Банкеръ Weekly

Briefs

PRODUCTION OF ENERGY INDULGENCES BEGINS IN 2006

Ecology will grow as a profitable business as time passes by and Bulgaria gets closer to its integration into the European Union (EU). Along with the hothouse gases trading in accordance with the Kyoto protocol, an entirely new market of green certificates will be established in the country in the middle of 2006. The green certificates are documents certifying that each power plant in the country has produced a certain amount of electricity from renewable energy resources. They will be used for trading and their buyer will get electricity as well as a guarantee that it is clean. Logically, nonecological power plants (mainly thermoelectric power stations which are considered a major pollutor of the environment) will face the dilemma whether to invest in the construction of ecological generating powers or simply buy themselves out through delivering the necessary electricity amounts from a green producer. The establishment of the green certificates market was regulated by the December 2003 Energy Act. The document was coordinated with the requirements of Directive 2001/77 of the European Union which requires that the member countries satisfy 12% of their domestic consumption from renewable energy resources by 2010. Moreover, the total ecological energy will have to account for some 22% of the EU energy balance.Currently, Bulgaria produces 7% of its electricity from renewable energy resources which puts it on the third place in the EU, following Belgium and the Netherlands, the Minister of Energy Milko Kovachev said some time ago. However, the National Electricity Company (NEC) predicts that the percentage will keep growing. That will make the ecological plants a gold mine for their owners. They already make a good profit as the electricity they produce is sold to NEC at preferential prices. The buyer pays BGN80 per megawatthour bought from a water power plant, BGN120 for the same amount bought from a wind plant, and BGN120 - for cogeneration.When the green certificate system is introduced in 2006, direct subsidizing will be practically eliminated. Incentives for ecological production of electricity will be offered. The obligatory quota that each power plant will have to produce will be fixed by the minister of energy. However, the subjective assessment may provoke disputes, experts comment. They claim that certain thermoelectric power plants may be given lower quotas than others. The sanctions for those who fail to meet the requirements will vary from BGN30 to BGN90 per megawatthour.Fines will be imposed if the producer fails to present a certificate for the amount of electricity he is entitled to produce. The indulgence may not be acquired personally - it may be bought from another power plant that has covered its own quota. A certificate will be issued for each megawatt of pure energy produced. Their price will be determined by the demand and supply as well as by the size of the fines. Logically, each producer will choose to pay BGN50 and buy a certificate instead of paying BGN60 as a fine, Kostadinka Todorova, Head of the Energy Strategy Department in the Ministry of Energy, said.In fact, a double profit will be made from the ecological electricity - first due to the increasing price in the sale and then due to the higher prices of the green certificates. The profit from trading in certificates will be 100%, because all expenses for the production of electricity will be included in its price. Such documents now cost more than the electricity sold in a number of EU member countries.The new market will be controlled by the State Energy Regulation Commission. It will keep a public register of green certificates that will contain information about their titular, the electricity producing plant, the amount and the production period. Moreover, the commission will register all deals signed, the buyer and the seller, and the amounts of pure energy traded.The trade on the new market will amount to hundreds of thousands of levs and will grow further, experts forecast. This is why the interest in investment in renewable energy resources keeps growing.

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