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BULGARIAN PHOTOVOLTAIC MARKET: HANDBOOK FOR INVESTMENTS 2012/2013 This Handbook represents complete and unique guide for investments in Bulgarian photovoltaic market. If you already have some background information about the market but you are wondering how to take decision to invest, then this is the Handbook you can use. In view of recent cuts in FIT’s announced in Germany, Spain, 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. It contains more than 150 pages of valuable information in this very detailed and in-depth investments guide. With comprehensive up-to date market data this handbook brings clear and concise insights, to help investors in their decision making process. You will optimize your legal and due diligence costs. For your convenience we offer opportunity for orders with customized book content. Reasons to buy this handbook include: Bulgarian political and economic environment overview, including PEST Analysis Solar resource potential in Bulgaria Historical data provided from 2007 to 2012 and forecasts until 2020 Overview of Bulgarian photovoltaic market development 2007 ÷ 2012 Grid connected photovoltaic installations for 2011/2012 Development scenario of Bulgarian photovoltaic sector until 2020 Current market prices of photovoltaic projects with scenario to 2020 Major active and upcoming photovoltaic plants in the country Porter Analysis Detailed overview of Bulgarian legal and regulatory framework for RES generation Key organizations affecting development of the photovoltaic sector Detailed review of most relevant financing and supporting incentives SWOT Analysis At next pages you will see the full table of content of this Handbook. For sample report pages request, please do not hesitate to contact us. To order this report just fill in and send us the enclosed at the last page order form. If you have any other questions please do not hesitate to call us on ++359 887 342 475 or write an e-mail to orders@ineaconsulting.eu
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BULGARIAN PHOTOVOLTAIC MARKET: HANDBOOK FOR INVESTMENTS 2012/2013
TABLE OF CONTENTS
FOREWORD ..................................................................................................................... 8 1. METHODOLOGY ....................................................................................................... 11 2. EXECUTIVE SUMMARY ............................................................................................. 13 3. BULGARIAN POLITICAL AND ECONOMIC ENVIRONMENT. PEST ANALYSIS ................. 17 3.1. Basic country data .................................................................................................... 17 3.2. Political Climate and Ruling Party ............................................................................ 21 3.3. GDP and Economic Growth ...................................................................................... 22 3.4. Labor market and unemployment rate .................................................................... 25 3.5. Electricity Imports and Exports. Electricity prices for business and households ..... 26 3.6. Industrial Output and Private Consumption ............................................................ 28 3.7. Foreign direct investments (FDI) .............................................................................. 29 3.8. Taxes ......................................................................................................................... 31 3.8.1. VAT ........................................................................................................................ 31 3.8.2. Income and Corporate Taxes ................................................................................ 32 3.8.3. Property Tax.......................................................................................................... 33 3.8.4. Transfer Tax .......................................................................................................... 33 3.8.5. Types of corporation in Bulgaria .......................................................................... 33 3.9. Inflation .................................................................................................................... 34 3.10. Monetary indicators ................................................................................................. 36 3.11. Banking and Credit Market ...................................................................................... 37 3.12. Monetary Indicators ................................................................................................. 39 3.13. Ease of doing business in Bulgaria ........................................................................... 41 4. BULGARIAN PHOTOVOLTAIC ENERGY MARKET......................................................... 42 4.1. General electricity market information ................................................................... 42 4.1.1. Electricity Consumption and Production .............................................................. 43 4.1.2. RES targets ............................................................................................................ 43 4.2. Country attractiveness index for renewable investments ....................................... 48 4.3. Porter 5 Forces analysis............................................................................................ 49 4.4. Photovoltaic market ................................................................................................. 51 4.4.1. Brief overview of European photovoltaic market ................................................ 52 4.4.2. Why invest in photovoltaic energy in Bulgaria? ................................................... 57 4.4.3. Bulgarian solar resource potential ....................................................................... 60 4.4.4. Overview of Bulgarian photovoltaic market ........................................................ 61 4.4.5. Market prices for PV projects in Bulgaria ............................................................. 64
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BULGARIAN PHOTOVOLTAIC MARKET: HANDBOOK FOR INVESTMENTS 2012/2013 4.4.6. Development projects and operational PV plants in Bulgaria ............................. 64 4.4.7. Local solar companies........................................................................................... 69 5. EUROPEAN RENEWABLE ENERGY POLICY LANDSCAPE .............................................. 69 5.1. Bulgarian RES Regulations and EU Directives .......................................................... 70 5.1.1. Precedent EU regulations ..................................................................................... 70 5.1.2. Most recent EU renewable energy policy developments .................................... 71 5.2. Renewable energy mandatory targets for Bulgaria set out by the EU .................... 72 5.2.1. Interim targets set out by the EU ......................................................................... 72 5.2.2. National support schemes flexibility allowed by the EU ...................................... 73 5.3. PV LEGAL Project ...................................................................................................... 73 6. BULGARIAN RENEWABLE LEGAL AND REGULATORY FRAMEWORK ........................... 76 6.1. Main laws and regulations ....................................................................................... 76 6.2. Zoning, planning and construction related authorizations ...................................... 78 6.2.1. Availability of Land................................................................................................ 79 6.2.2. DZP ........................................................................................................................ 79 6.2.3. Change of Designation of Agricultural Land ......................................................... 79 6.2.4. Design Visa ............................................................................................................ 80 6.2.5. National Institute for Protection of Immovable Cultural Valuables..................... 80 6.2.6. Parcel Plans for Power Lines ................................................................................. 80 6.2.7. Approval of an Investment Project ....................................................................... 81 6.2.8. Construction Permit.............................................................................................. 