Bulgaria’s feed-in tariff, the preferential fee paid by Bulgaria to companies that produce electricity from renewable energy sources, has spawned dozens of projects eager to take advantage of the state subsidy, to the extent that early in its term, the Bulgarian Government of Prime Minister Boiko Borissov even considered imposing a moratorium on new projects.

New amendments drafted by the Agriculture Ministry and now being considered by the Cabinet, would impose severe restrictions on where wind and solar parks could be built.
The proposal envisions a ban on renewable energy production on agricultural land rated in the top four categories, based on their fertility, which roughly covers all of Bulgaria’s cultivated land. Lands ranked as fifth- and sixth-category are mostly uncultivated meadows and pastures.

The amendments to the Agricultural Land Conservation Act are meant to put an end to the widespread practice of changing the designation of the land. Construction is banned on arable land, but the designation change removes any obstacle in the way of building electricity-generating facilities from renewable sources.

The bill further envisions an increase on the sanctions on civil servants that do not strictly follow all legal requirements concerning the prerequisites to change the land designation.

According to the Agriculture Ministry data, quoted by Bulgarian media, as of 2009, about 1150ha of arable land had its designation changed and was slated for future construction of solar or wind parks. By the end of 2009, the ministry had received a further 500 requests for a change in land designation, covering 750ha, that were yet to be examined.

"The goal is for the state to conserve the highly productive cultivated land," Dnevnik daily quoted Lili Stoyanova, the head of the ministry’s land consolidation department as saying. Just as importantly, it would serve to prevent the further spread of suspect projects – ostensibly applying for a land designation change for the construction of electricity-generating facilities from renewable sources, but ultimately pursuing other commercial interests for the land.

In recent years, Bulgaria has seen the announcement of projects that, if all are completed, would harvest 8000MW from wind farms and 4000MW from solar power, an amount that is several times larger than the country needs to meet the European Union’s green energy target, which stipulates that 16 per cent of Bulgaria’s electricity must be produced from renewable energy sources by 2020.

State-owned power grid operator NEK has been among the main critics of the avalanche of projects, saying it had the ability to connect no more than 15 per cent of the proposed capacity to the power grid.

Another amendment envisioned by the Agriculture Ministry is a change in how the land is taxed. Agricultural land is not subject to tax, as a rule, the only exception being if there is a building on it, when the local tax for buildings is due.

Under the amendments, the change in land designation would mean that the land would then become urbanised, so tax would be due even if there is no construction raised on the land yet. However, the bill does not stipulate how the tax would be calculated and a separate amendment to the Local Taxes Act would be needed.

Separately, the State Energy and Water Regulatory Commission plans to tighten controls over the issuing of licences to prospective green energy investors, demanding guarantees that the projects have secured sufficient funding.

Industry opposition
Unsurprisingly, the proposed amendments, announced in the first week of March, are being opposed by the respective industry groups, which branded them as discriminatory.
"We do not oppose the desire of the Agriculture Ministry to put an end to the practice of changing the designation of agricultural land for speculative purposes, but that could be done using economic means, not administrative ones," the head of a solar park industry group, Nikola Gazdov, was quoted as saying by Dnevnik.

"Any serious investor is willing to pay a higher fee to change the status of the land or deposit a guarantee with the local or central authorities," he said.

According to Gazdov, should the amendments be passed into law, investors would be restricted to building renewable energy installations on areas that were mostly part of the European Union’s Natura 2000 conservation areas.

About one fifth of Bulgaria’s five million ha of agricultural land was not used, mostly lands that the ministry designated as fourth category, Gazdov said.

Velizar Kiryakov, the head of a green energy industry group, said that a counter-proposal was being drafted to limit the ban only to areas rated in the top two fertile land categories.

"We have met environmental organisations, which agreed that investment in green energy would be badly inconvenienced if the only option is restricting their location to mountainous areas," Kiryakov said. He blamed "energy lobbies" for the proposed measures, which meant to hinder the spread of electricity production from renewable energy sources.

Agriculture Minister Miroslav Naidenov said that the private sector would have its chance to be heard. The bill has already gone through the mandatory interdepartmental approval procedure and was backed by the Economy and Energy Ministry.

"We will seek the position of private businesses to draft amendments that are workable. To this end, we are preparing a public discussion of the changes, scheduled for March 11 in Sofia," Naidenov was quoted as saying.

Deputy Economy and Energy Minister Maya Hristova, however, left the door open for efforts aimed at limiting the restriction. "The key aspect is that once land leaves the agricultural fund, it cannot return, which is why we agreed with the proposal. I am not familiar with the specific proposal, but if it indeed limits investment in renewable energy sources installations, I believe that the contentious provisions can be cleared," she said.