Ivan Ivanov: Consumers, not electricity distribution networks, will be at the center of the energy transition
I do not agree that electricity distribution networks will be at the center of the energy transition. Consumers will be in the center. This was stated during a discussion at the conference "The European Green Deal and the Bulgarian Energy Transition", organized by EMI and the Diplomatic Institute at the Ministry of Foreign Affairs, by the Chairman of the Energy and Water Regulatory Commission (EWRC) Ivan Ivanov. He also shared his personal expectation that the design of network tariffs will be hybrid - between the formation of tariffs on the basis of "requested capacity" and "electricity transmission". The EWRC Chairman did not spare his criticism for the delay in the reforms in the sector. He was quite laconic, but also skeptical in his expectation, both for the capacity mechanism and that the exit of household consumers will be a fact from the middle of 2021. However, he was adamant that the regulator complies with all requirements and obligations under REMIT.
I do not agree that electricity distribution networks will be at the center of the energy transition. Consumers will be at the center of the energy transition, said EWRC Chairman Ivan Ivanov in response to the earlier statement of the board member of the Institute of Energy Management Ivanka Dilovska and in response to a question from Angela Toneva from Energo-Pro. In her presentation, Dilovska, referring to what is happening in the electricity sector in Europe and in Bulgaria as a whole and given the expected connection of 60% of RES to the electricity distribution network, said that electricity distribution networks will be at the forefront in the energy transition process.
"According to the European Green Deal, as well as all the fundamental European documents, consumers are at the heart of energy transformation. Be sure that this is so and this will be confirmed with all the opportunities that are already given to energy consumers, "said Ivanov.
Regarding the change in the design of network tariffs, the Chairman of the EWRC suggested that the model would be a hybrid - between the formation of tariffs on the basis of "requested capacity" and "electricity transmission".
"Yes, it is true. There are countries in the EU where network tariffs are based on 'requested capacity' and not on 'electricity transmission'. In Bulgaria, tariffs are currently determined on the basis of "transmitted amount of electricity", he explained.
According to him, the reasons for the emergence of the thesis of a new design is that, "firstly, the cost of maintaining the network is virtually constant, in other words should not depend on the" amount of electricity transmitted ", and secondly - for another important energy source , such as natural gas, the "requested capacity" model is applied. "At the same time, however, I want to point out that there are counter-arguments. First of all, when we talk about European practice, the talks we have with the representatives of European regulators, even where the formation of tariffs on the principle of "declared capacity" is accepted, studies are already being done to change this design.
The reasons are as follows - above all, there is no doubt that in such a design, those households that consume a minimum amount of electricity will be most affected. I'm not talking about villas that are used a minimum number of days a year. I am talking about the consumers of electricity in the small settlements, and there are also in Sofia, but especially in the villages, which use only lighting and have one refrigerator and almost nothing else. The change of design in the direction of "requested capacity" will relatively seriously increase their price, which they will have to pay as network tariffs.
Secondly, in a certain way the stimulation, not through preferential prices, but the stimulation of the development of the production of electricity from renewable energy sources for own consumption is one of the main motivating factors is that they will not pay network tariffs. In the "requested capacity" design, they will pay the same network tariffs as they would have without the construction of their own solar parks, wind farms. Because due to the uneven nature of the energy produced by renewables, they really need to have such a "declared capacity". In the end, because you are also asking for my personal opinion and what the regulator could do, I believe that a hybrid model will be reached, "Ivanov said. In this regard, he recalled that "the public regulator must take into account the public interest, which is neither only for energy consumers nor only for energy companies."
"That is, a change in the design of network tariffs will begin, but without deviating the pendulum completely in the other direction, and we will look for a suitable balance, which we strive to find in our other solutions," explained Ivan Ivanov.
The chairman of the energy regulator also paid due attention to the importance of the European green deal. "Because in the order of priorities in a society there is no doubt that health, human life and protection of the natural environment are an absolute priority. Everything else should be in a certain way, even when it is difficult to comply in a certain way with this lofty goal. It is no coincidence that there is a continuous acceleration of all activities and processes related to the implementation of the European green deal. In recent days, the decision of the European Parliament to achieve a 60% reduction in harmful emissions by 2030 was mentioned - a goal that is difficult to achieve even in the words of Vice President Timmermans," said Ivanov and did not spare his criticism of Bulgarian energy policy.
"To a large extent, the problems of the Bulgarian energy sector are increasing due to the fact that we have been systematically, for many years, in the queue in the implementation of certain European policies, striving as much as possible to maintain the status quo and any others. All of this is accumulating in the end as a very big burden in terms of the necessary reforms. In order for them to be implemented, reformist thinking of the people who determine the Bulgarian energy sector is needed. Ultimately, any delay puts us in an unfavorable and uncompetitive environment in terms of the movement of European countries in the framework of the green deal, "he said, outlining his expectations for the future role of the regulator.
"Above all, the regulator subordinates its actions to the law, the regulatory framework and the energy strategy. Unfortunately, our lag is reflected even in the energy strategy. As in the one that has been valid for the last year - until 2020, so in the draft of the new energy strategy, where no answers can be found to important questions that should outline the direction of development of Bulgarian energy for the next 10 years, and with the action horizon until 2050. As we see, new projects are constantly appearing - either Belene or the 7th block of Kozloduy, tomorrow I do not know what will appear, which does not allow us to have a truly sustainable foundation and sustainable direction of development, "said Ivan Ivanov.
He defended the actions of the regulator with regard to signals of misuse of electricity trading on the free market subject to REMIT, stating emphatically that the regulator cannot and will not make such information public. At the same time, he warned that those who submitted signals were also subject to inspection.
By the end of the year, the regulator will present the platform for comparing electricity prices to all traders, it became clear from Ivanov's words. As for whether the intention for household consumers to enter the free market from the middle of 2021 will happen, he expressed rather doubts.
The expectations of the chairman of the energy regulator for the capacity mechanism are also not very optimistic. "Bulgaria would gain a lot if it introduced the capacity mechanism. Unfortunately, there is a problem that is difficult to overcome, "concluded the chairman of the Bulgarian energy regulator.