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Teodor Bobochikov, Managing Partner, V-Ridium
Energy Transformation – Trends and drivers
AUTHOR: Interview of Lyubomir Grozdanov

The interview is published in Bulgarian language in the UTILITIES Magazine, March 2022 (


Tell us more about V-Ridium, what is the vision of the future and what are the priorities of the company’s management – we are asking managing partner Teodor Bobochikov

V-Ridium company (owned by GreenVolt), has been successfully carrying out its activities in the fields of development and exploitation of RES projects for more than 10 years now. As a result of our successful development, V-Ridium currently operates in 7 European countries - Poland, Bulgaria, Italy, Greece, France, Romania, Serbia, as well as in the United States and Mexico.
With more than 17GW behind our backs and 5GW of active projects now, we have managed to develop the company so as to make a successful IPO, as part of GreenVolt's portfolio, on the Portuguese stock exchange in August 2021. With more than 270 million euros funding raised for expansion and development (170 million from the initial public offering and 100 million green bond), Green Voltis developing projects and taking an active part in the transformation of energy, which we are all currently experiencing.

The most important thing for us is that shareholders, team, partners, and stakeholders work in unison, led by our mission to change and decarbonise energy and the economy so that the economies of Europe and Bulgaria are more resilient, competitive and sustainable.

What are the main reasons for the energy transformation and the economy in general in Europe and why do you think this change is happening? Do you expect a change in trends?

Decarbonization and in general Energy transformation is here to stay it has a stable background of factors and drivers determining the direction. Renewables are cheaper than traditional sources and are preparing to dominate the system.

The energy system of each country exists with a single goal - to reliably and cost effectively supply energy to consumers (household and business) so that the economy realizes its potential and gains a competitive advantage over other economies. Unfortunately, for Bulgaria, recently even not falling behind becomes a sufficient goal
There are several major trends in economics, politics, technology, and ecology that have shaped and continue to shape the path of the energy sector transformation.
First, the time it takes for the old energy sources’ projects to realize is too long - developing for 10 years, taking 5+ years to construct and then carry operation for 50+ years, such as the cycle of nuclear, coal and gas plants, is in total contradiction with the accelerated volatility of economic cycles. Of course, all already built capacities must be used for as long as they are environmentally, risky, and economically acceptable for society and the world. But how to develop and build a new power plant that will operate until and even after 2080, when we don't know what tomorrow will be like?
Currently, the flexibility offered by the renewable’s development construction and operation cycle and the ability to accelerate and slow down their development according to the economic cycles is very clearly more coherent with the needs of the economy and better fit for the economy cycles. It is normal that the speed and scale development and putting on operation of RES (observed in the last 20 years) is nonlinear (ups and downs) as this is also how the economy cycles work.
In second place, without being second in importance, are the accumulated social funds (insurance, pensions), which are looking for a place for investments with aligned annuity of the cash flows according to the needs of the funds. The owners of the money, the society, have a strong preference and expectations that their money will be invested for the common/public good. Countries regulate the sector with social funds so that investments are done in eligible sectors. In addition, more and more banks are ruling out the possibility of investing in non-renewable energy sources. This active focus of investments in the direction of renewable energy and energy transformation in general and it is the engine for the growth in the sector.
Third, very important social trend is the desire of society to find a model for better than today distribution of wealth. This trend, combined with the modern trend of everyone being an investor, leads to the establishment of the sector not only as technologically modern, but also as a business-modern sector, enabling RES investments. Renewables are an obvious candidate and excellent opportunity for small companies and even individual investors to invest in a sector reserved until recently only for large corporations.
The desire to leave the environment cleaner, or at least bearable to live in, is stronger than ever. The movement for decarbonisation and the fight against climate change are in the hearts of politicians, economists, energy professionals and children.
Another trend that determines the imposition of, in the past called alternative energy sources, today renewable, and in the future perhaps only the energy sources, is the accelerated technological development, IT innovations and digitalization of everything and the incredible opportunities arising from it. It is clear to all of us that despite its many advantages, RES has its limitations and peculiarities. The volatility of production and its dependence on meteorological conditions pose new challenges to its integration into the electricity grid. In addition to traditional business models and technologies for balancing the network, the development of digital technologies such as IoT, AI, Blockchain, is used to create flexibility and management of the network and energy system in a new manner by finding new business models and new roles for the participants so that the demand changes (demand respond) according to the available resource (sun, wind, water).
The search for new energy storage technologies has already affected the development of batteries. Green hydrogen is also looking for a place in the sector's transformation. The electrification of transport, as well as other sectors, will lead to the inclusion of consumers in the electricity grids at a place and time for which the system is not ready now, but it will also give flexibility, which is not available today.
One thing is for sure - tomorrow's energy sector will have nothing to do with yesterday's energy sector and will be different from today's energy sector.

