Interview | Maritsa East 3 Thermal Power Plant to resume operations in July

Zhecho Stankov graduated in economics from the University of Regensburg in Germany. He is an expert in the field of energy. He has extensive experience in developing and defending projects for energy efficiency, renewable energy, and modern infrastructure. As former chairman of the Bulgarian Energy Holding, he contributed to the development of strategic energy initiatives at the national level.

His political career began in 2011. From 2015 to 2021, he was Deputy Minister of Energy, where he led numerous projects aimed at increasing Bulgaria's energy independence.

Since 2021, he has represented the Burgas region as a member of parliament and has been actively involved in the national legislative process. Mr. Stankov, we have gathered at the annual nuclear conference of Bulatom, and we see very active participation this year without any Russian presence.

What, in your opinion, are the prospects for Bulgaria's development of nuclear energy?

Today, the ministry and state-owned companies, and in particular Kozloduy NPP – New Power Units, have ensured the presence of both managers and experts. We want to show our partners in Europe and overseas that Bulgaria currently has a stable government, which has included in its program, in the energy section, the construction of new nuclear power plants, and the development of units 7 and 8 at Kozloduy is our top priority.

I often hear that nuclear energy is experiencing a renaissance, but the truth is that we are currently taking concrete steps to prove that nuclear energy continues to be part of Bulgaria's future. Why?

For several reasons: in the state budget that has just been adopted by the National Assembly and was proposed by the government, it is clear that we have once again allocated funds to the Kozloduy Nuclear Power Plant – New Units.

Secondly, in my first month as minister, I visited the United States, where I had the opportunity to talk to colleagues from the US Exim Bank. I was pleased to hear that they have prepared $8.6 billion for our project. The state, for its part, will provide between 20 and 30% of the funding. Our colleagues from the Korean Exim Bank are also ready to support the project.

From a financial point of view, we are sure how things stand.

The third piece of the puzzle remains, which is related to our colleagues from the European Commission. The team at Kozloduy NPP – New Power Units and the Ministry of Energy have started talks with the European Commission regarding the notification for state aid. This gives us the chance to sign the final investment decision and, respectively, the engineering contract and start the actual construction of units 7 and 8, with unit 7 naturally being at a more advanced stage. We expect that unit 7 will be able to be commissioned in 2034. This, by the way, gives Bulgaria the chance to be the first country in the European Union to have a working AP 1000 reactor from Westinghouse.

Isn't 2034 a very ambitious deadline? Somehow, given Bulgaria's experience with nuclear projects, there is a lack of confidence...

Bulgaria has learned its lesson in nuclear projects. We will not repeat the mistakes that were made in the past. That is why I mentioned the three important pieces of the puzzle that we need to put together.

I think we need to be ambitious. Ambition shows that we have, as they say, well-structured ideas to achieve the ambition we have set ourselves. We have specific measures in place to achieve our goal, and we will show our partners—the technology provider Westinghouse and the construction company Hyundai—that they too must be extremely ambitious in the actions they take at the Kozloduy site in Bulgaria.

Am I to understand that we have no problem with financing for both the seventh and eighth units and that the price will be around €15 billion?

The specific amount that was put forward before I became minister was around €15-16 billion. To tell you the truth, I expect the consortium to give us an indicative price by the end of this month.

And the first thing I will do is share it with the public because, as a Bulgarian citizen, and like all Bulgarian citizens, the first thing they would like to know is how much such a project costs, because this is a project of the Bulgarian state, of Bulgarian citizens.

However, we decided not to sell the equipment for Belene, which would have been a nice financial boost for the Kozloduy Nuclear Power Plant and would have meant we wouldn't have to take out an extra 1.2 billion lev loan. Why? Why did this happen and why did we turn down the money?

First, we did not refuse anything. What I found at the National Electric Company (NEC) was that discussions on funding were still ongoing. The other thing is that the easiest solution would be to sell equipment owned by the state.

In my opinion, we have enough time to consider all possible scenarios for which this equipment could be used.

Moreover, after my visit to the United States, I was encouraged that American companies and global companies in general are interested in and see Bulgaria as an opportunity for investment, for data centers and artificial intelligence centers.

However, in order for these investments to happen, they told me that we need to have an extremely large amount of energy, long-term, constantly secure energy, preferably emission-free, which is exactly what nuclear energy is.

