South East Europe in 2015 – Challenges for the nuclear sector and the regional electricity market by Slavtcho Neykov
South East Europe in 2015 – Challenges for the nuclear sector and the regional electricity market
Energy security within the EU continues to be challenged, while, it seems, the challenges seem to get broader and change the focus… For example, infrastructure security draws more and more attention as well as security of supply concerns. In addition, energy diplomacy faces new dilemmas with the July 2015 Council conclusions stressing, amongst other things, the need for a coherent EU energy policy, taking due account of geopolitical developments.
On this basis, the 2015 Energy Union strategy is burdened with deservedly high expectations; and its focus, particularly on infrastructure and energy security, included in the accompanying Action Plan, is easy to understand. One of the issues which underlines the strategy’s reasonableness, is that it not only strongly emphasises the role of EU member states, but also co-operation with neighbouring countries, adding an intensely regional flavour to the EU dimension. Without any doubt, such an approach contributes substantially to its viability.
The nuclear issue appears in the Energy Union strategy within a mixture of topics as well as a topic in its own right. The approach is well justified particularly when recalling that that “over quarter of the electricity and over half of the low-carbon electricity in EU is generated by nuclear”. Therefore, on this basis it seems reasonable to have a look at the recent status of the electricity market in South East Europe (SEE) from the perspective of nuclear. There are many points which deserve particular consideration of which I will emphasise three.
The first is linked to the status of the market. Contrary to the political will, it seems that the integrated regional electricity market, despite the established rule of law, multilateral decision-making and enforcement procedures, is still quite far off. The Energy Community Implementation Report (September 2015) is clear on this when referring to “a decade of false dreams of energy autarchy and vested interests in all Balkan countries have prevented that regional market from becoming a reality”.
The second issue, which is strongly linked to the first, is the lack of harmonized generation capacity considerations. A glance at the Projects of Energy Community Interest illustrates this and, moreover, it focuses on developments which are still in the future as very few projects are at final investment decision stage. In addition, 2018 will provoke even stronger debate on further problems as the countries from SEE will then also have to face very demanding environmental requirements linked to existing generation capacities.
However, there are two countries in SEE, Bulgaria and Turkey, which are far ahead in considering new capacities, particularly in nuclear. If these projects come to life, they will substantially change the regional electricity market when it comes to security of supply, for decades ahead, especially when the requirements for low carbon electricity production are taken into account. Certainly, the cases in these countries differ substantially when it comes to the status of preparation, scope and sites.
In Bulgaria, the idea of having a new NPP on the site of Belene seems more and more abstract. However, this is not the case with a new nuclear unit on the existing site of Kozloduy. It is also worth mentioning that once the political decision is in place on the ground of the relevant economic considerations, the construction process could go ahead easily. The availability and the use of already produced reactor for the needs of the country, which experts say meets all up-to-date safety requirements, could contribute to solving several issues and could have a national dimension for Bulgaria in terms e.g. of economic growth, national energy security, positive influence on arbitrage-related relations with Russia etc. In addition, without doubt it would also give an additional positive long term regional security perspective.
In Turkey, three sites are being considered: Akkuju, Sinop and, to a lesser extent, Kirklareli (Igneada). Although there are still open questions, including Akkuju where the project is most advanced (planned 4 reactors of 1200 MW each), the potential capacity of these and other planned capacity should be considered when analysing regional electricity developments. In addition, from the perspective of using gas for the production of electricity, Turkey’s role in regional electricity security should be also noted due to its importance for the development of the Southern Gas Corridor.
The third issue is about the approach to nuclear at an EU level. The EU law has clearly emphasised (see Article 194 TFEU) that the energy mix is a national priority, that is, a national sovereignty issue. However, energy security is a commonly-shared goal. Thus, once an EU member state has decided to have or further develop nuclear energy in its mix, it follows that it should have all possible support in case it meets the nuclear safety requirements and if it can contribute to the energy security, including of neighbouring countries. In the case of SEE, the latter refers not only to EU members but to any other countries, which, via the Energy Community anyhow, share the same objectives and the same legal framework in the energy field. As these adequate and timely steps concern the national energy security and the wellbeing of other citizens, the understanding and support should be considered not with regard to geo-politics, but on the grounds of objective energy security assessment. Losing time due to political reasons is not productive for anyone, as market and favorable conditions might change and possibilities might be lost.
In both the cases of Bulgaria (Unit 7 of Kozloduy NPP) and Turkey (the site of Akkuju) Russia might have a role to play. This, inevitably, brings to the table a political dimension, in general terms, linked to EU-Russia relations and in specific terms inter alia linked to sanctions. The latter deserves separate attention. However, it should be recalled that in the energy sector, strategic investments have two substantial characteristics. They need many years to happen but then they last for decades. And this should not be jeopardized by short-term political considerations when regional, economic and safety justifications are in place.
Slavtcho Neykov has more than 23 years’ experience in the energy sector, including as a Commissioner at the Bulgarian National Regulatory Commission, Secretary General of the Bulgarian Ministry of Energy and Director of the Energy Community Secretariat in Vienna. He is currently Chairman of the Board of Managers of the Energy Management Institute in Sofia.
All expressed views are strictly personal.