Summary of the latest changes to the Law for Energy from Renewable Sources
The latest changes to the 2011 enforced RES law were published in the State Gazette on May 10, 2012. The main changes are as follows:
The motives to the bill for amendments and additions to the RES law outline that “due to the significant number of contracts, which are in accordance with the requirements of the RES law (§6 of the transitional and final provisions), the connection of RES power plants is impossible within the stipulated in the law terms and this requires the amendment of the terms so that they correspond to the plans for development of the electricity transmission and distribution grid”.
With the new changes the plans for development of the grid will be taken into account through the introduction of connection schedules which will be drafted by the electricity grid operators in accordance with the sequence of conclusion of preliminary contracts for connection to the grid and will be presented to the producers by July 10, 2012. After that, producers will have 1 month to confirm in written form that they agree with the new date for connection. This way, if by August 10, 2012 the producer does not agree to the new date, the preliminary contract for connection becomes ineffective.
These schedules bring further uncertainty for investors in RES projects.
The new schedules will change already contractually agreed upon terms for connection with the risk that the realization of projects, in an advanced stage of development, gets significantly delayed.
At the same time, every year the new RES projects shall submit applications for available capacity for connection to the electricity transmission and distribution grid.
According to the provisions of the RES law, the first announcement of available connection capacities shall take place by June 30, 2012 on the website of the state energy regulator “DKEVR”.
Fixing of the power purchase price
The price at which electricity will be purchased for a mandatory term of purchase, now gets fixed at act 16 (usage permit), and not at act 15 (completion of construction of the power plant) as it used to be until now (art. 31, par. 1).The problem for wind energy projects comes from the fact that completion of construction typically takes 18 to 24 months from the time of financial closure, whereas the tariff for purchase of renewable energy gets amended once every year. This makes the investment very risky because while construction is taking place and all project expenses are already fixed, the energy regulator can decrease the tariff to an economically unfeasible level which will make the investment worthless before it is even finished. This tariff risk essentially means that banks will be reluctant to lend money to wind energy projects before construction of the power plant is completed because there is no way to forecast the level of future tariffs and respectively to determine whether projects will be able to pay their loans back (for more information take a look at the graphs and comments on the RES law below).
Realization of projects in stages
For projects which are commissioned in stages, the preferential power purchase price will change with the commissioning of each following stage (art. 31, par. 11).
Registration regime for installers of renewable energy systems
On April 1, 2013 a regime for registration of installers of renewable energy systems will become effective (new art. 20a, 20b, 20c, 20d, 20e, 20f).
Streamlined permission procedures for small renewable energy installations
The permission procedures and grid connection for small RES installations are streamlined (residential installations of up to 30 kW and commercial installations of up to 200 kW – art. 24).
A bilingual version of the RES law, including the highlighted changes from May 10, 2012 is available to members of the Bulgarian Wind Energy Association in our ‘Members Only Forum’.You can review the main steps of the investment process for wind park development on the graph here. Members of the association can review a detailed description of the steps on our forum.