Solar power plant (41MWp): Bulgarian renewable energy market study

Simeon Ventsislavov Arnaudov1, Byung-chul Park2, Gyung-sam Kim3, Kyung-sam Kim4, Mihaela Apostol5,

Rofat Math6, Young-sang Cho7

Abstract

Green economic growth became slogan of thousands public and private activities,

nevertheless there are arguments for switching to low-carbon, high-efficiency energy systems

disregard enormous investment cost. Innovative energy technologies are able to reduce

carbone emissions in aim to limit or avoid climate change directs the public debate. However

renewable energy source reduced dependence on imported energy, suspension of conflicts

over energy resources, and the increasing price of fossil fuels also are motivate actions.

Nonetheless, the potential price and difficulty of doing the transition to a new energy system

have brought forted essential opposition from fortified economic interests and consumers

equally. In this paper we investigate whether and how photovoltaic power plants as case of

renewable energy growing market as Bulgaria do, could become an economic occasion rather

than a precious burden. Could a photovoltaic energy capacity induce net economic growth

rather than social pay off burden? Analyzing foreign (Korean) direct investment as

photovoltaic power plant case study as example of some successful or unsuccessful practices

of rapidly growing domestic renewable market. Our aim is this paper to be useful to public or

private energy communities in supporting them with professional renewable domestic market

anatomy.

Keywords: photovoltaic power plant, feed-in tariff, renewable energy regulation, Bulgaria

1 PhD Candidate, ITPP/TEMEP, Seoul National University (IT Senior Expert at Ministry of education, youth and science, Republic of Bulgaria) 2 Senior manager, Korea South-East Power, Republic of Korea 3 General manager, Overseas business team, New business development department, Korea Southern Power, republic of Korea 4 Senior manager, Korea Southern Power, Republic of Korea 5 PhD candidate, ITPP/TEMEP, Seoul National University (Project consultant, Ministry of communication and information society) 6 Master Candidate, IEPP/TEMEP, Seoul National University (Planning officer, Ministry of industry, mines and energy, Kingdom of Cambodia) 7 Assistant professor, Yonsei University, Republic of Korea

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1 Introduction

1.1 Legal and regulatory framework Like member of The European Union, Bulgaria as state follow Directive 2009/28/EC, where

in year of 2020 16% of total consumed electricity must be from renewable source.

Particularly in Bulgaria the legal and regulatory framework is leaded by Ministry of economy,

energy and tourism (MEET), which conduct the energy policy pursuant Energy law. The

ministry is in account of all energy policy, and providing transparent, stable and reliable

framework for domestic and foreign direct investors, existed power plant owners, market

operators, electricity distributors, and sub supporting government agencies. Market structure

is showed on figure 1.

The national regulator authority for energy is recognized in The State Energy and Water

Regulatory Commission (SEWRC). The State agent is established by the Energy law as

specialized government agent which regulates all activities in energy, water supply and

sewerage sector.

Under EU legislation, the operators of the transmission networks for gas and electricity need

to be separated and made independent from undertaking with generation and supply activities.

This process of renewable energy sector is more advanced and market players need to have

certification of the Electricity System Operator (ESO) before SERWC8.

8 EU report march 2013; www.mi.government.bg/en 2

Figure 1: Legal, regulatory and market structure of electricity market in Bulgaria9

9 Ministry of economy, energy and tourism, Republic of Bulgaria; www.mi.government.bg

Renewable Energy Power plants

(under Feed-in Tariffs)

Coal Independent Power

Producers

State-owned Energy Suppliers

(nuclear, coal, gas)

NEK: single buyer; aggregator;

large hydropower generator;

supplier of last resort &

transmission company

System operator (owned

by NEK): organize the

balancing model

High-voltage

customers

Energo Pro

EVN

CEZ

Generation Transmission Distribution

Co-generation supplier

Purchased and paid for by NEK under Energy

Purchased and paid for by NEK under Energy

Law

Purchased and paid for by NEK under

Purchased and paid for by NEK under Energy

Distribution entities collect on behalf of NEK

Regulated electricity prices through

annual tariff orders

15%

15%

~58%

~12%

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1.2 National energy market structure Bulgaria’s share of renewable energy in final energy mix reached approximately 15% 10

(figure 2) following the target of 16% consumption required by Directive 2009/28/EC.

