Electricity and Natural Gas Liberalisation Process in Bulgaria

Transcription

1 Electricity and Natural Gas Liberalisation Process in Bulgaria Assoc. Prof. Ivan Ivanov Ph.D. EWRC Chairperson Sofia, 21 May 2015

2 Institutional Framework. Energy Strategy. Energy Basic Situation. data for the Measures Bulgarian Undertaken power to Overcome system and the electricity Crisis. market Energy Efficiency and Role of Natural Gas. Overview Vision and Priorities of the Regulator. Challenges of Electricity Market Liberalisation. Change of the Market Model. Questions that need to be answered. 2

3 Institutional Framework National Assembly Adopts the Energy strategy, by which aims stages means and methods of energy development are defined: 2011 Energy Strategy Legislation: Energy Act; Energy Efficiency Act; 2011 г. - Energy from Renewable Sources Act. Ministry of energy Directs the Energy Sector; Implements the national energy strategy; Drafts and applies energy regulations. Energy and water regulatory commission Regulates the energy activities in compliance with the National Energy Strategy and with the priorities and targets of the energy policy. 3

4 Energy Strategy First Energy Strategy Second Energy Strategy Third Energy Strategy 1999 GOALS: Restructuring and liberalization; Local energy resources development; Environment protection GOALS: Privatization and competitive market development; Energy financial recovering; Establishment of market rules and market relations GOALS: Reducing energy dependence; Fulfillment of the 16% renewable energy consumption obligations ; Increase energy efficiency by 50% till 2020; 30% households gasification. 4

5 Energy Strategy A need for new, stabile and long-term energy strategy The present strategy: Based on unrealistic forecast of electricity consumption growth; Envisages the realization of large energy projects, which due to economic, energy and financial reasons will not be implemented; Does not take into consideration the new EU targets, set out in the decision for the establishment of the European Energy Union. The set targets should be realistic: With the chronic overgeneration only replacement capacities are needed; 71% of NEK obligations come from megaprojects costs: Belene NPP (1.3 billion leva) and Tsankov Kamak HPP (984 M leva); Focus on energy efficiency enhancement; Energy strategy up to 2030 is needed, with perspective by

6 Състояние National Power на националната Sector Status енергетика I. Findings and recommendations of the World Bank report, 27 May 2013: Growing deficit in the sector: Termination of feed-in-tariff misuse of cogeneration (CHP); Better allocation of generation quota in the regulated market; NEK and Ministry of finance share on an equal footing the financial liabilities from RES feedin-tariffs, long term contracts and unsuccessful investments like Belene. Public mistrust: Disclosure of financial interests in the energy sector of executives and civil servants; Dismissal of BEH; Financial independence and technical capacity of the Regulator. Energy poverty: Increase energy aids; Increase energy efficiency. 6

7 National Power Sector Status II. Findings and recommendations of the European Commission report, March 2013 Improving the regulatory framework: Third energy package and their accounting rules; Transparent and fair balancing rules; Cold reserve amount. Facilitate the electricity export; Create efficient competition in the free market; Organized trading for management and balancing of day ahead and intraday markets; Accelerate the establishment of a regional electricity market; Reform the single buyer model; Roadmap of stepwise phase out of regulated retail prices. 7

8 National Power Sector Status Installed capacity Available capacity Peak Load Off-peak MW MW MW MW Gross generation in 2014 in MWh Thermo Power Plants 18% Renewable Energy Sources HPP 39% 10% Solar Industrial Power Plants and CHPP Nuclear Power Plant 33% Wind Biomass 8

9 National Power Sector Status Non-regulated market % % Regulated market % % Gradual transition of consumers from regulated to liberalized market. The total number of industrial customers who switched off the supplier (2014) is Small business consumers + Households 9

10 Measures Undertaken to Overcome the Crisis Measures Undertaken Mandatory purchase only of the high efficient power, generated in a combined heat and electricity method by district heating and industrial plants; Renegotiated availability price when purchase the power generated by AES Maritza East 1 and Contour Global Maritza East 3; Limit the electricity generated by RES and purchased at feein-tariffs; Partial compensation of NEK deficit through revenue from carbon emissions sales. 10

