Bulgarian Biomass Market 2012 by Ilko Iliev

T E K R A M S S A M O I B N A I R A G L U B

2 1 0 2 k o o l Out

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BULGARIAN BIOMASS MARKET: OUTLOOK 2012 This market report offers an incisive and reliable overview of the biomass sector of the country. With recent changes in law and strong government support for biomass sector, Bulgaria is supposed to become very promising biomass energy market for the next few years. In view of maturing biomass markets in Germany, Austria, France, UK, Czech Republic, Slovakia and Italy, Bulgaria represents a stable investment environment in SouthEast Europe with clear rules and fair FIT rates. The report provides a complete picture of the market situation, dynamics, current issues and future prospects. You will find more than 70 pages of valuable information in this unique in-depth analysis of the Bulgarian biomass market. With comprehensive market data this report brings clear and concise insights, to help investors in their decision making process. As 2011 was challenging year for biomass industry, the time for taking right decisions during 2012/2013 is limited. Fast changing market environment, requires relevant and accurate information. For your convenience we offer opportunity for orders with customized report content. Reasons to buy this market report include:

 Brief overview of the Bulgarian political and economic environment  Biomass resource potential in Bulgaria, including biogas and pellets sectors  Overview of Bulgarian biomass market development 2000 ÷ 2012  Grid connected biomass power plants for 2011/2012  Future market trends and planned biomass projects for 2012/2013  Current market prices of fully permitted and operational biomass projects  Bulgarian legal and energy regulatory framework for renewable projects  Key companies in biomass sector  Review of most relevant financing and supporting incentives  SWOT Analysis

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BULGARIAN BIOMASS MARKET: OUTLOOK 2012

TABLE OF CONTENTS

FOREWORD ..................................................................................................................... 7 1.

METHODOLOGY .................................................................................................... 9

EXECUTIVE SUMMARY......................................................................................... 11

BULGARIAN POLITICAL AND ECONOMIC ENVIRONMENT...................................... 14 3.1. Basic country data ................................................................................................... 14 3.2. Political Climate and Ruling Party ........................................................................... 17 3.3. GDP and Economic Growth ..................................................................................... 17 3.4. Electricity Imports and Exports. Electricity prices for business and households .... 19 3.5. Taxes ........................................................................................................................ 21 3.5.1. VAT ....................................................................................................................... 21 3.5.2. Income and Corporate Taxes ............................................................................... 21

BULGARIAN BIOMASS ENERGY MARKET .............................................................. 22 4.1. General electricity market information .................................................................. 22 4.1.1. Electricity Consumption and Production ............................................................. 23 4.1.2. RES targets ........................................................................................................... 23 4.2. Biomass market ....................................................................................................... 26 4.2.1. Why invest in biomass energy in Bulgaria? ......................................................... 27 4.2.2. Bulgarian biomass resource potential ................................................................. 28 4.2.3. Overview of Bulgarian biomass market .............................................................. 29 4.2.4. Market prices for BIOMASS projects in Bulgaria ................................................. 31 4.2.5. Development projects and operational BIOMASS plants in Bulgaria ................. 31 4.2.6. Key biomass companies operating on Bulgarian market .................................... 35

EUROPEAN RENEWABLE ENERGY POLICY LANDSCAPE .......................................... 37 5.1. Bulgarian RES Regulations and EU Directives ......................................................... 37 5.1.1. Precedent EU regulations .................................................................................... 37 5.1.2. Most recent EU renewable energy policy developments ................................... 38 5.2. Renewable energy mandatory targets for Bulgaria set out by the EU ................... 38 5.2.1. Interim targets set out by the EU ........................................................................ 38 5.2.2. National support schemes flexibility allowed by the EU ..................................... 39 5.3. BIOMASS LEGAL Project .......................................................................................... 40

BULGARIAN RENEWABLE LEGAL AND REGULATORY FRAMEWORK ....................... 40 6.1. Main laws and regulations ...................................................................................... 40 6.2. Zoning, planning and construction related authorizations ..................................... 41 6.3. Environmental related authorizations .................................................................... 42 6.3.1. Natura 2000 Network .......................................................................................... 42

