Bulgaria plans further cuts in solar incentives

Reuters News
Posted: Jul 26, 2012 5:42 AM
Bulgaria plans further cuts in solar incentives

By Tsvetelia Tsolova

SOFIA (Reuters) - Bulgaria plans to cut guaranteed rates for electricity generated from new solar power parks by an average of 30 percent from September after halving the feed-in tariffs in late June, the energy regulator said on Thursday.

The State Energy and Water Regulatory Commission will seek the reductions as a solar boom fuelled by generous guaranteed rates threatens to boost consumer prices and strain the power grid in the European Union's poorest country.

Less than a month after drastic cuts to incentives for photovoltaic parks, the regulator has now proposed cuts of about 35 percent for bigger installations on roofs and by 28 percent for solar energy parks on the ground.

A final decision on the cuts is expected in two weeks, the spokeswoman for the energy regulator said.

Renewable energy investors, who have poured millions of euros into solar parks in the Balkan nation have been highly critical of the plan, saying it lacks transparency and vowing to appeal.

"The new plans will kill the solar energy business in Bulgaria because, at the new tariff level, it does not make sense to invest," said Nikola Gazdov, chairman of the Bulgarian Photovoltaic Association.

Solar energy parks in Bulgaria have mushroomed in the past year after the government passed legislation guaranteeing tariffs over a 20-year period for solar investors.

Companies such as United States-based AES Corporation, Russia's Lukoil, South Korea's SDN, Saudi Arabia's ACWA Power and dozens of other German, Italian, Japanese investors have rushed to take advantage of the incentives and the abundant sunshine in the small southeast European country.

The total installed capacity of photovoltaic parks soared to about 600 MW by the end of July, a huge gain from the 134 MW in operation at the end of 2011, industry officials said.

The surge of solar parks, however, has pushed consumer prices up 13 percent in 2012 as the government seeks to recoup the cost of the subsidies.

Power prices are politically sensitive in Bulgaria, where energy bills eat away a huge part of monthly incomes, especially during winter months.

The government is also considering whether to impose additional taxes or fees on solar installations, as the Czech Republic did in 2010 to deal with a solar boom.

The Czech Republic, Germany and Spain have all cut their generous feed-in tariffs. In February the Czech energy regulator said that it wanted to stop almost all incentives for renewables as early as 2014.

(Editing by Michael Kahn and David Goodman)