What is the specifics of the Bulgarian energy system and why can we rely on RES in the long run? What measures can the government take to facilitate the transition?
Speaking purely technologically, the energy system of Bulgaria is characterized by the presence of a well-developed sector of hydro and pump HPP. The flexibility for energy system management, that currently exists is of great importance for the successful transformation that we can implement in our country.
The transmission and distribution network is relatively well developed and allows the integration (with some investments, of course) of distributed generation and implementation of smart grids.
We have outdated capacity (old thermal power plants) and poor fossil resources (lignite coal), which can logically and naturally be replaced by new modern facilities, in harmony (technological, environmental, and visionary) with the Energy of the Future in Europe and the World.
Of course, any change and sustainable development, requires a solid strategy and focused implementation efforts so as to facilitate the energy transition by removing the main obstacles and creating conditions for investment. In order to shape the future, it is important to clearly identify and address the limiting factors such as 1) lack of opportunities for grid connection 2) lack of predictability and manageability in the RES production, 3) challenges to the management of the system dominated by RES. It is important to find such approach to addressing them, which will achieve the best result with minimal resources and cost.
The development of the grid must for example follow a clear and modern development strategy, both technologically and geographically. It is not difficult to determine where are the best RES resources and where the network can be easily and swiftly developed.
In order to be successful, a government support program should be developed to eliminate one of the most important constraints for Banks and to some extend the Investors - the lack of stable de-risked revenues driven by lack of predictable energy price. A key factor for the success and growth of investments in the sector is to have this predictability and stability for Banking institutions that provide non-recourse project financing propeller for big investments in the sector.
One of the ways to attract /allow bank investment in the sector is to implement the best support system (already proven in Europe) - Renewables auction with floor price.
Of course the investor is expected (and rightly so) to take a commercial risk from the sale of energy, while banks are reluctant to take such risk. It is important for banks to have a minimum price or "floor" in order to have a guaranteed minimum income. This applies to all major energy projects (TPP, NPP, HPP). The peculiarities of non -recourse project financing and investments in wind and solar power plants are no exception. The support systems (feed in, green certificates) from the past are gradually moving into an enabler - floor price Renewables auction system, which allows the development of the sector without investing significant public resources.

The design of Renewable Energy Auctions with sufficient competition from developed projects leads to very low prices (floor protection), which in practice does not lead to payments, but fully meets the bank's requirements for risk reduction. For example, in Europe, auctions often end lower than 45-60 Euros. The won tender and the commitment of the state provide stability for the banks and the investor. In practice, however, the realized energy on the market (DAM) is always at higher prices and therefore the state has no support payments.
The investor expects to receive higher prices from the market and to realize a higher return, which of course is a risk that strategic investors must be willing to take 100%. The investor practically realizes his return only from the higher prices on the stock exchange and bears all the trade risk, which does not distort the foundations of the liberalized market.

What would you say about the alternatives and how would you outline the successful path of energy development in your opinion?
We can continue to "develop" the sector by trying to maintain the status quo, as we have done so far. Objective realities already show us that in this way we will expose our economy to a significant risk of non-competitiveness in the future and it can be expected that high energy or CO2 prices will have a dissuasive effect on the growth and development of local companies and on opportunities to attract investment.
In my opinion, the high gas prices in 2021-2022, and their negative impact, also have an awakening positive impact on the people who manage and regulate energy.
Feeding the economy and everyday life from energy, independent of fossil and imported fuels, energy independent of CO2 prices, must be a priority for all of us to ensure the competitiveness and success of business and the well-being of citizens. The long-sought and demanded Sustainability and Independence of the sector are beginning to have an increasingly tangible economic manifestation in our daily lives. We are still heavily dependent on the price of imported fuels. As can be seen, the rise in the price of gas surge sends energy  prices in the area of BGN 500+ per MWh. The sector is not resilient to these influences, and this may and will change bu adding  more / renewable sources of energy in Bulgaria energy consumption..
Of course, 100% RES in the network from today's point of view is impossible not only in Bulgaria but also anywhere. The significant increase in the share of RES should be done carefully and not to violate the security of the network. When we talk about the vision of having 100% RES, we must keep in mind that the environment, technology, and economy will change significantly in 2050 and beyond.
To date, RES have the lowest cost (LCOE-levelled cost of energy) compared to other (newly built) energy sources. With the development of technology, the cost will continue to decrease, along with improving the efficiency and technical characteristics to facilitate integration. It is right to look for opportunities to do more with these cheaper sources (RES).
The digitalization of everything will allow smart and flexible management of networks, the load and the production (smart grid). Electrification of transport will change energy flows in time and place, which is a challenge, but also an opportunity for additional flexibility in energy management (V2G - vehicles to grid).
The development of batteries and other storage technologies will allow optimizing the cost of integration of renewable energy sources and their easier balancing (Energy Balancing). Green Hydrogen can significantly change the way we transport and store energy in order to securely integrate RES (Green Hydrogen for RES integration).
One thing is for sure - the future is different. I believe that the energy, economy, and business in Bulgaria and EU will find a way to innovate and develop to lead, drive and benefit from the change.


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20.03.2022  Teodor Bobochikov, Managing Partner, V-Ridium
Energy Transformation – Trends and drivers
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