Wind energy in Bulgaria

MARKET EVELUATION

THE WIND POTENTIAL IN BULGARIA
Bulgaria has the wind potential needed for construction of larger wind farms. According to the Ministry of Economy and Energy the conditions are especially advantageous along the Black Sea costal line and in areas with an altitude above 1000 meters. They have prepared a report evaluating the wind potential in Bulgaria, where they break down the country in three regions according to average wind velocity and average wind power density. The main conclusions are:

• Wind potential: An estimated 1400 km2 in Bulgaria offers annual average wind velocities above 6,5 m/s, which is the presumed economic viability threshold for wind energy projects.
• It showed several areas with very good wind resources: three areas with wind speeds in excess of 9 m/s, two areas with wind speeds in excess of 7 m/s and several areas with speeds between 4.5 and 7 m/s. 
• The wind speed data originate from meteorological station data - all at 10 m above ground. At the typical turbine height of 50 m, this data would likely imply wind speeds between 5 and 13 m/s. Hence depending on the technical solutions areas with slower wind velocities may also have potential for future wind energy projects.
• A countrywide wind-atlas is available in the report.

To read the report from the Ministry of Economy and Energy with measurement results, wind-atlas of Bulgaria and a general evaluation of the country’s wind potential. Click HERE. 
 
LEGISLATION
At present mainly the 2003 Energy Act’s chapter eleven regulates Renewable Energy Sources (RES) production in Bulgaria. It includes national indicative targets for promoting of and production from RES. Furthermore it states mandatory purchasing of energy from renewable energy sources, which practically means that if a wind farm is properly registered the public suppliers/providers are obligated to purchase the full amount produced.      

The prices for renewable energy are regulated by the Ordinance on Setting and Applying Prices and Rates of Electric Energy, which states that energy generated from renewable energy sources will be given preferential pricing, and that transmission and distribution entities will be required to purchase all renewable energy produced at a fixed rate. Wind energy produced by wind farms with new equipment after 01.01.2006 is subject to a two-level approach depending on the production capacity of the wind generators as follows:

• For wind generators with optimal productivity annual hours- up to 2250 hours- 175BGN/ MWh
• For wind generators with optimal productivity annual hours- above 2250 hours- 156BGN/ MWh

However, the fixed price for the electricity produced by old wind generators (not exceeding 10 MW) amounts 120 BGN/MWh.

VAT is excluded from the above prices.

Regarding the long-term price perspective the Energy Act (§ 127 from the Transitional and Final Provisions) stipulates that the existing producers of energy from RES and the new producers of energy from RES will be able to conclude contracts with the public supplier of energy i.e. the National Electricity Company for a period of 12 years. As stated in the Act, this procedure will be valid for all producers of energy from RES till the end of year 2010. After this period the Minister of Economy and Energy is obliged (within one year period - end of 2011) to elaborate and submit for approval a new market mechanism for price-settings.
 
For more information on the process of starting up wind projects, the Energy Efficiency Agency has provided a report for the Ministry of Economy and Energy giving an overview over the investment process – it should be noted that the report is from 2004/2005 so there could be later amendments. Nevertheless it gives an indicative idea of the current investment process and legislation in the Bulgarian field of wind energy.    

To read the report from the Energy Efficiency Agency regarding investment process for wind power plants. Click HERE.

MARKET TRENDS

The Bulgarian government adopted The Encouragement of Investment Act, setting forth preferential treatment measures for investments meeting certain criterias specified in the law. As stated above several wind farms have obtained the classification of 1st class investments. Meaning that the projects are supported in terms of construction of infrastructure, purchase of land from the government and fast processing of licenses.

For more information on The Encouragement of Investment Act and Invest Bulgaria. Click HERE.
 

Currently approximately 30 second-hand wind generators are operating in Bulgaria. Two major wind farms are under construction though; one near the Black Sea town Kavarna to be built on Cape Kaliakra, and one planned in the Suvorovo municipality in the north of Bulgaria. Both projects are classified as 1st class investments. The former have already received the first licenses for construction.

The project in Cape Kaliakra was a subject to public attention as members of the Bern Convention claimed that the proposed wind farm posed an environmental threat because it was placed on a route for migratory birds. The turmoil ended with a decision in the Regional Inspectorate of Environment and Water Varna (RIEW) demanding among other things the establishment of a RADAR system switching off the generators during bird passing plus other minor adjustments. Bulgaria is seeking to establish a balance between promoting alternative energy sources - in accordance with the signed Kyoto Protocol – and the protection of environment and biodiversity. 

The European Bank for Regional Development (EBRD) underlines in an analysis of the Bulgarian wind energy sector that the main advantage – apart from the existing wind potential – is the supportive government with a pro-active regulatory approach.

In general there seems to be a positive attitude towards renewable energy in Bulgaria. A National Long-Term Programme for Encouraging Renewable Energy, stating that by 2010 a total of 8 per cent of the gross power generation should be generated by renewable sources and should reach 9 per cent by 2015, has recently been approved. The forthcoming EU-membership is further propelling this development: the EU Accession Treaty sets an indicative goal of 11 per cent of gross domestic consumption to be covered by generation from renewable energy sources – also including biomass, water, solar and geothermal energy.

MARKET EVALUATION

• According to the Ministry of Energy and Economy the wind potential in Bulgaria offers opportunities to set up wind farms in the country.
• Politically both from the Bulgarian government and the EU, focus on renewable energy is increasing – the signed Kyoto Protocol includes that 11 per cent of Bulgaria’s gross domestic consumption of energy should stem from renewable energy.
• Furthermore the Bulgarian Encouragement of Investment Act sets forth preferential treatment measures for investments – currently several new wind farm projects benefit from this arrangement thus through the first class investment certificate getting privileged state support for construction of infrastructure, purchase of land from the government and fast processing of licenses.
• The Bulgarian market has fixed prices for renewable energy from new wind generators between BGN 156 and 175 MWh depending on optimal productivity.
• The European Bank for Regional Development (EBRD) evaluates in an analysis that the advantage in Bulgaria – apart from the existing wind potential – is the supportive government with a pro-active regulatory approach.

THE SERVICES OF THE DANISH EMBASSY IN SOFIA
The Royal Danish Embassy in Sofia offers commercial assistance to Danish companies interested in exploring the Bulgarian market. The embassy could provide – in accordance with the client’s demand – more detailed market overviews, targeted partner searches, coordination of meeting programmes with potential partners including tailor made assistance. Furthermore we have substantial experience obtaining relevant information from government authorities and Ngo’s.