Bulgarian Watchdog Slashes Photovoltaic Investors' Profit Margins

Angel Semrdzhiev, Chair of the State Commission for Energy and Water Regulation (DKEVR), photo by BGNES

The State Commission for Energy and Water Regulation (DKEVR) is about to slash purchasing prices of solar-generated electricity in a bid to stem future power price hikes.

The new tariffs will most likely enter into force in August, when the energy watchdog is to make a final decision on the matter.

Investors in solar power projects will see their profit margin downsized from 20% to 7%, according to reports of private TV station bTV.

Angel Semrdzhiev, DKEVR Chair, argued Wednesday that the new tariffs would rein in future electricity price hikes amid the huge investor interest in building photovoltaic parks.

He insisted that photovoltaic projects had caused electricity prices to rise by 13% from July 1.

According to investors in the sector, the new purchasing prices make investments in renewable energy sources useless because the 7% profit margin is just about the profit rate on standard bank deposits.

The Bulgarian Photovoltaic Association (BPVA) and the Bulgarian Solar Association have vowed to appeal DKEVR's decision to reduce purchasing prices of solar-generated electricity before the Supreme Administrative Court (VAS).

According to BPVA Chair Nikola Gazdov, the state is forcing bankruptcy onto a number of investors who decided to invest millions of leva in such projects in the last few weeks or months but have not yet been connected to the energy grid.

In Gazdov's words, DKEVR based its decision on the data found on the website of a small German company producing solar panels which had unrealistically low prices.

"If they had used data of global producers of solar panels or independent consultancies or financial companies, the prices would not have been slashed as dramatically," Gazdov reasons.

At present, 600 MW of photovoltaic capacity have been connected to Bulgaria's grid.

Bulgaria's National Electric Company (NEK) and power distributors are now buying electricity from the first solar parks at much higher prices because prices of photovoltaic panels were much higher a few years ago.

According to DKEVR, prices of photovoltaic panels have decreased substantially, which is why the purchasing prices of the electricity they generate must be seriously downsized.

The BPVA believes that DKEVR's actions come too late and the decision simply aims to impose a moratorium on the construction of new photovoltaic parks at least until the parliamentary elections in the summer of 2013.

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