Renewable energy developers to pay for grid upgrades
Clean energy investors in Bulgaria will pay a one-off fee to fund power transmission grids, according to a proposal by the energy watchdog that could come in from next year. The idea of the State Energy and Water Regulatory Commission (SEWRC) could be incorporated into the new Renewable Energy Act being drafted by the economy ministry, which should be voted by parliament by December 5, 2010.
The new fee will be tied to the size of the capacity plugged to the grid. It is estimated that hooking up 100 MW of new projects annually would absorb roughly EUR 20 million. "Grid development costs could be alternatively split between investors and operators but the calculation mechanism is yet to be discussed," SEWRC member Plamen Denchev told Dnevnik.
The proposal is aimed to assuage a funding gap for grid expansion as new capacities are lining up to get connected. State-run grid operator NEK has not made any investments in expansion in the past years, stalling grid-connection for wind and solar parks in northeastern Bulgaria.
As of 2010, Bulgaria will introduce a new mechanism to set grid-connection prices to factor in expenses made by power distributors and utility company NEK. The current fee covers operators’ expenses to the connection point and developers are forced to build they own pipes and substations as operators refuse to hook up new projects.
Denchev explained the new fee will be higher and will be combined with the new grid development fee to ensure higher feed-in tariffs. The proposed changes got a lukewarm response from the clean energy industry.
"Even if the new fee is introduced, there will be no guarantee that investors won’t have to queue up for connection," said Velizar Kiryakov, chairman of the Bulgarian renewable energy association. He proposed that operators should be required to pay for electricity even when the plants are idle to account for lost profits.