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Lack of investor confidence due to a cap on the quantity of electricity purchased at feed-in tariff in Bulgaria

Last update: 2022-01-30

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Political and economic framework

Revenue risk under given support scheme

In 2015, the Bulgarian National Assembly imposed a cap on the quantity of electricity purchased at feed-in tariff (FiT) up to the average annual operating hours for the respective producers. At a preferential price are bought only the quantities up to the amount of net specific production (NSP), as defined by the Energy and Water Regulatory Commission (EWRC; Decision SP-1). The NSP is defined as the average annual electricity output for installations starting from 1 kW of installed capacity after deducting the own electricity consumption of the RES producer. Anything above the NSP level is sold at market prices. In July 2018, one of the producers affected by the NSP-restriction, Televic Bulgaria, won the trial against the Regulator. The Supreme Administrative Court (SAC) fully adopted the reasoning of the Penkov, Markov & Partners law firm, stating that the EWRC has no justification as to how and in what way is established the amount of NSP. SAC's decision on termination of the EWRC's restriction to the electricity production of RES affects only the company which won the case against the Regulator. However, there are still hundreds of identical pending claims of RES producers against the Decision SP-1 of EWRC, and if the case law of the above case is maintained, they will all be able to bring claims against the electricity buyers CEZ, EVN and Energo-Pro and the National Electric Company (NEK) to recover unrealised revenues. For most plants, the introduction of NSP has resulted in a third less revenue than expected. Despite all this, the Regulator has issued retroactive decisions in March and June 2019 that define new NSP levels, essentially overwriting the court's decision concerning Televic Bulgaria. As a result, more lawsuits have followed since the original 2018 court decision. Most recently, in October 2019, the Penkov, Markov & Partners law firm won a trial against the Regulator at the lower court but then appealed, due to the fact that the court did not invalidate the retroactive nature of the Regulator's decision. Currently, a higher court is expected to decide the case, which is still pending as of August 2021.

In the near future however, issues linked with the Bulgarian feed-in tariff should be less and less relevant, since the country plans on fully liberalising the electricity market. To this end, Bulgaria will phase out regulated electricity prices by the end of 2025, as stated in the last NECP for the period 2021-2030. 

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Competent authorities

For Lack of investor confidence due to a cap on the quantity of electricity purchased at feed-in tariff

Authority (Original name) Authority (English) Link
Комисия за енергийно и водно регулиранеEnergy and Water Regulatory CommissionVisit

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