SOFIA (Bulgaria), July 22 (SeeNews) – Bulgaria should continue to develop its legislation to promote investments in the manufacturing of equipment for renewable energy projects in order to sustain growth in the sector, a senior official from international law firm Wolf Theiss said.
“It is a very attractive sector – it certainly provides opportunity for the country, not only for the energy development but also in manufacturing,” Richard Clegg, managing partner at the Wolf Theiss Sofia office, told SeeNews in a recent interview. Wolf Theiss provides consultancy to projects in various spheres, including renewable energy.
"Renewable energy offers a wide range of potential assets to the country's economy, and that is something which the new government ought to appreciate," Clegg said.
Investments in the production of equipment for wind farms, solar parks and other renewable energy projects will lower capital costs and make the projects more competitive, he added.
"Bulgaria has a highly qualified manufacturing skill base which is not fully utilised […] and Bulgaria’s geography presents an opportunity for the new government to take a lead in developing renewable energy policy for the benefit of the Balkans and Eastern Europe," Clegg said.
Wolf Theiss is currently consulting three renewable energy projects in the country.
Bulgaria, an EU member since 2007, aims to increase the share of energy generated from renewable sources to 16% of its total production by 2020, compared to the current output which is below 10%. So far, the country has one solar park with a capacity of 1.0 megawatts (MW) and some 170 MW of wind farms.
"The state-run power grid operator NEK and local distribution companies are receiving hundreds of prospective interconnection applications for thousands of MWs," Clegg said. He, however, added that only a few of the prospective projects would be successful.
"The expectation is that between six and eight percent of all prospective projects will proceed towards completion."
In his view, the energy regulator and the government do not need to take measures against the so called "empty projects" as the market will regulate itself.
"In order to make money as a renewable energy investor, you have to invest equity into the construction of plant and infrastructure, into the grid and then you are selling at a regulated price. Process development, construction and interconnection naturally limit the number of projects that will succeed, not because there is a limit on the number of MWs from renewable energy that can be put into the system, but because there is a limit on the amount of money that equity investors are prepared to spend," Clegg said.
"Currently, equity investment is the easiest way for financing renewable energy projects after bank financing has been limited, following the global financial downturn," Clegg elucidated.
"What would limit renewable energy investment in Bulgaria is the fact that this equity investment hurdle is now higher and the amount of bank financing is less than it used to be, which would naturally limit the number of potential projects."
"Generally, the way larger renewable projects work is that an international utility or large financial investor will look for a local partner, and this is the opportunity for the Bulgarian businesses – to be a strong local partner," Clegg concluded.
Vienna-headquartered Wolf Theiss (www.wolftheiss.com) is one of the major law firms in central and southeast Europe. It has offices in 12 countries in the region providing consultancy in banking and finance, competition and antitrust, mergers and acquisition, dispute resolution, employment law, energy, infrastructure, telecommunications and information technology, real estate projects, regulatory and procurement, and tax law.
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