And where could be a safer place than in the immediate vicinity of a nuclear power plant? Even now, the existing Units 5 and 6 at Kozloduy can provide bridge energy until Units 7 and 8 are ready. Physical security is extremely high in the vicinity of the plant. We have the optical network owned by the Electricity System Operator.

Last but not least, it is close to the Danube River, which currently cools the Kozloduy NPP and can be used to cool the data center if necessary.

So, the portfolio we can offer to this type of investor, including the equipment for Belene, is something I have always dreamed of – for Bulgaria not only to be a net exporter of energy, but also a place where this energy remains in the country and is used to create added value.

What do you mean by added value?

Well, generating additional revenue for the state through all taxes and fees, which then goes into the state budget and is subsequently distributed through the municipalities to Bulgarian citizens.

We are talking about the equipment for Belene, but not about the site. Has a scenario been considered for this equipment to be installed at the Kozloduy NPP site?

To be honest, this is too technical a discussion, for which I rely on my colleagues at Kozloduy and the experts at the Ministry of Energy. Nuclear energy is a very specific field – you cannot just put something out there without being sure of what you are saying.

So, again, we will look at all possible scenarios for what could happen with this equipment.

Didn't we have too much time to consider these scenarios?

That is why I say that if we had approached it the way we are approaching it now, namely by securing state funding, which was not done at the time, securing credit financing, which is normal – in the sense that such large projects are not built with own funds alone. And lastly, obtaining permission from the European Commission, because it is part of this puzzle. We are part of the European Union, we have to meet certain requirements.

Realistically speaking, none of these three pieces of the Belene puzzle were ready. The equipment was ordered without securing state funding, without securing credit financing, without even informing our colleagues at the European Commission what, how, why, and how to proceed there.

So there are things that we are currently doing in the right way, and I am sure that this is the successful model.

Can we implement these reactors, this project, given the geopolitical situation, without Russia? Because the expert opinion is that this is Russian equipment and should continue with Russian expertise. We know they have a lot of experience in nuclear energy.

Undoubtedly, we need to talk to our European partners who are also experts in nuclear energy – countries such as France, for example, with their company Framatome – to what extent they could assist us in building such a plant.

But again, this is a promising project.

There have been talks with them over the years. What did they say then?

During my time as minister, the talks with Framatome have been more focused on diversifying nuclear fuel, and we're expecting the first fresh fuel assemblies for the sixth unit to arrive in 2026. And the possibility of their subsidiary Arabella supplying turbine hall equipment for the new plant.

We have not discussed this topic.

The Ministry of Energy, first and foremost, carries out the tasks assigned to it by parliament, so we expect clear indications from there at some point as to the direction we should take.

Returning to data centers, can you say anything more specific about who is interested in building data centers in Bulgaria? We have also heard some ambitious names.

I am sorry that I cannot mention specific companies or investors at this stage, because ultimately all these large companies are listed on the stock exchange. Such an investment is long-term and its announcement leads to changes in the stock market prices of these owners. So we have to be very cautious.

I assume you understand that projects of this kind need the necessary quiet so that they can happen. But rest assured that as soon as we are ready to announce details to the Bulgarian public, we will be available to do so.

You mentioned something very interesting a moment ago, that you are also considering the Maritsa basin as a location for a data center.

That's right. However, there is one disadvantage there compared to all the other locations—the higher air pollution, which is typical for an area with coal-fired power plants.

Of course, investors make their own assessments, but we have to present several options.

Undoubtedly, in addition to the nuclear power plant, such investments are also possible near large substations of the Electricity System Operator, whether 400 kilovolts or 110 kilovolts.

But the Maritsa basin is a good opportunity for us because we have state-owned land that has been reclaimed and can be made available immediately.

What's more, European rules on state aid allow us to organize everything related to the supply infrastructure and everything else that this type of investor needs.

So, through your media, I am also addressing all investors who are still hesitant or have not heard that Bulgaria has opened its doors wide to this type of investment.

Speaking of coal-fired power plants, what is the plan until 2038? Will they continue to operate as before after July 1?

2038 is a year that has been specified in the Energy and Climate Plan. But you can see that, based on what happened in Portugal, Spain, and North Macedonia, Europe is increasingly beginning to rethink how the energy sectors of each country should function.

Even as deputy minister between 2015 and 2021, I always argued to our European colleagues that each country should determine its own energy mix and that it makes no sense to push one technology ahead of another.

