A colossal bubble in green electricity can “burst” projects worth billions of BGN
A business in Bulgaria is inflating a real bubble that can burst projects worth billions of BGN. And this is not the real estate market, but the green electricity market.
A whopping 33,800 megawatts of renewable plants have requested grid connection to date. They are in
show data of the Electricity System Operator. Photovoltaic power plants are mainly built, and according to rough estimates, the construction of one megawatt costs around BGN 1 million. This means that the projects are worth BGN 33.8 billion.
For comparison, the total installed capacity in our country is 13,246 megawatts, and those that produce electricity are around 9,000 megawatts. Of these, renewable sources are 5,000 megawatts, and total green capacities are 7,265. From the data, it can be easily calculated that
only with the new green projects
power plants we should
The boom in this business is explained by the high electricity prices on the free market, where last year there were values of over BGN 1,200 per megawatt hour.
However, this remains a thing of the past, and quotes have long been many times lower. Prices on the energy exchange in recent days, for example, rarely exceed BGN 350 per megawatt hour. And there is no prospect of a return to new record values, because the energy shock in Europe due to the war in Ukraine is already passing.
Most experts believe that expectations of high profits will remain false precisely because there are no longer high prices to ensure quick returns.
Thus, there is a huge risk that some of the projects will not be implemented because of
impossibility of normal return
of the invested funds
This mainly applies to projects commissioned after the end of 2023, which are expected to be loss-making. Investing in large renewables therefore carries risk.
There are quite a few examples of how on the stock exchanges in Europe electricity prices are collapsing, in some cases even negative, especially in Germany. In such a situation, the companies pay to buy back the electricity from the wind farms.
A few months ago, in an interview with “24 Chasa”, the head of the Electricity System Operator, Angelin Tsachev, commented that with a large development of renewable energy in the peak hours of production and
in Bulgaria there may be negative prices
and stopping on greens capacities
In recent years, our country dominates the regional market and covers the energy shortage of its neighbors with exports. Last year, for example, electricity exports generated BGN 6.7 billion in revenue. However, the situation on the regional market is changing. There is strong competition from nearby countries that are at a more advanced stage in the construction of RES plants.
In Romania, Greece and Serbia, the state provides direct support to this business and some of the largest solar parks are being built there. And in our country, the gradual removal of strong regulation on the construction of green electricity plants, imposed because of the boom in 2012, has only just begun.
Analysts following the market closely say that actual green business investors with long-term intentions for RES plants are no more than 10% of those who submitted investment intentions. The rest are intermediaries who prepare projects only on documents in order to sell them. This is evident from the big sale that has started – solar power plant projects at various stages of completion have been announced for sale en masse – most of them are completely ready, and the rest have some of the necessary documents or are at the project level.
Evidence of this can be found in the submitted applications – most projects are not to meet the own energy needs of businesses and enterprises.
374 of these 3,205 requests are for large plants with a total massive capacity of 30,225 megawatts, making an average of 80 megawatts per project.
The 2,831 applications for small plants have a total capacity of 3,575 megawatts, ESO data shows, making an average installation of 1.26 megawatts.
Submission of applications does not mean that the project is “doomed” to success.
Last year, for example, 200 megawatts of renewable plants were connected to the grid. For this year, the forecast is that another 500 megawatts will be switched on, says the system operator. The 10-year grid development plan states that a total of 4,900 megawatts of RES will be connected.
Thus, the investment intentions stated on paper for 33,800 megawatts of new capacity, if built in the coming years,
they cannot be any way poets
from the existing one transmission network
of electricity and capacity for the balancing of the electricity system, according to experts. Of course, the plan is updated every year and with the signing of new contracts the number will increase, but it still remains far from the stated capacities.
In the strategic vision for the development of the electricity market until 2053 of the government, which is already in the parliament, it is committed to the construction of batteries to accompany the construction of RES plants.
The Electricity System Operator says large and small green electricity storage batteries would help balance the system.