Currently, Bulgaria renewable energy capacity has 850MW installed capacity of wind, 1040

MW capacity of photovoltaic and 3100 MW capacity of hydro (large and small) power plant

(3). Other installed RES as BIO are negligible (around 29MW[3]). Total installed capacity of

the Bulgarian electricity system is a bit less than 14 000 MW, where renewable power plant

account 35.5% of it. Furthermore, during year of 2012 peak of electricity demand were 7,444

MW, and minimum 2600MW. Comparing total capacity of RES reserve with domestic

market peak and minimum, it is obvious to conclude that the part of RES among all electric

capacity is high. However, have to claim that there is opportunity Bulgaria to share its own

RES capacity with other potentially having lack of RES EU members in the beginning of

2020. However the energy regulator has to keep in mind this positive news that the annul

nuclear power and thermal power plants can operate 7,000 hours/year, while wind and solar

farms can operate about 1,000 hours/year.

Implementing legislation for Feed-in tariff scheme to support RES was recognized from

investors as main driving force of sharp growing renewable energy sector. One more, the

regulator annually have rights to adjust the feed-in tariffs on 1st July each year gives chance

to many photovoltaic company to sign fortunate 20 year take-off contract. After rapid

expansion of solar power plants in 2012, regulator in aim to cool investor ambitions reduce

the feed-in tariffs respectively with 50%. This government campaign was recognized from

society as only way to safeguard the public interest of low price electricity consumption with

0.08€/ kWh. Another investor interest frizzing step was done on September 2012.The GRID

access fee have been introduced for renewable power plants as well, which reduce their

revenue by 10% to 39% depending on the type of renewable technology and date of feed-in

tariff signed contract. Finally the RES subserve accounts 7% in the final customer price for

bought household and liberalized market in 2013.

10 World bank assessment 27th May 2013; www.mi.government.bg/en

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Figure 2: Generation structure in 201211 (TWh)

According to “Finding and recommendation” of European commission in May 2013 after

resigning of Bulgarian government, shows in practice how the existing facilities of renewable

energy are much larger than necessary in year 2013 still far and away from pending

requirements Directive 2009/28/EC. The report announced that the government instability

followed by regulator intervention led to the temporary situation most of the RES plants to be

forcibly stopped or restricted to work. The limitations do not apply to hydro power plants,

especially (2013 Spring season) when the dams are full and cogeneration facilities of district

heating are needed in Urban area (used for supply central heating system to public buildings

and private householders). Other finding is price calculation of energy mix (nuclear; thermal;

photovoltaic; hydro; wind power) complexity. The price of energy from the picture 3 we can

see that it varies from $28.62 MWh to $479.93 MWh (08 June 2013 exchange rate: $1 = BGN 1,478),

while the price at which the National Electricity Company (NEC) sells energy distribution

companies and in turn consumers is $53.57 MWh. 12 European Commission report monitor

the energy surpluses, and call for greater transparency in the energy sector, which appeals to

government to open the door and the Electricity System Operator (ESO) began to publish

information in real time at what point how many and which power operate facilities in the

country13. It can be monitor online by stating that the published data are operational.

11 Ministry of economy, energy and tourism, Republic of Bulgaria; www.mi.government.bg 12 Ministry of economy, energy and tourism; Republic of Bulgaria; www.mi.government.bg 13 Electricity system operator: www.tso.bg/default.aspx/page-707/bg

15% Renewable energy

12% Long term contracted agr. TPP

35% Nuclear power plant

23% Thermal power plant

15% Steam thermal power plant

15%

15% 12%

35%

23%

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Figure 3: Power plant contracted price in USD/MWh (Source: MEET, Republic of Bulgaria8)

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1.3. Renewable energy in Bulgaria Definition14 of renewable energy claim that RES is energy that comes from resources which

are continually replenished such as sunlight, wind, rain, tides, waves and geothermal heat.

Importance of renewable energy is in reducing possible climate change and minimizing

global warming concerns, covered with high oil prices, and increasing government subsidies,

are driving increasing renewable energy legislation, incentives and commercialization.

Economic growth through increasing usage of RES meets strong social impact. RES usually

rely to innovation technologies, according to specific natural resources of Bulgaria, some of

those technologies are customized to the geographical location of the country. All engineering

solutions, scares of natural resources, government regulation, and profit maximization

increase amount of direct investment in creating brand new renewable power plant. It is

understandable if investor is private agent return of investment shortage is the main company

goal. In other hand level of electricity price has strong social impact. In case of Bulgaria, in

middle of Feb 2013 government resign under pressure of social street movement against

increased electricity bills in sudden.