Bulgaria has a unique mix – a nuclear power plant, coal-fired power plants, hydroelectric power plants, pumped storage hydroelectric power plants, and last but not least, its sun and wind. In this unique situation, what happened in Portugal and Spain cannot happen here.

In this regard, over 30% of the electricity last year came from the Maritsa basin. During the winter months, it sometimes reached over 50%. So, through your media, I am addressing all energy workers and miners in the Maritsa basin who work tirelessly in mud in winter and dust in summer so that every Bulgarian household can turn on the light when they flip the switch.

However, there are also such people at the ContourGlobal Maritsa East 3 thermal power plant...

ContourGlobal Maritsa East 3 is a power plant in which the state owns a 27% stake through the National Electric Company (NEC). When I became Minister of Energy at the end of January, I met with the management and they informed me that they intended to lay off all employees as of April 1. I told them that this was unacceptable to the state and that I could not allow it. As of today, the employees at the plant are still at their workplaces. A week ago, I had a meeting with them to ask them about this, because ultimately, the goal is not just to keep people at work. The 200 people who work at the plant provide jobs for another 6,300 miners in the complex. What I got from them is that in July and August, they'll get organized so the plant can keep running. In other words, keep using coal. As the energy minister, I'll make sure this plant keeps doing its job and stays part of the energy mix.

Where will they sell the electricity – on the exchange?

Most likely on the exchange. They will organize this and I assume they have a separate mix in which they can mix this price. The commitment is on the part of the management, based on a suitable price for the plant, as the state cannot oblige a private operator to operate at a loss.

But the commitment has been made and the plant will operate in July and August.

Only July and August or from then on?
July and August for sure, from then on it depends on market conditions. Look, experience over the years shows that July and August have always been successful months for coal-fired power plants because the price has allowed them to operate. The same applies to November, December, January, and February—these six to seven months of the year, the plants can operate.

So, the idea of selling is off the table, is that right?

In my first meeting with them (the owner, ContourGlobal), I told them that my vision as energy minister is for the plant to remain part of the energy mix. At the second meeting, they stated that due to a green bond they plan to issue, the plant itself cannot continue to be operated by them and they undertook to look for a potential buyer. Several more meetings were held, in which we discussed, from the state's point of view, whether they needed help, without interfering in their talks. In fact, we do not even know if there were any interested buyers.

In their opinion, there were, but at the last meeting they sent me an official letter saying that they plan to keep the plant in their portfolio and continue to operate it, which gave me confidence. KonturGlobal is a well-known partner with whom we have worked for over 10 years, and we trust them. So from that point of view, at least for now, they, as owners, majority owners of the company, intend to continue operating the plant.

Perhaps seeing what is happening in Europe, such power plants are extremely important and will certainly be appreciated from a financial point of view in the future.

In just a few days, the Energy and Water Regulatory Commission will discuss the new electricity price. Should we expect an increase in electricity prices?

The good news for all Bulgarian citizens is that we have had, I cannot call it a battle, but very good diplomatic talks over three and a half months with the European Commission and the commitment that was made some time ago, namely that domestic consumers will not be exposed to the free market, in other words, not be exposed to high electricity prices, especially in the early morning and late evening hours, we managed to negotiate this commitment.

What does this mean for household consumers? From July 1, nothing will change for them physically. They will know on July 1 what the price they will pay for electricity will be until June 30 next year.

If you look back in time, prices have always fluctuated up and down within the inflation rate. But I cannot commit to what the regulated price will be, because that is the job of the Energy and Water Regulatory Commission.

Yes, in a few days, this price will be publicly discussed and reviewed on the basis of all the procedures that have been followed by them to date.

But on July 1, we will have both a price that household consumers will pay and a market price, and the state will cover the difference, which we have been doing so far, by the way, but at a different level on the part of the National Electric Company (NEC), which provided the electricity and we paid the compensation to it. Now the difference is that the end suppliers (the electricity distribution companies) will buy this energy from the free market and we will compensate the end consumers directly.

And here it is also important to mention, because there has been speculation that at some point, if the money ran out, if there was no money in the state budget, household consumers would go directly to the free market – there is no such thing.

The Electricity System Security Fund is seriously capitalized. It has its own revenues.

How serious is it? Is there no deficit?