BULGARIAN BIOMASS MARKET: OUTLOOK 2012 6.3.2. Joint Implementation .......................................................................................... 42 6.4. Energy law authorizations ....................................................................................... 43 6.4.1. Power Generation Licensing ................................................................................ 43 6.4.2. Grid Interconnection ........................................................................................... 43 6.4.3. Power Off-Take .................................................................................................... 43 6.4.4. Feed-in tariff (FIT) ................................................................................................ 44 6.4.5. Certificate (Guarantee) of Origin ......................................................................... 45 6.5. Ten key points in new Bulgarian RES law ................................................................ 46 6.6. Financial Incentives and Support for RES electricity ............................................... 47 6.7. Future market pricing mechanisms......................................................................... 48 6.8. Key Co-financing opportunities ............................................................................... 49 6.8.1. Bulgarian Energy Efficiency and Renewable Energy Credit Line ......................... 49 6.8.2. Measure 311 ........................................................................................................ 51 6.8.3. Measure 312 ........................................................................................................ 52 6.8.4. European Local Energy Assistance ...................................................................... 52 6.8.5. Operational Program Competitiveness ............................................................... 53 6.8.6. Implementing Energy Saving Technologies in Enterprises Scheme .................... 53 7.

KEY ORGANIZATIONS AND INSTITUTIONS ........................................................... 54 7.1. Government ............................................................................................................ 54 7.1.1. The Ministry of Economy, Energy and Tourism (MEET) ...................................... 54 7.1.2. The State Energy and Water Regulatory commission (SEWRC) .......................... 54 7.1.3. Agency for Sustainable Energy Development (ASED) ......................................... 55 7.1.4. MOEW and RIEW ................................................................................................. 55 7.2. Electricity Distribution Companies (EDCâ&#x20AC;&#x2122;s) ............................................................. 56 7.2.1. EVN ...................................................................................................................... 56 7.2.2. E.ON Bulgaria/ Energo Pro................................................................................... 57 7.2.3. CEZ ....................................................................................................................... 58

SWOT Analysis .................................................................................................... 59

CONCLUSIONS .................................................................................................... 65

10.

LIST OF ABBREVIATIONS ..................................................................................... 67

11.

REFERENCES ....................................................................................................... 69

12.

DISCLAIMER ........................................................................................................ 78

APPENDIX I. BIOMASS MAPS OF EUROPE AND BULGARIA.............................................. 79

BULGARIAN BIOMASS MARKET: OUTLOOK 2012

LIST OF MAPS, CHARTS AND TABLES

Map 1: Where is Bulgaria on the European map .............................................................. 14 Map 2: Major transport corridors passing through Bulgaria ............................................. 15 Map 3: Bulgarian regions ................................................................................................... 16 Map 4: Biomass potential of Bulgaria ................................................................................ 27 Map 5: NATURA 2000 areas in Bulgaria............................................................................. 42 Map 6: Districts covered by EVN Bulgaria ......................................................................... 57 Map 7: Districts covered by E.ON Bulgaria/ENERGO-PRO ................................................ 58 Map 8: Districts covered by CEZ ........................................................................................ 59 Chart 1: Real GDP growth for the period 2000-2012 (including estimates)...................... 18 Chart 2: Bulgarian GDP growth compared to EU-27 for the period 2002-2011(Q1) ........ 19 Chart 3: Electricity imports and exports for the period 2004-2011 (in million MWh) including estimations ......................................................................................................... 20 Chart 4: Corporate tax income in the region .................................................................... 21 Chart 5: Structure of Bulgarian electricity market ............................................................. 22 Chart 6: Share of RES electricity in gross energy consumption 2010 ................................ 23 Chart 7: Bulgarian RES targets in % set by the EU ............................................................. 24 Chart 8: Cumulative developments of BIOMASS plants in Bulgaria in MWp from 2008 to 2013, including estimates .................................................................................................. 34 Chart 9: BEERECL Structure ................................................................................................ 49 Chart 10: Market Shares by Sales of the Major Utility Companies in Bulgaria in 2011 .... 56 Chart 11: Structure of ENERGO-PRO Czech Republic ........................................................ 57 Table 1: Electricity prices for business and households .................................................... 20 Table 2: Support schemes for RES generation in the EU countries ................................... 26 Table 3: Market prices for BIOMASS projects in Bulgaria for 2011 ................................... 31 Table 4: Selected operational, under construction and planned biomass projects in Bulgaria .............................................................................................................................. 34 Table 5: Feed-in-tariffs for electricity from BIOMASS sources in Bulgaria ........................ 45