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From Bulgaria

17.09.2012 12:46

Government Retro-Actively Slashes Renewable Energy Tariffs

Putting to bqncruptcy billions of investments in renewables leads to high risk of banking crisis, the Bulgarian Wind Energy Association said

AUTHOR: publics.bg

© aa7ae@flickr.com

From Tuesday onwards the income of all existing renewable energy projects will be reduced massively. At a secret meeting on Friday night the regulator (SWERC) decided to impose drastic cuts to the tariffs of renewable energy projects in the form of higher grid access taxes. Although the renewable energy law guaranteed investors fixed income for the next 12 to 20 years, from Tuesday onwards the income of all wind energy projects will be reduced by 10 %, solar projects from the previous years will lose 20 % and solar projects from the first half of this year will even lose 39 % of their income.

The drastic cuts will push the majority of all existing renewable energy projects into bankruptcy, as with income losses of 10 % to 39 % most projects will not able to make their loan repayments anymore. This means that several billion Leva worth of domestic and foreign investment along with hundreds of newly created jobs have been destroyed overnight. More so, the ultimate consequence will be that the Bulgarian banking system, which has so far been stable and insulated from the financial crisis all around the region, will end up with a massive amount of bad loans on its books. With its actions the government risks pushing the Bulgarian banking system and the Bulgarian economy into a disastrous crisis.

In its decision, the regulator masks the retro-active cuts of income as ‘necessary fees for difficulties of integrating fluctuating renewable energy into the electricity grid’. “This is nothing but a cheap pretense by the regulator. For example a solar project built in June will be charged 232.64 BGN per MWh while a technically identical project, built only three months later, will be charged only 2.27 BGN, over 100 times less. [The chairman of the regulator]Angel Semerdzhiev should be ashamed for allowing the regulator to be used to undermine and sabotage the law”, said said Sebastian Noethlichs, executive director of BGWEA, and continued:

“The message to any investor in any sector in Bulgaria is clear: what the law promises you today, can be retro-actively revoked tomorrow. Investing in Bulgaria no longer means investing in a stable, reliable, European market but in a wild, chaotic market where every investor is at the mercy of an in-transparent, secretive government.”

BGWEA believes that these actions, that threaten to ruin an entire sector and that endanger the financial stability and the credibility of the entire country are as illegal as they are dangerous. Therefore the association will exhaust all legal means available to it, to fight these actions.