Research by Simeon Arnaudov PhD candidate at Seoul National University

Solar Power Project (45 MW): Bulgarian Electricity Market Study

TEMEP, Seoul National University, Republic of Korea 31.05.2013

463.517 International energy expert policy program by professor Jong Dong Lee

Table of content 1. Introduction 2. Background 2.1 Energy market structure 2.2. Renewable energy sector

3. Benchmarking 3.1. Solar capacity per citizen in the European Union [W/capita] 3.2. Solar capacity in the European Union [MW]

4. Project scheme 4.1. Investment in a glance 4.2. Observation 4.3. Geographical location/ Solar radiation map/ Power GRID map 4.4. Project implication

5. Further research 6. References

1. Introduction a) Renewable energy - is energy that comes from resources which are continually replenished

such as sunlight, wind, rain, tides, waves and geothermal heat [8]

b) Importance of renewable energy - Climate change and global warming concerns, covered with high oil prices, and increasing government subsidies, are driving increasing renewable energy legislation, incentives and commercialization. [10]

c) Economic growth through increasing usage of RES (in sense of Social impact)

d) International regulation about RES - European 20/20 regulation, which mean increasing to at least 20% of using renewable energy and reducing energy consumption with 20% (energy efficiency).

e) Case study goals: Our team is planning to study Private Korean investment in Solar Power Plant in Bulgaria, with aim

to investigate successful and unsuccessful practices; Power plant capacity is 20MW + 25MW

2. Background

Renewable Energy Power plants (under Feed-in Tariffs)

Coal Independent Power Producers

State-owned Energy Suppliers (nuclear, coal, gas)

NEK: single buyer; aggregator; large hydropower generator;

supplier of last resort & transmission company

System operator (owned by NEK):

organize the balancing model High-voltage

customers

Energo Pro

EVN

CEZ

Generation Transmission Distribution

Co-generation supplier

Purchased and paid for by NEK under Energy Law

Purchased and paid for by NEK under Energy Law

Purchased and paid for by NEK under PPAs

Purchased and paid for by NEK under Energy Law

Distribution entities collect on behalf of NEK

Regu

late

d pr

ices

thro

ugh

annu

al ta

riff o

rder

s

15%

15%

~58%

~12%

1.2. Energy market structure [6]: a) Energy market organization

b) Main power plants in Bulgaria [10]

15% Renewable energy

12% Long term contracted agreement TPP

35% Nuclear power plant

23% Thermal power plant

15% Steam thermal power plant

15%

15% 12%

35%

23%

c) Price of electricity [USD $/MWh] (Source: ministry of energy, economic and tourism)

The price of electricity in the market with different sources of electricity by various PA is formed by the combination of various contracts, operation costs and allowances for green energy, while electricity price has strong social significance. According to the latest World Bank report on Bulgarian energy market (May 2013), Bulgarian citizens are energy poor. It is mean the sitizens are spending more than 10% of their income buying energy services (electricity supply; others) [7]. Price of electricity is summation of [6]: power supply (base price) power distribution price supplements price (for usage of green energy)

HPP Hydro power plant

Solar Photovoltaic power plant

NPP Nuclear power plant

CGPP Co-Generation power plant

TPP Thermal power plant Small HPP Small Hydro power plant

2.3. Renewable sector a) Bulgarian renewable energy market. On picture 1 is shown total capacity of renewable

energy by source [7]

2. Background

9010 MW

3400 MW Hydro power plant

1040 MW Photovoltaic power plant

850 MW Wind power plant

9010 MW Other fossil power plant

2.2. Renewable sector. Highlights: a) Driving force of renewable energy sector development is long term PPA (power purchase

agreement) and Feed-in Tariffs (FiT); b) Non-government organization (NGO) - Cluster organization represent private interest in front

government; c) International Events - renewable energy (RE) growth create opportunity Bulgaria to dominate

ins local Renewable market, example is Solar South-East Europe on 29-31 May 2013; d) Natural resources for RES power plant: Sun; Wind; Water; BIO is negligible (total capacity of

29MW). Geographic location of RE power plant is very important. e) Renewable energy affect price of energy price. Higher energy price harm social interest.

