NEK's profit for the 9 months is growing, but not its revenues

The change of the market model and in particular the elimination of NEK's obligation to purchase electricity from RES and WEKP with an installed capacity of 1 MW and over 1 MW, the operation in the conditions of COVID-19 and as a result a decrease in consumption participation in the free market characterize the work of the public electricity supplier during the nine months of this year. This is clear from the interim report of NEK for the nine months of the current 2020. However, the report does not cover the period of entry into the free market of non-domestic consumers connected to the low voltage network, which suggests that there will be significant differences in the annual report. However, it can be deduced from it for the forthcoming stage of liberalization and even for the final result in the full liberalization of the electricity market, when the role of NEK as a public supplier will disappear.

Production from HPP and SHPP

In addition to the public supplier, the National Electricity Company is the owner of HPPs and SHPPs, from which it carries out its own electricity production and which participate in the balancing market. However, the report on their participation is not optimistic. It is clear that in the 9 months of this year it decreased, albeit slightly - (minus) by 0.8 percent and amounted to 1,818,299 MWh.

NEK as a public supplier

The electricity company reports two opposite trends - high levels of electricity consumption by final suppliers in the first half of this year and a significant decline in the third quarter. More important, however, is the finding of a decline in free market participation. The reason for this is the crisis with COVID-19 and the reduced economic activity of economic entities, the company said. The role of NEK in the regulated market is once again emphasized, as it is noteworthy that, unlike before, neither the activity of the regulator nor the Ministry of Energy is openly commented on due to the inclusion of TPP Maritza East 2 in the regulated market. However, reading the document shows that the company has its remarks in this regard.

Purchases and sales of electricity

As a result of the change in the market model and in particular the changes in the Energy Act for the entry on the free market of electricity producers in a combined manner and of RES, the public supplier reports a decline in electricity purchases. However, this has also led to a change in free market participation.

"In the first nine months of 2020, NEK purchased 9,886,261 MWh of electricity, and compared to the same period of the previous year, a decrease in purchases by 6. 0% (minus 631,921 MWh) was reported. The decrease in the company's purchases is due to the decline in NEK's sales on the free market.

The structure of the purchased electricity has been changed ", the company reports. As it becomes clear, the purchases from the plants with quotas - Kozloduy NPP - by 41 percent, TPP "Maritsa Iztok 2" - by 1.8 percent (TPP "Bobov Dol" is zero percent) - a total of 22 percent . "The total amount of electricity supplied from the quota power plants has increased by 813,532 MWh compared to the period January-September 2020," the electricity company reported.

However, they have been reduced by plants with long-term contracts. For example, for TPP "AES - 3C Maritza East 1" it is a question of reduced purchases by 10.4%, and for TPP "Contour Global Maritza East 3" - by 4.3 percent and as already mentioned for electricity producers at preferential prices ( from RES and in a combined way from 1 to 4 MWh) with (minus) 73.4% and 94.9% respectively. "The total amount of electricity purchased under long-term contracts and preferential prices for the nine months of this year is 5,293,681 MWh, which is a decrease of 1,346,712 MWh or a 20.3% decrease," the document said.

The structure of the electricity purchased by NEK is changing accordingly. For the 9 months of 2020, electricity purchased at preferential prices and under long-term contracts decreased to 53.5% compared to 63.1% last year. The share of producers by quotas increased to 45.6% against 35.1% last year.

The electricity sold by NEK on the free market and regulated during the reporting period of nine months of this year decreased by 5.8% - 11,488,539 MWh. For comparison, at the same time of the previous year they reached a volume of 11,192,829 MWh. There is a general decrease in sales and in the regulated market. This decline is mainly due to the coronavirus crisis and in particular to the almost failed summer tourist season.