1. What electricity storage projects have been commissioned in your jurisdiction to date?
There are currently three operational pumped hydro storage projects in the Republic of Bulgaria. Their combined capacity is around 1.4 GW. All these three projects are operated by the National Electricity Company EAD, a company licensed as the Public Supplier and for the production of electricity under the Bulgarian laws. The largest of the projects, called Chaira PHPP, is the biggest underground plant in the Balkans with an installed capacity of around 900 MW. It has been specifically designed and put in operation in the 1980s by the Japanese companies Mitsui & Co. and Toshiba Corporation in order to make sure that the excess electricity from the two 1000 MW Nuclear units – unit 5 and unit 6 of Kozloduy NPP – is properly stored and utilized.
The National Electricity Company EAD is an active participant on the Bulgarian Independent Energy Stock Exchange (established in 2015 and functioning from the beginning of this year), where it sells the electricity produced by Chaira PHPP.
Similar to other states, the Bulgaria market is actively trying to encourage the use of the battery storage technologies. However, currently there are only a few small projects to cover the needs of the wind and solar projects, as these additional investments are not currently sufficiently competitive.
Monbat AD, a private company, is a producer of such batteries in the Bulgarian market. It still has not put in operation any significant battery storage projects.
2. What electricity storage projects are anticipated in your jurisdiction in coming years?
Yadenitsa, a pumped storage project, is one of the projects of common interest as determined by the regulations of the European Parliament and Council. This project was started by the National Electricity Company EAD in 1997 and has been put on hold in 2009 due to lack of financing. Recently, the European Commission decided to finance 50% of the project so it can be completed. The expected completion period is 7 years from 2015. The project is considered a common interest project because it will increase the energy efficiency of Chaira PHPP, and the time Chaira PHPP could operate at full capacity would be extended to 22 hours (currently being around 8 hours).
AES is one of the world leaders in the energy storage sector. As part of their expansion, the company is planning to develop a battery storage project in Bulgaria. In the middle of 2015, the company presented its proposal for the development of the battery storage technology in Bulgaria to the Minister of Energy. While AES has not started any specific projects, as it is the operator of the largest wind power plant in Bulgaria, some consider it most likely that the pilot project will be implemented there.
There are many small projects where consumers utilise battery storage technology for domestic purposes, such as reducing the demand charges of large energy users.
3. Is there any specific legislation/regulation or programme that relates to energy storage in your jurisdiction?
Energy storage is regulated under the Energy Act (promulgated on 9 December 2003, as amended from time to time). While gas storage is specifically regulated by the Energy Act, the electricity storage has no separate legislative framework. Gas storage is subject to licencing and specific regulations with respect to the storage, distribution and supply.
In practice, developers of electricity storage projects (such as hydro-pumped plants) over 5 MW must obtain a generation licence and comply with the Energy Act.
So far the Bulgarian legislation has placed a much greater focus on energy efficiency, having separate legislative acts and regulatory authorities. Recently the Energy Efficiency Agency has been renamed to Agency for Sustainable Energy Development, thus empowering this body with additional functions related to renewable energy and energy storage.
4. Please give examples of challenges facing energy storage projects in your jurisdiction and how current projects have overcome these challenges.
Energy storage projects are facing the following challenges:
- Lack of revenue – Energy storage projects are expensive to develop. The Bulgarian market is quite competitive and electricity prices are low. As a result, the development of electricity storage project is uncompetitive. In addition, there is significant revenue uncertainty during the project construction period.
- Storage and distribution licence requirement –The storage and distribution of energy are subject to licencing. Licensing is a costly and time-consuming process.
- Regulatory changes – The renewable energy projects in Bulgaria developed between 2007 – 2014 were incentivised by way of a FiT. As a result, in the times of curtailment of production or offtake (due to grid-related or balancing reasons) developers were incentivised to develop electricity storage facilities. Since the changes to the Renewable Energy Act, which entered into force in 2014, there is a cap of the electricity produced under FiT and therefore this indirect support mechanism has been eliminated.
- Cross-subsidies – Despite recent efforts, the electricity price is still cross-subsidised in Bulgaria, which is not providing the right price signals to the investors willing to consider energy storage projects.
5. What are the main entities in the electricity sector and what are their roles or expected roles in relation to energy storage?
Energy storage is mainly regulated by the Energy and Water Regulatory Commission (“EWRC”). This is the main regulatory body that regulates the licensing of electricity and gas storage operators, though, as noted above, there is no specific storage regulatory regime.
The Ministry of Energy (“MoE”) is the ministry of the Bulgarian Government which executes the Governmental policy in the energy field. Their function in relation to energy storage is to ensure that market participants implement the lowest-cost planning option when developing the various energy storage projects.
The Sustainable Energy Development Agency (“SEDA”) is the Governmental body dealing with energy efficiency and sustainable energy development, which implements various EU-led projects for efficient use of energy and will be driving the secondary legislation regarding the energy storage projects in the future.
Bulgarian Energy Holding EAD (“BEH”) is a company fully owned by the state. The main purpose of the company is the generation, extraction, transportation, storage, management, distribution and sale of gas and electricity. It has a function of general oversight of the electricity market in Bulgaria and usually its Chairman is the deputy minister in charge of electricity.
The National Electricity Company EAD is a subsidiary of BEH operating in the area of generation and sale of electricity to consumers. It operates the largest energy storage projects to date.
The Electricity System Operator is the Bulgarian Transmission System Operator. It is fully unbundled from the National Electricity Company EAD and is responsible for the common operational planning, coordination and control of the Bulgarian power system and its parallel synchronous operation with neighbouring systems. Its activity also includes transmission grid operation, maintenance and reliable functioning, auxiliary network servicing, as well as maintenance and repair services in the energy sector. It also manages the power transmission through the national grid and runs the electricity market.