Bulgarian government adopted "Access to sustainable and effective energy resources"

measures suggested by the EC. Follow pending EC regulation in year 2020 Bulgarian energy

market have to consume renewable energy in minimum of 16% out of total produced

electricity. According to EC report findings Bulgaria is going to reach this level in the end of

2013.

Research objectives are to study Korean FDI Solar Power Plant in Bulgaria. To analyze

renewable market situation, will be conduct company behavior of foreign direct investment

companies (special project companies): “RES technology” Ltd and “ASM investicii” Ltd. It

will be monitored company reaction induced from government market interventions.

Successful and unsuccessful practices of both companies will be presented as well. In

analyzing FDI in renewable sector will be study the degree of collaboration with domestic

energy expertise (in view of academic and other domestic companies who are providing

energy or engineer solutions).

14 European commission http://ec.europa.eu/energy/renewables/index_en.htm 7

2 Context

2.1 Price of electricity In this study we figure out two types of price: feed in tariff and consumer price. Price of

electricity15 is summation of power supply (base price) power distribution price; supplements

price (for usage of green energy).

The price of electricity in the market with different sources of electricity by various PA is

formed by the combination of various contracts, operation costs and allowances for green

energy, while electricity price has strong social significance. According to the latest World

Bank report on Bulgarian energy market (May 2013), Bulgarian citizens are energy poor. It is

meaning the citizens are spending more than 10% of their income buying energy services

(electricity supply; others).

Price of feed-in tariffs [USD $/MWh] (Source: ministry of energy, economic and tourism) is

shown in table 1.

Table 1: Feed-in tariff agreement by RES8

15 Bulgarian Photovoltaic Association www.bpva.org

Renewable energy company Capacity (MWp)

Feed-in tariff (USD/MWh)

Type of RES

ASM BG Investicii S.A. 21 $ 472.93 solar Wind force BG Ltd 10 $ 365.35 solar ZBE Partners S.A. 50 $ 365.35 solar BCI Cherganovo Ltd 29 $ 365.35 solar Helios project S.A. 25 $ 365.35 solar RES technology S.A. 20 $ 365.35 solar Ecosolar Ltd 15 $ 365.35 solar

Company for energy development Ltd 14 $ 365.65 solar Ecoenergy solar Ltd 10 $ 365.65 solar E.V.T – Electra Volt Trade S.A. 10 $ 365.35 solar

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By National Energy law regulation all photovoltaic power plants contract long term 20 years

purchase power agreement, also each year on 1st of July the regulator set up new feed-in tariff

for the new comers. It is mean one time signed PPA is stays till the end of the contract. On

year 2012 with aim to protect energy market and to limited rapid growth of photovoltaic

investment, regulator decreases the feed-in tariff approximately with 50%. Even though down

slope of feed-in tariff last year (after 1st July 2012) the amount of connected solar capacity to

national GRID was 721MW.

That time the only reaction of regulator was to decrease the take-off price of all new

renewable PPA contracts.

2.2 Energy export Usually, as was written above the important things in the energy sector in Bulgaria are

happening around the 1 July, when the energy regulator, which plays a decisive role in this

sector decides on electricity prices and quantities to be sold on the regulated and free markets.

So even before the decision of the regulator last year to be taken, traders of electricity warned

that exports from Bulgaria will be blocked. The reason cited was the increase in the price of

Dubovo energy Ltd 10 $ 365.35 solar Mondy Stamboliiski S.A. 10 $ 166.44 BIO BCI Kazanluk 1,2,8,9,10 25 $ 160.35 solar Vetrokom Ltd: VEP Kontakt Consult 23 $ 129.22 solar EVN-Kavarna Ltd 16 $ 129.22 solar A and S Geo energy Ltd. 156 $ 127.19 solar Eolika Bulgaria S.A. 60 $ 127.19 solar Vetrokom Ltd: VEP Vetrkom 50 $ 127.19 wind Kaliakra Wind power S.A. 35 $ 127.19 wind Haos invest-1 S.A. 16 $ 100.81 wind Sofiiska voda S.A. 3 $ 81.86 BIO Energo-pro S.A. 103 $ 75.78 Hydro BAD Granitoid S.A. 23 $ 75.78 Hydro Litex Hydro S.A. 6 $ 75.78 Hydro

