Is It Possible the Energy Companies to Take the Role of the Society Supporting the RES?
In the last few months we witnessed rising activity and a series of actions on behalf of the associations of RES investors. Their concerns are clear – every serious investor, as well as its creditor, needs long term stability and confidence in the rules. In the beginning they sought justice from SEWRC, although there were banners with the standard invocations to banish EVN and CEZ. The Commission was identified as the key figure, which has the responsibility and the authority to solve the problems.
The core of the conflict
Let us remember the core of the raging conflict – after the decision of the SEWRC on the prices from July 2012 to June 2013 it became clear, that the revenue to be accumulated by the green supplement is not enough and the buyer-companies are facing inability to buy up the RES electricity at the approved preferential prices.
A signal showing the difficulties in this year calculations was the SEWRC’s decision on a green supplement, equal to 11.10 BGN/MWh, given that a proposal for 8.65 BGN/MWh was published and discussed. Thus, within three days, the annual support for RES rose with over 100 million BGN – from 365 to 466 million BGN for the one year period.
The tension began when it appeared, that even these amounts will not be enough. We did not find official information, but in our calculations the deficit for the year will be about 400 million BGN.
Attempts for its resolution
The deficit could be cut in half (but not entirely eliminated!) in two conditions: first, if the RES generators agree on a compromise, paying the introduced by SEWRC temporary prices on network access by the end of June 2013 and second, if there could be found an acceptable way the funds collected by the introduced temporary access prices, to be transferred from the network companies to NEK – Public Provider and to the End Suppliers of CEZ, EVN and Energo- Pro, which are obliged to buy up and thus they are the affected ones.
Even if this optimistic option is fulfilled, the problem with the money insufficiency remains.
What decision is proposed by the Bulgarian Wind Energy Association, for example? The buyers (EVN Elektrosnabdiavane in this case) to find the necessary amount of funds, covering the insufficiency, in order to pay their obligations and “valiantly” to wait to the next year – until next price decision of the regulator, which will compensate them.
The proposal seems reasonable, in a similar way the regulator included 3 BGN/MWh to the green supplement in June, in order to compensate NEK for the losses incurred in amount of 120 million BGN because of RES purchases – power for the previous year.
It seems reasonable but only on the surface. If we take a closer look at the companies’ profiles, obliged to buy up the renewable energy, we will see, that these are companies, which does not have assets, except for their offices, even that great money flows pass through them actually. They collect money from clients, but give them back on the chain and negligible amount of funds remain with them – the margin covering their administrative costs.
It is not realistic to expect that they have provisions of that magnitude, as to be able to cover the deficit of the system for the forthcoming regulation period – to the next SEWRC’s decision. Moreover, a risk of that kind has never been provisioned. And this is because the costs, incurred by the obligations to the society should be compensated by the society itself, but not to bring financial risks to particular commercial entities.
Let us see if nothing is done how far will it go? As public companies the Suppliers of Last Resort publish their financial results every quarter. For one of these companies the announced data shows that the accumulated losses to 30 September 2012 are about 11 million BGN. And this is only the beginning.
The current situation threatens to bankrupt both sides – those who sell energy and those who indirectly fulfill the obligation of the society to buy it up. So the interests of both sides are unidirectional – the RES generators need a financially stable buyer of their energy as a guarantee to their own business stability.
Not to forget the nature, the root cause of the problem though – the actions undertaken now aim at resolving the problem with covering of the deficit, without increasing of the end prices.
The costs, incurred by the obligations to the society, have to be covered by the society itself, for which the appropriate mechanisms have to be created, as it is set also in the law.
These mechanisms are far from limited to increasing of the energy prices to the end consumers.
