Haskovo-Komotini) Longer Term: Diversify natural gas supply Bulgaria is strategically located for transit pipelines Nabucco South Stream Sud and Nord Trans-Adriatic Gas Pipeline Blue Stream Western Balkan Gas Ring 8

9 Potential Regional Pipelines Affecting Bulgaria 9

10 II. Bulgaria s Energy Intensity Decreasing - but not fast enough

11 Energy Intensity Comparison TPES/GDP TPES/PPP GDP Bulgaria Czech Republic France Germany Greece Italy Poland Spain United Kingdom Source: IEA, 2006

12 Energy Efficiency EE SOUNDS EASY: money lying on the ground, low hanging fruit, first fuel, first line of defense against climate change, helps meet RE target. Saves on energy bills and often provides greater comfort BUT IN PRACTICE IT IS NOT THAT SIMPLE: Much of the energy efficiency potential, particularly in Bulgaria and other EU 10 countries, remains untapped Estimates of EE potential keep increasing instead of decreasing in many countries Even the EU15 continue to have very significant EE improvement potential (e.g., the EU 20% target) Money continues to lay on the ground and Low hanging fruit continues to hang!

13 Negawatts versus Megawatts Negawatts (avoided or saved capacity, whether in power, gas or district heating) are more valuable than Megawatts: worldwide, 1 Euro invested in energy efficiency avoids 2 Euros in capacity they reduce local pollution and global greenhouse gas emissions, create more jobs Negawatts are also much cheaper than Megawatts on a life cycle cost basis, including investment and operating cost But Negawatts are more complex than Megawatts (see next slide)

14 Megawatts 1-2 stakeholders (equipment supplier and electric utility) One decision maker (generally the utility) Asset-based deal; relatively simple. Financing straightforward Mature market (tested technologies, quality standards, etc. already in place for decades) Less sensitive to (subsidized) consumer tariffs Negawatts Multiple stakeholders (equipment supplier(s), electric utility, consumers, intermediares like ESCOs, etc.) Multiple decision makers (utility, millions of consumers, etc.) Savings-based deal, hence requires pre- assessment (audits), measurement and verification,etc. Financiers hesitant Evolving market (standards may not exist, eg., CFLs, LEDs, product may not be available) Highly sensitive to (subsidized) consumer tariffs

15 How to Increase Energy Efficiency Strong political will and support needed, e.g., gradually move all energy prices to cost recovery levels and abolish cross-subsidies, while protecting the vulnerable. This should be accompanied by efficiency and service improvements on the side of the energy companies. Public sector should be the first mover and lead by example Creates market for energy auditors, suppliers, contractors; will benefit EE in residential, industrial and commercial sectors Set and enforce strong building codes and standards for appliances, industrial equipment, and vehicle fuel efficiency; mandate solar water heating Create long-term subsidy and tax incentive/credit schemes for EE investments so consumers can count on it and plan ahead Increase penetration of gas, especially for heating, once enough storage capacity and/or alternative sources/routes are available A comprehensive approach is required. A good National Energy Efficiency Action Plan (also a EU requirement) is needed, but also should be implemented

16 Net Electricity Trade in South East Europe (GWh, 2007) Source : UCTE

17 Thank you!