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15.11.2017 15:51
Ivanov: Contracts for difference are applicable for RES and cogenerations only

  • © Utilities Magazine

The two so-called American plants cannot enter the free market by contracts for difference. This was commented within the discussions with the European Commission, as was clear from the presentation by the Energy and Water Regulatory Commission (EWRC) Chairperson, Assoc. Prof. Ivan Ivanov, during the Seventh Regional Energy Conference held on 14 and 15 November in Sofia. It is organised by the Bulgarian Energy and Mining Forum with the media partnership of

“The Commission proposes and urges that the producers who satisfy the guidelines for the development of the EU energy sector enter the free market. This applies, in particular, to RES, but also to cogenerations, which are encouraged according to the guidelines. This does not apply for the long-term contracts which were concluded long ago. The Commission therefore insists negotiations are held and a solution is being sought,” EWRC Chairperson told journalists later.

Ivanov considers that negotiations on this matter are being carried out, but EWRC is not a party to the long-term contracts. “If these contracts are amended or terminated in a suitable manner, from a regulatory point of view, I would be very pleased. This would result in lower RES charges and even if there is a residual percentage, it would relieve all consumers”, Ivanov added.

In reply to a question from journalists, Deputy Minister of Energy Zhecho Stankov said that the Ministry of Energy has not received the Commission’s position. “The Ministry of Finance has a team which leads the talks with the Commission, but we do not have such information”, Stankov said. He clarified that EWRC participates in the talks in the Ministry of Finance. We remind that the Ministry of Finance is a party to the talks because the Commission analyzes the long-term contracts with the two American plants to find out if there is unauthorised state aid. The procedure began after the Commission received a complaint from the Bulgarian energy regulator at the time when it was led by Boyan Boev.

“Contracts for difference have been used in Western Europe predominantly for RES so far, but that does not mean that they cannot be applied for long-term contracts too. A contract for difference is a financial instrument”, the CEO of AES Bulgaria Ivan Tzankov commented. “The question is what decision will be made based on the World Bank analysis”, he added. Answering to a journalists’ question if calculations have been made in case of contract termination, Tzankov said that an option for adapting the contracts to the liberalised market is currently being worked on. “Whether this would include termination or modification, I cannot answer, because there have not been specific talks”, Tzankov said.

The executive director of ContourGlobal Maritsa East 3, Krasimir Nenov, also commented that no such topics have been discussed with the company.

TAGS: Ivan Ivanov | Ivan Tzankov | Krasimir Nenov | Zhecho Stankov | American plants | state aid | European Commission | long-term contracts | contracts for difference | CfD 

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