NEK’s new batteries

Amid the ongoing repair of the decommissioned Chaira Nuclear Power Plant, the National Electric Company (NEK) has firmly decided to modernize its portfolio of capacities by implementing energy storage systems, or simply put - batteries. Thus, the state, and not only business, will try to fit into the global trend of building such capacities with the aim of better optimization and management of the system as a whole. This is positive news given the problems associated with balancing energy during peak hours or those hours in which there is a shortage. Currently, the company does not have such batteries, despite the market opportunities and international trends.

NEK has told Capital that they are working as a priority on determining possible locations for the integration of batteries into existing hydroelectric power plants, with the idea that this will make the system more sustainable and modern. The Hydroelectric Power Plants (HPP) enterprise, which operates under the umbrella of NEK, maintains and operates 31 hydroelectric power plants, with 15 of them operating in the four cascades - Batak, Vacha, Arda and Belmeken-Sestrimo, which gives a wide field for "performance".

NEK's focus this year will be the implementation of the pilot project launched for the implementation of electricity storage systems at the Vacha 1 HPP with a capacity of 10 megawatt hours. Several more projects are also at inception - for the Studen Kladenets HPP, Aleko HPP, Devin HPP and Topolnitsa HPP with an expected total storage capacity of about 276 MWh. All this, along with the phased repair of the Chaira HPP, will allow the system to take a breather, after it emerged last year that Bulgaria is responsible for half of the disruptions in the European electricity grid precisely because of the lack of sufficient balancing or maneuvering capacities.

The hybrid theory

The project for "Vacha 1" is in its most advanced phase, and the goal is for the dam to become the first hybrid hydroelectric power plant in Bulgaria, where the two technologies - electricity production from a hydroelectric power plant and battery storage - will complement each other and ensure more efficient and reliable operation of the system. Although NEK says that the preparation for the construction of the system is at its initial stage, it is expected to be completed by the end of the year. In fact, the "Vacha 1" hydroelectric power plant is one of the oldest hydroelectric power plants in Bulgaria - it was put into operation in 1933. The installed capacity is 14.5 MW, and the plant is part of the lowest stage of the "Dospat - Vacha" hydropower cascade, together with the Krichim Dam, the Krichim Hydropower Plant and the "Vacha 2" Hydropower Plant. In 2023, the rehabilitation of "Vacha 1" was completed, which included new equipment, a new hydropower unit, and a new control room. The rehabilitation was a 9.6 million levs project, co-financed with grants from the so-called "Kozloduy" fund administered by the EBRD, as well as with the electricity company's own funds.

Under the new "Vacha 1" project, the activities now include the development, and detailed planning of the entire system, as well as all necessary infrastructure elements to accord with the highest standards of quality, efficiency and reliability, NEK explains. This time, the system is financed with NEK's own funds (6.8 million levs) and is planned to operate entirely on a market principle. It will be loaded during hours with a surplus of electricity and discharged in the event of a shortage in the system. And the ultimate goal is for NEK to make a profit from the difference in prices and this will lead to an improvement in its overall financial situation. According to the latest current data, at the end of the second quarter of this year, the company even increased its profit and it is now 177 million levs (compared to 170 million levs for the same period of the previous year), but this should not be a reason for consolation given NEK's serious chronic financial problems.

The coming four

Such hybrid systems are also planned for four more NEK power plants - the Studen Kladenets, Aleko, Devin and Topolnitsa hydropower plants with an expected total storage capacity of about 276 MWh. Last month, the electricity company published an order worth 123.6 million levs excluding VAT, which includes the design, delivery, construction, and introduction of the batteries, with the tender itself being divided into four positions for each of the dams. For example, for the Devin hydropower plant, the estimated value of the order is 25.9 million levs excluding VAT, for the Studen Kladenets hydropower plant - 44.5 million levs excluding VAT, and for the Aleko hydropower plant and the Topolnitsa hydropower plant - 44.3 million levs and 8.7 million levs excluding VAT, respectively. The company explained to "Capital" that the exact value will be determined after the completion of the tender process, with the deadline for submitting bids expiring on February 24.

Various instruments will be used to finance the projects, and the project also falls within the scope of the Recovery and Resilience Plan (RRP). This is good, as NEK will be able to secure additional financing that will not have to go through its own budget. On the other hand, it also seems quite risky given the increasingly small likelihood that Bulgaria will reach the second payment from the RRP. Even if there is a second tranche, it will certainly be in a rather reduced version due to Sofia's refusal to implement some of the key reforms required for the approval of the payments. And this puts many projects into question.

In addition to the currently planned sites, NEK is considering the possibility of implementing energy storage systems at other locations - land owned by the company. The company has not yet revealed which ones they are. But they say that, based on the results of the pilot projects, analyses will be carried out on the potential of other similar sites. In parallel with the construction of green energy storage systems, NEK is also working on the restoration of the Chaira pump-storage HPP.

In the last days of 2024, part of the plant became operational after 12 months of intensive repairs. This is the second hydro unit of the plant, but rehabilitation activities are pending for other elements of it. According to the relevant ministry, similar activities at the Chaira HPP have not been carried out since the construction of the plant and this is the first complete renovation of its control and management systems, as well as some turbine components. Pre-project studies are also underway for the construction of two new HPPs at the Batak and Dospat dams, for which experts from the InvestEU fund, the EC and the European Investment Bank began an analysis last June.

The feasibility reports for the projects are likely to be ready by November, and the aim is for each of the two plants to add around 800 MW of generating capacity. The value of each of the projects is estimated at around 900 million euros, but financing remains unclear at this time.

The phased implementation of the projects will give NEK a chance to become a key player in terms of storage projects in the region and will certainly give a breath of fresh air to ESOs, who are busy balancing the system. As long as, of course, the financing for all this is guaranteed.

What about the water?

However, what happens to the levels of the dams after another dry year? According to the data from the latest NEK report, the situation is not (yet) that critical. By the end of the second quarter of this year, the trend from 2023 continued: the water resources in the dams managed by NEK were not in sufficient volumes, but the power plants produced 10% more (or a total of 1,679,093 MWh) of electricity compared to the previous year. Hydroelectric power plants actively participate in the balancing market and are an important part of the management and regulation of the system, so water reserves are of utmost importance. In other words, to produce electricity and play the role of a balancer, they simply need to have water.