1RenewableenergyinSoutheastEuropeShiftingintohighergear2RenewableEnergyinSoutheastEurope3TableofcontentsKeyfindingsInvestmentsandM&AbycountryFinancialAnalysisVendorslandscapeMarketSizeRegulatoryupdatebycountryTrends&ForecastsMethodologyReferencesDisclaimer5827283346676869734RenewableEnergyinSoutheastEuropeAbouttheauthorsSeeNexthelpsthedecision-makersoftodaynavigatethevolatilebusinessworldbydeliveringtrustworthyandunbiasednewsandactionableinsights.Asacompanywith18+yearsofexperienceandateamofexpertsintherealmsofbusinessnewsandanalyses,westrivetogivein-depthunderstandingandrelevantinterpretationofdata.Ourteamofjournalistspublishesover2000businessnewsstoriesmonthly,coveringmorethan20industries.Ourteamofbusinessanalystscanhelpyoubaseyourdecisionsonfacts,figuresandknowledge,usingamethodologyoracombinationofmethodologiesbestsuitedtoyourneeds.Contactusatconsulting@seenext.orgorat+35928012630toreceivemoreinformationaboutourtailor-madesolutions.5KeyfindingsTheSEERenewableEnergyReportanalyses2,567Greek,Romanian,Bulgarian,CroatianandSloveniancompaniesengagedinoperation,maintenance,assetmanagement,construction,engineeringorprojectdevelopmentofpowerplantsgeneratingrenewableenergy(solar,wind,hydro,biomass,biogasorotherrenewablesources),ormanufacturingofbatteries,engines,turbinesandotherequipmentforrenewablepowerfacilities.WeidentifiedthefollowingkeyfindingsforthedevelopmentoftherenewableenergysectorinSoutheastEurope(SEE)inthethree-yearperiodbetween2019and2021:Thetotalinstalledcapacityoftherenewablessectorinthefivecountriesstoodat32,169MWin2021,havingincreasedataCAGRof3.6%duringthe2019-2021.Hydropowerplantsaccountedformorethanhalfoftheregion’srenewablecapacitywithanaggregateof17,015MW,followedbywindfarmswith9,165MW,photovoltaicplantswith6,589MW,biomassandbiogaspowerplantswith525MWand10MWofgeothermalfacilities.Solarandwindwerethemostdynamicallyexpandingfacilitiesintheanalysedperiod,growingtheirinstalledcapacityatCAGRsabovethesectoralaverage,of8.1%and7.2%,respectively.Biomassandgasfromrenewablesourcesalsoadvanced,by5.5%,whilehydrocapacitiesstagnatedintermsofsizeandin2021werealmostidenticaltothoseinthebeginningoftheperiod.TherenewableenergysectorinSEEgeneratedaggregateoperatingrevenueofEUR12.9blnin2021,upby30%year-on-year.Growthwasdrivenbyclimbingelectricitypricesandincreasingdemandforalternativeenergy.Operation,maintenanceandassetmanagementwasthelargestsegmentwithoperatingrevenueofEUR9.5bln,accountingfor73%oftheoverallmarketsize,andalsogrowingatthefastestannualrateof32%.Construction,engineeringandprojectdevelopmentgeneratedEUR2.2blninoperatingrevenue,whilemanufacturingwasthesmallestsegmentwithEUR1.2bln.Operation,maintenanceandassetmanagementdominatedtheregionalmarketwith1,980companiesversus512entitiesengagedinconstruction,engineeringandprojectdevelopmentand75inmanufacturing.Atsub-segmentleveloperatorsofsolarandwindfacilitieswerethemostnumerouswith1,489companies,or75%ofallrenewableelectricitygenerationvendors,whileamongthosefocusedontheconstruction,engineeringandprojectdevelopmentofpowerplantssolarandwindhadashareof89%.Headcountgrew1.3%y/yto33,439in2021,withmorethanhalfofallemployeesbeingbasedinRomania.GreeceandBulgariawerethetwocountrieswiththemostsignificantincreaseofemploymentinthesectorduringtheperiod2019-2021,registeringCAGRsof7.8%and2.5%,respectively.Thetotallabour,materialandamortisationexpensesofSEErenewableenergycompaniesstoodatEUR4.9blnin2021,followinganannualincreaseof10%.TheupwardtrendwasmostprominentinGreeceandBulgaria,wherecostsexpandedatyearlyratesthatwerehigherthanthesectoralaverage,of24%and15%,respectively.Ontheotherendofthespectrum,Slovenia’srenewableenergysectorsawitscostsshrinkingby14%y/y.ThesectorpostedacombinednetprofitofEUR1.7blnin2021.Thebottomlineimprovedby30%ontheyear,matchingtheoperatingrevenuegrowthrate,thusleavingthenetprofitmarginunchangedfromthepreviousyear’s13.2%andimprovingcomparedtothe10.5%inthebeginningofthethree-yearperiod.Companiesactiveinoperation,maintenanceandassetmanagementweremoreprofitablethanthoseoperatingintheothertwosegments,withanetprofitmarginof15.7%in2021.Approximately20%oftherenewableenergycompaniesinSEEwereownedbyforeignparentcompaniesfrom41differentcountriesasofend-2022.Italywasthemostimportantsourceofinvestmentinrenewablesintheregionwith16%ofallforeign-ownedcompaniesinthesectorbeinginItalianhands.OthercountrieswithstrongpresenceinSEErenewablesincludedGermany,theCzechRepublic,Austria,CyprusandLuxembourg.6RenewableEnergyinSoutheastEuropeCorporatePPAs:AkeytoolforSEE’sroadtoNetZeroEuropeisinthemidstofanenergytransition.Buildinganewgreeneconomy,compatiblewithNetZero,willrequirethemass-scaledevelopmentandinstallationofwindturbines,solarfarms,batterystoragefacilitiesandotherlowcarboninfrastructure—suchashydrogenelectrolysers—acrossthecontinent.Thesedevelopmentswillhavedramaticimplicationsinthewayweproduceandconsumeelectricity.Typically,whendevelopingutility-scalerenewableenergyprojects,therearethreeroute-to-marketoptions,eachwithdifferentrisk-rewardtrade-offs:ThisarticlefocusesoncorporatePPAs(cPPAs),whichareontheriseinEurope,aslargeCommercialandIndustrial(C&I)customersareincreasinglyseekingcleanelectricitytopowertheirbusinessactivities.Inturn,theireffortstodecarboniseputpressureontheirsupplychaintodothesame,creatingavirtuouscycleofdemandforsuchcontracts.Forbuyers,cPPAscanleadtosignificanteconomic,environmental,andsocialbenefits,coupledwithcostcertaintyandmorepredictablefinancialplanning.Forsellers,cPPAswithcredit-worthyofftakerscanprovidestablerevenuestreamsthatcanhelpsecureprojectfinancingandboostequityreturns.Theyalsorepresentthemainmechanismbywhichprojectdeveloperscanestablishlong-termrelationshipswithendclients.WhilstmostcPPAsinEuropehavehistoricallybeensignedinWesternandNorthernEurope—Spain,GreatBritain,Sweden,Norway,andGermanyarethefivelargestEuropeancPPAmarketstoday—thereissomeevidencethatthecPPAmarketisalsogrowinginSoutheastEurope(SEE),albeitataconsiderablyslowerpace.ThetablebelowpresentsalistofpubliclyannouncedcPPAsrecentlyconcludedinSEE.Forcontext,thetotalannualelectricityconsumptioninSEEiscloseto300TWh,ofwhichapproximatelyone-third—100TWh—isconsumedbylargeC&Icustomers.Assumingthathalfofthisdemandcouldbecoveredvialong-termcPPAswithrenewableenergyproducersandanaveragecPPAtenureof10years,themarketsizeforcPPAsinSEEcouldbeashighas