81 6.2.9. Operating Permit .................................................................................................. 82 6.3. Environmental related authorizations ..................................................................... 82 6.3.1. Ecological Assessment .......................................................................................... 82 6.3.2. Environment Impact Assessment ......................................................................... 83 6.3.3. Natura 2000 Network ........................................................................................... 83 6.3.4. Joint Implementation ........................................................................................... 85 6.4. Energy law authorizations ........................................................................................ 86 6.4.1. Power Generation Licensing ................................................................................. 86 6.4.2. Grid Interconnection ............................................................................................ 86 6.4.3. Power Off-Take ..................................................................................................... 88 6.4.4. Feed-in tariff (FIT) ................................................................................................. 88 6.4.5. Certificate of Origin .............................................................................................. 90 6.4.6. Scheme of Administrative procedure for PV plants in Bulgaria ........................... 90 6.5. Ten key points in new Bulgarian RES law ................................................................. 92 6.6. Complementary Financial Incentives and Stimuli for RES electricity ...................... 94 6.7. Future market pricing mechanisms.......................................................................... 95 6.8. Key Co-financing opportunities ................................................................................ 96 6.8.1. Bulgarian Energy Efficiency and Renewable Energy Credit Line .......................... 96 6.8.2. Measure 311 ....................................................................................................... 101 6.8.3. Measure 312 ....................................................................................................... 102 6.8.4. European Local Energy Assistance ..................................................................... 102 6.8.5. Operational Program Competitiveness .............................................................. 103
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BULGARIAN PHOTOVOLTAIC MARKET: HANDBOOK FOR INVESTMENTS 2012/2013 6.8.6. Implementing Energy Saving Technologies in Enterprises Scheme ................... 104 7. KEY ORGANIZATIONS AND INSTITUTIONS .............................................................. 104 7.1. Government ........................................................................................................... 105 7.1.1. The Ministry of Economy, Energy and Tourism (MEET) ..................................... 105 7.1.2. The State Energy and Water Regulatory commission (SEWRC) ......................... 105 7.1.3. Agency for Sustainable Energy Development (ASED) ........................................ 106 7.1.4. Ministry of Agriculture and Food and Regional Directorate of Agriculture and Forestry .......................................................................................................................... 106 7.1.5. BEH...................................................................................................................... 106 7.1.6. NEC...................................................................................................................... 107 7.1.7. ESO ...................................................................................................................... 108 7.1.8. MOEW and RIEW ................................................................................................ 108 7.1.9. MOH and RIPCP .................................................................................................. 109 7.1.10. Napoitelni Sistemi EAD .................................................................................. 109 7.2. Electricity Distribution Companies (EDC’s) ............................................................ 109 7.2.1. EVN ..................................................................................................................... 110 7.2.2. E.ON Bulgaria/ Energo Pro.................................................................................. 111 7.2.3. CEZ ...................................................................................................................... 113 7.3. NON-GOVERNMENT ORGANIZATIONS .................................................................. 114 7.3.1. BPVA ................................................................................................................... 114 7.3.2. APEE .................................................................................................................... 115 7.3.3. Bulgarian Wind Energy Association (BWEA)....................................................... 116 7.3.4. ABEA ................................................................................................................... 117 7.3.5. American Chamber of Commerce – RES Group ................................................. 119 7.4. Lobby groups .......................................................................................................... 119 7.5. Stаkeholder Аnаlysis .............................................................................................. 120 8. RISKS ABOUT RENEWABLE INVESTMENTS IN BULGARIA ......................................... 123 8.1. Risks Associated with the Renewable Energy Industry in Bulgaria ........................ 123 8.1.1. Regulatory Risk ................................................................................................... 123 8.1.2. Competition within the Renewable Energy Industry ......................................... 124 8.1.3. Public Attitudes towards Renewable Energy Projects ....................................... 125 8.1.4. Emerging Market Risk ......................................................................................... 125 8.1.5. Insurance Risk ..................................................................................................... 126 8.1.6. Force Majeure Risk ............................................................................................. 126 8.2. Risks Associated with the Investor’s Finance Arrangements ................................. 126 8.2.1. Asset Sale Risk..................................................................................................... 126 8.2.2. Borrowing Risk .................................................................................................... 127 8.2.3. Foreign Exchange Risk ........................................................................................ 127 8.3. Risks Associated with the Development of Renewable Energy Plants .................. 128 8.3.1. Variability in the Source of Renewable Energy .................................................. 128 8.3.2. Development of the Project and Construction Risk ........................................... 128 8.3.3. Capital Cost Risk.................................................................................................. 129
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BULGARIAN PHOTOVOLTAIC MARKET: HANDBOOK FOR INVESTMENTS 2012/2013 8.3.4. Permits ................................................................................................................ 129 8.3.5. Land Options ....................................................................................................... 130 8.3.6. Construction ....................................................................................................... 130 8.3.7. Dependency on Suppliers ................................................................................... 131 8.3.8. Technology Risk .................................................................................................. 131 8.3.9. Operation and Maintenance Risk ....................................................................... 132 8.3.10. Market Price of Electricity ............................................................................... 132 9. SWOT Analysis ....................................................................................................... 133 10.