No, there is no deficit. Firstly, it receives 5% of the revenue of every electricity producer in the country. Secondly, all free quotas that the state receives from carbon emissions are sold on the exchanges through our colleagues at the Ministry of Environment and Water and also go into the Fund as revenue. And thirdly, as Minister of Energy, I submitted a report to the Council of Ministers announcing the technology limits above which companies also have to pay additional funds.

However, you have changed these ceilings – you will take more from Kozloduy NPP and less from coal-fired power plants.
This is not the case, and I will tell you why. If Kozloduy NPP has had the following mix so far – BGN 67 on the regulated market and BGN 150 on the free market, one unit was operating for the regulated market at BGN 67 and the other at BGN 150. If you take these two prices and calculate their weighted average, you get a price of BGN 117. We are giving the plant the opportunity to receive an additional BGN 3-4, which is about BGN 30-40 million in additional revenue for the Kozloduy NPP.

On the contrary, as energy minister, I have to take care of the financial stability of companies, so I have not underestimated my role in relation to the nuclear power plant in any way. For me, it is, as they say, one of the hearts of Bulgarian energy. I cannot allow it to be harmed in any way.

But why did you then raise the ceiling for coal-fired power plants?

The ceiling for coal-fired power plants was increased for one reason only: our colleagues at the Maritsa East 2 Thermal Power Plant literally gave their all during the past regulatory year and worked at full capacity for a very long time. Despite this, the financial result was not positive. What happens is that within a 24-hour period, the coal-fired power plant very often makes a profit in 8 hours, while in the remaining 16 hours the price is below what it should be. And when we take too much of this price, because we take more than BGN 300 per tonne of emissions for the past year, we take too much of their revenue during these profitable hours and leave them in the red, which is not good practice. + emissions for the past year, we take too much of their revenue during these profitable hours and leave them at a loss, which is not good practice. Based on the calculations we made, we estimated that their threshold should be raised by at least an additional BGN 100 per megawatt hour.

Are there any weaknesses in the new market model that came into effect on July 1? It seems like everything happened very quickly, on the fly...

Look, it's rushed for those who weren't involved in the negotiation process. We're talking about three and a half months of literally sleepless nights for the entire team, because such a process of convincing the European Commission that it is not acceptable for Bulgarian consumers to be exposed to high electricity prices, backed up by data from the Energy and Water Regulatory Commission and the Energy System Security Fund, takes time.

This model is essentially no different. For domestic consumers, nothing will change from July 1, they will not have to queue at counters anywhere, they will not have to change their supplier, or do anything else.

You said that this will cost up to BGN 1 billion and BGN 7.5 billion so far for businesses. If this money had remained available in the energy sector, where would you have invested it?

I have just finished a meeting with the Deputy Minister of Energy of Slovenia. They have decided not to provide so much support to households and businesses. And do you know what this has led to – which makes me think even more that we were right – a large part of their heavy industry has now stopped working, and if it has not stopped working, it has moved to a neighboring country, and if it has not moved, it has limited its work to non-energy-intensive areas.

So I believe that going forward, given the size of the buffer in the Fund, we should direct funds to non-residential consumers along two lines. Firstly, if the price for household consumers rises above BGN 220, the state should have a mechanism that automatically kicks in so that no one – from bread producers to hairdressers and the smallest businesses – is left paying a high price. Because they will pass it on to their customers the very next month.

On the other hand, we must also protect energy-intensive businesses, which in countries such as Germany have even been given compensation for anything above BGN 120. We cannot afford such a figure, but we will look for something similar in order to really help energy-intensive businesses.

This is for the working group, which is a joint effort between the Ministry of Energy, the Energy System Security Fund, industry and employer organizations.

But more importantly, we will have a model that will maintain calm and, so to speak, cover the needs in the event of a price increase, whether due to the war or for any other reason.

Am I to understand that the compensation will remain only for energy-intensive industries?

No, there will be compensation above a certain level. Today, I am giving you the amount – BGN 220 – but I expect my colleagues to also give me the amount for absolutely all household consumers above BGN 220. But under this model, the price will be an average for six months. For example, if this month it is BGN 150 and next month it is BGN 230, it is normal to average it out and see, because ultimately we are still moving towards an average price below BGN 220.

So it will not be determined on a monthly basis, as it has been until now, but on a six-month basis?

