Bulgaria cuts preferential prices for renewable energy

June 29, 2012 by  
Filed under Green Energy News


Fri Jun 29, 2012 8:17pm IST

* Wind subsidies cut by 20 pct, solar by 50 percent

* Cuts aim to address fears of soaring electricity prices

* Investors say government “killing” the sector

* Chinese Ming Yang Wind Power Group may sue government

* Power transmission fees increased by 50 percent

By Tsvetelia Tsolova

SOFIA, June 25 (Reuters) – Bulgaria’s energy regulator
drastically cut guaranteed rates for electricity generated by
wind and solar power parks on Friday on fears of soaring
electricity prices, further unsettling renewable-energy
developers in the Balkan country.

The regulator cut by more than 50 percent the preferential
feed-in tariff for the obligatory purchase of solar energy and
by 22 percent the energy produced by wind power. The new tariffs
come into effect from July 1 for solar and wind parks that will
be connected until July 2013.

Dozens of Austrian, German, Japanese, Chinese, Southern
Korean and American companies rushed to take advantage of the
sun and wind potential of the small country southeast European
country, which also offered lucrative incentives for green
energy.

But growth in installations has outpaced forecasts, applying
pressure on the ageing power grid and electricity prices in the
European Union’s poorest country.

The regulator also raised prices for consumers, increasing
them by 13 percent from July 1. It said that a large part of the
increase was because of the growing proportion of more expensive
green energy.

Electricity prices are politically sensitive in Bulgaria,
where power bills eat away a huge part of monthly incomes,
especially during winter months.

The centre-right government had changed the law on renewable
energy to curb development of such projects and indicated that
the subsidies will drop, but the severity of the cuts surprised
investors.

“What we see is not a policy, but improvisation with a final
aim to stop the development of wind and solar energy in
Bulgaria,” said Velizar Kiriakov, head of the Association of
Producers of Ecological Energy.

China Ming Yang Wind Power Group, which has planned
to start construction of a 120 megawatt wind farm in northern
Bulgaria next month, is now considering cancelling the 150
million euro ($186.40 million) project.

“We will probably sue the government for bringing us to this
country … and, when we are ready with the investment, to be
‘kicked out’ by the new conditions,” said Jonathan Mann, CEO of
W Power Group, which handles the project.

Mann said that they had expected a decrease of up to 5
percent, adding that a 22 percent cut is “ridiculous” and will
make the project unprofitable.

The energy regulator said Bulgaria was already meeting 12
percent of its electricity needs from renewable energy sources.
Its EU-backed target is for 16 percent by 2020.

Bulgaria joined the ranks of Germany, Spain and the Czech
Republic, which also been reducing their generous feed-in
tariffs. In February, the Czech energy regulator said that it
wanted to stop almost all incentives for renewables as early as
2014.

In a separate move, the energy regulator also increased
power transmission fees by 50 percent from July, citing the rise
in green energy, in a move that will hit electricity exports to
neighbouring countries.

“The move is a catastrophe,” said Vladimir Dichev, head of
the Association of Electricity Traders. “It will block exports
and lead to huge losses for both producers and traders.”

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