Bulgaria

Bulgaria

FIT cut expected to stall wind growth

BULGARIA: Bulgaria's wind industry has suffered a triple hit of bad news this summer, which is widely expected to bring development to a halt.

Energy regulator SEWRC slashed the feed-in-tariff (FIT) for wind projects by more than 20% at the end of June. For projects completed in the 12 month beginning 1 July, SEWRC set the FIT for the first 2,250 hours of operation at the equivalent of a full-load at BGN 0.149/kWh (EUR0.076/kWh), down 22% from the previous rate. Above that, the rate drops to BGN 0.133/kWh, a 23% cut. Currently, the FIT is set only on project completion and is valid for 12 years.

Complaint

On 11 July Bulgarian wind energy association BGWEA filed a complaint with the country's highest administrative court to challenge the cut. Investors had expected a maximum 5% tariff cut and broadly agree the criteria to justify the tariff cut was faulty. Even Chinese investors, which have been eager to get a foothold in the market, have described the cut as excessive.

Also at the end of June, the energy act was amended to allow the regulator to intervene during the year and decrease the FIT further. On top of that, SEWRC announced that zero grid capacity would be available for new wind and other renewable projects for one year from 1 July.

Executive director Sebastian Noethlichs said the appeal is aimed at attaining better conditions in the country for wind, which had already suffered from restrictive legislative measures over the last year. "To earn the trust of investors and reduce risk, regulatory decisions must be objective and transparent," he explained.

"The situation is extremely difficult," said Yordan Merakov, Bulgaria manager for Danish developer Global Wind Power. "Worse than the FIT cut itself is the negative message being conveyed to investors. We are expecting a market standstill."

Kostadin Sirleshtov, head of the energy practice at European law firm CMS Cameron McKenna's Sofia office, said the possibility of further cuts to the FIT during the year makes financing projects impossible. He added that the announcement about grid connections means only projects with final grid connection agreements have a chance of being implemented.

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