EU position on Bulgarian state aid to energy sector still unclear

It is still unclear when the European Commission would formalise a position on Bulgaria’s complaints that long-term electricity purchase contracts and the renewable feed-in tariff scheme should be considered state aid.

In June 2014, energy regulator WERC asked the commission to investigate if renewable energy producers in Bulgaria are receiving excessive state aid.

In addition, the regulator notified the commission about another outstanding issue – the long term purchase contracts between state-owned utility NEK and the private coal-fired producers operating the 670MW AES Maritsa East 1 and 908MW ContourGlobal Maritsa East 3 (see EDEM 25 June 2014).

The contracts were struck to ensure a return of investment for American companies AES and ContourGlobal, which have since upgraded the plants and made them more efficient and compliant with environmental standards.

At the time WERC said it had asked the commission for permission to discontinue state aid partially or in full until the EU authority makes an official decision on the matter.

The regulator expected a decision from the commission by last October but so far there was no update on the matter, a commission spokesman said on Thursday.

In the meantime the government has started renegotiating the NEK purchase contracts with the coal-fired plants in a bid boost the utility’s balance sheet and stabilise the country’s struggling electricity sector (see EDEM 21 January 2015). These should be finalised by the end of this month.

And last Friday the feed-in tariff scheme was officially scrapped for new renewable installations (see EDEM 6 March 2015). The country has already reached its 2020 renewable target.

The Bulgaria’s Photovoltaic Association (BPVA) said at the time that while the move would reduce investment interest in the country, the introduction of an electricity exchange could give renewable investors new incentives. Irina Peltegova