Energy storage is among pillars of Bulgaria’s green recovery plan

A lot of legislative work is left to be done before Bulgaria can start the investments from its National Recovery and Resilience Plan – NRRP. However, all political parties are determined to avoid breaching deadlines, Dimitar Zwiatkow from law firm CMS Sofia told Balkan Green Energy News. Energy storage is a key part of it, he pointed out and estimated that cofinancing for renewable energy projects would remain available in the longer term.

Bulgaria is eligible for EUR 10.4 billion within its National Recovery and Resilience Plan, of which EUR 6.3 billion is in grants and the remainder should be provided through public and private financing. The package is part of the European Union’s Recovery and Resilience Facility, which makes up most of the NextGenerationEU spending program for a rebound from the COVID-19 pandemic.

The purpose is to make the economy greener and stronger at the same time and the main focus is on clean energy. There is EUR 1.7 billion earmarked for the item, which includes 350 MW in batteries.

Electricity storage is a key part of Bulgaria’s NRRP, says Dimitar Zwiatkow, Partner in the energy department of international law firm CMS Sofia, part of the CMS Reich-Rohrwig Hainz Rechtsanwälte GmbH regional office. Also, a special fund is envisaged for a pilot scheme to support small and medium-sized enterprises to install renewable energy systems for their own needs, he explained.

Ukraine war changing focus but not final goal

The deployment of renewables and energy storage will have an impact not only on a national level, but also in the whole Balkan region as it will entirely redefine supply chains and create cluster groups, in his view. It will be a call for all available suppliers and experts in Bulgaria, Romania and Croatia, but the other countries as well, Zwiatkow claimed.

“The war in Ukraine is changing the focus, but without changing the final goal – independence based on decarbonization. Climate change and the deadlines for CO2 emissions decrease will be put to second place for several years. But the final effect will be the same – in ten, fifteen years, we will have independent energy sources on the EU level, based on a decarbonized economy. Hydrogen also has big potential and will have decisive influence on decarbonization,” Zwiatkow stressed.

In ten, fifteen years, we will have independent energy sources on the EU level, based on a decarbonized economy

Dimitar Zwiatkow has more than 15 years of experience and is one of the preeminent advisers on mergers and acquisitions and large-scale portfolio transactions in the energy sector. He graduated from the Ludwig Maximilian University in Munich. His clients include a wide range of participants in the energy market like developers, investors, banks and energy suppliers from the fields of wind power, hydropower and photovoltaics.

CMS Sofia is the largest international law firm in Bulgaria, with seven partners and more than 40 lawyers – specialized in corporate law, banking and finance, energy, real estate and construction, commercial, tax, litigation and alternative dispute resolution. Energy has been a top practice area for CMS Sofia since the office opened in 2005.

The Recovery and Resilience Facility has very ambitious deadlines. Neighboring Romania already expressed concern it could miss the target date for the construction of renewable electricity plants of 950 MW in total.

All the political parties are showing and have to show readiness to avoid breaching deadlines by applying a more flexible legislative approach

“Bulgaria is about to submit the request for the first tranche under the NRRP amounting to EUR 1.4 billion as the National Assembly finally adopted the Law on Management of European Structural and Investment Funds. There are still challenges with the utilization of the second tranche, consisting of EUR 724 million. The political will is there. However, statistically speaking, only four out of 22 legal acts under the second phase have been adopted or are close to being adopted. Without doubt, all the political parties are showing and have to show readiness to avoid breaching deadlines by applying a more flexible legislative approach,” Zwiatkow said.

Roadmap for coal phaseout is stable

Another issue is the dynamic public opinion on some of the crucial policies for avoiding negative social and economic effects of the decarbonization of the economy, he warned. But the coal phaseout, which was a sticking point for a long time, now has a stable roadmap, in Zwiatkow’s view.

A range of coal exit scenarios and timelines are under analysis, with a focus on national security in the energy sector

Different scenarios with different timelines are under analysis with a focus on national security in the energy sector, he said. Even the Confederation of Independent Trade Unions (CITU) is proposing the creation of an energy transition commission to look at ways to decarbonize the energy sector, which was unthinkable a few years ago, Zwiatkow noted.

According to CMS Sofia’s knowledge, companies are expecting up to half of the financing needed for the implementation of individual projects to be obtained through funds granted under the NRRP. Zwiatkow asserted that cofinancing for green energy projects may remain available in the longer term.

Decision on nuclear power is political

Modernizing and expanding the country’s power distribution grid has a central role in the low-carbon economy policy reform set in the plan, he stressed. “The measures include establishing a national decarbonization fund as well as lowering the administrative burden for companies and households throughout the project cycle, especially for those that need to join the grid. Moreover, there are a number of investments laid out in the plan for building and commissioning infrastructure adequate for transmission of hydrogen and low-carbon gaseous fuels for the supply of power stations. The improvement of the electricity grids is also progressing – I refer to the recent doubling of the Dropla cable line in the northeastern part of the country and the connectivity improvement plans with neighboring countries,” Zwiatkow said.

As for Bulgaria’s stance on nuclear energy, he highlighted the current controversies in Germany and on the EU level and underscored it is a question of technology, strategic partners and international politics. The Balkan country is more than 20% dependent on its Kozloduy nuclear plant.

“You cannot compare renewables with nuclear. They have totally different drivers and risk components for investors. Development of new nuclear capacity in Bulgaria will be a political decision based on the country’s global positioning,” Zwiatkow added.