3400 MW

1040 MW 850 MW

3. Benchmarking

Electric power per capita [ Watt ]

Total population electricity consumption [ MW·h/yr ] x 1 000 000 =

365.25 x 24 x (population)

3.1. Solar capacity per citizen in the European Union [W/capita] Source [10]

3.2. Solar capacity in the European Union [MW] Source [10]

4. Project scheme

Company name: RES technology ASM-BG Investicii

Geographical location Zlataritsa village, V. Turnovo

Samovodene village, V. Turnovo

Date issue of license 2009.12.14 2010.01.18

Date of generating energy N/A N/A

Project consultant Kim & Chang, Korea Kim & Chang, Korea

Constructor LG CNS, Korea LG CNS, Korea

Technology Photovoltaic panel Photovoltaic panel

Power plant capacity 20 MW/h 25 MW/h

Off-taker National Electric Company National Electric Company

Electricity distributor EVN EVN

Investment € 70 million € 80 million

4.1. Investment in a glance

ROI 9% per year 9% per year

4.2. Observation a) Risk allocation – financing is done with 100% solo Korean participation. There is

no risk allocation; b) Technology – there is not enough information for used technology c) Long term PPA – 20 years, with contracted price of [$324 / MWh] – very flat

annual income; d) Maintain and operation – there is no information about M&O e) Technology – not enough information for the type of used photovoltaic power

panels; f) Both power plants are situated in very close geographical location – this increased

probability of less generated power energy from bad weather conditions in same time;

g) Aerography (weather) forecast affect similarly both photovoltaic power plants

4. Project scheme

4. Project scheme 4.3. Geographical location/ Solar radiation map/ Power GRID map [11][12]

4.4. Project implication a) Reduce O&M cost – even this cost is significantly low compare with investment cost of

the project, there are possibilities to improve operating and management cost; b) Improve solar power panel stationary rotating technology – The power plant is

situated in four seasons geographical area. Respectively solar radiation is falling in different angle according to different seasons;

Solar radiation has different power during 4 seasons. According to Solar map: 1110 < Radiation< 1420 kWh/sq. m. [13] Discover the [solar, hours/year]. For example in Plovdiv area [2260 solar h/y] [13] After implementing solar panel rotating technology re-calculate solar radiation power;

sun light angle; [13]

4. Project scheme

Equator

Sun light Sun light Sun light

a) Spot successful and unsuccessful practices of Korean Solar investment b) Answer the question: What have to be improved if investment is going to be

develop today? c) Solar power plant – financial (OM), technology, government regulation; d) Offshore renewable farms; e) Technology: investigated to current used photovoltaic technology; f) Study government regulation in Renewable sources : energy price as social

impact; RES price differentiation.; g) Recalculate the RoI (return of investment) : “RES technology”; “ASM - BG

investicii”; h) Research objectives of Bulgaria to convert to Green Economy. In sense of

increasing number of public electrical transport with expanding Public Electrical Network in big cities as Sofia, Plovdiv, Varna, Stara Zagora. Expected results is to decrease carbon oxide, decrease number of gasoline stroke engine vehicles and increase consumption of renewable energy;

5. Further research

1. http://en.wikipedia.org/wiki/List_of_countries_by_electricity_consumption 2. http://tso.bg/uploads/image/2013/Karta_nova_03_2012_BG.jpg 3. http://www.dnevnik.bg/video/2013/05/28/2069952_otlaganeto_na_reformata_v_energetikata_struva_okolo_1/ 4. http://www.capital.bg/politika_i_ikonomika/bulgaria/2013/04/08/2037825_top_20_na_elektroenergiinite_moshtnosti_v_bulgariia/ 5. http://www.capital.bg/biznes/kompanii/2013/04/18/2044541_koi_kolko_tok_proizvejda/ 6. http://kadebg.com/wp-content/uploads/2011/02/как-се-изчислява-цена-на-тока.pdf 7. http://www.mi.government.bg/files/useruploads/files/powersectorrapidassessment__may27_final.pdf 8. http://en.wikipedia.org/wiki/Renewable_energy 9. United Nations Environment Programme Global Trends in Sustainable Energy Investment 2007: Analysis of Trends and Issues in the Financing of Renewable Energy and Energy Efficiency in OECD and Developing Countries 10. Ministry of energy, economy and tourism, Republic of bulgaria www.mi.government.bg 11. www.tso.bg 12. GeoModel Solar pro 13. http://www.shtrakov.net/RET/Lect_03.pdf

6. References

End!