Bulgaria’s future as a gas hub

Natural gas is a key technology in the transition to decarbonization. With the goal of achieving a 55% reduction of greenhouse gas emissions by 2030 to meet Europe’s Green Deal ambitions, EU Member States must adapt their infrastructure and investments to pave the way for renewable technologies.

Because natural gas pairs well with renewables it gives it an important role for the diversification, resilience and security of the grid. In their ambition to reach emission reduction goals, Member States must also make sure that growing energy needs are met. An energy matrix that contemplates a sustainable coexistence between intermittent renewable sources and firm energy sources can help achieve renewable energy development while maintaining the resilience and stability of the electrical system.

Director General for the European Commission’s DG Energy, Ditte Juul Jorgensen recently stated that “it's clear that when we look at the energy transition ahead of us, gas, including natural gas and fossil gas, will have an important role in this transition”.[1] Although the Commission is trying to limit investment in non-renewable technologies, natural gas represents a key bridging technology due to its lower carbon footprint.

The role of gas in Bulgaria’s energy transition

There are two ways in which natural gas can play a role in meeting greenhouse gas emissions reduction targets while ensuring security of supply. First, existing coal plants which have remaining useful life can replace the coal burners in the boilers by natural gas burners, hereby decreasing their CO2 emissions by more than 50%. Second, new efficient natural gas Combined-Cycle Gas Turbine (CCGT) plants may be built next to existing coal plants in order to leverage the existing infrastructure consisting of grid interconnection, availability of cooling water, and availability of skilled workforce.

Gas-based energy production could help Bulgaria to keep much needed capacity thus contributing to grid stability and security of supply during a transition of the generation mix from thermal-based energy to carbon free electricity generation. This is made possible by the fact that Bulgaria is diversifying its gas supplies through the construction of new gas pipelines and gas interconnectors with its neighboring countries. In addition, there are studies ongoing around the world to find out how natural gas infrastructure may be converted to hydrogen once it becomes available in large quantities at affordable prices.

AES is leading the energy transition by investing in sustainable growth and technological and commercial innovations to enable companies and industries to rapidly decarbonize. AES is today a global leader in the renewables and energy storage market, and also in the Liquified Natural Gas (LNG) sector with over 15 years of LNG procurement and management experience in Central America and the Caribbean. In the Dominican Republic and Panama, AES operates two LNG terminals with export capabilities making cleaner, affordable fuel available to regions traditionally reliant on imported high emission power sources. Furthermore, in Chile, AES is working with an international hydrogen producer on a novel large green hydrogen-based ammonia project. Overall, AES has a proven experience to support Bulgaria in its transition to renewables whilst ensuring security of supply throughout the process.

Bulgaria’s role as a gas hub

It is important for Bulgaria to capitalize on the potential benefits of gas and the business expertise at its disposal, as the country is poised to become one of Europe’s most important gas hubs and a key junction for the energy sector in all of South Eastern Europe. Bulgaria has an extensive network of gas pipelines with neighboring countries owing in part to its strategic location at the centre of several EU energy corridors.[2]

Bulgaria deepened its ties with Greece by investing in Gastrade, a Greek company developing a floating LNG facility in Alexandropolis. On 17 June 2021, the Commission approved a direct grant of €166.7 million destined to Gastrade to develop the LNG terminal in Alexandroupolis. This new energy source could feed into the gas interconnector between Greece and Bulgaria (ICGB) and further diversify energy supplies in the South Eastern European Region. It is of strategic importance to Bulgaria, who is developing its gas hub, to partake in this project.[3] The 182.5 km ICGB, also known as the Stara Zagora-Komotini pipeline, is another project which will bring further infrastructure integration, diversification of energy supply and, consequently, security of supply in the region. It is expected to become operational by June 2022 and will deliver gas from Azerbaijan and other countries as the pipeline becomes part of the Southern Energy Corridor[4], a European Commission proposal to procure LNG from the Caucasus and the Middle East, in order to reduce Europe’s dependence on Russian natural gas and boost security of supply.

Another projected gas interconnector between Serbia and Bulgaria will expand the reach of the Trans Adriatic pipeline. This project is supported by the EU as a Project of Common Interest and is to receive €25 million from the European Investment Bank.[5] Bulgaria will be a central actor in expanding import avenues for natural gas into Europe.

In other words, Bulgaria is well-positioned to become a strong, independent energy hub. Natural gas can help to decarbonize the energy mix as Europe transitions to renewables and strives to meet key climate objectives. Natural gas can help achieve renewable energy development while maintaining the reliability of the electrical system with lower emissions. It can be further assisted by technologies such as CCS or through a shift to green hydrogen directly. AES’ expertise can help Bulgaria realize this green transition whist guaranteeing security of supply.

[1] The role of gas in Europe’s future energy mix and the transition to zero carbon of Europe’s power sector, May 4, 2021. Available at: https://www.youtube.com/watch?v=Pa3I47Ky6Bg

[2] Towards a Balkan gas hub: the interplay between pipeline gas, LNG and renewable energy in South East Europe, Oxford Institute for Energy Studies, 2017. Available at: https://ora.ox.ac.uk/catalog/uuid:00ac940a-a4da-4d0a-8bef-be09437a167c/download_file?file_format=pdf&safe_filename=Towards-a-Balkan-gas-hub-NG-115.pdf&type_of_work=Working+paper

[3] Bulgaria takes 20% stake in Greek LNG terminal, Reuters, 2021. Available at: https://www.reuters.com/article/bulgaria-greece-lng-idUSL1N2K30R6

[4] New pipeline connects gas transmission systems of Bulgaria and Greece, European Commission, 2021. Available at: https://ec.europa.eu/regional_policy/en/projects/bulgaria/new-pipeline-connects-gas-transmission-systems-of-bulgaria-and-greece

[5] EIB to finance the construction of the Serbian section of the Bulgaria-Serbia interconnector, CEENERGYNEWS, 2021. Available at: https://ceenergynews.com/oil-gas/eib-to-finance-the-construction-of-the-serbian-section-of-the-bulgaria-serbia-interconnector/