Interview with the Managing director of AES Bulgaria Ivan Tzankov for Trud Daily
Long-term PPAs are one form of capacity mechanisms
– Mr Tzankov, recently the Minister of Energy Temenuzhka Petkova announced that an option for introducing a market model of a capacity mechanism for Bulgaria is being considered, at which the fixed costs for salaries, repairs, and maintenance of coal plants will be covered. How do you find these ideas?
– Coal plants are important for Bulgaria’s energy security. They provide 40% of the country’s electricity, and in the winter, their share in the energy mix reaches 60%. It is therefore encouraging for us that the Government is considering different options for implementing capacity mechanisms in Bulgaria. As explained by experts recently, long-term PPAs are one form of capacity mechanism and we remain open to discussing the proposed models in order to reach an acceptable solution for all stakeholders.
– The Chairman of the Parliamentary Energy Committee Valentin Nikolov admitted that there are delays in the procedures for introducing capacity mechanisms in Bulgaria. What do you think?
– I would prefer to focus our attention on what is to be done. The representatives of the governing bodies, including the Minister of Energy Mrs. Temenuzhka Petkova, have repeatedly stated that Bulgaria will continue to rely on the coal-fired power plants. In the draft Integrated Energy and Climate Plan, coal plants are in the country’s energy balance by 2030 with a horizon of 2050. Therefore, we hope that the Ministry of Energy will take the necessary steps towards ensuring the operation of the coal capacity with us. I hope that the relevant deadlines are met so that capacity mechanisms will also be applicable to Bulgaria.
– Mr. Tzankov, capacity mechanisms would undoubtedly provide a breath of air for the coal plants with us. But the EU is steadfastly following its policies to significantly reduce coal capacity by 2030. What is your overall vision for the future of this type of power in Bulgaria?
– EU policies aim to reduce carbon emissions and support the transition to cleaner sources of electricity. This envisages long-term structural changes in Member States’ energy systems. As I have said before, such policies should not be automatically introduced in different countries, as each energy system has its own specificities and also a different degree of willingness to implement these changes.
The energy sector, not only in Bulgaria but around the world, is facing serious challenges. They are related both to its transformation towards low-emission power generation, mainly from renewable sources, and to the provision of sufficiently reliable, stable and autonomous electricity supply to businesses and households. Here comes our TPP AES Galabovo which is the only coal plant built in the last 40 years in Bulgaria. It is not only the latest but also the most up-to-date facility in terms of operational and environmental standards that have been laid down in its design. TPP AES Galabovo demonstrates that coal-fired electricity production can be carried out within the emission limit values. And this is due to the fact that every process in TPP AES Galabovo has been designed and implemented in compliance with modern environmental standards, which are very strict. Extremely detailed and rigorous control is applied to every step of the process – from the entry of coal into the plant to the disposal of waste. Therefore, our power plant is an example that modern coal plants are a guarantee for the transition to low-emission and reliable Bulgarian energy.
– However, a number of European countries have announced plans to phase out their coal facilities. What do you think is the significance of TPP AES Galabovo about the Bulgarian energy sector?
– Coal provides more than 40% of the energy mix of the country and this defines their key role for Bulgaria’s energy – both in terms of stability of the electricity supply and in terms of energy independence because the coal produced in our country is a source of energy which we do not import. If we start closing now the coal plants in the Maritza East complex, this would have huge negative consequences. In such a situation, we shall not be able to provide electricity for consumption because there will be nowhere to go. Citizens and businesses rely on electricity supplies to be reliable and uninterrupted. Importing electricity is not always a solution. In hot summers, where air conditioning is used everywhere, or in severe winter, electricity can be difficult to import. It is enough to remember what happened in January 2017. Extreme cold weather then put the energy system across Europe to the test. Low temperatures dramatically increased gas and electricity consumption. It even came to a halt in exports. At this critical time for the system TPP AES Galabovo was running at full power. Then, we provided more than 11% of the total electricity production in the state. And TPP AES Galabovo proved how important it is for Bulgaria’s energy security. If it had not been our plant, power cuts would have been imposed on Bulgaria. At that moment, it was impossible to import electricity, because the conditions were heavy everywhere.
– How would you comment on the EC’s intentions in the summer to start a procedure against Bulgaria because of the air quality? Galabovo was mentioned as one of the most polluted regions.
– Categorically, TPP AES Galabovo operates following extremely high environmental standards. It is enough to recall that the TPP is the only one where the desulphurization installation cannot be shut down and, in that sense, it is impossible for the TPP to work without performing the necessary actions for emission purifying. The desulphurization rate achieved on average basis is more than 97%. The emissions levels from the TPP’s production are completely in norms. AES Bulgaria has always strived to work in a way that guarantees that we and our kids would breathe the air in Galabovo without worry.
– When talking about the transition to low-carbon energy sources, can we assume that the construction of new RES capacity is a step in the right direction?
– The construction of such capacities is fast, but this is not enough to provide stability and predictability of the electricity supply. And we have to solve the problems of power supply today. In addition, in the last years, electricity consumption is constantly growing, and this does not depend on the presence or absence of sun or wind. Our power system cannot rely on photovoltaics or wind farms only. We should have flexible capacities which provide system services for dispatching and balancing exactly such kind of RES power-plants, which are quite volatile in their production. TPP AES Galabovo is the most flexible coal capacity in the state and has the best parameters for system services. Thanks to our plant, Bulgaria covers ENTSO-E requirements for primary regulatory reserve. That is why, when we talk about the closure of coal-fired power plants, we should not perceive them only as power capacities. The real meaning of these TPPs for the energy system should be understood. In my opinion, the coal-fired power plants in Bulgaria will be important for the energy system in the next decade, too.
– Economically, what is the meaning of TPP AES Galabovo for Bulgaria?
– AES Bulgaria has been the largest investor in the Bulgarian energy sector for the last 30 years. The company has invested more than BGN 3,2 billion in modern energy capacities, which produce reliable energy. Only the taxes and social security contributions paid by the company have amounted to BGN 703 million for the last 8 years. TPP AES Galabovo is the newest and most high-tech coal-fired power plant in Southeastern Europe. Its exploitation provides – directly and indirectly, more than 4,500 jobs and guarantees the stability of the state energy system. Annually, the plant uses more than 5 million tons of coal from Maritza East Mines. This means employment for miners. AES is also the majority owner of the largest wind park in Bulgaria – Saint Nikola Wind Farm. But to be the biggest investor is also a serious responsibility both to society and local communities. That is why we are proud of our social projects, which we develop in the country. By now, AES Bulgaria has invested more than BGN 14 million in various socially significant initiatives in Galabovo and Kavarna regions. We aim at creating not only jobs but also better conditions for education, sports, and healthcare. We contribute to the success of the kids and we hope to keep their parents living in their birthplaces. We believe that big employers in an area can contribute to a qualitative change in people’s way of life.
– Are you ready with the preparation works for the upcoming winter season?
– In end-August, the planned maintenance of TPP AES Galabovo Unit 1 was finished. In September, the planned maintenance of Unit 2 was also finalized. We performed the necessary prevention of the plants’ equipment and systems so that the plant can work fault-free in the upcoming winter season. We have the necessary coal and limestone reserves to meet the winter.