Bulgaria has great potential and is currently attracting major investors interested in large-scale renewable energy projects. Currently, over 1,500 megawatts of solar and over 800 megawatts of wind projects are operating. Still, the country’s power generation is highly dependent on its baseload power capacity coming from thermal power plants (over 3,600 megawatts). However, to meet the net zero economy targets, renewables could be the solution to replace these capacity volumes. Thus, at least 2,600 megawatts in RES capacity are expected to be installed by 2025, to allow Bulgaria to meet its target of 30.33% of energy produced from renewable sources.
For the time being, Bulgarian legislation is not providing for a tender or other procedure for securing grid connection for new renewable energy projects. The grid connection contracts are provided on a first come first served basis to greenfield projects. Projects with an installed capacity over 5 megawatts are connected to the grid of the national transmission system operator. The Bulgarian Transmission System Operator (ESO) confirmed that it had received applications for the construction of RES projects with a total installed capacity of 33,000 megawatts.
The grid connection facilities are designed and constructed by ESO. As of early 2023, the producers have the right to ask ESO to propose a connection through a temporary scheme – for the whole or part of the requested capacity – to be applied until the extension or reconstruction of the grid is completed. Such a scheme is proposed to each producer that requested it, where the specific technical solution is applicable, in the order of request receipt.
In early 2023, certain administrative burdens were decreased, as the minimum power generation installed capacity (subject to licensing) was increased from 5 megawatts to more than 20 megawatts.
Bulgaria has predominantly abolished the feed-in tariff (FiT) state support scheme. It currently applies only to operational renewables power plants with an installed capacity of up to 0.5 megawatts. The operational renewable energy projects have gradually migrated from FiT-based PPAs to “contracts for premium,” granted by the Electricity System Security Fund without major changes to their cashflow. The premium price for the specific renewable projects is determined by the national regulatory authority annually, for a regulatory period from July 1 to June 30.
With respect to sales of electricity, the Energy Act introduces several types of transactions for electricity in the liberalized part of the market applicable to RES producers: (1) at freely negotiated prices by means of bilateral contracts – RES producers with plants commissioned after January 1, 2019, may execute corporate PPAs to sell the electricity produced through bilateral contracts; (2) on an electricity exchange market; (3) on the balancing market of electricity (PPA / balancing agreement) – the most common approach for producers with plants commissioned before January 1, 2019, is to sell a part or all the electricity produced through a coordinator of a balancing group; (4) direct power line – an uncommon approach that secures a supply of electricity through a direct power line by a producer or by an electricity trader.
In early 2023, a regulatory framework for electricity storage was introduced to secure balance and flexibility for the power system. Electricity storage facilities of any size are not subject to a licensing procedure. In terms of the construction process, the energy storage facility is defined as a movable object, and it can benefit from a simplified procedure for its installation.
Another step forward was the introduction of new regulations addressing the rooftop and facade photovoltaic installations for self-consumption. These regulations address only end customers of electricity willing to construct such installations for self-consumption, limited up to twice the amount of the allocated capacity to a site, but not more than 5 megawatts.
Bulgaria is taking steps according to the new trends in the renewables sector. There are no operational or developing floating photovoltaic and agrivoltaic projects yet, but the market is preparing for the first ones in 2023. With respect to floating photovoltaics and agrivoltaics, the sector is yet to witness any developments, since the legislative framework does not regulate such projects. However, investors’ interest is growing, and the legislative amendments are on the agenda. Bulgaria is also striving to exploit its 62-gigawatt offshore wind potential.
Due to the political turbulence in the country and numerous caretaker governments, further legislative amendments in the renewables sector are expected after May 2023.
By Kostadin Sirleshtov, Managing Partner, and Dian Boev, Associate, CMS Sofia