Currency exchange rate (8th May 2013) 1 USD= 1.478 BGN

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transmission, which is paid for each megawatt hour of electricity exported from the country

and which in July 2012 was increased from $ 15.56 to $ 23.21 per MWh, an increase of

74.72%. Hardly the problem with this fee would be so great if it was applied in all other

countries. At present, however, charge transfer electricity export only in Romania and Greece,

but is significantly lower than the Bulgarian. This naturally led to the non-competitiveness of

the Bulgarian electricity to regional and is one of the main factors for the sharp decline in

exports from Bulgaria. Statistics export results shows in Q1, 2013 Bulgaria's16 electricity

exports had decreased by 22.5 % on the year, while domestic consumption of electricity had

fallen by 13.07%.

Reducing transmission cost could increase renewable energy productivity on the free market

and elevate income from exporting energy to country neighbours markets.

2.3 Renewable energy restriction Above were discussed decreased feed-in tariffs and increased transmission cost. These are not

only cooling restriction to RES investor in domestic energy market.

Since February 2013, in aim to secure domestic energy balance from huge surplus capacity

the Electricity System Operator (ESO), gives one day in advance maximizing quotas to

power generator capacity of all wind farms and photovoltaic panels. The announcement of

these quotas is spread to power contractors by the three power distributors. For example the

quotas restricted wind and solar contractors by 40% from 10 am to 5 pm on Thursday (18th of

April 2013) in order to maintain a balance between the production and consumption of

electricity17. This act significantly will affect revenue income of photovoltaic power plants.

In other hand according to the statement of the Bulgarian Photovoltaic Association (BPVA),

renewable energy plants cannot influence the balance of the energy system because their

capacity ranges from several KW to several MW8. However hundreds of small photovoltaic

contractors are contributing to over produced capacity of energy.

16 Energy news http://www.novinite.com/view_news.php?id=150837 17 Energy news http://www.novinite.com/view_news.php?id=149868

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2.4 Renewable sector overview In figure 4 is shown total capacity of renewable energy by source14.

Figure 4: key figures for the Bulgarian electricity market in end of 2012

The installed generation capacity stood at 13.8GW, the share of nuclear, fossil fuel and

renewable energy being 14.5%, 50.0% and 35.5% respectively. The Bulgarian power plant

generated almost 47TWh of electricity, net exports were 8.4TWh and the inland consumption

was 38.6TWh. The share of nuclear, fossil fuel and renewables stood 33.6%, 53.8% and 12.6%

respectively [7]. In comparison Word bank assessment2 shows 15% of total capacity of

consumed electricity was generated by renewable sources. Important finding is the amount of

maximum load of 7.4GW (or 54% of the installed capacity) was reached in February 2013. In

90% of the hours the load was below 5.5GW. The minimum load of 2.6GW (or just 19% of

the installed capacity) was reached on May 2013. Based on those findings the Bulgarian

electricity system had significant overcapacity.

9010 MW

3400 MW Hydro power plants

1040 MW Photovoltaic power plants

850 MW Wind power plants

9010 MW Other fossil power plants

3400 MW

1040 MW

850 MW

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2.5 Renewable sector highlights. Under normal market circumstance, included well design central buyer, electricity

distributors and energy experience build in fossil and fuel energy, the renewable energy sector

was very welcome from hundreds domestic investors as new business opportunity.

Renewable market highlight underline several very important points as:

• Driving force of renewable energy sector development is long term PPA (power

purchase agreement) and fixed Feed-in Tariffs (FiT);

• Non-government organization (NGO) - Cluster organization represent private interest

in government face;

• International Events - renewable energy (RE) growth create opportunity Bulgaria to

dominate in local renewable energy market, example is Solar South-East Europe on

29-31 May 2013;

• Available natural sources of RES are: sun; wind; water; hot thermal springs

(negligible source).

• Good academic and university programs thought specialist for energy sector.

• Investor cooling restrictions was enlarging from high cost of renewable energy fixed

FiT, which somehow harm social interest in using cheaper sources of electricity.

• Regulator scalping prices of renewable energy had drop drastically from 1 July 2012.

