AES globally has a lot of investment in renewables combined with batteries

Mr. Tzankov, what do you think the Bulgarian energy system looks like today? What do you see?

The situation, in short, I would say is quite dynamic, because, on the one hand, there have been a lot of investments in recent years in renewable energy sources. This is quite normal, following the policy of the EU and the Green Deal. Our wind farm also contributes a lot to fulfilling the commitments that Bulgaria has made under this deal.

What is the capacity of the wind farm?

156 megawatts installed capacity, 52 blades, 3 megawatts each.

And it is the largest in Bulgaria?

So far, yes, it is still the largest wind farm in Bulgaria.

As you say, investments in the renewable energy sector are developing very dynamically, is there something wrong with that or is it a good thing?

It is good in general because definitely investing in renewable energy is something innovative, something that contributes to environmental protection. The point is that, at the same time as investing in renewable energy, it is extremely important to think about investing in facilities that can balance them, because unlike the so-called dispatchable capacities such as our TPP or the Kozloduy NPP, renewable energy sources are not dispatchable because they depend on factors that are beyond human control like wind and sun. These imbalances that they introduce into the system are extremely important to be managed and balanced in order to preserve the overall integrity of our energy system.

Is this what the experts mean when they talk about baseload capacity and that RES cannot play the role of baseload capacity?

Not exactly. Baseload capacity is that capacity which provides energy continuously and that energy can be controlled. For example, thermal power plants and nuclear power plants can operate as baseload capacities. In contrast, balancing capacities are those that can simultaneously provide electricity in a constant mode and can also be switched on or off very quickly, or their output can be increased or decreased, in order to balance precisely the intermittent generation from renewable sources.

If, say, renewables are equipped with batteries, can they play the same role at some point, or has the technology not reached that point?

On the contrary, the technology has reached that point, and the company I represent, AES, has a lot of investments globally precisely in combining renewables with batteries. It is when you combine a renewable energy project with a battery, then it could very much work as a baseload power, it is a subject to dispatch - control by the system operator.

What can replace coal in Bulgaria's energy system in your opinion?

A year and a half ago, through AmCham Bulgaria, AES, along with some of the other members, funded a study by a very good international consultant on exactly what decarbonization of the electricity sector in Bulgaria should look like. As summary, until reaching full carbon neutrality, coal can play the role of the transit fuel for this transit period, with a gradual reduction until it is gradually replaced by renewable capacities with balancing and new investments in nuclear.

What do you think about the thesis expressed by many people that because Bulgaria does not have nuclear fuel, for one reason or another does not produce its own oil and gas, and coal is the only energy resource Bulgaria has and if we cross it off the map it means new dependencies, in some form a threat to national security?

Whether Bulgaria has oil and gas reserves or not, I would not like to comment. Either way, whether we have or not, the fact is that we have coal, it is a national treasure. For many years, it has played an extremely important role in the whole energy sector and, as I said, it can continue play such a role for the next ten years, until this transit period happens, when we will see the new energy mix. That is to say, we cannot shut down all the coal-fired power plants overnight and, from the next day, commission all the new investments of the aforementioned types.

In order to be able to secure this smooth entry of all the new projects - renewables, modular reactors, which take at least ten years to build, coal will, in my view, continue to play a very important and key role to be able to secure this transition.

Something even more important, when you talk about coal, usually in people's minds the main function that coal performs is to produce electricity, but, you see, now we may not even need this electricity because we can import it from outside. Yes, the fact is that in the last few months Bulgaria has been importing electricity from outside most of the time.

There is, however, one absolutely critical role that coal-fired power plants continue to play in the energy mix, which is not so much to provide the electricity that is needed, which is also of course very important, but they provide some specific system services so that the whole electricity system is stable, or so it continues to exist at all and so there is a system to carry the electricity from point A to point B. These are very specific primary regulation services, secondary regulation services, and frequency regulation of the whole system, and without these rotating units, which currently exist only in the coal-fired power plants in Bulgaria, the ESO simply cannot safely maintain the stability of the electricity system. And this is something extremely important that needs to be explained to electricity consumers, that it is not only important to have electricity when you need it, but it is also important to be able to get it delivered. And it's those services of maintaining the stability in the electricity system that is something that, for the moment, coal-fired power plants cannot be replaced by any other generation capacity. There are no other such assets currently in the Bulgarian electricity system that can provide these services.