CONCLUSIONS ................................................................................................... 139
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LIST OF ABBREVIATIONS .................................................................................... 142
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REFERENCES ...................................................................................................... 145
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DISCLAIMER ....................................................................................................... 155
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APPENDIX I. SOLAR IRRADIATION MAPS OF EUROPE AND BULGARIA ................. 156
LIST OF MAPS, CHARTS AND TABLES
Map 1: Where is Bulgaria on the European map.................................................................... 18 Map 2: Major transport corridors passing through Bulgaria.................................................. 18 Map 3: Bulgarian regions ........................................................................................................ 20 Map 4: Solar potential of Bulgaria .......................................................................................... 58 Map 5: Solar radiation potential in Bulgaria according to Bulgarian Academy of Science .... 61 Map 6: NATURA 2000 areas in Bulgaria.................................................................................. 83 Map 7: Districts covered by EVN Bulgaria ............................................................................ 111 Map 8: Districts covered by E.ON Bulgaria/ENERGO-PRO ................................................... 113 Map 9: Districts covered by CEZ ........................................................................................... 114 Chart 1: Real GDP growth for the period 2000-2012 (including estimates)........................... 23 Chart 2: Bulgarian GDP growth compared to EU-27 for the period 2002-2011(Q1) ............. 25 Chart 3: Unemployment rate in % from 2000 to 2012 ........................................................... 26 Chart 4: Electricity imports and exports for the period 2004-2012 (in million MWh) including estimations.............................................................................................................................. 27 Chart 5: FDI for the period 2000-2012 (in million EUR) .......................................................... 30 Chart 6: Corporate tax income in the region .......................................................................... 32 Chart 7: Inflation Rate per year for the period 2004-2012..................................................... 36 Chart 8: Structure of Bulgarian electricity market .................................................................. 42 Chart 9: Gross electricity production 2012 ............................................................................. 43 Chart 10: Bulgarian RES targets in % set by the EU ................................................................ 45
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BULGARIAN PHOTOVOLTAIC MARKET: HANDBOOK FOR INVESTMENTS 2012/2013 Chart 11: Solar indices November 2011 by E&Y analysis ....................................................... 48 Chart 12: Comparison of the recent PV growth (in MWp) in the EU including estimations .. 54 Chart 13: Trajectory to reach share of renewable energies in the EU in 2020, EPIA ............. 57 Chart 14: Cumulative developments of PV plants in Bulgaria in MWp from 2007 to 2020, including estimates ................................................................................................................. 69 Chart 15: Scheme of administrative procedure for PV plants in Bulgaria .............................. 91 Chart 16: BEERCL structure ..................................................................................................... 97 Chart 17: Structure of BEH .................................................................................................... 107 Chart 18: Market Shares by Sales of the Major Utility Companies in Bulgaria in 2012 ....... 110 Chart 19: Structure of ENERGO-PRO Bulgaria ...................................................................... 112 Table 1: Electricity prices for business and households ......................................................... 28 Table 2: Support schemes for RES generation in the EU countries ........................................ 56 Table 3: Market prices for PV projects in Bulgaria for 2012 ................................................... 64 Table 4: Selected operational, under construction and planned photovoltaic projects in Bulgaria ................................................................................................................................... 67 Table 5: Cumulative developments of PV plants in Bulgaria in MWp from 2007 to 2020, including estimates ................................................................................................................. 68 Table 6: Feed-in-tariffs for electricity from PV sources in Bulgaria ........................................ 89 Table 7: Types of Renewable Energy and Energy Efficiency Projects Financed by BEERECL . 98 Table 8: Benefits of renewable energy and energy efficiency projects ................................. 98
Š 2012, Inea Consulting Ltd., Bulgaria; Last Edition on 15.02.2012
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