High CO2 levels are affecting energy prices across Europe

The price of electricity traded on the free market is BGN 200 per megawatt hour. No price changes are expected for this year, which means that consumers will have to deal with this amount at least until the end of 2021. The reason for this sharp rise in the price of electricity is that in recent years the Bulgarian electricity market is gradually shifting through the transformation from an individual to a larger common energy market together with those of our neighboring countries Romania and Greece. A merger process is underway. This is the opinion expressed by financial expert Emil Asparuhov to Bloomberg TV Bulgaria.

"The Bulgarian energy market is becoming part of the region and even of the whole of Europe"

Emil Asparuhov touched upon the topic of "coupling" of the energy markets in the Balkan region, or in other words - a process of unification. The positives of this process are that Bulgaria cannot be isolated from the pan-European energy market and can more easily oppose the monopoly. The negative effect is visible - the sharp rise in the price of electricity, which mostly affects electricity consumers, but Emil Asparuhov believes that this will be temporary.

"Romania has long been in a coupling with Hungary, and Hungary itself is the most liquid and developed market in Central and Eastern Europe. In reality, Bulgarian electricity can reach any point in Europe. "

Another fact that Asparuhov points out is that Greece and Italy are also in this kind of coupling relationship, and traditionally the Italian energy market is more expensive. This type of interconnection proves that in Europe there is a process of equalization of prices on the electricity market. Large discrepancies in prices per megawatt-hour are no longer noticeable, and the differences in the development of the economy of the whole country are not a special factor.

The high cost of carbon also plays a key role in raising the price of electricity. We remind you that the price per ton of carbon emissions is 60 euros, which makes one megawatt-hour extremely expensive.

Another factor that financial expert Emil Asparuhov points out is inflationary pressures. The Covid pandemic imposed a blockade on production and consumption, but now there is a huge economic activity and consumption, which is combined with the still valid facilities imposed by central banks. "The combination of all these factors cannot but affect the price of electricity," said Emil Asparuhov. The rise in the price of electricity is not a phenomenon that can be seen only in Bulgaria. Prices are skyrocketing across Europe.

However, the financial expert does not think this is a cause for serious concern. Yes, consumers will have to bear the brunt of rising prices, but on the other hand, this will lead to more people wanting to get involved in the electricity business - because of the profit from the price of electricity. More electricity producers means that more electricity will be produced, which will inevitably lead to a drop in price.

Emil Asparuhov predicts that there will be an increase in investments in renewable sources, but this time it will be on a market basis and not through government intervention. Solar energy is an alternative because it is easier to manage and predict than electricity. Wind turbines are also an option. Despite the temporary inconvenience of the price jump, this process means that the market is freeing itself from the monopoly, and the production capacity known so far will not be as important. A new generation of businessmen is coming to invest in alternative energy sources.