The majority of the contracted power will originate from a 123 MW solar PV project that is currently under construction, with commercial operations scheduled for the spring of 2023. Both off-takers, Yettel (formerly Telenor) and CETIN, are part of the PPF Telecom Group and cumulatively serve over 10 million customers in Bulgaria and Hungary. As per Enerdatics’ research, the power purchase agreement (PPA) marks Bulgaria’s second major corporate PPA signed for a period of 10 years at freely negotiated prices, following the 33 MW PPA signed by another telecom company, A1 Bulgaria, in Mar '22.
The PPA is believed to be driven by several initiatives taken by the Bulgarian government to ramp up renewable installations in the country, amid its transition away from a power mix based on conventional energy sources. One of the major regulatory changes is the Draft act, which simplifies grid connection procedures through the introduction of a universal interconnection agreement for greenfield projects, replacing the existing system of preliminary and final grid approvals for the same project. The move will help the country accelerate permitting for 24 GW of renewable energy project applications, as per an Oct’22 report from Bulgaria’s Electricity System Operator (ESO). Bulgaria targets to reach 5.9 GW of renewables capacity by 2031, and a recent forecast by SolarPower Europe pegs the nation as one of the most attractive emerging markets for solar development in Europe, with 3.8 GW of capacity expected to come online by 2024. Market uptake will be supported primarily by unsubsidized large-scale solar projects backed by PPAs in the absence of an auction system for utility-scale PV.
Swiss energy company Axpo has called out the vast potential of corporate PPAs in the Balkans, highlighting the lack of national support schemes for renewable energy projects. Axpo Bulgaria MD Milena Videnova stated, however, that the PPA market in the country is not yet developed - Bulgaria witnessed its first corporate off-take agreement in Mar’22. "Usually, the project is leveraged, and the lenders would like the project's cash flow to be very well protected. The challenges in front of the PPA market in Bulgaria are liquidity, debt, and credit risk," Videnova said. She called on the EU to cover the construction risk on the projects via the European Investment Fund, adding that state support may be required to mitigate counterparty credit risk, considered high in Bulgaria and the whole of Southeast Europe (SEE) amid the current high energy price volatility.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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