According that fact, the electricity from photovoltaic panels mounted on roofs and

facades with power up to 30 kilovatpika will fall from $ 409.49 to $ 224.57

(approximately 45% less). For installations from 30 to 200 kWp current price of

$403.58 will be $203.18 (approximately 49% less). Manufacturers of wind energy are

less disadvantaged. In wind farms that work 2250 hours the decline was 21% (from

$127.39 to $100.61) and for working more than 2250 hours the reduction is 30%;

• Regulator on 1st July 2013 keeps regulation rights to change the feed-in tariffs for next

period of one year.

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3 Benchmarking Compare with other Member states, the Bulgarian efforts to reform the electricity sector

started late and look modest and largely incomplete. The electricity market in Bulgaria

follows a hybrid model where part of the transactions for the sale of electricity are concluded

at regulated prices, approved by the regulator, and the remaining part is trade on the

liberalized market at freely negotiated prices.

European commission regulation 2009/28/EC force state members to encourage investment

in renewable energy sources and in other hand encourage energy efficiency. The Bulgarian

market follows the EU regulations rabidly. For example, in 2020 year, Bulgarian has to

consume 16% of total capacity of electricity generated from renewables. In 2013, by World

bank assessment7, the consumed 15% of total capacity generated by RES. This is result of

huge investments in wind and photovoltaic power plants. Impressive is photovoltaic growth,

which draws sharp slope-up in 2012 adding 721MW (Figure 6) to the national GRID18.

All this details gives to Bulgaria respectful position in European Photovoltaic Giga Family. In

Europe are short numbers of countries with generated solar capacity upper than 1GW. Since

May 2013, in a glance Bulgaria has capacity to generate 1040MW by usage of photovoltaic

panels.

Worthy is the number of consumed electricity gained from solar power plants, here the

Bulgarian consumer keep 6th place among EU members with its own consumption of 12719

[Watts] per day generated from solar power plants. This number is far ahead from its north

neighbor Romania with its 0.3 [Watts] (Figure 5).

National policy of yearly changing FiT was as soil for renewable energy seeds. Cause

regulator had of fixed FiT policy on the market new industry appears15 . Renewable investor

expansion creates not only possibility to fulfill EU regulations, also increased employment

rate in energy sector. RES growth created new branch associations, the market became center

18 Eurostat http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/ 19Energy news http://www.capital.bg/politika_i_ikonomika/bulgaria/2013/04/08/2037825_top_20_na_elektroenergiinite_moshtnosti_v_bulgariia/

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of number international events for green energy growth. A global market leader had entered

the market and increased the local competitiveness of RES construction, operating and

maintains (O&M) services. The market became enough matured to export good practices to

neighbor countries, and in other hand its create opportunity to domestic and multinational

companies to cooperate and in some case for signing MoU for future joint working.

Only and big disadvantage is minimum participation in manufacturing own RES technologies.

There are some numbers of companies who are focusing on producing (generating less than 2

kW electricity) home appliance, where solar panel manufactures in producing panels with

capacity higher than 2kW are few.

14

Picture 5: Solar capacity19 per citizen in the European Union [W/capita]

15

Picture 6: Solar capacity18 in the European Union [MW]

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4 Project scheme Electricity production in Bulgaria dates back to the late 19th century. The first Thermal

Power Plant was put into operation in 1899 in Pernik city. In 1900 was put into operation the

first “Pancherevo” Hydro power plant with capacity of 1600 kW. By the middle of the 20th

century were built many small thermal and hydroelectric power with a total 111 000 kW. In

1939 they produced 266 million kWh of electricity and 42 kWh / inhabitant. Currently energy

diversification calculates nuclear, thermal, wind, solar, hydro and BIO power plants.

Currently on the energy market are operating Public and Private companies. The partial

privatization of energy market allowed private domestic and foreign companies to invest in

energy sector.

Attractiveness of historically mature energy market brings participants all around the Globe.

To understand the nature of Bulgarian RES market will be analyze company’s experience

operating with Korean source of capital or RES technologies. In this case those companies

are LG CNS, “Korean Power Electricity Company” and “SDI Company Limited”.

4.1 Special Project Company In year 2011 Korean electric power company (KEPCO) and SDN are creating Special Project

Company (SPC). Purpose of SPC 2SDN-KEPCO Veliko Tarnovo Solar Plant” is building,

operating and owning Solar power parks situated in two neighborhood district in Veliko

Tarnovo County.

Main financial source of SPC is Korea Development Bank (KDB) with $ 49 million, where

both companies are participating with private debt funding of $97 million. Debt equity grant

ration is 72/28, where private equity funding is $ 57 million. [19]. Source of company

revenue is contracted fixed FiT for 20 years, more information about SPC is shown on table 2.

