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Bulgaria

Bulgaria

Developers flock to maturing Bulgaria

BULGARIA: Bulgaria has proven to be a popular location for wind energy deals this spring, with a number of companies announcing plans to develop wind farms in the country.

In June, German wind developer PNE Wind announced it had acquired a 51% stake in Windpark Dobrudzha, the owner of a 150MW project in the Dobrudzha region in the north-east of Bulgaria. PNE said that the environmental impact assessment for that project was under way, while project approvals are expected shortly. The 150MW project is in addition to another 400MW of Bulgarian wind farm projects PNE says it already has in the development pipeline.

Innovative Wind Concepts (IWC), a 50-50 joint venture between German developer Windkraft Nord and Siemens Project Ventures, revealed some details of a 140MW wind project in Lozenets. IWC expects that the project, if authorised, will be constructed and begin operations in 2013. The joint venture expects to invest about BGN 440 million (EUR225 million) for the Lozenets wind farm, for which turbines have not yet been selected. IWC says it has an additional 600MW of projects under development in the country.

Suzlon Wind Energy announced that it has entered a joint venture with the Bulgarian arm of German wind developer Volkswind aimed at accelerating its growth in the Bulgarian market. Suzlon 2.1MW turbines are already being used on a 12MW project being constructed in Kardam, Bulgaria, owned by Switzerland's Stream Invest Holding and expected to be operational later this year. The group will use only Suzlon turbines.

Another turbine manufacturer, the Italian firm Leitwind, was on the selling end of a Bulgarian deal. Leitwind sold a 49% stake in two wind farms in Bulgaria's Kavarna region - an operational 9MW wind farm and another 9MW project, which will come online later this year - to Italgen, the power generation unit of Italian cement manufacturer Italcementi.

As Suzlon noted when announcing its joint venture with Volkswind, Bulgaria's wind energy market, with its competitive tariffs, is one of the most attractive in Eastern Europe. Wind farm producers in Bulgaria receive a feed-in tariff of BGN 0.191/kWh (EUR0.097/kWh) for the first 2,250 hours of production at the equivalent of a full load each year and BGN 174/kWh (EUR0.089/kWh) above that. The tariff is guaranteed for 15 years, although there is some discussion about extending that to the full operational life of a plant or improving the support scheme in other ways.

"It's no secret that Bulgaria has binding (renewable energy) targets, generous wind resources near the coast and a support scheme which might even be improved," explains Marc Muhlenbach, analyst with the European wind energy advisory group of Emerging Energy Research.

With current installed wind capacity of just over 350MW, Bulgaria is expected to see that figure increase roughly tenfold by 2020. Wind energy is expected to play a significant role in allowing Bulgaria to meet its binding renewable energy obligation as an EU member state. Bulgaria must trace 16% of energy consumption to renewable energy sources by 2020, up from about 9.4% in 2008.

Muhlenbach notes that investors have been streaming towards Bulgaria for the past few years, although momentum has increased lately. Compared to just a few years ago, Bulgaria's market is showing increasing signs of maturity. "When you looked two years ago at the project pipeline in Bulgaria, it was more local developers trying to make a buck and shady holding companies," notes Muhlenbach. "There are a lot of credible ventures going on now."

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