EKIP– Expert Club for Economics and Politics A Different Opinion
The national plan under the EU Recovery and Resilience Mechanism is a major topic of discussion in both the new Bulgarian parliament and the excited post-election public space. The mechanism is only part of the pandemic-born “Next Generation EU” package of €750 billion (nearly half in the form of loans), which sets high goals for the “greening” and digitalization of the economies in the Union, in addition to the recovery after the crisis-ridden 2020, of course. Even more importantly and not quite explicitly, it aims to lay the foundations for a new fiscal power in the hands of Brussels, the next step in the process of integrating the member states into a common, more centralized federation. A European Commission with access to an “own resource” in the form of new pan-continental taxes is perhaps the most sought-after result of this initiative.
The European Green Pact (known as the “green deal”) is also part of the major political processes on the Old Continent and occupies an enviable space in the budget of the Recovery and Resilience Mechanism by requiring that 37% of the funds in each national plan be directed to supporting the EU’s climate goals. The largest of which is achieving the so-called “climate neutrality” of the European economy by 2050 – or reaching an economy with net zero carbon dioxide emissions. In other words, either switching to 100% renewable sources of electricity, or offsetting part of the emissions through other technologies, such as carbon capture.
It is easy to conclude that renewable energy technologies exist and are developing today in Europe in an environment with enviable state support. It is not only Brussels that is pushing for a transformation of the energy system, but many countries also have their own influential green political movements that are intensifying the drive to quickly eliminate traditional forms of electricity generation and replace them with energy from wind, sun and water. The support is not only in rhetoric or in the “climate of ideas”, but also takes a very material form through direct subsidies for renewable energy and by limiting its competitors. This is a large-scale political project that world leaders have recently compared to the moon landing.
Can we imagine, however, that the more serious potential of RES lies not in grandiose plans, but in the local, local and decentralized? Can small sources of renewable energy not repeat the path of technological development that we have seen with mobile devices, laptops and the Internet? Can we see an even bolder future in which, just as each of us can store our funds and manage them from the smartphone in our pocket as a sole bank, thanks to Bitcoin and cryptocurrencies, tomorrow we can also manage our own power plant from the roof of our home?
Although their main role, according to most analysts and the general public, remains the reduction of harmful and greenhouse emissions, the development of renewable energy sources also has an important side effect – the possibility of energy independence. The last three decades in the energy sector have been characterized by a desire to break its monopoly status, the so-called vertically integrated companies, and introduce competition where possible – in production, additional systems and services for managing the electricity system, wholesale and retail. The only segment remaining unaffected by the increasing competition is the network services for transmission and distribution of electricity. This is where we can take advantage of the opportunities of small RES to introduce additional competition.
The energy independence we are talking about goes beyond the geopolitical positioning familiar from television screens regarding who and how to supply gas, oil or nuclear fuel and through which exact stream, pipe or hub. The form of independence is not at the state level, but at the household level. When using small RES installations for their own consumption, the end customers of network services – households and small businesses – can reduce their costs for network services, since they will not use them. What is more – they are now less dependent on the price of electricity, since they have their own production, which protects them from the unpredictability of the free market, which in Bulgaria looks more like an oligopolistic market, since it is dominated by three large state-owned companies.
The comparison with Bitcoin is a stark contrast and represents two polarities in the development and dissemination of innovative technologies. We have RES with the full ideological and practical support of governments, corporations, universities, media, etc. The virtues of renewable energy are preached from the pulpit around the clock, while its competitors are under constant pressure. On the other hand, Bitcoin not only arose in the most remote crypto-libertarian corners of the web, but unlike even other cryptocurrencies, not only does it not have its own marketing team, but it can boast of a disappeared anonymous creator. We can hardly distill cleaner versions of the command-and-administrative approach in the face of RES, and the bottom-up method in Bitcoin.
Renewable energy sources need exactly this voluntary, self-organized, bottom-up energy of the crypto world and can find it through the decentralization potential of small RES. Renewable energy technologies have something to offer purely in the market for the individual consumer. Own production reduces the need for investments in transmission services and new installed capacities. Production is close to the point of consumption, which drastically reduces losses from transmission and transformation of electrical energy at different voltage levels. In photovoltaic plants, the energy supply is right in the peak consumption range of the majority of businesses and households, which can drastically reduce their electricity costs. In other words, there is something to be put on the table even without the climate catastrophe narrative.
In the recently published report of the EKIP, we examine the obstacles to realizing the decentralization potential of small RES in our country. How can we make the installation of our own production more accessible to the home or small business. The procedures for issuing a construction permit and connecting to the electricity grid need to be simplified, so as to optimize their duration. We recommend removing the requirement that the site where the power plant is being built be connected as a consumer, i.e. that the customer has a concluded electricity supply contract. Particular attention should be paid to the pricing of network services in order to avoid negative incentives for operators. Not to mention the need for the widely discussed liberalization of the Bulgarian energy market, a process that has been going on for too long.
The article was originally published in the newspaper "Trud".
