Early 2023 the Bulgarian parliament introduced legislative amendments to enhance the development of the renewables sector.
By means of amendments and supplementations in the Energy Act (EA), three major steps were undertaken:
- the minimum power generation installed capacity (subject to licensing) was increased from 5 MW to more than 20 MW installed capacity;
- the initial legal framework for electricity storage was introduced;
- guarantees of origin in the exchange market was introduced.
Licensing regime for power plants with installed capacity 20 MW or more
As a result of the introduced amendments, renewable energy plants with total installed capacity up to 20 MW are no longer subject to licencing procedure. Moreover, the licences already issued for power plants with a capacity of up to 20 MW are to be terminated with the entry into force of the EA amendments thus decreasing the administrative burden on investors.
The legislative amendments laying down the framework for energy storage represent another step forward. The rationale behind the amendments is to provide balance and flexibility to the power system. The storage facilities and their integration into the national power system, given the variability of such energy sources, will benefit the further development of the renewables sector. Energy storage is a crucial step for the low-carbon economy since storage enhances the security of supply and the development of the capacity for renewables. Moreover, the storage may be used as a tool to tackle the fluctuations in both price and consumption of electricity.
The electricity storage facilities of any size are not subject to licensing procedures, which is explicitly stipulated by EA.
In line with the unbundling regime under the Electricity Directive (EU Directive 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU), TSO (ESO) and distribution system operators are prohibited from owning, developing, operating or managing electricity storage facilities.
Only energy storage facility operators are entitled to perform energy storage activities, where the energy will be stored at facilities constructed to a new or existing power production site or an independent facility. A simplified procedure for their construction will also apply, since the energy storage facility is defined as a movable object under the Spatial Development Act.
These storage facilities cannot be constructed to rooftop and facade renewable installations for self-consumption with a total installed capacity up to 5 MW under the Energy from Renewable Sources Act (‘ERSA’).
The storage facility operator is entitled to store its own or purchased energy and may execute transactions in electricity and/or provide additional services. The transactions with respect to energy storage should be further regulated in the Energy Trading Rules (ETR).
The execution of transactions by operators of energy storage facilities commissioned after 1 February 2023 will be exempted from the obligation to execute transactions on exchange market.
The regulatory provisions provide for storage facilities to have equal access to the grids if security requirements are met, and for these facilities to have equal access to the electricity and balancing markets.
The connection to the grid of an energy storage facility constructed by an energy producer follows the approach of power generation facilities and is subject to the same legal requirements: executed grid connection agreement and compliance with it by the producer, constructed power facilities and an executed grid access agreement.
Energy producers willing to construct energy storage facilities can benefit from a simplified procedure in the event that no increase of connected capacity is necessary. In such cases, the producer submits a notification to the grid operator and they will execute an additional agreement governing the technical specifications. No grid connection agreement is executed with respect to storage facilities.
An electricity customer may construct an energy storage facility on its own site where there is a connection to the respective transmission/distribution grid. In the event no increase of connected capacity is necessary, the customer submits a notification to the respective grid operator. They execute an additional agreement governing the technical specifications and no grid connection agreement is executed with respect to the storage facilities. If the customer’s site requires extension or reconstruction of the grid, at customer’s request the grid operator may propose a connection through a temporary scheme for the whole or part of the requested capacity to be applied until the extension or reconstruction is completed.
The National Recovery and Resilience Plan of Bulgaria envisages the construction of national storage infrastructure with 6000 MWh storage capacity worth EUR 800 million wholly financed from the Recovery and Resilience Facility.
Guarantees of origin exchange
The third amendment is the introduction of a guarantees of origin exchange market. The amendment would allow a licensee in organising an exchange market in electricity to organise an exchange market in guarantees of origin. Establishing an exchange market for guarantees of origin will introduce transparency, and will enable market participants to trace the true value of ‘green’ certificates.
For more details on these amendments and opportunities in Bulgaria's energy sector, contact your CMS client partner or local CMS experts Kostadin Sirleshtov and Dian Boev.