SPC company study shows some limitation in collecting information. Nevertheless confined

information collected from World bank’s “Private principals in renewable energy” data base

we do professional analyze of company behavior as FDI investor. Further, more we do

evaluate number of successful and unsuccessful practices.

17

According to financial risk allocation SPC were established from Korean State Company

(KEPCO) and semiconductor venture company (SDI). Our sentiment is support by very

temporary political instability which we saw in Feb 2013. It’s was proved that Bulgarian

government canceled PPA agreements with RES companies unduly. Currently Bulgarian

judiciary sues that act, and all RES companies has available PPA agreements with personally

contracted fixed FiT. Other financing limited risk allocation is that the fund source of

investment is fully supported by Korean side (Korean bank and private company funds). On

stock market, SDI had negative 52 weeks slope of share price decreasing (-68% for the

period).

About installed photovoltaic technology there is very limited information. According to

Chinese PV producer Chient, they do supply some of the installed equipment. In other hand

according to LG CNS web site they supply some of the photovoltaic panels. According to

Bulgarian newspaper in Samovodene Solar parks are installed PV panel produced by LG

CNS, and in Zlataritsa Solar power plant are installed Chinese manufactured PV panels.

Both solar parks are having different contracted fixed FiT. Samovodene Solar park had

contracted before 1st July 2012 with 20 years fixed FiT of [$472.93/ MWh], where Zlataritsa

Solar power plant was contracted after 1st July 2012 with 20 years take-off agreement with

fixed income of [$365.35 / MWh]. These differentiations make different index of rate of

return in both projects.

Similarities of these solar parks are analogous geographical location. In solar power

technology only generating source of electricity are solar radiation20, daily sunny hours and

average number of yearly sunny days (picture 7). It is obvious that both parks will have alike

parameters. In one side this had made easier investigating the solar power potential of Veliko

Tarnovo County. Our expertise strongly emphasize disadvantage. Aerography (weather)

forecast affect similarly both photovoltaic power plants. For example there is a rain storm, or

cloudy days, both solar parks will produce very limited capacity of electricity, which means

decreasing of FiT daily income. Research stab to collected information about power plant

maintain and operation is unsuccessful.

20 Figure design is done by Simeon Arnaudov, based on data and maps with Source: www.mi.government.bg and http://www.solarpro.bg/show.php?storyid=1125

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Table 2: Special Project Company “SDI-KEPCO Veliko Tarnovo Solar power plant” overview

Company

RES technology ASM-BG

Geographical location Zlataritsa village, V. Turnovo Samovodene village, V. Turnovo

Date issue of license 2009.12.14 2010.01.18

Date of generating energy N/A N/A

Project consultant Kim & Chang, Korea Kim & Chang, Korea

Constructor N/A N/A

Technology Photovoltaic panel Photovoltaic panel

Power plant capacity 20 MW/h 21 MW/h

Off-taker National Electric Company National Electric Company

Electricity distributor EVN EVN

Investor

€ 70 million € 80 million

ROI 9% per year 9% per year

Capital

KEPCO - SDI KEPCO - SDI

19

Figure 7: Geographical location/ Solar radiation map/ Power GRID map

20

4.2 RES technology provision Korean companies joined Bulgarian RES energy market is experienced with photovoltaic

equipment supplying as well. LG CNS penetrates the European solar power market for the first

time with supply and build of 21.3MW (KRW 65.4 billion) solar power plant system. The

generated electricity from these photovoltaic panels are enough to power 7,500 household per

year, reducing over 138,000 tons of CO2 equivalent of planting 5,000 pine trees21.

LG CNS has implemented solar power systems in full operation in 4 areas of Bulgaria – Yambol,

Valchin, Skobelevo, and Smolnik. The total amount of the projects worth 44 million Euro (KRW

65.4 billion) with contractor Astronergy Solar Korea Co., Ltd14.

The Bulgaria project has received the spotlight in the industry as the first overseas project to use

the Smart Green Solution (SGS)* that LG CNS developed for the first time outside Korean

market. The SGS system is an integrated solution with aim to support the managing the

electricity generated process in an efficient way supporting distance controlling.

The LG CNS success of the Bulgaria solar power project was in expanding companies

experience into the overseas solar power markets such as Eastern Europe is, in a time where

investments in renewable energies are increasing.

