In May, Bulgaria's electricity market and production outlook was turned upside down, and for the first time in decades, the state became a net importer of electricity. In other words, it produced less than was required and bought the rest from neighboring countries such as Romania and Serbia. In recent years Bulgaria has always sold more and has played a key role in the Balkans in balancing the grid.
The change is important in many ways. First of all, it shows that energy is no longer what it used to be, and all predictions and plans for the future must take this into account. Bulgaria imports electricity to meet its needs not because it lacks its own capacities to produce electricity, but because it is cheaper to buy from elsewhere. The market participants are looking for the best opportunities and they are definitely not in the Bulgarian thermal power plants.
But the fact that we have become a net importer of electricity is not the only precedent in May. Last month saw record solar generation (over 10% of the total mix) as well as record generation from renewables as a whole (over 30% of the total mix).
And in absolute terms, we have the lowest generation from nuclear energy for at least 5 years, and from coal - for at least two years.
In this situation, average electricity prices have fallen to mid-2021 levels - around BGN 170/mWh. This means that businesses will now pay their lowest electricity bills in 23 months.
It should not be forgotten that the month itself is specific, because during it the scheduled repair of one of the units at the Kozloduy NPP is underway. Or to put it another way - the system works without 1000 megawatts of baseload power, which is generally available every day, at a relatively low cost.
Production fails to keep up with consumption
In May 2023, the production of electricity in the country looked quite different from May 2022. On one hand, the Bulgarian plants produced nearly 32% less electricity on an annual basis, and specifically in the case of coal plants, the decrease is by as much as 58%. On the other hand, the consumption in the same month on an annual basis decreased by only 7%, which is precisely why we import more electricity.
Bulgaria produces less because of the lower competitiveness of its energy mix, still dominated by coal - even after the record decline in thermal power generation, their share in the total mix remains above 32%.
Although the price of carbon allowances on the European Exchange (ETS), which are a major element in the costs of coal plants, fell in May by more than 10% (to around €80 per tonne), power from thermal plants remains twice as expensive as the levels on the energy exchange. And in the coming months, it will occupy a smaller and smaller share in the production. It is significant, for example, that the state thermal power plant Maritsa-Iztok 2 was operating with only 10% of its capacity over the past week.
Although monthly rainfall targets have been met in many places, hydropower production is down year-on-year, due to the drought in the previous months and the lack of snow in high mountains which fills the dams. However, the recent rainfall has had an impact and on a monthly basis the production from the hydropower plants is growing seriously - by 40% compared to April. The other reason for that is the suspended 5th unit of the Kozloduy NPP, which has been replaced by hydro plants, especially during the evening hours.
The production of solar power in the country reached more than 256 thousand mWh, which is as much as 25% of the previous record in July 2022 - 201 thousand mWh. This amount represented 10.4% of the total production for the month, which is significantly higher than the same indicator in April, when it was 6.6%, as well as from last May, when solar generated 5.5% of the energy in the country.
It is safe to say that in July we will have new records for solar, not only because of the expected sunnier weather, but also because of the launch of the country's new largest solar park.
In 2022, the export of electricity brought to Bulgaria more than BGN 6 billion in revenue. A significant amount explained by the record level electricity prices that held sway in Europe. So far this year revenues are only about BGN 300 million, and in May the amount literally fell, given the country bought more than it sold.
In May, Bulgaria imported 518 thousand mWh of electricity and exported only 334 thousand mWh. Bulgaria is a net importer of electricity from two countries, with Romania headlining, and it's worth noting that Serbia is the second country. On sunny days, Greece also exports electricity to Bulgaria, however, Athens has imported 100 times more energy from us than we have from them.
Bulgaria buys huge amounts of electricity from Romania for another good reason - Romanian electricity is massively resold to other countries through swap transactions. Greece is one of the countries that benefit the most from this. Thus, in practice, a significant part of the electricity that enters Bulgaria from Romania is not for domestic needs. However, the Electricity System Operator, which charges transmission fees for each megawatt hour, profits from such deals.