After Bulgaria joined the European Union on 1 January 2007 the renewable and alternative energy sector underwent rapid developments, as under the Treaty of Accession, Bulgaria has undertaken to achieve an 11% share of the electricity generated from renewable energy sources in gross electricity consumption by 2010. Thus, the applicable legislation currently provides for a favourable investment climate in renewable energy generation.

The ARAESB primary objectives are:

• Promotion of the development and use of technologies for generation and consumption of energy generated from renewable energy sources and alternative energy sources;
• Promotion of the development and use of technologies for production and use of biofuels and other renewable fuels in the transportation sector;
• Diversification of energy supplies;
• Increasing the capacity of small- and medium-size enterprises, of producers of energy from renewable energy sources and alternative energy sources and of producers of biofuels and other renewable fuels;
• Environmental protection;
• Creation of conditions for achieving sustainable development at the local and regional level.

The above objectives are promoted by application of feed in tariffs for Renewable Energy generators excluding energy produced by hydro power plants above 10 MW installed capacity. The feed in tariffs are set by SEWRC annually (in March) and become effective as of 1 April of the respective year.

The electricity buy-out is obligatory and is by the Public provider and or the respective End suppliers depending on the geographical point of connection to the respective grid, the Voltage level (HV to Transmission Grid / Public Provider or MV to Distribution Grids/ End Suppliers) and the installed capacity (above 5MW to Transmission Grid / Public Provider or equal or below 5 MW to Distribution Grids/ End Suppliers).

Obligatory procurement is settled under Power procurement Agreements (PPAs) concluded between the public provider or end suppliers and the Renewable Energy producers for the period defined by the ARESEB - 25 years for geothermal, solar energy sources and 15 years for hydro sources with installed capacity below 10 MW and other Renewable Energy sources. These terms apply for the existing Renewable Energy generators, excluding Hydro generators above 10 MW installed capacity after renegotiation but not later than 31 March 2009. For all new RES producers, excluding Hydro generators above 10 MW installed capacity the term starts as of the start of the generation but not later then 31 December 2015.

A draft legislation providing for a market mechanism and incentives to encourage the RES sources generation is expected to be finalised by the MIET not later than the end of 2011. As of 01.07.2009 SEWRC issued an equalisation Mechanism of obligatory costs due to procurement under the ARAESB.

In addition, the Bulgarian legislation provides for certain additional investment incentives for large scale projects in the renewable energy sector, which mainly apply towards developers in renewable energy production facilities, manufacturers of equipment for the production of energy from renewable sources. These incentives are stipulated under the Act promotion of investments.

Energy Efficiency

Bulgaria has a national indicative target to reach 9 % reduction in energy consumption by 2016 and intermediate indicative target to reach 3 % reduction in energy consumption by 2010.

Respectively, the Energy Efficiency Act (EEA) stipulates improvement of the energy efficiency as major factor to increasing competition of economy, achievement of security of the energy supplies and environment preservation.

The specific measures and actions to promote the EEA aims are listed in an Ordinance for defining the methodologies for setting the national indicative targets as individual targets for energy savings between the parties envisaged in Article 10, para 1 of the EEA, permitted measures on energy efficiency and methods for assessment and ways of confirming the energy savings (in effect as of April 10 2009).