Do you remember the Recovery and Resilience Plan? And those much-vaunted 6 billion euros that Bulgaria was due to start receiving last year from the EU's stimulus package to aid member states recover from Covid-19? Well, it subsequently transpired that the first version of the plan (drafted by GERB) was full of mistakes. Two caretaker governments tried to render it acceptable to Brussels. And, finally, in order to get approval, Deputy Prime Minister Atanas Pekanov even did what no predecessor had done - he proposed a deadline for closing Bulgaria's coal plants in the Maritsa basin.
But this, apparently, was insufficient and Sofia remained one of two countries not to get any advance payments last year. Now the new man in charge - Deputy Prime Minister and Minister of Finance Assen Vassilev - and his team want to submit a final, revamped version of the document as soon as possible. Two factors go in their favor: firstly, since they are no longer chasing the deadlines for the advance payment, they are free to propose radical new projects (especially in the justice sector) and they are not tied to any previous versions of the plan. And secondly, a plan submitted by a regular (i.e. not a caretaker) government will be viewed more favorably by the EU Commission, which will have more reason to trust its long-term commitments.
The expectation is that Brussels would allow the revised Plan to be adopted without much interference with the future of the Maritsa East complex, which had been a sticking point hitherto. Mr Vassilev and Prime Minister Kiril Petkov appear to have no current intention of broaching the closure of the complex and will probably want to postpone it for as long as possible. But they are ready to commit to reducing the overall CO2 emissions Bulgaria produces, which is indirectly linked to the operation of coal plants.
April - the new deadline
When Mr Pekanov submitted the plan, there was talk that it could be approved by February this year. However, two weeks ago, the government asked for another deferment and Brussels agreed on a new deadline - 15 March. As all other national Recovery plans have already been submitted, the EU Commission would only have to deal with the Bulgarian and the Dutch one. Thus, it is possible that the assessment will not take more than a month and, if everything goes according to plan, by April Bulgaria could finally join the other EU countries working with the new financial instrument.
This will also unlock the new European funding programs, which are ready, but still await the green light from the EU Commission. However, Sofia is not that far behind in these terms - only 13 countries have already signed for the new programming period. The way Mr Vassilev's team approached the revision of the plan was different from the first revamping. The focus this time around was on the two most problematic areas: energy and transport. Most of the players in these sectors only found this out last week, during the public presentation of the changes - and were quite surprised by what they saw.
Energy: A battery-powered future
There were rumors to this effect, but very few believed that the government would dare drop the 2 bln BGN planned investment into steam and gas capacities for the Maritsa East complex, connecting it to the gas grid and other financial instruments dedicated for its transition away from coal. These funds are now redirected towards giga-batteries for balancing the energy system. According to the announced plans (the specific project has not yet been published), batteries with a total capacity of 6,000 MWh will be installed, which will be able to feed 1,000 MWh into the grid for 6 hours. This is equivalent to the operation of one of the Kozloduy Nuclear Power Plant (NPP) units, but with much less loss during the transportation of energy (typically around 8 - 10 percent) as the batteries would be distributed around the country.
This is a cardinal change in approach that turns the current plans for the development of the Bulgarian energy sector on its head. However, there is logic behind it. The gas facilities that could have been built would have increased the country's dependency on gas imports - recent months have shown that natural gas can be extremely expensive and even disappear from the market altogether during times of conflicts. The caretaker cabinet deemed them necessary in order to replace coal and still provide some employment for workers in the Maritsa East complex.
The new government believes energy security could be provided through the installation of batteries, which have several advantages - they are very flexible, can be powered by local resources (sun, wind, water) and better maintain the frequency and security of the grid. In addition, while some batteries run out of power, others can be re-charged and vice versa.
This does not eliminate the drawbacks of batteries. They are still quite expensive, they are hard to find in large quantities within a short period, and do not create any jobs. That is why an essential part of the government's plan is to build a factory to produce such batteries, probably in the Stara Zagora region. This will create jobs, offset the economic transition costs and, as global demand for batteries increases in coming years, create export opportunities.
According to market estimates, the investment in 1 MWh of electricity storage capacity costs around 200,000 euro, which means at least 1.2 bln euro to implement the project. But here too there are contingencies - this is the current cost, while the bulk of the batteries will be installed in the period 2024 - 2026. By then their cost is expected to have fallen by at least 30 percent, and their efficiency ought to have improved.
Implementing this project is undoubtedly quite difficult and risky. However, if the government manages to organize a good international tender to attract an investor in the battery plant and it is indeed built within the next two years, Bulgaria could score a great win. At the moment, the country has declared investment intentions for over 15 thousand MW of new renewable energy capacity, half of which could actually be commissioned by 2026. Combined with giga-batteries for energy storage and planned investments in grid improvement and management, this will provide a large amount of cheap, secure and green energy - conditions that all foreign investors are now setting.
Transport: Trains leave in every direction
Trade unions, representatives of transport associations and other players in the sector listened in awe while the team of Transport Minister Nikolay Sabev explained how almost 400 mln BGN would be invested in new trains - both urban and suburban, including double-deckers, as well as high-speed and shunting trains.
Later, Mr Sabev, explained his intentions to journalists: "If we have a better rolling stock soon, the quality of this service will increase sharply. If we manage to shorten the transport time and provide better conditions, I guess people will start preferring rail transport. A line that is designed for up to 160 km/hour train speed is now used at 40 km/hour. We just need to revamp it."
That's a bold assumption on his part. Bulgaria is indeed last in Europe in terms of train service quality, so it is difficult for anyone to express, at least publicly, opposition to his plans for improvement. But it is likely that future discussions with representatives of the sector might cause turmoil.
In any case, currently it is hard to conceive how a sector so neglected for more than 30 years and riddled with problems, could be transformed so quickly. Renewing railway lines is a painfully slow process. As it emerged last week, the Burgas-Sofia line, which has been generously funded throughout the last two EU programming periods, will be completed in 2028 - 21 years after Bulgaria joined the EU. These lines are being renewed by the National Railway Infrastructure Company, which is under direct ministerial control, but is probably the most inefficient state structure.
That's not to say that Mr Sabev's idea is bad per se. Purchasing modern trains is an essential part of the solution and sets the tone for the new government's priorities. If his team can get all parts of the system working faster and more efficiently, the railway knot may well start untying. Combined with cheap and safe green energy to power the trains, the result might be even better.