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17.11.2017 11:56
Belene NPP might work at an average price of at least €73 per MWh on the exchange
Viable options are at investment costs below €10,5 bln, interest below 4,5% and 70% or more debt capital
AUTHOR: Teodora Todorova

  • © Ministry of Energy

Belee NPP might work at an average price of at least €73 per MWh on the exchange. €73 is the minimum amount of the levelised cost of electricity (LCOE) of the project, while the maximum is €91 for the project duration. This was made clear during the presentation of the report by the Bulgarian Academy of Sciences (BAS) on the possibilities for the realisation of the equipment for NPP Belene. The presentation was attented by the Minister of Energy, Temenuzhka Petkova and the CEO of the Bulgarian Energy Holding (BEH), Petyo Ivanov. Calculations from the report were presented by the project leader at BAS – Prof. Alexander Tassev.

BAS’s report is based on forecast of exchange prices of electricity in the region in the range of €57-84 per MWh from 2020 until 2040, as the project leader underlined that they are based on estimates by institutions such as the European Commission and the World Bank. After 2028, when NPP Belene is expected to be operational, the estimate for the exchange price for the period until 2040 ranges from 68 to 84 euro per MWh. BAS did not answer which is the lowest price and in which scenario the viable options for the realisation of the Belene project “emerge”, nor did it say the number of viable options in the price range of 68-84 euros. The total number of iterated scenarios is 90, which includes options based on the Paks 2 model. According to Prof. Alexander Tassev, low price levels do not offer viable options, but the highest exchange prices allow the realisation of all possible scenarios.

The period for the return of the project BAS has used is 20 years and capital expenditure is €10,5 bln. In Prof. Tassev’s words, viable options exist when interest rates are below 4,5% on average for the period at different debt-to-equity ratios but primarily at 80:20 and investment costs below 10,5 billion euro. State participation significantly improves financial results because it would mean better chances for achieving a debt-to-equity ratio, lower interest, etc., Tassev pointed out. According to him, this predetermines the idea that the state must participate in such a large-scale construction.

Three scenarios have been considered about the economic development of Bulgaria. The first one (without major changes) forecasts an annual growth rate of 2,5-3%, the second (moderate) – 3-4% growth, and the optimistic one – 3,5-6%.

The scenarios about consumption are again three. Only the optimistic one was announced which estimates an increase in consumption of 25%.

The deficit of electric energy is considered in the context of the regional market, which includes Hungary except the countries from the Balkan Peninsula. Currently, there is an electricity deficit in the region, Prof. Tassev said, without specifying its size. Again, three different scenarios have been considered, the worst of which with a major deficit forecasts its amount to increase by 24-49 TWh. Tassev explained that this estimate excludes Turkey, which is a major factor for electricity consumption in the region. According to him, if Turkey continues to be such a big importer, the deficit would be even larger.

The estimate about the necessary base capacities in Bulgaria is developed according to 4 scenarios. The reference scenario, in which coal-fired power plants are being decommissioned, shows that Bulgaria would need 1650 MW manoeuvrable capacity and some 420 to 1670 MW – base capacity. Regional needs for base capacity is estimated to be 2000 MW.

The legal analysis of BAS has shown that there is no obstacle to Belene NPP’s assets being included in a separate entity which would be privatised, but this is the same as looking for a strategic investors, Prof. Tassev pointed. According to him, the sale of the equipment would be much more difficult, at a much lower price, because the reactors are built to suit the specifications of the Belene site and they cannot be sold elsewhere. Worst case scenario would be if nothing is done on this matter, he added.

Tassev stressed that the Belene project has an advantage over other projects since preparatory work has been done – there is infrastructure, environmental impact assessment (EIA) and others, which give the project a lead of 5 to 8 years compared with other projects. Belene NPP can be realised, if the parameters set out in our financial analyses are achieved, Prof. Alexander Tassev concluded.

“The report by BAS will serve as a basis for decision making on the possibilities for the realisation of NPP Belene project related assets, the Minister of Energy,” Temenuzhka Petkova said. According to Minister Petkova, a decision about the realisation of the NPP Belene assets must be responsibly taken and it should be based on a broad societal consensus, because a project of such a magnitude engages future generations. “We will hold an in-depth discussion with all stakeholders so that all arguments are heard. This will allow us to combine all efforts so that we decide the future of the project together,” the Minister of Energy underlined. According to her, a decision on the issue must be taken quickly, but not too hastily.

TAGS: Bulgarian Academy of Sciences | BAS | Belene NPP | report | presentation | Temenuzhka Petkova | equipment 

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