1. ENERGY AND WATER REGULATORY COMMISSION
Liberalization of the electricity market in Bulgaria in the context of EU requirements
Assoc. Prof. Ivan Ivanov Ph.D.
EWRC Chairperson
Sofia, 16 May 2017

2. Gross generation in 2016 in MWh
Electricity market status 2016
Installed capacity
Available capacity
Peak Load 4th January
Off-peak 24th May MW
9 595 MW
7 105 MW
2 662 MW
Gross generation in 2016 in MWh
Thermo Power
Plants
Renewable Energy Sources
Industrial Power
Plants and CHPP
40%
HPP
Solar
Wind
Biomass 8%
Nuclear Power
Plant
17%
35%
ENERGY AND WATER REGULATORY COMMISSION 2

3. Customers, who switched off supplier in 2016
Electricity market status 2016
Liberalized market
2016
Regulated market 2016
54 %
46%
National market – 37 %
Export – 17 %
National market – 37 %
Losses – 9 %
Customers, who switched off supplier in 2016
85 350
ENERGY AND WATER REGULATORY COMMISSION 3

4. 97 % 3 % Electricity market status 2016 Customers on regulated market
Customers on liberalized market
3 %
ENERGY AND WATER REGULATORY COMMISSION 4

5. Electricity market status 2016
Structure
Bilateral contract
market
Day ahead
market
Intra day
market
(planned for the beginning of 2018)
Ancillary system services market
Пазар за разпределение на капацитети
Capacity allocation market
OTC
market
ENERGY AND WATER REGULATORY COMMISSION 5

6. Reforms What was done: ENERGY AND WATER REGULATORY COMMISSION 6
Easing the process to enter the market
Standardized load profiles
Launching PX
Nominated
NEMO
Fair distribution of the costs for public service obligation between all end clients and launching Security of the power system fund
Market Rules Amendment
ENERGY AND WATER REGULATORY COMMISSION 6

7. Market Liberalization Road Map
Reforms
What has to be done:
Market coupling
Market liquidity
Energy Act Amendment
Market Liberalization Road Map
New Market Model
ENERGY AND WATER REGULATORY COMMISSION 7

8. Common efforts Parliament Regulator IBEX Market participants
Government
ENERGY AND WATER REGULATORY COMMISSION 8

9. European target model
The European target model shall ensure the completion of the EU Internal Electricity Market and common standards for each timeframe: Day Ahead (DA), Intra-Day (ID) and Forward Market.
A fair and transparent PX price is a key factor for the models success.
Price Coupling of Regions (PCR)
Multi-Regional Coupling (MRC)
The integrated European electricity market is expected to increase liquidity, efficiency, social welfare and transparency of prices and flows.
Finland
Sweden
Russia
Norway
Estonia
Latvia
Northern
Ireland
Denmark
Lithuania
Ireland
Belarus UK
Poland
Nether- land
Germany
Ukraine
belgium
Luxembourg
Czech Republic
Slovakia
Moldova
France
Austria
Hungary
Switzerland
Romania
Slovenia
Croatia
Bosnien & Herzegovina
Serbia
Bulgaria
Italy
Monte- negro
Kosovo
Makedonia
Spain
Albania
Turkey
Portugal
GreeCe
ENERGY AND WATER REGULATORY COMMISSION 9

10. Capacity Calculation Regions
In May 2016, EWRC approved the proposal of all Transmission System Operators for Capacity Calculation Regions for "day ahead" and “intraday" markets as required by Regulation (EC) 2015/1222.
The total number of regions is 11 (eleven)
Bulgaria is part of a capacity calculation region: South-East Europe. This region should consist of the boundaries of the bidding zones and should cover the transmission system operators of the Republic of Bulgaria, the Hellenic Republic and the Republic of Romania.
Romania
Transelectrica
ЕSО
Bulgaria
IPTO
Greece
ENERGY AND WATER REGULATORY COMMISSION 10

11. Common price for the two areas
Electricity flows in a coupling market
Surplus area
Deficit area
Demand curve
Supply curve
Demand curve
Supply curve
PRICE [EUR/MWh]
PRICE [EUR/MWh]
50 EUR/MWh
Common price for the two areas
= 40 EUR/MWh
30 EUR/MWh
VOLUME [MWh]
VOLUME [MWh]
Flow
ENERGY AND WATER REGULATORY COMMISSION 11

12. Main troubles concerning the liberalized market
PPAs – obligations of mandatory energy purchase
RES support scheme
Encouragement top-up to the price of High Efficiency Cogeneration
Lack of competition and lack of conditions for liquid trading on the PX
Lack of trust and confidence across the energy market
Lack of measures to protect vulnerable consumers
Existence of a single buyer
Regulated retail prices
ENERGY AND WATER REGULATORY COMMISSION 12

13. Challenges - Contracts for Difference
Return the difference from the producer to the Fund
Ц Е НА
В Р Е М Е
Payment of difference
by the Fund to the generator
Market price
Agreed
price
ENERGY AND WATER REGULATORY COMMISSION 13

14. Energy Strategy
Need for new, stable and long-term energy strategy
The present strategy:
Based on unrealistic forecast of electricity consumption growth;
Envisages the realization of large energy projects, which due to economic, energy and financial reasons, will not be implemented;
Does not take into consideration the new EU targets, set out in the decision for the establishment of the European Energy Union.
The set targets should be realistic:
With the chronic overgeneration only replacement capacities are needed;
71% of NEK obligations come from megaprojects costs: Belene NPP (1.3 billion leva) and Tsankov Kamak HPP (984 M leva);
Focus on energy efficiency enhancement;
Energy strategy up to 2030 is needed, with perspective by 2050.
ENERGY AND WATER REGULATORY COMMISSION 14

15. „public service obligations”
EWRC's functions in the liberalized market
Licensing and supervision of issued licenses;
Regulating network tariffs;
Setting price for “Pubic Service Obligations”;
Market monitoring.
Power Generation
Transmission
and Distribution
Supply
on the wholesale
or retail markets
Regulation
on network tariffs
Competition
Competition
„public service obligations”
ENERGY AND WATER REGULATORY COMMISSION 15

16. Thank you for your attention! Assoc. Prof. Ivan Ivanov Ph.D.
ENERGY AND WATER REGULATORY COMMISSION
Thank you for your attention!
Assoc. Prof. Ivan Ivanov Ph.D.
EWRC Chairperson