WIND

It’s bleak in Bulgaria

ADAM BARBER

December 13, 2013

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Ah, Bulgaria. Is this the beginning of the end, or the start of the beginning?

For in the space of just 36 months the Balkan territory has, having initially embarked on a course to develop commercial wind energy, undertaken what amounts to nothing short of a U-turn.

Earlier in December Bulgaria’s parliament voted to enforce a 20% charge on income generated by wind energy projects in 2014.

Faced with daily protests associated with corruption and the increasingly perilous financial position of state energy provider NEK, the government was coming under pressure to act.

And, whatever your view, its position of relative inactivity was no longer tenable.

Indeed, having overthrown the previous ministerial cabinet back in February, based in part on its previous management of the domestic energy markets, an extreme overcorrection comes as no surprise.

What does raise eyebrows, however, is the speed and extremity of the change – with the measures pushed through parliament between the two budget law readings and with no opportunity for debate.

Moreover, with the charges due to come into effect from 2014, there’s real concern from those within the market that in the short term, the fees will cause a series of bankruptcies, while in the longer term, they will scare away the prospect of future inward onshore wind energy investment.

That’s significant not just for Bulgaria but for the wider view that key portfolio players take in assessing the merits of the Balkans – particularly as they’ve previously viewed Bulgaria as a possible way in which to diversify any intended spend.

Of course, industry insiders would argue that the changes currently taking place within Bulgaria have been not without their warnings – since overcapacity of electricity generation has previously called into question future developments.

Indeed, in April some estimated that, with an installed total capacity of about 12,000MW, a maximum consumption of about 4,700MW and a limit of about 300MW available for export, change was inevitable.

Whatever the case, as wind energy developers increasingly look beyond Europe and into key emerging markets within Sub-Saharan Africa and South America, the experiences within Bulgaria should muster merit.

Particularly since, while many would view this as an isolated instance in what amounts to an increasingly well-established European continent, without learning lessons from the past, history has a horrible habit of repeating itself.

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