As ongoing political instability rages on in Sofia and the fifth general election in two years looks increasingly likely, the Balkan country has made significant economic gains since Russia invaded Ukraine.
According to data from energy think tank Enappsys, Bulgaria net exported 6.6 TWh of electricity to other countries, most often to neighboring countries Romania, Greece, Turkey, North Macedonia and Serbia, which catapulted it to third place in Europe in terms of net electricity exports first half of 2022.
High prices also mean big profits.
The sale of electricity in the Balkans brought in almost 1.5 billion euros for the state-owned Bulgarian Energy Holding (BEH), which was in a difficult position before the war because of expensive CO2 quotas and the bankrupt Sofia thermal power station.
With the profits, the state compensated the companies for the high share prices, and the price of electricity for households remains stable despite price increases across Europe.
Meanwhile, data for the first six months of the year shows no increase in corporate bankruptcies or startups, with levels remaining stable over the past two years.
Meanwhile, European economic forecasts are not too gloomy, with the summer 2022 edition promising GDP growth of 2.8%, 0.1pp above the EU average.
High inflation (18.7% in September) is worrying both the economy and households, but still lags behind regional players such as Hungary, which hit 20.1% last month.
Coal to the “rescue”
Global energy turmoil has also increased the Balkan region’s dependence on Bulgarian coal.
Serbia applied for and signed an unprecedented deal to import large quantities of Bulgarian lignite to offset uncertainty in the gas and oil markets.
In 2022, for the first time in history, the state-owned Maritsa Iztok coal mines signed a contract to export 1.75 million tons of coal to the country.
North Macedonia has also signed a deal to import Bulgarian electricity, which will come into effect in the winter.
Bulgaria produces almost half of its electricity from its coal reserves, with coal-based electricity accounting for the largest share of electricity exports. Another 25% of production comes from the nuclear power plant in Kozloduy.
Currently, Bulgaria does not even use one of the reactors of the Kozloduy nuclear power plant, as it is undergoing scheduled maintenance.
“Bulgarian electricity exports play an important role in stabilizing the energy grid in the Balkans. The importance of the Bulgarian coal-fired power plants for the region is enormous. Export capacity is at maximum capacity,” the Institute of Energy Management’s chief economist Kaloyan Staykov told EURACTIV Bulgaria.
“Bulgaria’s role is very important because south-eastern Europe traditionally experiences power shortages that can be traced over the years. Bulgaria is an exporter, but in the last two years its role has increased even more because this regional deficit has increased due to the overall energy deficit in the EU,” he added.
Regional actors point to larger emitters in the West given the environmental concerns of burning coal.
Asked how the return of coal is politically and economically related to the Green Deal, Staykov reminded that Bulgaria’s carbon footprint is negligible compared to all other Eastern European countries.
According to data from the Institute for Energy Management for 2021, Bulgaria contributes 1.5% to the total energy consumption in the whole EU. The carbon footprint of Germany is 28%, Poland 15%, Italy 14%, the Netherlands 7%, Spain 7% and the Czech Republic and France 5% each.
Rethinking the Green Deal
Energy gains are also fueling voices calling for a rethink of the EU’s climate ambitions.
According to Staykov, the bloc’s Green Deal and the global Paris climate deal should be reconsidered because they came about without a war. While he doesn’t call for a full overhaul, he thinks the steps to achieve it should be reconsidered.
“It’s not a general question of whether we should go in this direction, but how we can move in the most sustainable way so that we don’t get into situations like last year. The answer is simple: the coal-fired power plants have been restarted. Obviously these policies that we have been pursuing for the last 10 to 20 years for the energy transition are not bringing the desired results and we are going backwards,” he said.
[Edited by Vlad Makszimov, Alice Taylor]