In 2012, as the contractor of the Bulgaria solar power plant invested by Chint, LG CNS had

demonstrated its expertise in building PV power plant. Chint/ Astronergy today announced its

completion of a solar PV power plant with a total installed capacity of 50MWp in Bulgaria. The

commercial operation date of the solar power plant is on June 12, 2012. Given the smooth

collaboration in this project, the two companies decided to seek further cooperation in the solar

power industry with signing MoU22 in March 2013.

21 http://www.lgcns.com/pr-center/news/view/1358/lg-cns-penetrates-the-european-solar-power-market-for-the-first-time 22Chint S.A., http://en.chint.com/about/detail?id=50

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5 Implementation strategy

5.1 Technology solution Electricity production and its cash flow of fixed FiT with irreversible installed photovoltaic

panels completely depends of scared natural resources. In other words FiT cash flow is

calculated from generated and transmitted electricity to national GRID. Theoretically FiT cash

flow increased with increasing transmitted electricity. Practically there are many regulatory or

atmosphere obstructions. On the order of Privet owner of Power plant SPC company cannot

influence regulator policy. For example regulatory to increase feed-in tariffs or to increase the

daily quotas for RES energy. Similarly SPC could not change the scarcity status of natural

resources.

However SPC company based on accumulated experience could re-engineering the installed

technology for electricity generation.

Historically develop energy market support development of academic and R&D centers.

Professor Stanko Strakov23 in 2010 published methodology to calculate the total solar energy for

various regions of the country and for different slopes and orientation of host surfaces is

developed, The methodology is applied to software program “Solar”. With this methodology

could be calculated daily, monthly and annual amounts of solar radiation for various slopes and

orientation of the receiving surface and different sunlight angles (Figure 8).

23 Assoss. Prof. Dr. Stanko Vladimirov Shtrakov; Faculty of Mathematics & Natural Science; Dep. Computer System and Technology; Dep. Physics

22

Figure 822

Due to the influence of latitude, weather conditions and local topography of the area, different

regions of the earth receive different amounts of solar energy. The intensity of solar radiation

depends very much on the geometrical position of the host (absorbent) surface Solar radiation

has different power during four seasons (figure 9). The difference in the intensity of solar

radiation, however, related to the plane perpendicular to the sun's rays is not large for different

latitudes. This means that with an appropriate choice of the slope of the receiving surface, solar

energy can be utilized in any area on Earth.

Figure 923

In Bulgaria there is evidence of long-term observations of the duration of sunshine (sunshine).

23

The mean period of sunshine in Bulgaria is about 2100 hours a year. In some areas it reaches

2,500 hours, corresponding to 1400 ÷ 1600 kWh/m2 per year on a horizontal surface, with the

existing long-term solar radiation data, the basic concept in providing data for the territory of

Bulgaria is based on empirical relationships for data conversion for the duration of sunshine (or

clouds) in estimates of solar radiation. Data on the distribution of hours of sunshine there for

about 40 weather stations in Bulgaria.

Based on professor Strakov research we proposed SPC Power company to do re-engineering of

fixed PV metal construction, and recalculate the necessary the horizontal surface, the solar

radiation data in Solar park geographical area.

5.2 Regulatory proposal Feed-in tariffs which guarantee purchase of all renewable energy regardless of cost, renewable

power plant agents tends to allow more price competition between different types of renewable

energy, but can be limited in competition through eligibility and multipliers for RES agents.

Those supporting the adoption of RPS mechanisms claim that market implementation will result

in competition, efficiency and innovation that will deliver renewable energy at the lowest

possible cost, allowing renewable energy to compete with cheaper fossil fuel energy sources.

Bulgarian Government is planning to create a RES supporting fund, where the taxes for carbone

gas emission to be collected and distributed equally to end user of RES electricity in aim to

decrease electricity price and safeguard direct investments in producing “green energy” and

energy efficiency.

5.3 Local company opportunity Rapidly growing RES market create a domestic market leaders, and increase competitiveness of

companies offered O&M, EPC. Even on the market appear companies offered full support from

power plant construction, engineer design and O&M.

For example company S.I.G. Bulgaria offer followed services to RES investors: feasibility study

search and evaluation of a suitable location; acquisition and consolidation of land; detailed

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development plan crossing the stage Ecology change of reinstatement; design of wind and

photovoltaic plants; solar and wind energy audit; analysis of shading; connection to mains supply;

production of drawings and projects ready for coordination with state municipal authorities;

supply and installation of solar panels and wind.