Please understand that the electricity meter, as before, is a kind of payment account on the basis of which the state will compensate. We will do this so that, ultimately, businesses do not pay an average of more than BGN 220 for electricity. And for energy-intensive businesses, we will develop an additional scheme to protect them, if necessary.

Why have politicians portrayed liberalization as something scary, something bad? Why is everyone afraid to talk about liberalization?

I see myself more as an expert than a politician, and I want to tell you that I did not like the way it was announced, without criticizing the media – the way it was announced to the public.

“Liberalization has been postponed indefinitely” – headlines like these sounded as if it were not a good thing. On the contrary, it would be important for every politician, and for me as an expert, to do what Bulgarian citizens would do if they were in our place. Isn't that why they voted for us?

What Bulgarian citizen, if in my place, would allow the price of electricity for domestic consumers to jump by 60–70–80%?

Are you sure about these percentages?

I am absolutely sure. They are based on calculations. I did my own calculations of what would happen if the market were deregulated on July 1.

During the hours when domestic consumers consume the most energy – between 6 and 8:30 in the morning and in the evening after 6:30 until at least around 11 p.m. – the price of energy varies between three and seven times more than the regulated price. When you apply these figures to the consumption curve of domestic consumers, when they consume the most energy, it turns out that at least about 60% of the price would be higher if we left them on the free market from today to tomorrow.

If we take into account both the daytime and nighttime tariffs in this free market, because at present the nighttime tariff is something that many household consumers use – whether to turn on the boiler or the washing machine – the price increase would reach at least 80% if the nighttime tariff were abolished.

So there was no way that I, as Minister of Energy, and this government could defend any interests other than those of Bulgarian citizens.

Four new pumped storage power plants, with priority given to the Ravnogor plant. But what private investor would want to invest in a power plant knowing that the state will then take part of the revenue?

A week ago, we submitted documents to the European Commission for four new pumped storage power plants to be recognized as projects of common interest. This gives us a 40% advantage in terms of additional European funding and a reduction in the deadlines for the construction of these plants. We have the following approach, which I personally think is the right one, because the state cannot come up with money for four pumped storage plants overnight.

Certainly, “Ravnogor,” which I personally like, would be a project that the state can afford to implement. However, there is no reason for the other three pumped storage power plants to remain on hold. In my opinion, we should choose the approach that the whole world is choosing, namely to find investors who will compete on the basis of the project's return on investment, We should establish a transparent procedure through the World Bank or the Bank for Reconstruction and Development, or the European Investment Bank, and after a roadshow, invite the world's largest companies that have the capacity not only to transfer technology but also to develop and build this type of facility.

We will invite them to compete with each other, and then the state will select the best one with the best rate of return. When a contract is signed with such a potential concessionaire after a certain number of years, whether it be 15, 20, or 25 years, this will be specified in the contract based on the return on the finished installation built by the concessionaire, which will be paid off at the required rate of return for the investor, and the power plant will remain the property of the National Electric Company (NEC).

In other words, when we have already built the Ravnogor pumped storage power plant, for example, we will not wait 10 years to raise money for the next one in Dospat and another 10 years for the one in Batak, but these power plants will be ready and operational instead of waiting to raise money. When they are ready, they will be provided free of charge to the state, which will, of course, receive a concession fee.

I think this is the right approach.

In recent days, the top topic in the energy sector has been the news about a cartel in the private energy sector, sales by heating companies at higher prices, in short, a major scheme, albeit in the private Bulgarian energy sector. How would you comment on this?

For me, the top topic in Bulgarian energy is the start of construction of the Vertical Gas Corridor, the accelerated work on units 7 and 8, the pumped storage power plants, what we are doing with the expansion of the energy network with our colleagues from the Electricity System Operator, the search for and exploration of oil and gas, and the state's desire to join these blocks.

So these are the top issues.

What you mentioned is something that is outside the scope of state energy – private companies. I took the trouble to familiarize myself with the information, and I have instructed my colleagues in the companies to carry out the relevant checks to see.

But what I have read and seen so far is that the state energy sector has no physical involvement.

And to be honest, if there is anyone in the past who has been accused by the European Commission of a dominant position, but we have proven that this is not the case, it was the state energy sector, because it owns about 80% of the energy capacity in the country.

Once again, I say that the state energy sector is market-oriented. If there is something like what you are talking about, I am sure that the competent authorities will do their job, and the case itself is not as energy-related as in other sectors.

Translated with DeepL.