Bulgaria: EWRC sets RES tariffs for July 2023–June 2024. Biomass added to the list

The Bulgarian Energy and Water Regulatory Commission (KEWR, abbreviated EWRC in English) published a decision on 30 June 2023 setting feed-in tariffs for energy from RES for the period from 1 July 2023 to 30 June 2024. Electricity from biomass was added to the list. The regulator also set premiums for producers with capacity up to 500 kW and above 500 kW.

What the decision contains

According to the commentary by the law firm CMS of 3 July 2023, the decision:

• sets feed-in tariffs for the regulatory year from 1 July 2023 to 30 June 2024;
• adds energy from biomass to the list;
• determines premiums separately for installations with capacity up to 500 kW and above 500 kW;
• sets the reference price for photovoltaics (the estimated market price) at BGN 250.27/MWh, i.e. about EUR 128/MWh at the fixed exchange rate of BGN 1.95583 per euro.

How the premium works

The reference price is the basis for premiums paid from the Electricity System Security Fund (ESSF). The premium equals the difference between the applicable feed-in tariff and the reference price. The generator sells electricity on the market, and receives the difference between the tariff and the reference price from the fund.

CMS points out a risk: photovoltaic producers realised only BGN 160–170/MWh in the first half of 2023, so the reference price of BGN 250.27/MWh was higher than what the market actually delivered. For investors this is a signal that a premium calculated from an inflated reference may not cover the difference.

Planned reform

At the time of the decision, the law in force allowed the EWRC to change premiums at most once every six months and only after a significant change on the exchange market. A draft act from the Council of Ministers provided for the possibility of changes once every three months if the difference between the estimated and the achieved market price exceeds 5%. It also provided for a year-end compensation: the producer would receive the difference if its revenue from the previous year (sales and premiums) were lower than the value resulting from net production at the feed-in tariff, with a lower bound based on the monthly average base price on the IBEX day-ahead market. The draft passed its first reading in the National Assembly, and the second was expected before the end of July 2023.

What this means for biomass

The inclusion of biomass in the list means that biomass power plants have established bases for settling the tariff and premium in the 2023/2024 regulatory year.