5TWhperyear.Additionally,ifC&Icustomersalsorequire“additionality”—aconceptwheretheconsumedelectricitymustcomefromrenewablepowerplantsthatwouldnothaveotherwisebeenconstructed—thenthecPPAmarketinSEEcouldsupport1.5-3GWofnew-buildrenewableenergycapacityperyear,dependingonthemixofsolarandwindprojects.1)Government-backedcontractssuchasContractsforDifference(CfDs)whichinEuropeareusuallyallocatedviacompetitiveauctions;2)PowerPurchaseAgreements(PPAs)whicharesignedbetweenprojectdevelopersandeitherutilities/traders(“utilityPPAs”)orlargeCommercialandIndustrialcustomers(“corporatePPAs”);3)Merchantbusinessmodels,wheretheelectricityproducedissolddirectlyinthewholesalemarket.JennVasileiadiNicolasKyriakoglouPavlosTrichakisBy7ThetablealsoillustratesthatdespitetheextremevolatilityandrecordpricesobservedinEuropeanenergymarketsin2022,largeC&IcustomersinSEEhavebeenrelativelyslowtoembracethetrendoflong-termrenewableenergyPPAs.ThisisbecausethereareseveralbarriershinderingthedevelopmentoftheSEEcPPAmarket,including:Whilethislistofbarriersmayappeardaunting,thereareseveralsuccessfulpolicyexamplesinotherEuropeancountriesthatSEEpolicymakersmaylooktoemulateinordertoacceleratethedeploymentofcPPAs.Spain,forexample,tookstepsin2020towardsencouragingcPPAsbycreatingaEUR-600-mlnreservefund,the‘FERGEI’fund.FERGEIprovidesloanguaranteestolong-termrenewablePPAswithaminimumtermoffiveyearsandcancoverupto80%ofthenon-paymentorinsolvencyriskfromthepowerpurchaser.BeneficiariesarecompaniescertifiedasElectro-IntensiveUsersbytheSpanishauthorities,withtheSpanishExportCreditAgency(CESCE)actingasthemanagingagentofthefund.Francerecentlyfollowedsuitbycreatingafund,tobemanagedbyFrenchlenderBpifrance,thatwillcoverdefaultrisksforindustrialbuyers,enablingcontractsforupto500MWofcumulativeinstalledcapacity.Thetermsofthecompensationgrantedtocontractsindefaultwilloperateasamechanismsimilartoadditionalremuneration.Thefundwillbeself-fundedbythepremiumspaidbyguaranteedcontractsandtherecoveryofpartoftheirexcessincome,intheeventofhighmarketprices.Toconclude,whilebarriersandregulatorydrawbacksstillexist,onethingisclear:cPPAswillbeanimportantmechanismforensuringthefinancingofsufficientvolumesofrenewableenergyprojectstomeetNetZerotargets.Governments,policymakers,consumersandproducersinSEEarecalledtoworkcloselytogethertodevelopathrivingC&Imarketforcleanelectricity,atthecentreoftheenergytransitionintheregion.Table1:Listofpubliclyannouncedlong-termrenewableenergycPPAsinSEE1.DealdateCountryTechSellerOfftakerAssetcapacity(MW)Contractedsupply(GWh/a)Tenor(years)Q12021GreeceSolarEgnatiaGroupMytilineos200Undisclosed10+5Q22022BulgariaSolarRenalfaA1Bulgaria332010Q12022RomaniaWindVerbundMultinationalautomotivecompany226705Q12022HungarySolarIDEnergyGroupLAFARGE26Undisclosed15Q32022CroatiaWindProfessioEnergiaHrvatskiTelekomUndisclosed50101)Regulatorybarriers,suchasinRomania,wheretheGovernmentreinstateddirectlynegotiatedPPAcontractsonlyinJanuary2022,followinga10-yearban;2)Concernsaroundmarketinterventionincreasetheriskofenteringintolong-termcontracts,particularlyinmarketswithatrackrecordofretroactiveinterventionforrenewableenergyprojectssuchasGreece,BulgariaandRomania;3)Poorornon-existentliquidityinforwardelectricitymarketsinSEEwiththeexceptionofHungary;4)LackofexperienceandsophisticationamongLargeC&IbuyerstonegotiatecomplexPPAs.Contractsarestill“firstofakind”,withlittlestandardisation.Thislimitsthepoolofeligiblebuyerstocompanieswithstrongcreditratingsandlargeenergyprocurementdepartments,capableofpurchasingvolumeandpricerisks;5)Finally,themajorityoflendersinSEEarestillnotveryfamiliarwithcPPAsandoftenhavehighlyrisk-averserequirementstoreach‘bankable’termsoraskforexpensiveguarantees.www.baringa.com/en/1NotethatthislistexcludesutilityPPAs,whereutilities/tradersenterintorenewableenergyPPAsandmaythenre-sellthecontractedvolumestoC&Iclients.8RenewableEnergyinSoutheastEuropeInvestmentsandM&Abycountry9RenewableelectricitygenerationinBulgaria-fromsolar,windandhydrosources-stoodat17%ofthecountry'spowermixin2021,accordingtodataavailableonthewebsiteoftheNationalStatisticalInstitute(NSI).Solarphotovoltaicparksandonshorewindfarmsaccountedforabitmorethan6.1%ofBulgaria’stotalgrosselectricityproductionof47.8TWh,or3.1%and3%respectively,datafor2021publishedbystate-ownedElectricitySystemOperator(ESO)show.ThiscontributionwouldcertainlyincreaseinthecomingyearsasinvestorinterestindevelopingnewrenewableenergyprojectsinBulgariawasespeciallystrongin2021and2022.Inasignofthegrowingattractivenessofthesector,ESOsaiditreceived2,377applicationsfortheconstructionofrenewableenergyprojectsin2022,foratotalcapacityof17.5GW,upfromthestillimpressive15.2GWin2021.Solarphotovoltaicswerethedominantsegment,witha60%annualjumpto164inthenumberofapplicationsfortheconstructionandconnectiontothegridofsolarPVplants.Whilein2021theoverallcapacityofsolarapplicationswas6.78GW,lastyearitroseto11.33GW,accordingtoESOdata.Applicationsforwindpowerprojectsalsomorethandoubled,goingupto31for4.4GWin2022from14fortotalcapacityof2.66GWin2021.Intermsofoperationalcapacity,Bulgariahasjust706.4MWofwind,onshoreonly,aswellas1,910MWofsolarand2,373MWofhydro.AccordingtotheAgencyforSustainableEnergyDevelopment,651solarsystemswerecommissionedin2022withatotalcapacityof579MWandnowindfarms.In2021,asmanyas2,659solarinstallationswentliveadding100.4MWofcapacity,alongwithjustone2MWwindpark.BulgariaplanstouseEUfundingavailableunderitsRecoveryandResiliencePlantoboostmuch-neededdevelopmentanduseofrenewables.Thecountrywillseektoadd3.5GWofnewsolarandwindcapacitybymid-2026.Atleast1.4GWofthetotalwillbecombinedwithenergystorageandallocatedinsolar-plus-storagetenders.Lookingaheadto2023,ESOexpectstoconnecttothegrid500MWoftherenewablesprojectsthathavebeenappliedfor,incomparisontoover200MWswitchedonin2022.InitsproposedplanforthedevelopmentofBulgaria’selectricitytransmissionnetworkbetween2022and2031,ESOforeseesconnectingtothegrid343MWofwindpowergenerationassets,4,439MWofsolarand46MWofhydrobytheendoftheten-yearperiod.Theproposedwindcapacitydoesnotreflectrealisticexpectationsfortheincreaseintheshareofwindforelectricitygenerationinthecountry,theBulgarianWindEnergyAssociation(BWEA)saidinApril2022.Takingintoaccountexistingprojectsunderdevelopmentandinvestmentproposals,theindustrybodycalledforarevisionofESO’sproposalconcerningwind,urgingthatthetotalproposedwindgenerationcapacitytobeconnectedtothegridshouldriseoverthirteentimesto4,500MWby2031.BWEAcalledfortheconnectionof1,500MWin2026,1,000MWin2027,and500MWineachyearbetween2028-2031.WindMostonshorewindparksinBulgariaarelocatedinthenortheasternpartofthecountry,intheregionofDobrichneartheBlackSeacoastnorthofVarna.RESinvestmentpicksuppaceinBulgaria10RenewableEnergyinSoutheastEuropeIn2021,METRenewablesHolding,partofSwitzerland-basedenergycompanyMETGroup,receivedcompetitionclearanceinBulgariatoacquirethelocalwindpowerunitofItaly'sEnelGreenPower.ThedealgaveMETRenewablescontroloverthecountry’sfifth-largestwindparkof42MWintotal,locatednearthenortherntipoftheBlackSeacoast.InAugustofthesameyear,METwentontoexpanditsoperatingwindportfolioinBulgariato102MWbyagreeingtopurchaseSpanishgroupEnhol’s60-MWSuvorovoWindPark,formerlyknownasEolicaBulgaria,whichatthetimeequalled8.5%ofBulgaria’stotalinstalledwindcapacity.Atthetime,theSwissgroupsaiditaimedtoreach500MWinoperationalcapacityfromrenewablesintheCentralandEasternEurope(CEE)regionby2023.Portugal-basedrenewableenergyproducerGreenvoltsteppedontotheBulgarianmarketin2021throughitsPolishrenewablesunitV-Ridium,withitsSofiaofficetakingonapipelineof200MWofwindpowerprojects.InanotherboosttoBulgaria’swindpowerindustry,CWPEurope,ajointventureofleadingAustralianrenewableenergydeveloperCWPandglobalenergyandcommoditygroupMercuriaEnergyTrading,unveiledplanstoinvestoverBGN1bln(EUR511.4mln)inrenewableenergyprojectsinBulgariainthenearterm.CWPaloneisinchargeofaportfolioofwindpowerprojectswithatotalcapacityof669MW,includingtwolargeprojectsinthenortheasternpartofthecountry,aswellassolarparks.AnotherrenewablesdeveloperwhichhasfocusedonnortheasternBulgariaisGermany’swpd,whichisworkingonthe96MW,16turbineSokolovowindprojectnearDobrich.InAugust2022,itslocalsubsidiarywpdWind1unveiledaninvestmentproposalfortwowindprojectsofupto35turbineseachwithtotalcapacityrangingbetween75MWand100MW.Inlate2022,DobrotichWind,aBulgarianunitofCWPGlobal,welcomedasapositivesignacourtdecisiontoreverseabanoninstallingwindturbinesinthenortheasternBlackSearegionofVarna.Thecompanycontinuesworkonlegalprocedurestoadvanceaplanned592MWwindfarmthatwillnearlydoublethetotalinstalledonshorewindcapacityinBulgaria.SolarCopperproducerAurubisBulgaria,partofGermany'sAurubisAG,startedworkin2021ona10MWself-consumptionsolarplant,consistingofover20,000solarpanelsonreclaimedandrecultivatedformerlandfillareanearitssmelterinZlatitsa.Thefacilitywascommissionedattheendofthatyear,withAurubishavingrecentlyannouncedplanstoexpanditscapacityto24MWby2024foranincrementalinvestmentofEUR20mln.Lastyear,BulgariananimalandhumanhealthandnutraceuticalscompanyHuvepharmasetouttoexpandthecapacityofitssolarplantto190MWby2023from25MWin2021,foraninvestmentofEUR180mln,targetingself-sufficiencyfromrenewables.AnothersignificantmarketplayerisESCOBulgaria,theformerunitofCzechpowerutilityCEZ,whichwastakenoverbyBulgariandiversifiedgroupSyntheticaafterCEZexiteditsBulgarianelectricitybusinesstoEurohold.ESCOhadover50MWofsolarphotovoltaicparksbuiltorunderdevelopmentin2022.InDecember2021,Bulgariancleanenergyande-mobilityinvestorRenalfateamedupwithDanishrenewableenergydeveloperEurowindEnergytosetupEURAEnergy,ajointventurecompanywithadevelopmentportfolioofover1GWofwind,solarandPower-to-X(suchashydrogen)projects.EURAEnergy’sfirstpipelineprojectinBulgariaisa200MWsolarparkinTenevo,southeasternBulgaria.Inthesamemonth,China’sHareonSolarTechnologyCorporation,theendowneroflocalsolarpowerplantoperatorHeliosProjects,startedaliquidationofassetswhichledtoSofia-basedinvestmentcompanyMalexManagementacquiring,throughitsmajority-ownedunitHeliosEnergyInvest,indirectshareholdinginterestinHeliosProjects.Heliosdeveloped,built,andoperatesa50MWphotovoltaicpowerplantinthevillageofPobeda,inthenorthernPlevenregion.TwomajordevelopmentsinBulgaria’ssolarsectortookplaceinlate2022.GermancompanyProfineEnergy,ajointventureofProfineGroupandWirthGroup,signedaletterofintenttoinvestoverEUR1blnintheconstructionofafloatingsolarplantwithacapacityofbetween500MWand1,500MWontheOgostareservoirinMontana,northwesternBulgaria.Profineiscurrentlystudyingthepossibilitiesofdevelopingfloatovoltaicslocallyandisyettodecideonwhethertoparticipateinthepotentialtender.Meanwhile,Bulgarian-Germanutility-scalesolarprojectsdeveloperSunotecisforgingaheadwithconstructionworkonwhatwillbeBulgaria’slargestgrid-connectedsolarPVplant,theVerilasolarparkinsouthwesternBulgaria,withapeaknameplatecapacityof124MW.Theground-mountedinstallationisexpectedtoraiseBulgaria'soverallsolarpowergenerationcapacityby12%.Inlate2022,FrenchinvestmentmanagementcompanyRGreenInvestteamedupwithBulgaria’sRenalfaSolarproGroupviaa140millioneuroequityinvestment.Thedeploymentofthefreshcapitalwastoprioritisethedevelopmentandconstructionof519MWofground-mountedPVprojectsinBulgaria,NorthernMacedoniaandHungary.IndependentpowerproducerRenalfa,whichissupportedbyEPCfirmSolarproHolding,islookingtobringover1GWofPVprojectsonstream.HydroFrance-basedrenewableenergypowergroupAkuoEnergystrengtheneditspresenceinBulgariabyacquiringPVBPowerBulgaria,aunitofItaly’sPetrolvillaGroup.AkuoaddedfivehydroelectricplantsontheIskarriver,withatotalinstalledcapacityof15.5MW,toitsexistingfourhydroplantsinBulgaria,whichhaveacombinedcapacityof63MW.In2022,AkuoEnergyrefinancedthehydropowerportfoliowithparticipationfromtheEuropeanBankforReconstructionandDevelopment(EBRD)andBulgaria’slargestlender,UniCreditBulbank.Aspartofthetransaction,FrenchinvestmentmanagerRGreenInvestacquiredastakeof49%intheoperatingportfoliothroughitsINFRAGREENIVfund.11Biogasplantsforownconsumptioncanmakeanyindustryenvironmental-friendlyMrs.Atanasova,whenwasAtamiqlaunchedandwhatwerethemainchallengesintheenergylandscapeatthetime?Atamiqwaslaunchedattheendofthesecondquarterof2022.Inordertohaveastronglaunch,wehadtoconvinceearlyuserstojointheplatformevenbeforescalingup.Behindallthefunctionalitiesandbeforetheofficialstart,wedevotedalmostayeardevelopingtheplatformandgatheringtechnicalinformation.Anothersignificantchallengewasthatourpartnerswerenotreadytogoonlinewiththeirentiretechnicalportfolio,thiswashardevenforcompanieswith150yearsofhistory.Butdespiteallthechallengeswemet,todaywecanproudlysaythatAtamiqisthefirstplatformabletodigitisetheprocurementprocessesinenvironmentalprojects.Theaddedvalueisthatindustrialexpertsnolongerhavetobeengagedintime-consumingprojectsastheyarenowabletofindsolutionsandengineeringadviceonline.Howhavethecompany’soperationsandcustomerprofilechanged?Thereisasayingthatnecessityisthemotherofinvention.Wehadtorespondtoacustomer-drivenchange,usingdigitalinteractionswithindustrialserviceprovidersworldwide.Thechallengesinprocurement,supplychainandmanufacturingitselfwereattheforefrontoffindingnewwaysofdoingbusiness.BypositioningourselvesasanESGsolutionprovider,weaimtomakeourcustomersmoreefficient,savetheirtimeandhelpthemreducetheenvironmentalimpactoftheindustrytheyareinvolvedin.Transitionalchanges,coupledwithindustrialrevolutioninservice,provedthatthecustomerprofilehadtobedeeplyreorganisedsothatourcustomerscanhave24/7accesstotechnicalexpertiseandonlinesolutions.Atamiqoffersproductsintheareaofgreentransitionandsolutions.CanyougiveusanexampleofsuchproductsforindustrialclientsandwhatmakesthemdifferentthanproductsthatarenotincompliancewithESGandgreenstandards?Ourportfolioofsolutionsincludesvariousenvironmentalareas.Asweknowhowimportantindustrialdecarbonisationis,wetriedtocombineourexpertiseindelivery,installation,automationandmaintenanceservicesinthefieldsofwatertreatment,sludgerecovery,biogassystems,wastemanagement,airqualitysystems.Inlinewiththenetzerogoal,weprovideourexpertisewithPVsystems,includingPVfacades,powercogenerationandhydrogentechnologies.TheenergygreentransitionisatoppriorityforEurope.Awell-executedESGstrategycanstrengtheninvestmentreturnsbyallocatingcapitaltomorepromisingandsustainablebusinessopportunitiesandmeettheneedsofthepresentwithoutcompromisingpossibilitiesforthefuturegenerations.Whenitcomestosolutions,Atamiqhasexpertiseinanumberofareas.Oneofthemostinnovativesolutionsinyourportfolioisthesystemthatenablestheproductionofelectricityfromsludge.Canyoutellusabitmoreaboutitandwhoisitsuitablefor?Thesludgeproducedduringthewastewatertreatmentprocessisamajorchallengenowadays.Moreandmoreindustriessolvethisproblemviaanaerobicdigestionthathelpsthemreducedisposalcostsandproduceenergy.Biogastechnologiesturntheplantfromanenergyconsumertoanenergyprovider.Biogassourcesproducedthroughdigestiontechnologiesareturnedintoarenewablesourceofheatandelectricity.Thisiswherecogenerationcomesintoplay.Cogenerationisacombinedgenerationofheatandelectricity,thusachievingaveryhighefficiencyofuseofenergycontainedinthefuel,whichissludgeinthiscase.Mostindustrialresiduescanbeusedasasourceofenergy.Frombreweries,throughthefoodindustry,pulpandpaper,chemicals,municipalwastetreatment,etc.-biogassystemshaveextremelywideapplications.Oneofourlatestprojectisabiogasinstallationwithinamunicipalwastewatertreatmentplant.Wecompletedthedelivery,installationandstart-upofthetechnologicalequipmentincludingdigesting–equipment,gasstorage,gasflare,heatexchangerandcontainerisedcombinedheatandpower(CHP)unitwithelectricaloutputof120kWandheatoutputof176kW.Inordertohaveamaximumproductivity,biogasconsumptionisabout52Nm³/h.Icanassurethatifanindustryiscommittedtodecarbonisation,circulareconomyandsustainability,abiogasplantthatproducesenergyforitsownconsumptioncancontributetoreachingthe“E”(environmentalfactor)infromanESGperspectives.www.atamiq.comAtamiqisaB2Bplatformofferingproducts,solutionsandservicestohelpindustrialcompaniesintheESGtransition.Thecompanyisspecialisedinanumberofareasofsustainabledevelopmentsuchasdelivery,installationandmaintenanceofdrinkingandwastewatertreatmentsolutions,PVandcogenerationsystems,hydrogentechnologies,biogasplants,wastesortingandrecyclingfacilities.MayaAtanasovaisthefounderandCEOofAtamiq.MayaAtanasovaFounderandCEOofAtamiq12RenewableEnergyinSoutheastEuropeCroatiaaimsforaRESshareof36.4%ofthegrossfinalenergyconsumptionin2030,accordingtothecountry’sNationalEnergyandClimatePlan(NECP)submittedtotheEuropeanCommissionin2020.ThisisthehighesttargetedshareamongitsregionalpeersandCroatiaistheonlySEEEU-membertobealreadyclosertothe2030objectivethantothe2020threshold.Inaddition,intensiveinvestmentinsolarandwindfacilitieswillprobablyresultinCroatiaexceedingthistarget.Onshorewindpowercapacityisprojectedtoreach1,990MWbytheendofthedecade,doublingfromthe988MWin2021,whileinstalledsolarcapacitywillexpandseventimesto770MWfromthecurrent109MW.Thecountryintendstocompletelystopusingcoalby2033atthelatest.Inthepasttwoyears,thefastestgrowthinrenewableenergyinvestmentinCroatiacamefromthewindsector.Inmid-Croatiancompaniesgoallinonwind,solarenergyinvestments132022,SpanishrenewableenergycompanyAccionaEnergiasaiditwouldbuildtwowindfarmswithatotalcapacityof72MWinCroatia,aninvestmentofnearlyEUR100mln.Thewindfarms,expectedtobeoperationalin2024,willproduce203GWh.Ayearearlier,thelargestwindfarminCroatia,theSenjwindfarm,whichismajority-ownedbyChinaNorthIndustriesCorporation(Norinco),startedoperation.Ithasaninstalledcapacityof156MWandrepresentedaninvestmentofsomeEUR230mln.Thewindfarmisexpectedtogenerate530GWhofelectricityperyear.Croatianstate-ownedenergysupplierHrvatskaElektroprivreda(HEP)isbehindoneofthebiggestlocalinvestmentsinwindenergy,worthaboutEUR66mln.ThecompanyputintooperationtheKorlatwindfarm,of18windturbinesof3.6MWeach,in2021.HEPalsoplanstobuilda99MWsolarpowerplantnexttotheKorlatwindfarm.Renewableenergyprojectscurrentlyinthepipelinealsoincludetwoonshorewindfarmswithatotalcapacityof111MWintheZadarregion,aninvestmentbyCroatianelectricityproducerKunovac.Inaddition,DutchwindenergycompanyGreenTrustandGermanwindturbinemanufacturerEnerconaredevelopingaEUR500mlnwindfarminCroatia.Withaninstalledcapacityof425MW,theLickiMedvjedparkwillbethebiggestwindfarmunderdevelopmentinthecountry.BusinessesfromotherindustriesarethemaindriverbehindthesolarenergymarketexpansioninCroatia.Theself-consumptioncapacitiesarefornowsmall,buttheypointtoanewtrendonthelocalmarket,mirroringglobaldevelopments.Podravka,thecountry’sbiggestfoodandbeverageproducer,closed2022withthelaunchofa2.4MWsolarpowerplantworthEUR1.7mlnontheroofsofitsproductionbuildingsinKoprivnica.Cromaris,thefishfarmingandprocessingcompanyofdiversifiedholdinggroupAdris,startedoperatinga700kWsolarpowerplantworthaboutEUR700,000,expectedtomeetafifthoftheelectricitydemandofitshatcheryinNin,northernDalmatia.Earlierin2022,shoppingmallchainSupernovaGroupannouncedplanstoinstallthreesolarplantswithatotalinstalledcapacityof722.42kWpontwomallsinSisak.TheprojectisvaluedatEUR700,000.In2021,hoteloperatorValamarRivierainstalledsolarpanelson26hotelsandcampsitesontheAdriaticcoastaspartofajointsolarpowerprojectwithE.ONHrvatska,theCroatianunitofGermanenergycompanyE.ON.Thesolarpanelsarecovering5%ofValamar'senergyneeds.Amongenergysectorplayers,oilandgasgroupINAin2022agreedtheconstructionoftwosolarpowerplantsasafirststeptocreatingarenewablesportfolio.Thetwoplantswillproduceatotalof16GWhannually,equaltotheaverageconsumptionof4,800households.Thesameyear,FrenchinvestmentfundPEARLInfrastructureCapitalputintooperationasolarpowerplantfortheneedsofits5MWe/13MWthcogenerationplantEnergy9inSlatina.M&AactivityintheCroatianrenewableenergysectorwashighinthepasttwoyears,mostlyinvolvingtheacquisitionoflocalprojectsandcompaniesbyforeigninvestors.In2022,UK-basedrenewableenergycompanyCindrigoagreedtoacquire90%ofCroatiancompanyEESDravacelEnergetika,whichholdsageothermalexplorationlicenceinSlatina,northCroatia,withaviewofdevelopinga20MWgeothermalpowerplant.Thesameyear,IsraelicompanyEnlightRenewableEnergysignedanagreementfortheacquisitionandjointdevelopmentofa525MWportfolioofrenewableenergyprojectsinCroatia.Theportfoliocomprisesfoursolarpowerplantsandonewindfarminvariousstagesofdevelopment.ThepastyearsawtheentryofAustriancleanenergyefficiencysolutionsproviderCLEENEnergyintheCroatianmarketthroughtheacquisitionofprojectrightsfor23MWpofrenewableenergycapacity.Thecompanyholdsanoptiontopurchaseprojectrightsforafurther50MWpofcapacityinCroatiaatalaterdate.Thecombined73MWpofrenewableenergycapacityconsistsofseveralphotovoltaicprojects,aswellasfourbiogasplants.ThebiggestrecentlocalM&AtransactionincludesrenewableenergycompanyProfessioEnergiaacquiringin2021PRGlobalDaniloandVjetroelektranaRudine,whichownwindfarmswithatotalinstalledcapacityof77.7MWinsouthernCroatia.14RenewableEnergyinSoutheastEuropeE.ONCroatiaeyesSEEmarketstoextendregionalreach1.Mr.Belamarić,whatarethemainareasofoperationofE.ONinCroatia?E.ONSEoperatesintwomainareas.Oneis,whatwecall,energynetworksandthatconcernspowerandgasgrids.Theotherareaismorebroadanditsmainfocusarecustomersolutions.Bycustomersolutions,wemeansupplyofelectricityandgas,energysolutionsforhouseholdsandE.ONCroatia,partofGermany’senergymajorE.ON,hasbeenoperatingintheCroatianmarketsince2009.Thecompanyspecialisesincustomerenergysolutionsandoperatingenergynetworks,butitalsosupplieselectricity,gasandwastewaterdisposalservices.Itscustomersincludebothhouseholds,bussinescustomers,industriesandcommunities.VedranBelamarićisthecompany’sDirectorofCustomerSolutionsEIS(energyinfrastructuresolutions).VedranBelamarićDirectorofCustomerSolutions15www.eon.hr/hr.htmlwww.eon.com/en.htmlinfrastructuralsolutionsforindustryandmunicipalities.ThispartofthebusinessisreferredtoasenergyinfrastructuresolutionsorshortlyEIS.E.ONCroatiaispresentinallofthesedomainsbutweseethehighestgrowthpotentialinEISforbusinesscustomersandpartnersinlocalmunicipalities.Besidesthesebusinessstreams,wearealsooperatingthebiggestwastewatertreatmentfacilityintheregioninthecityofZagreb.2.E.ONCroatiaisalreadyamarketleaderwhenitcomestosolarenergy.Doesthecompanyplantoreinforceitsotherrenewablesegmentsorfurtherdiversifyitsportfoliointhecountry?Overthelastseveralyears,E.ONCroatiahasbecomealeaderinphotovoltaics(PV)intermsofinstalledcapacity,havinginstalledcloseto50MWpin2022alone.OurmainmodelisPVsolutionforprosumers,whicharecustomersthatconsumetheenergyproducedbythePVsystemonsite.However,wearedesigning,buildingandoperatingbiggergroundmountedPVparksaswell.Lastyear,webuiltthetwobiggestsystemsatthemomentinCroatia,eachcloseto10MWpinstalledcapacity.Whenitcomestothequestionaboutdiversification,theansweris,yes.WeareworkingonbringinganarrayofenergysolutionstoourcustomersbesidesthePVsystems.E.ONhasahugeknow-howinmanyotherenergysolutions,likecogeneration,biomass,lowtemperatureenergysystems,coolingandheating,heatpumps,butalsoauxiliaryservicesandenergymanagementingeneral.WearejustabouttofinishourfirstcogenerationplantinLjubljana,Sloveniaandweareworkingoncoupleofbiomassprojects.Besidesthat,wearealsoprovidingenergyefficiencysolutionstosomeofourbiggercustomers.Wewanttobecomethenumberonepartnerforenergytransitiontoourcustomersandpartners.3.Theenergycrisisacceleratedthetransitiontogreenenergyandthenumberofinvestorsinvestinginlarge-scalesolarprojectsisincreasing.WhatsolutionsdoesE.ONCroatiaoffertolargeclients?WestartedasanEPCcompany,meaningthatweprovidedengineering,designandinstallationservicesfromthebeginning.ButE.ONismuchmorethanthat.E.ONoffersaccesstoenergymarketsforsuchcustomersandweareopentopartnerships,includingdifferentjointventuresandfinancingoptions.Ouraimistoofferafullrangeofsolutionsandservices,whichisauniquevaluepropositionforthecustomersinthemarketswhereE.ONoperates.Thisincludesbiggersolarparks.4.Thecompany’sportfolioofprojectsencompassesawiderangeofindustries.Canyoutellusaboutthecurrenttrends-whichindustriesinvestthemostinsolar?Alotofourprojectsaretailor-madeforspecificcustomers.Butthemostimportantindustrieswherewehavebroughtgreenelectricityandsecurityofsupplytoourcustomershavebeenthefoodandbeverageindustry,manufacturing(woodindustryandpharma)andtourism.Butthereisahugepotentialfordecarbonizationacrossthewholespectrumofindustriesinwhichweareactive,likeretailandprojectswithmunicipalitieswherewecandeliverprojectsonlargescales.Weseethatthistrendisontheriseandcompaniesarerealizingthatapartfrompricerisk,thesecurityandstabilityofthesupplyisalsoimportant.Manyofthecustomersintheseindustrieswanttolocktheirenergycostsforthelongerperiod,forexample10-20years.Whatarethecompany’splansforfutureinvestments?Areyoulookingintopotentialexpansiontoothermarketsintheregion?In2022,E.ONCroatiainvestedmorethanEUR22mlninprojectsinCroatiaandSlovenia.WearelookingtofurtherscaleuptheinvestmentsthroughBOTandESCOmodelsforourcustomersbutalsoPPAfromtheoffsitePVparks.Wearealreadypresentinthesetwomarketsbutourapproachistofollowthecustomers.WeworkwithanumberofcompaniesthathavearegionalfootholdinSoutheastEuropeandwewanttoprovidesolutionsforthesecustomersinourneighboringcountrieslikeSerbia,BosniaandHerzegovina,NorthMacedoniaandpotentiallyBulgariaifthereisaneedforit.Forthetimebeing,wearestilloperatingfromZagrebwheretheheadquartersoftheregionaloperationsislocated.FurthermorethereisE.ON’sfirstcogenerationpowerplantintheregion–theAquafilprojectinLjubljana.