Country goals
In 2023 Bulgaria adopted key legislation amendments that are expected to lead to a boom in green energy investments in the following years. The measures are taken in response to the decline of renewable energy sources’ share in the country’s end consumption for the last two years. The 2022 share of renewable energy sources in the end consumption of electricity in Bulgaria was 19.1% remaining far from the 2030 goal of 27%.
The simplification of the administrative procedures in the last quarter of 2023 combined with the low taxes and the long annual hours of sunshine in Bulgaria led immediately to intensification of the green energy investment initiatives. Until recently, the foreign investors in this sector originated from Germany, Czech Republic, Italy and Austria, leaving the Bulgarian companies dominating 70% of the market. These figures are about to change since Israeli, Chinese, Danish, US and Indian companies already expressed serious interest in the development of large-scale energy projects in Bulgaria.
Our experts estimate that by 2030 Bulgaria will double its current 2.4 GW renewable energy production capacity, thus arriving ahead of EU’s goals for the country.
Incentives for project development
The recent changes in the legal framework paved the way for shorter project development terms, improved production efficiency and increased financial flexibility for electricity producers.
The amendments in the Energy Act filled a pre-existing legislation gap with regards to the energy storage. They gave a detailed legal basis for the realisation of projects under the EU Plan for Reconstruction and Resilience for Bulgaria investing in the equipment of renewable energy power plants with batteries. Other amendments charged the Energy Exchange operator with the establishment of market for exchange of guarantees of origin. The commercial platform is under development and is scheduled to launch in early 2024.
Business will further benefit from the shortened period of six months for conclusion of grid connection agreements with the grid operator and the elimination of redundant steps in the procedure for designation of agricultural lands for production of electricity. The authorities will now have much less reasons to reject initiatives for construction of new power plants than before.
Green energy for own consumption of the industry
Special attention shall be given to industries striving to reduce their carbon footprint. Aurubis Bulgaria, one of the largest European copper producers, is in the process of constructing solar power plants that will satisfy 20% of its energy needs. Other big factories in the areas of electrical appliances, cement, clothing, automobiles etc. have announced even more ambitious plans to become carbon neutral in the near future.
The Bulgarian government contributes to this process by providing financial support to small and medium enterprises’ to cover their increasing electricity needs. The €1.2bn, dedicated by the EU to support the Bulgarian transition from coal to green energy, shall be partially consumed in 2024 in the form of grants provided by the Ministry of Innovation and Growth and the Ministry of Energy to support private projects for production of green energy for their own needs.
Offshore wind
An entirely new line of opportunities may open in the beginning of 2024 in case of the adoption of а Draft Law on renewable energy sources in Black sea territories. Once into force, this piece of legislation will provide for the granting of concessions for installation of offshore wind power plants. The concessions will be granted for a period of 30 years, with an option to be extended by five years. Taking into account the much lower initial investment compared to renewable energy projects on land, the 35 years should be sufficient for the accumulation of an attractive profit.
An offshore energy capacity development plan is anticipated to be adopted within the first half of 2024. It is expected to envisage the development of more than 3 GW offshore wind plants and will deal with the determination of priority areas for construction of wind power plants and the underwater routes of technical infrastructure, including power cables, substations, etc.
Incentives for the households
Households will also contribute to the upcoming energy developments. With legislative amendments from November 2023, it has been prescribed that from 1 January 2026, household customers will be supplied only by electricity traders at freely negotiated prices. Micro-investments in renewable energy are encouraged through the long-awaited transposition of the provisions of Directive (EU) 2019/944 related to new participants in the electricity market – citizen energy communities and active customers. Еnd customers are entitled to participate together with producers in renewable energy communities that will be able to produce electricity without a licence and sell the excess amounts of energy.
Households and small businesses will also benefit from the shortened terms for development of renewable energy sources with a total installed capacity of up to 1 MW. Further facilitation is achieved by the elimination of the requirement for issuance of a building permit for installations on roofs and facades of residential buildings for production of electricity from thermal and solar sources for own consumption with a total installed capacity of up to 20 kW.
Pending projects
2023 was marked by the commissioning of one of the biggest Bulgarian photovoltaic power plants with installed capacity of 123 MW and located on the south slope of Verila mountain. The investment was 100 MM EUR, 75% of which were borrowed from two banks. The power plant has ten-years power purchase agreements with two companies from the IT and telecom sectors.
A 250 MW hybrid project (wind and solar) is on its way of realisation in the south-east of Bulgaria.
Andrey Delchev & Partners – Eurolex
The firm advises national and foreign investors (including corporations from Israel, US, China, Germany, India etc.) on the financing, development, construction, operation and management of power plants. Due to their paramount experience the company’s experts, led by managing partner Andrey Delchev, are regularly assigned by national authorities with legal analysis and law drafting in the energy field.
