Bulgaria: electricity from biogas and biomass — feed-in tariffs, premiums and the Security Fund

The Bulgarian support system for electricity from biomass and biogas is based on feed-in tariffs set by the regulator, the EWRC, and on mandatory purchase of energy, and in recent years also on premiums paid from the Electricity System Security Fund (biomass was added to the list of tariffs and premiums only from 1 July 2023). For biomass the tariff purchase period is 20 years. The EWRC updates the level of the tariff every year.

Legal basis and mechanism

Support is regulated by the Renewable Energy Sources Act (ERSA). According to the regulator, it includes:

• priority connection of RES generators to the transmission or distribution network,
• mandatory purchase of energy from biomass power plants,
• preferential feed-in tariffs for the energy purchased,
• funds for network development, taken into account in the operators' investment programmes.

The act of 2007 set the duration of long-term contracts: 15 years for biomass generators. After the new act entered into force in May 2011, the period for purchasing energy from biomass at the tariff was extended to 20 years. The EWRC also maintains a methodology for fairly spreading across all customers the difference between the market (reference) price and the feed-in tariff.

How the tariff is set

In setting tariffs the EWRC analyses the type of renewable source, the technology, the installed capacity and the manner of installation. It takes investment and operating costs into account. The biomass tariff is updated every year depending on changes in three components: the cost of feedstock for energy generation, the cost of transport fuel, and labour and wage costs.

For example: in 2013 the tariffs for energy from thermal gasification of biomass and the biodegradable fraction of waste were BGN 367.88/MWh for installations up to 5 MW without cogeneration and BGN 400.97/MWh with cogeneration, and for installations above 5 MW BGN 357.98 and 391.06/MWh respectively. At the fixed exchange rate of BGN 1.95583 per euro this gives about EUR 183–205/MWh. These values date from 2013 and do not reflect current rates.

Connection rules

Biomass generators with total capacity up to 1500 kW conclude an access agreement with the distribution system operator on general terms, and above 1500 kW with the distribution or transmission system operator on general terms approved by the EWRC. Operators present annually forecasts of the capacity that can be connected, and the EWRC approves and publishes them.

Premiums and 2023

In its decision of 30 June 2023 the EWRC set tariffs for the period from 1 July 2023 to 30 June 2024 and added energy from biomass to the list (commentary). Premiums were set separately for installations up to 500 kW and above 500 kW. The premium equals the difference between the feed-in tariff and the reference price, and is paid by the Electricity System Security Fund. The producer's revenue will equal the tariff only if its market price equals the reference price.

Capacity limits in new contracts

According to press reports from 2015, the regulator was then proposing that new RES power plants built after December 2013 should no longer receive the preferential tariff and should sell electricity at market prices, with the exception of rooftop photovoltaics and biomass power plants up to 1.5 MW. For biomass this would have meant a segment supported for longer than most technologies.

The first biogas plants

The first Bulgarian biogas plant, located near Balchik, was commissioned in mid-June 2013 and has an electrical capacity of 1 MW. According to an interview with a representative of the technology supplier, published in March 2014, three further installations (0.9 MW and two of 0.5 MW) were to be built by the end of June 2014. The interviewee judged that Bulgarian tariffs offer greater stability than Romanian green certificates (Romania: green certificates).

Comparison

Bulgaria has a system of regulated tariffs in which the generator knows the rate, unlike the tenders in Germany, where the price is set by the bid (EEG 2021). The risk, however, is that the premium depends on a reference price set by the regulator, and that price can be higher than the market prices achieved, as the case of photovoltaics in 2023 showed.

Premium versus tariff: how it is calculated

A simplified example: if the feed-in tariff for an installation were BGN 300/MWh and the reference price BGN 250/MWh, the premium from the Security Fund would be BGN 50/MWh. If the producer actually sells electricity at BGN 200/MWh, its revenue is BGN 250/MWh, i.e. BGN 50/MWh less than the tariff, because the premium is calculated from the reference price and not from the actual one. That is why the regulator reduces the risk through annual updating and through discussed changes to the act that would allow premiums to be adjusted every three months and a true-up to be paid at the end of the year (discussed in the text Bulgaria: EWRC sets tariffs for July 2023–June 2024). The values of BGN 300, 250 and 200/MWh are illustrative.