Other domestic company "Solarpro Holding" has become the largest system integrator of

photovoltaic systems in Bulgaria with a total of 32 parks in various stages of completion and

total capacity of about 100 MWp. "Solarpro holding"13 signed its first contract to build a

photovoltaic plant in Macedonia. The park will be 1 MW and will be located in Bitola. "Solarpro

holding company" takes full service EPC (Engineering, procurement and construction) of the

project.

Maturity of Bulgarian RES market create opportunity to FDI investor in green energy to contract

EPC, O&M or other agreement with local companies in aim to fulfill better rate of index of

return, or simply just to relocate and reduce the risk of investment.

6 Expected results Renewable energy players does expect in short time the energy regulator to reduce electricity

transmission fee (GRID connection fee) and in other side to support electricity export. This

combination of increasing electricity export and decreasing amount of transmission fee will

safeguard fast growth of renewables in domestic market. Furthermore the RES growth push

Bulgaria to become not just follower of Directive 2009/28/EC but also makes the country and

National energy sector to be one of the early adopters of renewable energy policies not only as

implementing new technologies to the market, also as innovator in setting up suitable

government regulation in securing energy market. The main remaining problem is still in macro

level with conflict between social and private interest. It is mean low purchasing power of end

electricity customer with return on investment of expensive renewable technologies. Here will be

interesting after not very long time the market to be investigated again, with aim to be shown the

results of future regulatory changes.

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7 Implication Implication could be dividing in a several group: improve regulatory framework; protect end

consumer; increase electricity export; reengineering off-taker obligation; stimulate domestic

academic and R&D centers in researching in area of RES. Regulatory framework could be more

transparent and fair balanced to energy market. The regulator has to review additional fees and to

ensure they are not discriminatory. Facilitate export of electricity with overview of local South-

East European energy market, and cooperate with countries as Turkey with current high

electricity demand. Mandatory is to transmission fees to be reduced.

Off-take obligation have to be adjust to electricity demand. It is need to set up a transparent

framework for daily energy quota. For example the quotas have to limited highest emission

energy producers. In our situation quotas are limiting RES producer with only logic to reduce

consuming expensive electricity. Increase possibilities RES producers to become participants of

free energy market.

8 Conclusion We expect the Bulgarian electricity consumer to increase consuming renewable energy with

contribution to reduce carbonate gases waste. Return of investment does depend of electricity

demand. The regulator has to stimulate efficient consuming of electricity, however the economic

problems of price are electricity and RES investor return have to be solve as well. In few months

we expect the regulator to do reengineering of government policy with aim to stimulate

producing energy from RES.

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9 Bibliography JonhZysman; Mark Huberty; 2From religion to reality: Energy systems transformation for sustainable prosperity”; June 2011; The Berkeley Roundtable on the International Economy; Ministry of economy, energy and tourism, republic of Bulgaira: www.mi.government.bg/en World bank assessment 27th May 2013 Energy news: http://www.novinite.com/view_news.php?id=150837 Energy news: http://www.novinite.com/view_news.php?id=149868 Bulgarian Photovoltaic Association http://www.capital.bg/politika_i_ikonomika/bulgaria/2013/04/08/2037825_top_20_na_elektroenergiinite_moshtnosti_v_bulgariia/ Electricity system operator: http://tso.bg/default.aspx/page-707/bg http://en.wikipedia.org/wiki/Renewable_energy http://www.solarpro.bg/show.php?storyid=1125 http://en.wikipedia.org/wiki/Cost_of_electricity_by_source Assoss. Prof. Dr. Stanko Vladimirov Shtrakov; Faculty of Mathematics & Natural Science; Dep. Computer System and Technology; Dep. Physics Proper company: “My sunny Bulgaria” Ltd, Svilengrad city, 7A Parijka komuna Str., Bulgaria, Post code: 6500 www.mysunnybulgaria.com http://en.chint.com/about/detail?id=50 http://www.lgcns.com/pr-center/news/view/1358/lg-cns-penetrates-the-european-solar-power-market-for-the-first-time http://ppi-re.worldbank.org/Data/Project/sdn-kepco-veliko-tarnovo-solar-plant-6665 http://www.corporateinformation.com/Company-Snapshot.aspx?cusip=C410000R0

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