11 Energy Efficiency and Role of Natural Gas Energy Efficiency Bulgaria has the last position in EU in energy efficiency; Target increase the GDP by 27% at constant energy consumption; Increase the energy efficiency in electricity generation, transmission and distribution. The Role of Natural Gas In % gasified households, 53 thousand toe NG; Primary resource: Natural gas 90% ECE; Coal 25% ECE. Target: % gasified households 318 thousand toe NG. Replacement effect: ЗTWh in households; ЗTWh in industry. Gasified households: 3% Target 2013 г. Thousand toe NG 53 Natural gas ECE 90% 25% Coal Primary resource 30% 2030 г

12 Vision and Priorities of the Regulator Enhance the prestige, independence and capacity of the energy regulator: EWRC s assignment by the Parliament, based on transparent and objective procedures and affirmation of Regulator s political independence; Members of EWRC to take public personal responsibility by open voting of EWRC s decisions; The Regulator being financially independent, meeting its needs with the fees and fines, which shall allow it to enhance its administrative capacity ; Expand cooperation with АСЕR concerning the implementation of EU legislation on the internal energy market. 12

13 Vision and Priorities of the Regulator Future EWRC function and role in liberalised energy market: Licensing and supervision of issued licenses; Regulating network tariffs; Setting price for Pubic Service Obligations ; Market monitoring. Power Generation Transmission and Distribution Supply on the wholesale or retail markets Competition Regulation on network tariff Competition Public Service Obligations 13

14 Challenges of Electricity Market Liberalization The First Necessary Steps Toward Competitive Electricity Markets 14

15 Challenges of Electricity Market Liberalization EWRC, ESO EAD and IBEX Interaction Role Three roles interacting: Each of them assigned their own monitoring and surveillance tasks as they know their own markets and customers best, but with reporting obligations towards EWRC, at least in case of suspicious behavior, issues, incidents or for dispute resolution. IBEX EWRC EWRC Licensing and supervision of the issued licenses Setting price Obligation for society Regulate transmission and distribution tariffs ESO EAD IBEX (forward), day ahead and intraday market places ESO EAD Balancing market and imbalance settlement responsible 15

16 Change of the Market Model Key Market Issues Energy Act requires the Public Provider to buy electricity from Contour Global Maritsa East 3 and AES 3C Maritza East according to PPAs. The contractual pricing mechanism does not conform to the principles and objectives of the Third Energy Package, creating conditions for the removal of barriers to competition in the energy market. Other key problems are the increased share of electricity generated from RES and CHPs, the obligations of the Public Provider to purchase compulsorily the whole amount of power generated from renewable sources which is not consistent with the actual electricity consumption in the country. European Commission recommendations - EU should achieve its energy and climate objectives at the lowest possible cost to consumers and without the unnecessary usage of non-market mechanisms and distortion of competition. Is it possible to achieve a fully liberalized market in non market-based environment and obligatory purchase conditions? 16

17 Change of the Market Model For the successful market liberalization is needed A change of the market model Creation of optimal conditions for the development of market efficiency. All these could not lead to a functional and efficient liberalized market market Long-term contracts Conditions of mandatory feed-intariff electricity purchase Non- Market practices PPAs mandatory obligations Nonmarket conditions Existing market failures Lack of Competition 17

18 Change of the Market Model Solving problems related to the introduction of a new market model and market liberalization in a very non-market environment, requires collaboration of EWRC with the Parliament, the Government, the Ministry of energy and market participants. Collaboration and Partnership WHAT NEEDS TO BE CHANGED: Electricity prices should be formed on the basis of free supply and demand, allowing consumers to choose a supplier. Problems and Solutions Following the full liberalization of the market, the regulator should set only network services prices and the public service obligation price. 18

19 Key questions that need to be answered 1. Is it possible to achieve a fully liberalized market in non marketbased environment and obligatory purchase conditions? 2. Liberalized market with regulated market segment? 3. How to mitigate the influence of high RES costs for industrial consumers without EU considering it as a state aid? 4. New market model with or without Public Provider? 19

20 Sofia, 21 May 2015 Thank you for your attention! Assoc. Prof. Ivan Ivanov Ph.D. EWRC Chairperson