Austria: Renewable Energy Law Is Approved By The Bulgarian Parliament

On 21 April 2011 the Bulgarian Parliament passed the draft of the new renewable energy law. The next step is to send it to the President for signature. If signed, the draft law will be published in State Gazette within 14 days and might become effective. The President is entitled to veto the draft law within these 14 days. In case of a veto, the draft law will be returned to the Parliament. In order to overrule the veto, the draft law should be approved by qualified majority vote (i.e. at least half of all members of the Parliament). After the confirmatory vote, the draft law will be published within 7 days in the State Gazette and become effective.

In the present version of the draft law the provisions regarding renewable energy projects differ based on the stage of their development.

  1. Renewable energy plants in operation

    : The term of the power purchase agreement remains as provided in the previous law (e.g. 25 years for solar parks, 15 years for wind parks).

    Price: The purchase price will be fixed for the remaining term of each agreement at the feed-in tariff announced on 31 March 2011. It will not be subject to further adjustments as it was under the previous law.

  2. Projects with connection agreements

    If, by the date the draft law becomes effective, the investor has (a) already paid the connection fee or (b) undertaken to build the connecting facilities instead of the transmission/distribution company, the connection will be completed according to the previous law. If neither (a) or (b) are met, the connection will be completed according to the previous law but the connection fee will be estimated according to the new regime (minimum of BGN 50,000 per MW installed capacity for projects above 5MW, respectively minimum of BGN 25,000 per MW for projects with capacity up to 5MW).

    Term: The term of the power purchase agreement will be according to the new regime which is less than the terms under the previous law:

    • 20 years for solar parks (instead of 25 years)
    • 12 years for wind parks (instead of 15 years)

    Price: The applicable price to the power purchase agreement of each project will be determined at the moment of completion of the construction (certified with Act No. 15 under the Spatial Development Act). Under the new regime the feed-in tariff will be updated every year by 30 June at discretion of the State Regulatory Energy and Water Commission. Unlike the previous law the premium for each renewable energy source can be decreased without limitation (this used to be restricted within 5% decrease). In effect, it will not be possible to estimate the applicable feed-in tariff until the completion of the construction of the plant. This will introduce significant uncertainty in estimation of the investment and the rate of return of the project.

  3. Projects with preliminary connection agreements

    Within 2 months after the new law becomes effective, the investor is required to submit evidence to the transmission, respectively distribution, company, that (a) the property rights on the land where the project will be built are acquired; (b) the zoning necessary for the construction of the project is approved and effective and (c) to submit a deposit for the connection fee as per the new regime (minimum of BGN 50,000 per MW installed capacity for projects above 5MW, respectively minimum of BGN 25,000 per MW for projects with capacity up to 5MW) or, if the investor has undertaken to build the connecting facilities instead of the transmission/distribution company – a guarantee in the same amount.

    If the conditions are not met, the preliminary connection agreements are deemed invalidated after the expiration of the above said 2-month period.

    The term of the preliminary connection agreement is decreased retroactively to up to one year as the moment the draft law becomes effective but in any case not more than the term stipulated in the respective preliminary connection agreement.

    Term: As per (ii) above.

    Price: As per (ii) above.

  4. Projects with statement for connection

    : The statements for the terms and conditions for connection will be invalidated as of the moment the draft law becomes effective. In such case the connection procedure is to be started anew under the new regime.

According to the draft law, within one month after the new law becomes effective, the feed-in tariff announced by the Regulatory Commission on 31 March 2011 will be revised according to the new regime and the premium can potentially be decreased further upon discretion of the Regulatory Commission.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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