"For too long Bulgaria and other countries of the region have been
concentrating on large scale pipeline projects such as South Stream and
have left behind the development of important regional infrastructure,
notably interconnections with neighbouring countries," Klaus-Dieter
Borchardt, Director Internal Energy Market at the European Commission's
Directorate-General for Energy, has told Novinite.
Mr Borchardt was asked to comment on the challenges facing Bulgaria's
energy sector at a time the country is no the road to electricity market
liberalization and is pinning hopes on building a number of gas link
with its neighbours.
Borchardt, whose professional
experience at the EU Commission began in 1987, is no stranger to energy
developments in Bulgaria. He is coming to the country on December 9 to
attend several events here and also to meet Energy Minister Temenuzhka
Petkova. Mr Borchardt, with Bulgaria's energy exchange due to have its
test launch very soon, and liberalization of the electricity market
forthcoming, is there any risk of deepening the crisis in the country's
energy sector, rather than solving its problems?
No, there is no alternative to market liberalization and full
integration into the Single European Energy Market. Why do you have the
crisis in your energy sector? It is mainly because of an old fashioned
regulatory framework, too much and badly targeted state interventions
and the lack of competition. All this does not create incentives for new
investments which are necessary in order to modernise and transform the
energy system into a system which delivers on the overarching energy
objectives which are the providing security of supply through a sustainable energy production at affordable prices.
Does Bulgaria stand a better chance of integrating into Europe's electricity market now that liberalization is about to begin?
Yes, liberalization is a prerequisite for the integration into Europe’s
electricity market which will bring large benefits to Bulgaria over
time.
Judging from European experience so far
and from your observations, are electricity prices in Bulgaria likely
to soar due to the liberalization?
This is difficult to say - in the short term this cannot be excluded but
in the mid-term it is certain that a functioning electricity market
will keep prices in check and bring them down. What is therefore needed
is a smart transition from the current foreclosed market to an open und
integrated market. Therefore, accompanying measures fighting energy
poverty and protecting vulnerable consumers are necessary.
Can long-term electricity supply
contracts co-exist with market liberalization in the case of Bulgaria
without slowing down the liberalization process?
Long term contracts as such are not a problem and can even be beneficial
for security of supply. However, above a certain percentage they can
foreclose a market and hamper competition. What we need is a sound
balance between long term and short term products.
Bulgaria is among the EU member states severely affected by energy poverty. What measures can the EU take to fight this problem?
This is a very serious issue and needs to be dealt with as a priority.
At EU level we have adopted in the framework of the London Forum for
consumers recommendations and best practices. It is for the Member
states to come forward with the needed measure targeted to the specific
situation in the respective country. There is not a one fits all
solution; fighting energy poverty has to take the national specificities
into account. The Commission will however assist Bulgaria in the
exercise to find the best and most efficient solution.
How do you assess Bulgaria's proposal
to host a gas distribution center? Is it viable and will it contribute
to Europe's (and Bulgaria's own) energy security in any specific way?
Bulgaria in view of its geographic location and existing gas
infrastructure has the potential to develop into a regional gas hub.
However, to achieve this objective Bulgaria must become a regulatory
model in the South-Eastern European region and fulfil a number of
essential prerequisites, in particular have access to diversified gas
sources, develop infrastructure connecting Bulgaria to neighbouring
countries and establish a well-developed trading environment. Once
established such a well-functioning gas hub can secure gas supply for
the whole South-Eastern European region which is today the most
vulnerable region in Europe in terms of security of gas supply. Bringing
security of supply to this region fits perfectly into the EU security
of supply strategy which was presented in 2013 and has become one of the
pillars of the European Energy Union.
Being familiar with Bulgaria's years-long effort to build gas links
with its neighbors, why do you think none of them has been constructed
yet? How will the inclusion of interconnectors in the list of
common-interest projects speed up the process?
For too long Bulgaria and other countries of the region have been
concentrating on large scale pipeline projects such as South Stream and
have left behind the development of important regional infrastructure,
notably interconnections with neighbouring countries. After the
abolition of South Stream the Commission has put in place the CESEC High
Level Group which has selected 9 priority project for the South-East
European region of which 3 concern directly Bulgaria. In this group
under the chairmanship of the Commission all political, regulatory and
financing problems of these projects are discussed and resolved. We hope
that this process will speed up the procedures and lead to a swift
implementation of the projects. The PCI status as such adds 3
advantages: firstly, all necessary permits will be channelled through
one single authority (the so called "one-stop-shop”), secondly the
permit granting period cannot exceed 3.5 years and thirdly PCI projects
have access to the Connecting Europe Facility (CEF) which provides EU
funding for PCI when necessary and justified.
Bulgaria has reiterated several times
it would demand "equal treatment" for Nord Stream and South Stream, a
year after the latter project was abandoned. Is Sofia right to ask for
this?
Sofia is completely right and entitled to ask for equal treatment. All
infrastructures need to comply with EU law and like in the case of South
Stream the Commission will make sure that also the Nord Stream 2
pipeline complies with EU law. The same rules and standards will apply
to this project as it was the case for the South Stream project.
Are there any threats to Europe's
energy security stemming from the construction of Nord Stream-2? This is
what Ukraine, the Baltics and several other countries have suggested.
It is not a secret that the Commission takes the view that Nord Stream 2
does not fit into the EU’s security of supply strategy which is looking
for more diversification. Nord Stream 2 is leading exactly to the
contrary, i.e. more concentration on one single transport corridor. It
is also weakening further the development of a diversified gas market in
the South-Eastern European region and threatens the continuation of the
gas transit through Ukraine.
Within the context of ongoing climate
talks in Paris: many countries in Central and Eastern Europe see the
Energy Union as a means to have their large-scale infrastructure
projects (many of them gas-related) prioritized. Having this in mind,
how will the Energy Union work to reduce dependence on fossil fuels?
There is only one way forward if we want to achieve our climate goals:
we have to develop further the production of renewable energy and we
have to make the Emission Trading System (ETS) work providing a
reasonable carbon price. Furthermore, we should work towards the
abolition of all types of subsidies and let the market play its role all
over Europe. Gas can stay as a back-up fuel but large-scale
infrastructures are not necessary – we should concentrate on the
necessary interconnectors.
Bulgaria has seen recent efforts to revive stalled nuclear projects, but is there a future for nuclear energy in Europe?
The decision on the energy mix stays with the Member States. Therefore, I cannot answer this question.