EL Bonus is a licensed family-owned energy trader. The main activity of the company is purchasing electricity from RES plants and balancing them. The company has a team of professionals with more than 14 years of experience in the free electricity market, who managed to build one of the largest and most reliable standard balancing groups in Bulgaria. The present interview is with the Chairman of El Bonus, Mr. Stefan Gugushev. Stefan is a lawyer by profession and an entrepreneur by heart. Along with his brother Victor Gugushev, he has established couple of successful business ventures over the years. One of them is El Bonus, leader in energy trading.
Following is the full text of an interview with Gugushev, first published in The Renewable Energy Sector in Bulgaria report published by SeeNews and Gugushev & Partners Law Office.
Mr. Gugushev, following its liberalisation, Bulgaria’s energy market has started developing rapidly. Where do you see the role of energy traders in this process?
The liberalisation of the Bulgarian energy market is indeed developing rapidly, but the processes we are observing now were planned years ago. The liberalisation of the market started in 2004. In 2014, the Independent Bulgaria Energy Exchange (IBEX) was born, namely to support the process of liberalization, but the actual work of the IBEX platform started in 2016. Up until last year, businesses had the opportunity to buy electricity from the free market, but since October 1st, 2020 all commercial consumers are obliged to operate on the free market. The next big step towards full liberalisation of the market is planned for 2025 when all consumers, including private individuals, will be obliged to buy their energy from the free market. It is quite important for all of us to be well prepared for this, including with public information campaigns.
Energy traders, like EL Bonus for example, are playing an important role in this process. We are the link between producers and consumers. That is why it is pretty important who your energy trader is, regardless of which side you are on. Reputable energy trading companies are helping the grid stay stable. Unfortunately, in recent years we are observing quite a lot of cases of unfair competition. Once we reach the phase of negotiations with a client, be it a producer or consumers, there are a lot of companies on the market that are dumping the prices by taking unjustified financial risks. Once they secure the contract, only a couple of months later, the energy trader is terminating the existing agreement or changing the terms under that contract. This on one side is pressuring other players to offer low prices in order to secure business, but on the other side is also misleading the clients to sign on favourable terms which are changed at a later point. Of course, in this case, the client can buy/sell energy with another trader, but the initially proposed financial conditions by this trader will be changed. This leads to losses for the client and instability for the market.
What are the main challenges you are facing in the context of the Bulgarian market and the different client groups you are servicing?
If I have to go back to the previous question, probably that will be the creation of wrong expectations. Unfair competition has quite a serious role in that. Clients are expecting to have low prices for consummation and producers are expecting high prices for production. Reputable energy traders, among which I do believe EL Bonus is, are trying to identify a balanced approach and meet those expectations by protecting the interest of all parties involved. Only in this way the stability of the grid and the market will be secured. For example, we are trying to be as flexible to our clients as possible. I can quote a lot of cases where we were the party that proactively proposed better conditions to our partners, even after they had already signed the contract. We are constantly observing the market and if we identify an opportunity that can result in a better profit or savings for the clients, we seize it. Sometimes this minimizes our margin, but we invest in a long-term relationship with our partners. We are not targeting instant profit.
Do you see any room for regulatory improvements that could streamline and facilitate further energy trading in the country, especially in the context of the European Green Deal?
There is always room for improvement in everything. The market conditions are quite dynamic, competition is aggressive and clients are constantly changing their financial requirements and capabilities. As I said, it is a matter of firm policy and business philosophy to go along with these changes. Indeed, the European Green Deal is a hot topic. I do believe our government and respective authorities related to the energy sector must have long term-planning on how to meet all requirements under the deal. Currently, there is no support for the RES project in Bulgaria even though green energy is the future. Not only that, but we as a company are always trying to advise our clients how to optimize their consumption. Smart grid systems must be part of every conversation, when we are speaking about our green future.
You can download the report here.