Bulgaria to get energy boost with EIB-NEK deal on new hydropower plants

This article is published in association with European Investment Bank.

• The EIB will help Bulgarian national electricity company NEK prepare to build two large pumped-storage hydropower plants vital to ensuring adequate domestic and EU energy supplies.
• The two projects involving the EIB Advisory services bolster the stability of the power grid and integrate more renewable power sources.

The European Investment Bank (EIB) will provide advisory support to Natsionalna Elektricheska Kompania EAD (NEK), Bulgaria’s national electricity company, in preparing the construction of two large pumped-storage hydropower plants in the southwestern part of the country.

The pair of new renewable energy sources, named Batak and Dospat, will each add generation capacity of approximately 800 megawatts (MW) and expand storage capacity, strengthening electricity supply in Bulgaria and the European Union.

Under the agreement signed today, EIB Advisory – as a main partner of the InvestEU Advisory Hub of the European Commission – will examine the technical feasibility and economic viability of the two projects as well as assess their benefits and risks. This will allow NEK to make informed decisions crucial for the development of the two projects.

“The EIB supports the development of strategic sustainable investment projects in the energy sector across the European Union and beyond,” said EIB Vice-President Kyriacos Kakouris. “We are pleased to provide the Bank’s expertise in assessing the feasibility and the viability of the two projects, which can significantly impact Bulgaria’s energy mix and enhance the stability of its power grid while reinforcing the overall European energy grid infrastructure.”

A pumped-storage hydropower plant (PSHPP) has the ability not only to generate hydroelectric power but also to store and then release it into the electric grid when needed, acting like a giant battery.

“The partnership between the European Investment Bank and the Ministry of Energy is key to delivering projects that will contribute to achieving the energy transition. Among them is the development of pumped-storage hydropower plants, which could become the largest energy storage batteries in the region,” said interim Energy Minister, Vladimir Malinov. “The implementation of such projects will enhance our energy security, improve Bulgaria’s energy infrastructure and achieve our decarbonization goals. We are grateful for the EIB’s expertise and support for this very important project.”

“The agreement signed today between NEK and the European Investment Bank marks an important step not only for the development of the Batak and Dospat PSHPP projects but also for ensuring the security of supply within Bulgaria’s electricity system and for achieving the country’s decarbonisation goals,” said NEK CEO Martin Georgiev. “It further represents an important tool, which unlocks the value that hydropower brings for the Energy Transition. The benefits and social significance of investing in such sustainable infrastructure are undeniable and we esteem it a privilege to have the expertise and support of the EIB and the European institutions involved in the process.”

The advisory support for NEK underscores the EIB’s commitment to sustainable green and energy transformation throughout the European Union.

Key contribution to energy stability and security of power supply in Bulgaria and European Union

The pair of new renewable energy sources, located at hydropower cascade dams and reservoirs near the towns of Batak and Dospat in southwest Bulgaria, are expected to function as large rechargeable batteries, storing green energy. This will provide NEK with flexible 24-hour and weekly management, rapid capacity replacement during emergencies and additional balancing services. With an estimated total cost of about €900 million each, the plants are projected to become operational by 2032.

The two projects are part of the Ten-Year Network Development Plan (TYNDP) 2024 of the European Network of Transmission System Operators for Electricity (ENTSO-E).

Background information

About the EIB

The ElB is the long-term lending institution of the European Union, owned by the Member States. It finances sound investments that further EU policy objectives. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality.

The EIB Group, consisting of the EIB and the European Investment Fund (EIF), reported total financing signatures in Bulgaria of €1.11 billion last year, more than double the €494 million in 2022. Overall, the EIB Group signed €88 billion in new financing in 2023.

About InvestEU

The InvestEU programme provides the European Union with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. It also helps mobilise private investments for the European Union’s policy priorities, such as the European Green Deal and the digital transition. The InvestEU programme brings together under one roof the multitude of EU financial instruments currently available to support investment in the European Union, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. The InvestEU Fund is implemented through financial partners that will invest in projects using the EU budget guarantee of €26.2 billion. The entire budget guarantee will back the investment projects of the implementing partners, increase their risk-bearing capacity and thus mobilise at least €372 billion in additional investment.

Under InvestEU, the EIB acts as the main advisory partner to the European Commission by delivering advisory services to promoters.

About NEK

Natsionalna Elektricheska Kompania EAD (NEK EAD) is a wholly-owned subsidiary of the Bulgarian Energy Holding EAD, under the principal oversight of the Ministry of Energy of Bulgaria. Established in late 1991, the company has solidified its position in Bulgaria’s power industry and economy. NEK’s mission is to ensure safe, efficient and uninterrupted power supply. The company operates 31 hydropower and pumped-storage hydropower plants, with a total installed generating capacity of 2 739 MW and a pumping capacity of 932 MW. Additionally, NEK EAD manages some of the largest dams and hydropower schemes in the country. The total capacity of the dam reservoirs operated by NEK EAD accounts for 55% of the controlled water resources in Bulgaria.