The Bulgarian Industrial Capital Association (BICA) wants to create a European mechanism for financial compensation for enterprises from Southeast Europe that are experiencing serious problems with extremely high electricity prices. " Let us have affordable and secure energy. This is the first key. Of course, with the understanding of the priority of low-carbon energy. If Europe tries to impose a single model for all countries, this will not work, because the situation in Silesia is different from that in Portugal or southern Spain." , said Rumen Radev, on behalf of BICA, during today's meeting of the Energy Working Group (SGI Europe ) with chairman Elmar Thien. He stressed that among the main reasons for high prices in the South-Eastern Europe region are the growing local energy consumption, the specifics of production costs with a significant share of costs for carbon dioxide quotas, limited hydropower capacities due to persistent droughts, increasing cross-border flows as a result of intensive investments in renewable energy and the intermittent nature of this energy source, as well as the impact of the conflict in Ukraine, leading to significant imports of electricity to Ukraine and Moldova from our region.
The Energy Working Group met today in Warsaw to discuss key EU energy policies, in which representatives of business, industry and experts participate. Mr. Thomas Christensen from the team of the Energy Commissioner Mr. Dan Jorgensen also participated in the meeting, who also actively participated in the conversation with Mr. Radev in discussing the problems with energy prices in the South-Eastern Europe region. The meeting addressed strategic issues such as affordable energy, security of energy infrastructure and sustainable industrial transition. National policies and initiatives of the European Commission were presented, with a focus on future challenges and opportunities in the sector. The meeting concluded with an outline of the next steps in the work of the group. Mr. Radev noted that the Bulgarian industry is placed in an additional complex situation due to the fact that over 70% of the electricity in the country is traded on the day-ahead market, which creates instability, and a significant part of the long-term contracting is actually on a weekly basis. Combined with the dominant participation of electricity traders, this makes the achievement of contracts by industrial consumers practically impossible or at best - highly limited. He emphasized the challenges facing the Bulgarian industry related to limited cross-border capacities and the impact of the war in Ukraine on the energy market. "Bulgarian industry can no longer cope with these prices. Our production costs are higher than in Germany, France or the Netherlands. A mechanism must be sought to compensate the affected countries without leading to distortions in the common European market ," Radev pointed out. According to him, the significantly higher prices in the region show that this is not a pan-European problem, but a strong regional distortion of the market, which is under stress in terms of electricity supplies, which is an indicator of inefficiency in market coupling. According to ENTSO-E data, after May 2024, the price difference between Southeastern and Central Europe deepens, and in the summer months it exceeds 51%. This, in turn, leads to a weakening of the internal market, which undermines the competitiveness and cohesion of the EU.
"This crisis has several serious negative effects. First, it creates speculative profits for electricity producers in the region. Second, it sends the wrong signals to investors; instead of building more interconnection to alleviate the problem, they build more production capacity in intermittent electricity production. Last but not least, it weakens the internal market, which undermines the competitiveness of not only the region but also the EU. Urgent coordination is needed at national and European level to avoid even greater imbalances in the energy sector ," said Rumen Radev.
In order to overcome the problems, BICA proposes accelerating investments in interconnections, with an emphasis on better connectivity with the Central European market area, through which electricity flows can be balanced, better coordination in network management, as well as in the coordination of national energy plans, as well as a reassessment of the compensation mechanism between operators. But while these are mainly long-term measures, it is important in the short term to develop and implement a common financial compensation mechanism to overcome the significant price differences. The forum also discussed the role of nuclear energy and renewable sources in Europe's future energy mix, as well as the possibilities for supporting low-carbon technologies, while maintaining adequate technological neutrality.
At the beginning of February 2025, BICA sent a letter to Bulgarian and European institutions calling for the urgent preparation of a mechanism to overcome the imbalance in the European electricity market and the persistently high prices in Southeastern Europe and to provide compensation.
