CMS Sofia Managing Partner Kostadin Sirleshtov and Counsel Borislava Piperkova talk about energy in Bulgaria in 2025.
CEELM: What is in the pipeline in terms of legislation that you believe will have the most impact on the energy sector in Bulgaria?
Sirleshtov: Both the Bulgarian renewable energy sector and the rest of the carbon-free technologies are expecting the introduction of Contracts for Differences (CfD) in Bulgaria. Judging from the recent success stories in countries like Romania, this change will have a transformational impact on the Bulgarian energy. Similarly, extending the stability clause in the Bulgarian Underground Resources Act to fiscal stability will allow for streamlining of oil & gas upstream investments. Last, but certainly not least, the amendments to the Bulgarian legislation, which will streamline the wind energy investments and will allow offshore wind investment, are desperately needed for unlocking the Bulgarian wind energy potential.
CEELM: Of the above, which ones are you/your clients most excited about and why?
Piperkova: These reforms are not only exciting but also necessary for all the stakeholders in the Bulgarian energy sector. In a situation where the society is sensitive about the cost of energy and the security of the supply, the CfD reform will allow for huge investments at the minimal cost, thus allowing greater generation and an appropriate mix of sources. Furthermore, CfDs will allow for nuclear energy financing, capitalizing on the unprecedented public support for this technology in Bulgaria. Extending the stability clause in the Bulgarian Underground Resources Act to fiscal stability will bring the necessary certainty into the international investment community about the long-term support of the Republic of Bulgaria for these investments. A discovery offshore Bulgaria (such as Neptun Deep in Romanian waters and Sakarya in Turkish waters) will be a game-changer for the Bulgarian energy sector. The direct and indirect benefits for the society could be in tens of billions of euros. Between 2019 and 2024, Bulgaria put some 3 gigawatts of new photovoltaic projects in operation and no wind capacities. These two are the technologies that provide the lowest levelized cost of energy, i.e., produce the cheapest electricity. These are also technologies, which are complimentary – usually the wind turbines produce when the sun is now shining and vice versa. Bulgaria desperately needs further reforms to bring wind and offshore wind investments.
CEELM: On the flip side, what updates are you/your clients dreading the most and why?
Sirleshtov: Both international and local clients dream about stability and lack of regulatory reforms changing the “name of the game” upon completing an investment. As most of the renewable energy projects started under the old feed-in tariff are approaching the end of the validity of the support mechanism, it is necessary for the Bulgarian state to honor these undertaking and to avoid any escalation of disputes locally and internationally, as we have proven that we could win these in court or in arbitration.
Political stability is a must for long-term energy investors. Our clients are dreading the thought that Bulgaria might face its eighth general elections in the last three years. Reforms in the energy sector need political stability and years in the making and therefore everyone hopes for a stable government and regulatory bodies.
CEELM: What are the main/largest energy projects you expect to be finalized in Bulgaria in 2025?
Piperkova: To name a few, we expect to have the first Enka project in Bulgaria – the Kameno 40-megawatt peak photovoltaic project – in operation. We also expect all three Chint/Astronergy new photovoltaic projects with 200 megawatt peak capacity to be put in operation. We anticipate a lot of Bulgarian-sponsored photovoltaic projects, such as the Sinitovo 50 megawatt peak capacity plan, to become operational. Finally, we hope for a discovery in the Han Asparuh oil & gas block by OMV Petrom following the new drilling campaign in 2025. We also expect 2025 to be the year of battery storage in Bulgaria, with at least 3 gigawatts of such capacities in the pipeline.
CEELM: What is the biggest challenge for the energy sector in Bulgaria at the moment, in your view, and what is the likelihood you’ll see it overcome in 2025?
Sirleshtov: The Bulgarian energy sector has a permanent problem, and it is the lack of understanding in the decision-makers about the regulatory conditions for the successful financing of energy projects and the fact that financial structuring and regulatory reforms come first – much before the appointment of technology providers, EPC contracts, etc. We have around EUR 1 billion at risk due to this somewhat unique problem that the Bulgarian energy sector has been facing for decades. In addition, the Bulgarian regulatory environment has been lagging for so many years that it becomes a colossal and close-to-impossible task to update it. Following the successful adaptation of the new Energy Strategy in 2025, the new Bulgarian government and Parliament need to dedicate 2-3 years for a new Energy Law, a new Renewable Energy Law, and subsequent reforms.
This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
