Bulgaria: Changes to feed-in-tariff regulations

On 22 May 2012, the State Energy and Waters Regulatory Commission was given more detailed and specific powers as the energy sector's independent regulator in relation to the feed-in tariff under which the state buys energy produced from renewable sources.

The new framework for the SEWRC's powers was introduced under an amendment to the Electricity Prices Ordinance. The Energy from Renewable Sources Act 2011 sets out the legislative framework under which energy from solar, wind, biomass and other renewable sources receive preferential treatment when energy is being purchased by the state.

The criteria to be considered by the SEWRC when determining the feed-in tariff (which is fixed for the entire off-take period), are now:

• Investment costs (including facility and technology expenses, project development costs, administrative charges, grid connection fees, etc)

• Rate of return (calculated on the basis of risk assessment of renewable energy production)

• Capital and investment structure

• The processing capacity of the installations, including the type of technology and resources used

• Environmental protection costs

• Cost of materials

• Transportation costs

• Employment costs

• Other exploitation costs (including the expected inflation rate)

The SEWRC will decide the precise scope of these factors on the basis of its research into international experience in this area and then adjusted to the specific circumstances in the Bulgarian market.

The SEWRC also has to consider the nature of the specific technology used. The main factors to be taken into account in this regard are the particular type of renewable source and technology, the installed capacity and the construction of the facilities.

The changes to the Ordinance also include the introduction of specific rules on energy projects subsidized by national or European aid schemes. Investors have to present notary-certified declarations that they have not received such support on the date of signing renewable energy power purchase agreements. If they are receiving support, they must provide evidence of how the project has been financed and the feed-in tariff should then be a fair and equitable reflection of the influence that the approved subsidy has had on the project.

The feed-in tariff has to be determined for the whole term of the power purchase agreements. Once they have expired, they may not receive any further support.

The feed-in tariffs for electricity produced from renewable sources are subject to annual review and determination, which SEWRC has to conduct no later than 30 June each year.

The changes apply to all renewable sources except for hydro power plants of installed capacity exceeding 10 MW. Also, the predicted inflation rate should not be included in the consideration of exploitation costs for biomass projects.