The feed-in tariff (FIT) for photovoltaic (PV) installations is to be further reduced, following the publication of a report showing that the investment cost of PV projects has decreased by more than 10%.

This change follows just three weeks after the State Energy and Water Regulatory Commission announced a FIT decrease of more than 50% for PV installations, using new powers under renewable energy laws coming into force on 17 July 2012.

The SEWRC report contains an analysis of PV module prices and the cost of PV plants already in operation.  It shows that the current price of PV modules varies between 0.5 and 0.7 EUR/W, depending on the capacity installed and volume of supply.

Most PV modules used in Bulgaria come from China. The SEWRC data has been compared with data on PV installations across Europe (held on Europe-Solar.de) and, on the assumption that PV modules represent 50-60% of the overall investment costs for each PV plant, indicate that the cost of building PV plants has dropped significantly.

Other factors determining the FIT have been left unchanged by SEWRC, namely:

- 2% inflation

- 7% average rate of return

- 14.84% annual utilisation factor 1300 hours)

- 20 year useful life of the assets

- c.1.3 EUR cents/kWh operation and maintenance costs

Based on this, SEWRC is planning to reduce the current FIT for PV plants, to the following levels based on installed capacity:

- 381.18 BGN/MWh (up-to 5 kWp rooftop and façade)

- 289.96 BGN/MWh (5-30 kWp rooftop and façade)

- 226.87 BGN/MWh (30-200 kWp rooftop and façade)

- 206.34 BGN/MWh (200-1,000 kWp rooftop and façade)

- 193.42 BGN/MWh (PV plants up to 30 kWp)

- 188.10 BGN/MWh (PV plants from 30-200 kWp)

- 171.37 BGN/MWh (PV plants from 200-10,000 kWp)

- 169.85 BGN/MWh (PV plants above 10 kWp)

If these reduced FITs are introduced for PVs in Bulgaria, they are likely to stop any development in the sector for the foreseeable future.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 24/07/2012.