Is it possible to say whether in thirty years the economy will consume more electricity or less compared to now given how much effort and money is being put into energy efficiency measures?

Undoubtedly, investments in energy efficiency are something very important and particularly relevant for Bulgaria on the one hand and I agree that all these investments in energy efficiency should lead to a reduction in electricity consumption. On the other hand, just as we're putting in the new LED bulbs, we're seeing more and more cars with EA registration plates, so electric cars are coming on at a serious rate. Also, and on artificial intelligence, I recently read an analysis that with the expected development of artificial intelligence and all the technologies that support it, we need to invest very seriously in new electricity generation capacities. So as a result of electrification on the one hand, which we are seeing expressed in electric cars and all the new technologies such as artificial intelligence, the expectation is certainly that there will be an increase in electricity demand.

Tell me about the St. Nikola wind farm. How long has it been operating near Kavarna?

It began commercial operation in March 2010. An extremely well-performing asset across the company's portfolio with a great team that takes care of its impeccable maintenance. One of the things I am extremely proud of myself is that this is the first park in Bulgaria to operate an Integrated Early Warning System for Bird Protection.

How does it protect?

With a combination of technology and investment in special radars that can detect a flock of birds approaching the wind farm from 10 km away, and teams of ornithologists 24/7, that is around the clock at least one team is on site and receives notifications from the radar system. They analyze accordingly whether the approaching flock of birds is a protected species and if it is, they give a signal and a whole group of blades that are possibly in the path of this flock are stopped so that the birds can pass without any problem.

In the last 12 years of operations, there have been less than five cases where we've had any incidents with birds of non-endangered species. So, thanks to this system and thanks to the fact that we have been able to include other wind power producers that are around us, Bulgaria has not actually been effectively sentenced to pay penalties by the EC. This has been confirmed by the so-called Bern Convention, which is a special institute that analyses whether Member States have taken the appropriate measures, so we are very proud of the implementation of this system.

What are AES's plans for Bulgaria? If they keep pressing you to cut emissions, what are you planning to do in Bulgaria, what's next for AES?

Thank you for your question. Undoubtedly, the future of the Maritza plant is the number one priority, and we have been focused on it for more than a year. We have been looking at a lot of options about what you can do with a thermal power plant designed to run on lignite, possibly what you can replace coal with. From everything on the palette of alternatives that we have looked at, we have concentrated on two very interesting projects. Since our plant has two units of 345 megawatts each, one of the projects is for transforming one unit from an electricity generation facility into a power storage facility using a molten salt technology.

When cheap electricity is available, we use heaters to introduce it into the salt, so that it melts - salt is a unique chemical element that has the ability to take in heat for a longer period of time with little loss. And then, when the evening consumption peak comes, when there's no more sun and there's a need for electricity, using the existing turbine, cooling the salt, steam is produced and using the existing equipment, we put the energy back into the system as electricity. I think that such an electricity storage system is an extremely interesting project because, as I said, the Bulgarian electricity system is in great need of precisely the capacity that can balance it. So, this is one project we are working on. Quite innovative, but as a technology, this has worked for a long time. Here we have joined forces with our colleagues from Chile, where we have another similar thermal power plant, so these two projects are going simultaneously. For the second unit, we are developing a project to go completely from lignite combustion to combusting a mixture of special pellets that are made from municipal waste. When I say pellets, I mean further processed waste in the form of small balls that can eventually be ground in our mills, and biomass. Thus, these are the alternatives that we see for our TPP and we are working very hard with consultants to be able to implement them.

That sounds very interesting. In other words, the company is stable in Bulgaria.

AES has been a strategic investor in the Bulgarian electricity sector for more than 30 years, so we are here.