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Bulgaria's electricity distributors given decision power on green energy projects

Bulgaria's electricity distributors given decision power on green energy projectsBulgaria's three electricity distribution companies will be the entities deciding when a electricity-generating facility using renewable energy will be connected to the country's power grid, according to amendments passed by Parliament in March and published in the State Gazette on April 10, weekly Capital reported.

The goal of the amendments is to slow down the boom of renewable energy projects in the country, the publication said. The generous subsidy paid by the state in the form of a high electricity buy-out price (called the feed-in tariff) has spurred a flurry of investment activity, far beyond the initial estimates and far beyond what the state can afford to pay without increase the final consumer price.

Previously, companies in the sector had until May 3 2012 to sign final contracts to connect to the power grid. Under the new amendments, the three power distribution companies – owned by Czech CEZ, Austria's EVN and Germany's E.ON (now in the final stages of the sale to Czech Energo-Pro) – along with Bulgaria's power grid operator ESO will be required to draft, by July 10 2012, 10-year plans for the connection of all renewable energy projects to the grid.

Investors who are unwilling to wait until their allocated time to sign the contracts will have until August 10 to renounce their claims, regardless of the amount already invested in the project, the report said.

The amendments will affect only solar and wind-power projects, as biomass producers will continue to be connected to the grid under the old rules, with final connection contracts signed within a year of signing a preliminary contract.

To further reduce the drain on Budget coffers, the new amendments make payment of the feed-in tariff contingent on the project receiving the final use permit, known in Bulgarian regulations as Act 16. Previously, payment began as soon as construction was complete and the project received a certificate confirming that it conforms to the original design (known as Act 15).

The difference is significant because Act 15 is fairly easy to obtain, but final certification for Act 16 often takes much longer, sometimes in excess of a year. A proposed amendment that would fix a deadline for issuing Act 16 was rejected by MPs.

Once the electricity distribution companies draft the schedule for connecting renewable energy production facilities to the grid, they will be required to make it available online by December and update it every six months, according to the amendments.

While this brings a much-needed modicum of transparency to the industry, the Economy Ministry has thus far refused the request of several renewable energy associations to be allowed to sit in on any investigation into whether any of the existing preliminary power grid connection contracts were signed legally.

Currently, it is unclear how many projects state electricity utility NEK, which was tasked with signing grid connection contracts before the latest amendments, has contracted, nor is their identity known. The defense for not releasing names is that it is privileged commercial information and it is also the reason the ministry has refused outsiders from participating in any inquiry, although Deputy Economy Minister Valentin Nikolov, whose portfolio is the energy sector, recently said that the ministry had the political will to investigate the matter, Capital reported.

20 April 2012 - Sofia Echo

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