Market Status: Bulgaria - Developers move in despite grid problems

BULGARIA: Data from Bulgaria's Association of Producers of Ecological Energy (APEE) shows that in 2009, 57MW in new wind capacity was installed, bringing the national total to roughly 177MW.

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APEE forecasts around 190MW of wind capacity could come online in 2010, more than doubling the country's installed capacity. That objective appears to be within easy reach, with US energy giant AES predicting that its 156MW Saint Nikola plant will become operational in the first half of this year.

Kostadin Sirleshotov, who runs the energy practice at the Sofia office of law firm CMS Cameron McKenna, believes 2010 will be a key year for wind and renewable energy in Bulgaria. The government is due to announce its new strategy for energy to 2020 and, like other EU countries, faces a June 30 deadline for filing its national renewable energy action plan with the European Commission. This should result in a change in the country's legislation. "There is still hope among some developers that there will be a minimum floor set on the feed-in tariff," says Sirleshotov.

Solid tariff prices have helped support the market, though Sirleshotov notes that the government-mandated purchase price for wind is set on a yearly basis. At present, wind producers receive BGN 0.189/kWh (EUR0.097/kWh) for the first 2,250 hours of operation at the equivalent of a full load each year. Once the production cap is reached, the purchase rate drops to BGN 0.172/kWh (EUR0.088/kWh) for the rest of the year.

Grid connection

Meanwhile, there is concern about the grid's ability to accommodate new wind capacity, especially as most wind farms - both existing and planned - are concentrated in the north-eastern part of the country. "In Bulgaria, the wind regime is satisfying, the tariffs are satisfying, but there are a lot of grid issues," notes Mikael Ronholm-Nielsen, chief operating officer of Danish developer Global Wind Power. "It's a long and uphill process (for grid connection) and there's a lot of competition for sites."

Yet, despite the hurdles and the still relatively small scale of Bulgaria's wind sector, a lot of investors are moving forward with projects. "Just to give you a flavour of the investment boom in wind, there are applications for over 8GW," says Sirleshotov. "Obviously, this is never going to be achieved." But forecasts for wind in Bulgaria are still positive, with APEE estimating wind plants with combined capacity of 3-3.2 GW could be operating by 2020.

Alongside AES, other companies are getting closer to project completion. At the end of 2009, Italian utility Enel commissioned a 21MW wind farm in Karmen Briag - the largest project that year - and was expected to commission another 21MW project in Shabla early this year. Both were developed by Global Wind Power.

Austrian power company Verbund forecasts its 16MW Black Sea coast wind farm will be up and running by year-end. Swiss energy group Alpiq and EVN Naturkraft, a joint venture between Austrian utility EVN and German wind developer Enertrag, are both constructing 50MW projects - one near the town of Kazanluk in central Bulgaria, the other in Balgarevo in the north-east - that could also be up and running by the end of the year.

And the European Bank for Reconstruction and Development (EBRD) is helping to finance a 60MW wind farm in Suvorovo, developed by Eolica Bulgaria, a majority-owned subsidiary of Spanish renewable energy group Enhol. Construction is likely to be completed this year.

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