The Energy Strategy – Realistic Forecasts, Unmet Gasification Targets, Overfulfilled Renewable Energy Targets

The Energy Strategy (the Strategy) of 2011 requires contains a requirement its implementation to be monitored on a regular basis and biannual monitoring reports to be developed, including an analysis of the implementation of the objectives and priorities set, proposals for changes in the existing mechanisms and the legislative environment in order to correct negative trends in the Strategy implementation and to update the estimated energy balance with 10 and 20 years horizons ahead.

Such reports have not been published by now, but on the bases of 2015 statistical data some interesting comparisons between Strategy projections and facts can be made.

Energy consumption forecasts – right on target

Indicators of energy consumption in 2015, foreseen in the Strategy, are virtually identical or slightly different (2% to 8% deviations) from statistical data:

	Strategy	Statistics
Gross domestic energy consumption, mtoe	20,2	18.5
Final energy consumption, mtoe	10.5	10
Gross domestic electricity consumption,TWh	38	37
Final/Gross energy consumption ratio, %	52	50.8

Total energy consumption forecasts are slightly higher than the reported consumption and this is explained by assumptions for a faster economy revival, for a higher economic growth respectively.

Electricity consumption estimates are 2% lower than actual consumption. This can be explained mainly with the unmet goals of accelerated household gasification by 2020, which would lead to replacement of electricity with natural gas. The gasification failure is also the reason for the worse ratio of final and gross energy consumption, compared to the parameters of the Strategy.

Production forecasts – more modest than statistics

The forecasts for both total energy production and electricity production in 2015 are lower than actual production:

	Strategy	Statistics
Energy production, mtoe	9.8	11.5
Electricity production, TWh	43.2	48.4

Strategy objectives for closing old installed capacities due to inefficiency and environmental reasons have not been fully achieved. “Varna” TPP stopped working, which is not foreseen in the Strategy, while the plants identified for closure are still operational.

Electricity production from renewable energy is not a cause for the divergence – in 2015 it coincides with the forecast for the year. Although the overall national target for a 16% share of RES by 2020 is significantly exceeded in 2015, this does not apply to the sectoral electricity target.

Forecast energy prices – almost equal to actual prices

An average electricity price of 75.3 euro/MWh is calculated in the Strategy for 2015 on the basis of production costs. Actual prices for both industry and households exceed this forecast and are respectively € 78/MWh and € 80/MWh (according to Eurostat data for the second half of 2015).

Prices of electricity from renewable energy are higher than the assumptions in the Strategy. The increase of the share of electricity produced from renewable energy sources (RES) has been achieved by failing to comply with the Strategy on “Using mechanisms to reach quantitative targets at lowest price for consumers”. This is a factor for having higher actual prices compared to forecasts.

However, another factor acts in the opposite direction – that is the lower actual CO2 allowances price. Ultimately, the influence of these two factors is mutually eliminated and their impact on prices is practically close to zero.

Estimated emission prices – several times higher than the actual

The main instrument for achieving low carbon targets – the European CO2 Emissions Trading Scheme – is not yet effective enough. Emissions prices, which were expected to reach 15 euro/tonne, are sometimes lower and do not stimulate investment in low-carbon technologies. Discussion is underway for changes in the scheme that will lead to its successful implementation in the next decade by 2030.

Is it time for energy balance update?

The Strategy describes a mechanism for updating the energy balance, including by extending its horizon. The scenario of updated and extended balance will depend on European energy policy. Its trajectory by 2050 will be delineated after the adoption of a new fourth energy package, the debate on which is underway and will be at its peak during the Bulgarian presidency and perhaps the time to write new strategies will come after, not before its final adoption…