The political turbulence within and beyond Bulgaria has not only caused unpredictability in the regulatory environment but also drastic changes in the national energy sector. Following the Russian invasion in Ukraine, Bulgaria took steady steps to break its dependence on Russia as a single supplier of natural resources.
At the beginning of 2023, the caretaker government adopted a Strategic vision of the Bulgarian energy sector with a horizon 2053 (Strategic Vision). The emphasis of the Strategic Vision is put on nuclear energy, where 4000 megawatts of new nuclear capacity is envisaged to be put in operation until 2045, in parallel with the decommissioning of the existing 2000 megawatts. The construction of a second nuclear power plant (NPP) in Bulgaria, with a 2000-megawatt capacity on the Belene nuclear site, is also part of the Strategic Vision even though several governments over the last 30 years have tried, without success, to find a strategic investor to develop the Belene NPP project.
In addition, Bulgaria took significant steps toward the diversification of its nuclear supplies for its existing reactors away from Russia. The single operating nuclear power plant, Kozloduy NPP, signed a ten-year agreement with Westinghouse, which as of 2024 will be delivering nuclear fuel for the 1,000-megawatt VVER Unit 5. Moreover, as of 2025, Framatome will supply nuclear fuel for the 1,000-megawatt VVER Unit 6. On top of that, in January 2023, the Bulgarian National Assembly adopted a decision requiring the caretaker government to initiate negotiations with the US Government for the construction of two new AP 1000 Westinghouse units at the existing Kozloduy NPP site.
The natural gas market in Bulgaria, despite being liberalized, has a high market concentration since the public supplier Bulgargaz holds a dominant position in the wholesale segment. Lately, the natural gas market in Bulgaria suffered numerous changes. Bulgaria was among the first European countries to have its gas deliveries from Russia halted. In April 2022, Bulgargaz refused to follow the ruble payment requirement that Gazprom made attempts to introduce unilaterally, following a Russian presidential decree.
However, due to the halted gas deliveries from Gazprom, Bulgaria took steps to diversify its supplies and break its dependence on that major supplier. Before the halted Russian supplies, Bulgaria counted on its two long-term gas supply agreements – with Gazprom and with the Azerbaijan Gas Supply Company (for around one sixth of the annual consumption in 2021).
In October 2022, the Interconnector Greece-Bulgaria (IGB) was commissioned and, thus, Bulgaria currently receives 1 billion cubic meters of Azeri gas per year, at highly competitive prices. The Azeri gas covers around one third of Bulgaria’s annual consumption. Since the long-term gas supply contract between Bulgargaz and Gazprom expired at the end of 2022, Bulgargaz migrated to spot-market deals to satisfy the consumer demand for 2023, while searching for long-term solutions.
Also, at the beginning of 2023, Bulgarian transmission system operator Bulgartransgaz started the construction of the Interconnector Bulgaria-Serbia (IBS), with a bidirectional capacity of 1,8 billion cubic meters per year. Considering the consumption fluctuations during winter and summer, in 2023 Bulgartransgaz started the expansion of the Chiren underground gas storage up to 1 billion cubic meters.
Thoughts for the Future
Changes are envisaged to allow Bulgaria to decrease its carbon dioxide emissions by 55% until 2030, compared to 1990, and reach a net-zero economy by 2050. Significant changes are expected in the energy sector, with the decommissioning of the coal thermal power plants (with a capacity of over 3,600 megawatts) around 2030. Nevertheless, the Strategic Vision developed a model considering the construction of seven gigawatts of solar and two gigawatts of wind capacity by 2030, and 600 megawatts of storage capacity.
The key asset in Bulgaria’s energy balancing market is the Chaira Pumped Storage Hydropower Plant (PSHPP), with a production capacity of 864 megawatts and a pumping capacity of 788 megawatts. It is out of operation and the government is trying to restart it in 2023. The Chaira PSHPP could secure flexibility in the power system since (1) it can exploit its pumping capacity to balance the excess production and (2) produce power in the event of shortages. Future investments of EUR 200 million are envisaged to enable the restart of its generation capacity.
By Kostadin Sirleshtov, Managing Partner, and Dian Boev, Associate, CMS Sofia