The Bulgarian Parliament published draft amendments to legislation for the planned retroactive CfD scheme and changes to REMIT in the Bulgarian section of the World Energy Council website: http://www.wec-bulgaria.org/закон-за-изменение-и-допълнение-на-закона-за-енергетиката-общест/ (“the Bill”).

A summary of the draft and an English translation can be found at the following link.

Any comments about the draft should be made before 23 March 2018 by sending an email to the following address: komisia_energetika@parliament.bg

A summary of the main changes to the legislation include:

I. CHANGES ENTER INTO FORCE ON 1 JULY 2018 AND AFTER THAT DATE THERE WILL BE NO OFFTAKE UNDER FEED-IN TARIFF

Most of the provisions of the Bill enter into force on 1 July 2018, and from this date onwards the Public Provider (National Electricity Company) and the end-suppliers (CEZ, EVN and Energo-Pro), according to article 37 of the Bill, can not offtake electricity produced from renewable energy producers with 4 MW or more installed capacity under the current Feed-In Tariff (“FiT”). The Bill does not terminate existing Power Purchase Agreements (“PPAs”), but article 37 asks producers to choose between the newly established retroactive Contracts for Difference (“CfD”) scheme or joining the free market, which is not an economically feasible solution. By 30 June 2018, prior to the entry into force of the Bill’s main provisions, renewable energy producers with 4 MW or more installed capacity will enter into the retroactive CfD called “contracts for compensation with a premium” under article 31a of the Law for the Energy from Renewable Sources (“LERS”).

II. STRENGHTENING THE POWERS OF THE ENERGY AND WATER REGULATORY COMMISSION (“EWRC”)

The Bill provides for strengthening the EWRC by providing the regulator with the power to: (i) determine CfD premiums by 30 June each year; (ii) determine the estimated price of the electricity need to cover technological losses of the TSO and the electricity distribution companies; (iii) initiate changes to the Electricity Trading Rules; (iv) control the limitations established by EU Regulation No. 1227/2011 on wholesale energy market integrity and transparency (“REMIT”); (v) cooperate with other authorities, ACER and regulators in EU member states to implement REMIT. The Bill empowers the EWRC to investigate breaches to REMIT, and outlines the respective sanctions.

III. CfD PREMIUMS

The EWRC determines premiums by June 30 each year for renewable electricity by calculating the difference between the FiT and the estimated market price for the following 12 months. Producers will be obliged to pay a deposit/bank guarantee of 150% of the highest monthly level of produced electricity over the last 12 months (“CfD counter-party”). These deposits/bank guarantees will be reduced as the producers fulfill their obligations to the CfD counter-party. CfD premiums will not be paid, if a producer: (i) has not sold electricity on the free market; (ii) the deal was concluded on the electricity exchange at a negative price; (iii) its monthly certificates for origin or guarantee of origin have not been dully transferred. CfD premiums will be paid by the end of the next month following the production of electricity after presenting the invoice for the electricity sale, and the monthly transfer of certificates.

IV. CfD

The CfD will be signed between the producers and the CfD counter-party. CfD premiums will not be paid if a producer has any obligations to the CfD counter-party. The CfD counter-party will compensate with a CfD premium for producers with installed capacity of 4 MW or more for the entire quantity of the produced electricity, registered with monthly certificates for origin with the exclusion of the quantity of the electricity needed for securing the exploitation stability of the main facilities, and the quantities used for their own needs or for participating in the balancing market.

V. CHANGES TO LERS AND TO THE SECONDARY LEGISLATION

The Bill provides for related changes to LERS. Secondary legislation implementing these changes will be adopted within three months.