Inpreparationforbiomasscogenerationandstepforwardintootherenergysolutions.E.ONCroatiainnumbers48MWpinstalledPVin2022Totalinstalledcapacity:approximately70MWp,over200powerplants25millioneuroofinvestmentssofar30millioneurotobeinvestedinthecomingperiodThelargestphotovoltaicpowerplantsinCroatia(9.9MWpDravaand9.6MWpPliva)Over100MWpofprojectsinthesalespipelineatahighstageofdevelopment16RenewableEnergyinSoutheastEuropeGreeceisoneofthebestpositionedEUmembersonitsroadtocarbonneutrality.InOctober2022,thecountryincreaseditsprevious2030renewableenergytargetof70%toanevenmoreambitious80%shareinelectricitygeneration.Furthermore,anewlypassedclimatelawcommitstocompletephase-outofcoalinthecountry’senergymixby2028,butshouldsecurityofsupplyallow,thiscouldhappenasearlyas2025.Asof2021,Greecehad11,520MWofinstalledrenewablecapacity,whichcorrespondedtojustshortof40%shareofrenewablesinthenationalenergymix.Theconsiderableincreaseincapacityprojectedbytheendofthedecade,coupledwithhighelectricitypricesandstateSoaringinterestinsolarpowersignalsbrightfutureforGreece’srenewableenergymarket17subsidysupport,havelurednumerousglobalplayersintoinvestingintheGreekrenewablesmarket.BothlocalplayersandforeigninvestorshaveannouncedbiggreenenergyinvestmentsinGreeceoverthepasttwoyears,drawingagreenerfutureforthecountry’senergy.Solarpowergeneration,inparticular,isexpectedtoreachnewheights.InJanuary2023,MetonEnergy,PPC’sjointventurewithGermany’sRWE,announcedplanstoinvestEUR180mlninfivesolarpowerplantswithatotalcapacityof200MWinnorthernGreece.PPCRenewables,thegreenenergyunitofPPC,isalsoworkingonaprojecttobuilda550MWsolarparkatthesiteoftheformerPtolemaidalignitemine,inthenorthwesternpartofthecountry.Anotherlocalsectorplayer,HellenicPetroleum,inApril2022commissioneda204MWsolarparkinthenorthernpartofthecountry,whichisthelargestinEuropeusingbi-facialsolarmodules.Thesamemonth,theGreekgovernmentapprovedasastrategicinvestmentaprojectforapumpedstoragehydropowerfacilityinCretebydomesticrenewablesfirmTernaEnergy.TheprojectwillseeaninvestmentofEUR280mlninafacilitythatwillusewindpowertopumpwaterbetweentwoseparatereservoirs.TernaEnergyplanstoinstallan89-MWwindparkwith27windturbinesfortheproject.Greece’ssolarenergypotentialhasbeenrecognisedbyinternationalinvestors,aswell.InSeptember2022,UK-headquarteredHiveEnergyannouncedplanstobuilda200MWsolarplantandalithium-ionenergystorageplantwithacapacityof100MWinGreece.Upto16tonnesofgreenhydrogenperdayarealsoplannedtobeproducedatthesite.TheinvestmentisestimatedatEUR226.4mln.Earlierin2022,CeroGeneration,anindependentportfoliocompanyofMacquarie’sGreenInvestmentGroup(GIG),officiallycommencedworkonaprojectinvolvingtheconstructionofa100MWsolarparkinGreece.Inadifferentmajorforeigninvestmentdeal,TelAviv-basedindependentpowerproducerKenlovRenewableEnergyplanstodevelopatotalofninewindandsolarpowerprojectswithacombinedcapacityof378MW.AnotherIsraelicompany,renewableenergyfirmEcoenergy,enteredtheGreekmarketin2022throughadealwithlocalTernaEnergy.ThetwocompanieswilljointlydevelopaportfolioofsolarpowerplantsinGreece-aninvestmentprojectworthanestimatedEUR265mln.Theyearbefore,FrenchrenewableenergycompanyTotalErencommissionedfoursolarphotovoltaicplantswithacombinedinstalledcapacityof40MWpinthenorthernpartofGreece.UAE-basedrenewableenergyfirmMasdarandFinland’sTaaleriEnergiaagreedtodevelopa65-MWsolarprojecttobemanagedthroughthecompanies’jointventureMasdar-TaaleriGeneration(MTG).TheappealofGreece’sgreenresourcesisalsomirroredinthebigM&Adealsinthesectorinvolvingsomemajorglobalnames.Lastyear,Spain’sFotowatioRenewableVenturesacquiredaportfolioof600MWofbatteryenergystoragesystemsunderdevelopmentinGreece.In2021,SwedishenergysystemsmanufacturerMetaconABagreedtoacquiretheremaining41.13%stakeinGreekhydrogenandenergysystemsdeveloperHelbioHoldingsitdoesnotalreadyownforSEK129.4mln(USD15.6mln/EUR12.8mln).InotherdealsinvolvingGreekcompanies,PPCsignedanexclusivityagreementwithEnelonthepotentialbuyoftheItaliancompany’sentireoperationsinRomaniainlate2022.Earlierthatyear,theGreekpowerutilitystruckabindingagreementtoacquirethe112MWrenewableenergyportfolioofVolterraAE,theenergydivisionofGreekconstructiongroupAvax,andtransferittoitsunitPPCRenewables.18RenewableEnergyinSoutheastEuropeICGBseesfuturepotentialforhydrogentoflowalongGreece-BulgariagaspipelineTheIGBwentliveonOctober1,2022ensuringtheflowof1billioncubicmeters(bcm)ofnaturalgasperyearfromAzerbaijanintoBulgaria.Whatisthelikelihoodthatthepipelinewillstartcarryinghydrogeninthefutureandinwhatquantitiesorpercentageofcapacity?Whatnecessarymodificationsmustthetransmissioninfrastructureundergoforthatpurpose?WithitssuccessfullaunchinOctober2022,IGBreshapedtheregion’senergymapandopenedanentirelynewroutefordiversifiedandsecurenaturalgasdeliveries.Atpresent,consideringthechallengingnewenvironmentcreatedbyRussia’saggressioninUkraine,supplyingBulgariawithnaturalgasandallowingtransportationofquantitiestoothercountriesintheregionisthemainpriority.Yet,asatransmissionoperatordevelopinginfrastructurethatwillbeexploitedforthenextfewdecades,ICGBisnaturallyalreadylookingatfutureopportunities,includingtheuseofhydrogen.Wearecurrentlyresearchinghydrogentransmissionpossibilitiesinallrelevantaspects–technical,economicandregulatory.Thelikelyinfrastructuremodificationsneededrelatetospecialmeteringandgasqualityequipment,improvedsealingofvalvesandfittingsandmoreadvancedsafetysystems.Inaddition,IGBisonlyonepartofamuchbiggerpictureorperhapseventwobiggerpictures.OneisthegeneralpossibilitytotransportH2viaexistingnaturalgaspipelines,butforthattohappen,atleastseveralconsecutiveinfrastructureoperatorsshouldbereadyforhydrogentransportationto/fromacertaindestination.Thetransmissionserviceisjustcomplementarytoamarketofagivencommodityitself,beingitnaturalgas,hydrogen,etc.Weneedahydrogenmarkettobeservicedbyus,thetransmissionoperators.Amarketwithitsfundamentalsofsupplyanddemand,differentlevels,andspecificregulations.ThewholeeconomicvaluechainregardingtheH2-production,itsdeliverytotheentrypointsofthepipelinesystems,itsdirection,andfinaluseisstillundeveloped.Bulgariastandstoget35mlneuroinfundingundertheEU-backednationalRecoveryandResilienceplan(RRP)todevelop55MWorover4,300tonnes/yearofrenewablehydrogenproductioncapacityby2030.WhatrolecouldIGBplayindevelopingthatcapacityandwhatinvestmentswillneedtobemadetobackthateffortinthenearfuture?ICGBisthedeveloperandindependenttransmissionoperatorofthe182-kmGreece-Bulgarianaturalgasinterconnector(IGB),whichwascommissionedinlate2022.OntheBulgarianside,thecompanyisledbyTeodoraGeorgieva,ExecutiveOfficer.ICGBisheldequallybystate-ownedBulgarianEnergyHolding(BEH)andIGIPoseidon,ajointventureoftheGreekDEPAInternationalProjectsandtheItalianenergygroupEdison.ConsideringICGBhastheroleofanindependenttransmissionoperator,wewillbecloselyfollowingthetrendsinthetransmissionofnaturalgasandmaybehydrogeninthefuture.Ibelievewewillmorelikelyblendifthatmarketdevelops.PotentialinvestmentsconcernnecessarytechnicalmodificationsandpossiblythephysicalconnectionofhydrogenproductionsitestoIGB,ifsucharetoappearalongthepipelineroute.Ofcourse,ICGBisandwillremainopentocommunicationswithgovernmentbodiesandbusinessforfurtherdevelopmentsinthatrespect.Afterall,theEuropeanUnion,andBulgariaasamemberstate,arelookingatgreenersolutionsthatwouldenablereachingtheenergytransitiongoals.Asacompanydevelopinganenergyprojectthat’satruegame-changer,ICGBhaseveryinterestinbeingapartofthatprocessofchange.Couldmodificationsbemadetothepipelinetotransportothertypesofrenewablefuel,e.g.biomethane?Theinjectionofgreenhydrogenandbiomethaneiscurrentlyseenasthenextsteptowardsthedecarbonisationofthegassectorinseveralcountries.However,theintroductionofthesegasesinexistinginfrastructurehasenergysector-related,materialandoperationalimplicationsthatshouldbecarefullylookedat.Accordingtovariousstudies,hydrogencontentupto20%byvolumeappearstobepossibletoaccommodateinthecurrentinfrastructurewithonlyminortechnicalmodifications.However,attheDistributionSystemOperator(DSO)level,theintroductionofgasqualitytrackingsystemswillberequiredduetothedistributedinjectionnatureofhydrogenandbiomethane.Thedifferenttolerancesforhydrogenblendingofconsumers,dependingonend-useequipmentwillbecriticalduringthetransitionperiodtoa100%greengasgridasthereisariskofpushingconsumersoffthegrid.Whatroledoyouseeforcurrentgastransmissiongridsin30years’time?HowcouldICGBcontributetotheinclusionofrenewableenergysourcesintheenergymixofBulgariaandtheSEEregion?Fromtoday’sperspective,IshouldsayIGBwillholdtheroleofanextremelyinterlinkedandharmonisedpan-Europeantransmissionnetworkwiththepossibilitytoaccommodatedifferenttypesofgasesproducedandusedinclimate-neutralways.ICGB’scontributionwithrespecttotherenewablessectorliesinthetransmissionofenergystoredintheformofgas.Itgoeswithoutsayingthatthemainpresentdisadvantagesofrenewableenergysourcesarebalancingandstorageofgeneratedenergy.ThatiswherehydrogenisdeemedtobetheanswersofarandwhereIGBcomestousebytransportingit.PerhapsitwillbenotlongbeforewewillbeprovidingtransmissionofhydrogenfromGreecenorthtoBulgariaandthewiderregion,usingwindorsolarpower,comingfromeithertheMediterraneancoastlineordeliveredviaFloatingStorageRegasificationUnits.www.icgb.eu1920RenewableEnergyinSoutheastEuropeThelasttwoyearssawrenewableenergyinvestmentsinRomaniagofromamorphousambitiontosolidfinancialprospects.Cleargoalssetoutinthe2021-2030IntegratedNationalEnergyandClimatePlan(INECP)coupledwithEUandstatefinancinghaveturnedRomania’srenewableenergylandscapeintofertilegroundforprivateinvestors.EU’sgoaltoreachnet-zerogreenhousegasemissionsby2050furtherenforcesthegreenenergyagenda.Romania’scommitmenttoenergytransformationisreflectedintheINECP,whichaimsata30.7%renewableenergyshareingrossfinalenergyconsumptionby2030.Tothiseffect,Romania'stotalinstalledpowercapacityissettojumpbyroughly32%in2030comparedto2020,mainlyduetoinstallingnewwindandsolarenergycapacitiesamountingto2.302GWand3.692GW,respectively.Thiswouldbringthetotalinstalledcapacitiesofwindandsolarprojectsin2030to5.255GWand5.054GW,respectively,withintermediarygoalsof4.334GWand3.393GWfor2025.HydropowerisprojectedtomaintainitsleadershippositionasRomania'stopenergyresourceintermsofinstalledcapacities,increasingfrom2.953GWin2020to7.593GWin2025,withnoadditionalplanstogrowfurtherby2030setoutintheINECP.M&AhighlightsRomania’srenewableenergyindustryispickingupspeedonthemergerandacquisition(M&A)front,withseveraltransactionsmakingitamongthehighest-valuedealsof2021and2022.Money…OneofthemostsizeableM&AtransactionsoverthelasttwoyearswasabundleacquisitionofsevenoutofnineassetsownedbyCzechenergygroupCEZinRomaniabyfundsmanagedbyMacquireInfrastructureandRealAssets(MIRA),aunitofglobalfinancialservicesorganizationMacquireGroup.ThetransactionwascompletedinMarchof2021,withCEZGroupannouncinginitsfinancialreportforthefirstthreequartersof2021thatthedealhadbroughtinCZK24.6bln(USD1.13bln/EUR1.03bln).Theassetsaleincludeddistributorsandtradersofconventionalenergy,whileontherenewablefront,itencompassedtwowindfarmswithatotalinstalledpowercapacityof600MWandfourhydropowerplantswithacumulativeinstalledcapacityof22MW.InFebruary2021,Romania’scompetitionauthorityapprovedthetakeoverofa108MWwindfarmbyRomanianhydropowerproducerHidroelectricafromGermanenergygroupSTEAG.ThetransactioninvolvedtheacquisitionofSTEAG’ssharesinlocalsubsidiariesCruceaWindFarmandSTEAGEnergieRomania.InaJanuary2022pressrelease,globalconsultancyDeloittesaidtheEUR130milliontransactionwas2021’sfifthbiggestoveralldealandtheonlyoneintherenewablesindustrytomakeitintotheconsultancy’stop-five.OneofthelargestdisclosedM&Adealsof2022didnotquitestackuptothevaluesoftransactionsin2021,butrakedinEUR71mlnforCanadianrenewableenergycompanyJadePowerTrust,whichsoldallitsrenewableenergyoperatingassetsinRomaniaandtheNetherlandstoAustria-basedcompanyEneryPowerHolding.TheRomanianportfolioincludedtwoonshorewindparks,twosolarphotovoltaicfarmsandtwohydroelectricpowerplants,withatotalinstalledcapacityof81MWp.NodealsintherenewablesindustrymadeitintoDeloitte’stop-fivefor2022,butEnery’sacquisitionofJade’srenewableassetstoppedtheconsultancy’slistforthethirdquarterof2022.