AES Bulgaria’s role in Bulgaria's Recovery and Resilience Plan

At the beginning of May, the Council approved the highly anticipated Bulgarian Recovery and Resilience Plan (BRRP) which is viewed as one of the most robust green plans within the European Union. The plan comprises a total funding envelope of €6.3 billion in grants, of which 58.9% of the total will be allocated to investments to accelerate the decarbonisation of Bulgaria’s energy sector.

Investments in the decarbonisation of the Bulgarian economy are expected to bring significant positive effects on growth and productivity over the medium to long-term. The reforms and investments are mainly focused on liberalising the wholesale and retail electricity market and modernising the electricity grid by its digitalization and speeding up the deployment of renewable energy generation and large-scale storage facilities in the country.

The modernisation efforts are expected to deliver an additional 1.4 GW of renewable capacity combined with energy storage and grid-scale energy storage facilities with a total capacity of 6000 MWh. Furthermore, the plan aims to reduce carbon dioxide emissions associated with electricity generation by 40% below 2019 levels, to be achieved by 2025. The BRRP will also support pilot projects enabling the introduction of green hydrogen and biogas for industrial applications as well as geo-thermal facilities.

In line with similar upcoming initiatives at EU level, the BRRP also envisages to reduce the administrative burden for renewable energy projects related to their installation, connection and operation, with the aim of eliminating the barriers to their deployment and introducing a support framework for the construction and connection of RES facilities.

On a structural level, the Plan contains far-reaching measures to improve the functioning and effectiveness of the public administration and the justice system, which will in turn contribute to improving the business environment and promote research and innovation. These efforts will be key to maintaining an attractive business environment for investors and provide them with long-term predictability. The BRRP sets ambitious reforms of the energy sector that require both the upgrade of existing infrastructure as well as the construction of new infrastructure and capacity. Consequently, this offers an unprecedented opportunity for private investors.

AES Bulgaria has been present in the country for over 30 years and is the largest US investor in the country’s energy sector, which provides an important impetus for economic growth and sustainable development. AES Bulgaria is ready to support Bulgaria’s decarbonisation through its expertise and resources and by exploring new investment opportunities to bring additional capacity to the energy market.

AES Galabovo remains key in the transition of the Bulgarian economy to decarbonisation. To achieve a new energy mix that meets the net zero CO2 emissions target by 2050, Bulgaria needs a transition period whereby coal remains an important part of the energy system to ensure energy security until investments in innovative green technologies are made. AES Galabovo guarantees Bulgaria’s energy independence, security of supply and provides important system maintenance services for the stability of the entire energy network in the country. In the current geopolitical context and in view of a responsible transition to decarbonisation, the phase-out of coal plants should not jeopardise security of supply and energy independence.

At the same time, AES is exploring technologies to convert AES Galabovo and to produce the same amount of electricity with less coal, such as natural gas, biomass, or processed waste (Solid Recovered Fuel). An important driver in the ultimate decision to use these energy sources will depend on availability of alternative fuels, and the ability to meet high standards set at the EU level.

AES is also the owner of the largest wind farm in Bulgaria – St. Nikola near Kavarna. In January 2022, St. Nikola Wind Farm has set a record in its monthly wind power output, producing nearly 55,500 MWh of renewable energy. This is equal to the average monthly consumption of 185,000 Bulgarian households.

In parallel, AES is analysing the opportunities offered by the BRRP to develop solar and energy storage projects leveraging its existing asset base in Bulgaria with the objective of accelerating the green transition. Battery-based energy storage is another vital enabler of the transition to clean energy, of which AES is a pioneer through its partnership with the leading global energy storage technology and services provider, Fluence.

In this context, AES Bulgaria and the Bulgarian Ministry of Energy signed a Memorandum of Understanding to share knowledge and experience in innovative technologies and explore new opportunities for innovative energy solutions. Specifically, it will explore the opportunities for the deployment of a solar project with a generation capacity of around 100MW together with a battery energy storage system (BESS). AES Bulgaria will also explore the deployment of a stand-alone grid scale BESS project of 80MWh in the area of Sofia.

However, all investments need to be driven by rational economic considerations. EU funds made available by the BRRP will play an important role in complementing the efforts by private investors for single projects. Bulgaria’s long-term vision for the development of the energy sector will however be key to guide business decisions of investors and energy producers.