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Bulgaria Plans Caps On New Green Energy Assets

Date: 27-Sep-10
Country: BULGARIA
Author: Tsvetelia Tsolova

Bulgaria plans to put limits on new renewable energy assets to avoid a spike in sensitive energy prices and a collapse of its aging power grid, Economy and Energy Minister Traicho Traikov said on Friday.

Traikov said the Balkan country can add up to 2,000 megawatts of new solar, wind and hydro power plants by 2020 without jeopardizing the security of power supply and keeping the energy prices at affordable levels.

The European Union country, where lucrative incentive schemes to support renewable power created wind and solar energy boom, has already tightened rules for environmental permits and aims to ban building of energy assets on quality arable land.

Traikov said the limit will not prevent Sofia to raise green energy's share of total power consumption to 16 percent by 2020.

"We will meet our target. But we also aim to have the energy from renewable sources at an affordable price," Traikov told Reuters in an interview.

"We are planning indicative maximum quotas for different types of renewable energy. It is clear that that the national cap should be at 1,500-2,000 MW for all, not more," he said.

Power prices are a politically sensitive issue in EU's poorest member state, where energy and heating bills during winter eat up a significant part of wages and pensions.

The indicative caps are part of a new law on renewable energy, which also plans to tighten the application rules for new projects and set timetables for connection to the grid. It is expected to be approved by the end of the year.

Dozens of Austrian, Spanish, American and German companies have rushed to build new wind and solar energy plants, bringing the wind energy capacity to 336 megawatts (MW) this year from 103 MW in 2008 and solar to 9 MW from 1.4 MW from two years ago.

The guaranteed preferential purchase prices and lax laws have boosted wind and solar projects to over 12,000 MW, well above the aging grid's capacity, and have clogged the system frustrating both investors and power distributors.

The new law also plans to fix the feed-in tariff for already installed solar energy parks, a legal pitfall that had prevented a steeper growth of photovoltaic assets, Traikov said.

At present, the guaranteed for 25 years preferential power purchase price can drop by an annual 5 percent for both new and old installations.

The installed solar capacity will surge to 330 MW by 2020 while wind power capacity will increase four times to 1,250 MW, according to Bulgaria's national plan on renewable energy.

The bulk of the green energy will still come from hydro-power plants, whose installed capacity is expected to reach 2,600 MW in ten years from 2,100 MW now, the plan showed.

Traikov said hydro-power projects, like the 500-million-euro Gorna Arda project, will help Bulgaria meet its green energy goals and maintain low energy prices in the same time.

In July, Austrian utility EVN signed a deal in July with state power utility NEK to take a majority stake in the long-delayed project with an expected capacity of 175 megawatts.

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