…andpowerThemostsignificantdealinvolvingasingleprojectcameintheformofa1,044MWphotovoltaicparkunderdevelopmentinAradcounty,westernRomania.Uponitscompletion,RomaniacouldhouseEurope’slargestsolarPVplant.InNovember2022,Luxemburg-basedsustainableinfrastructureinvestorActissaidthatitsportfoliocompanyRezolvEnergyhadacquiredtherightstobuildthegiantsolarplantfromMonssonGroup.Theproject,tohave1.6millionpanels,receivedagridconnectioncertificatefromRomania’stransmissionsystemoperator(TSO)TranselectricainMarch2022.Withanaverageannualgenerationofroughly1,500GWh,theplantcouldbringgreenpowertomorethan370,000households.Oneotherdealisespeciallyimpressivewhenitcomestoplannedcapacity.USinvestmentfundGlobalInfrastructurePartners’(GIP)takeoverofGermanrenewableenergycompanywpd'slocaloffshorewindbusinessinvolvestwoprojectsofacombined1.9GW.ThetransactionofanundisclosedamountwasapprovedbyRomania’santitrustauthorityinSeptember2022andencompasseswpd’sthreelocalcompaniesestablishedtofacilitatetheconstructionofthe500MWBlackSea1and1.4GWBlackSea2windfarmsoffRomania’sBlackSeacoast.Theprojectsareintheearlyplanningstage,asinJuly2021,wpdwasthefirstcompanytoofficiallyapplybeforeRomanianauthoritiesforthedevelopmentofoffshorewindprojects.GreeninvestmenthorizonInternationalMVPsThebrighteststarsonRomania’srenewableenergyinvestmentstageweremostlyinternationalplayerswhichmainlyenteredthemarketthroughbrownfieldacquisitionsofestablishedcompanies,oftensetupaspurposevehiclesforthedeliveryofvariousgreenenergyprojects.Romania’sjourneytowardsgreenerenergy:M&AhighlightsandinvestmentMVPs2021-202321InadditiontospearheadingtheM&AdealthatcoulddeliverRomania’sbiggestsolarpark,RezolvEnergyalsohasplanstoinvestina450MWonshorewindfarminRomania,nearBucharest,inpartnershipwithUKinvestmentcompanyLowCarbon.RezolvEnergyholdsa51%stakeintheproject.InDecember2022,theRezolvEnergy–LowCarbonpartnershipalsoannouncedplanstobuildtwoonshorewindfarmswithacombinedcapacityofupto600MWinthesoutheasternConstantacounty.Thisbringsthetwocompanies’jointlocalportfoliopipelineto1GW,inadditiontoRezolv’sownover-1-GWsolarparkandtwoonshorewindprojectsofacombined1GWbyLowCarbonthatareindevelopmenteastofBucharest.OneofthemostactiveplayersintermsofinvestmentsisIsraelirenewableenergyinvestorNofarEnergy.ItsfirstmajormoveontheRomanianmarketcameinNovember2021,whentogetherwithEco-Energyitacquireda153MWsolarparkprojectfromCzechrealestatedeveloperPortlandTrust.ThepricetagwasEUR98mln.Halfayearlater,inMay2022,NofarannouncedthatithadsignedaEUR130mlndealfora169MWpphotovoltaicprojectinIepuresti,Giurgiucountry,whichwouldbereadytobebuiltinthefirsthalfof2023.Twomonthslater,thecompanyunveileda255MWsolarprojectwhoseconstructioncostswereestimatedatEUR135mln.Nofarkickedoff2023byannouncingtheacquisitionofa73MWpsolarprojectinRomania’ssoutherncountryofGiurgiuandsayingitplanstoinvestanadditionalEUR500mlntodevelopsolarenergyprojectsinRomania.The73MWpprojectwillbereadytobuildinthefirsthalfof2023anditscapacitymaybeexpandedto130MWp.NofarEnergy’sprojectpipelineinRomaniacurrentlyexceeds600MWp,whichwillbeimplementedduringthesecondhalfof2023andconnectedtothenationalgridstarting2024-2025.AnotherinternationalplayertomakeitintotherosterofsignificantinvestmentsoverthelasttwoyearsisINVLRenewableEnergyFundI,runbyLithuania’sINVLAssetManagement.ThefundisfocusedontheRomanianandPolishmarketsandhasamassedninesolarprojectswithatotalcapacityof475MW–eightofthesemakeupthefund’sRomanianportfolio,withacumulativecapacityof442.7MWandinvestmentsthatcouldreachEUR350mln.Constructionworksaresettostartlateinthefirstquarterof2023andareprojectedtoconcludebytheendofthethirdquarterof2025.Locally-grown,locally-ownedRENRomanianhydropowerproducerHidroelectricadistinguisheditselfasthemostactivelocalplayerintermsofinvestmentsinrenewables.Itstakeoverofthe108MWCruceawindfarmfromGermanenergygroupSTEAGinFebruary2021solidifieditscommitmenttogreenenergydiversification.InApril2021,HidroelectricawastherecipientofaRON1.25bln(EUR255mln),seven-yearloanfromlocallenderBRDGroupeSocieteGenerale.Thefundswouldbedirectedatacquisitionsanddirectinvestmentsinoperationalprojectsbasedonwindandsolarenergy,Hidroelectricasaidatthetime.Sincethen,ithassoughtconsultantsforafeasibilitystudyfortheconstructionofa50MWgreenhydrogenproductionplantnearthePortiledeFierGorgeontheDanube,a300MWsolarplantandagreenhydrogenproductionplantontheOltriver.InJanuary2022,HidroelectricacontractedlocaldesignandconsultancycompanyRomproiectElectrotobuilda45MWpsolarplantintheeasterncountyofBrailaandinstallphotovoltaicpanelsontheroofsof20ofitshydropowerplants.InJanuary2023,HidroelectricasaiditwouldcallonitsinvestorstovoteonprojectsworthatotalRON1.09bln(EUR222.3mln)fortheupgradeofseveralhydropowerplantsonFebruary16.By2025,thecompanyplanstohaveinvestedRON3bln(EUR612mln)inrefurbishmentandmodernisationprojectsthatwouldaccountforaninstalledpowercapacityof1.97GW.TheRomanianstateownsan80.06%stakeinHidroelectrica,whileinvestmentfundFondulProprietateaholdstheremaininginterestof19.94%.Asoftheendof2021,Hidroelectricahad187hydropowerplantswithatotalinstalledcapacityof6.372GW.Grid-approvedpipeline–onestepclosertosealeddealsWhileasignificantamountofinvestmentsareonthehorizonforRomania’srenewableenergyindustry,projectcompletionisnotalwaysguaranteed.Agoodfirstindicatorofinvestors’commitmenttoseeingtheirprojectsthroughcomesintheformofgridconnectionapprovalsgrantedbyRomania’sTransmissionandSystemOperator(TSO)alongwithothersmallerdistributors.Projectswithatotalinstalledcapacityof7.76GWhavereceivedsuchapprovals,withsolaraccountingfor5.53GW,ora71.3%share,accordingtodatapublishedbyRomania’sTSO,Transelectrica,attheendofDecember2022.Windpowerprojectsweretherunneruptosolar,summingup2.2GWor28.4%ofthecumulativeinstalledcapacityofallprojectswithgridconnectionauthorisation.Newlyapprovedhydroprojectscameinthird,with19MW,whilebiogasattractedasingle0.5MWproject.Oftheprojectsthathaveobtainedgridconnectionapprovals,thetopfiveintermsofcapacityareallsolarandwind.Theyaddupto2.56GW,whichisequalto33.1%ofallprojectswithgridconnectionapprovals.The1,044MWplantrunningforthetitleofEurope’slargestsolarparkanddevelopedbyRezolvtopstheTSO’sgridconnectionapprovalslist.Theprojectisduetobeoperationalby2024.Thencomesa629MWwindfarm,tobedevelopedbyRomanianenergycompanyHoopeksInternationalinGalati,easternRomania.Theprojectshouldstartproducingpowerattheendof2025.Uponcompletion,itwouldoutrankthe600MWFantanele-CogealacwindfarmdevelopedbyCzechelectricitydistributorCEZ,nowinthehandsofMIRA.ThirdandfourthonthelistaretwosolarprojectsdevelopedbythelocalarmofItaly’sEnelGreenPower.TheyarelocatedinAradcountry,WesternRomania,andhaveacombinedcapacityof666.5MW.Bothareexpectedtobeoperationalbytheendof2024.Fifthonthelistisa226.5MWwindprojectbythelocalsubsidiaryofPortugal’sEDPRenewablesinsoutheasternRomania.Itisplannedtostartproducingelectricityattheendof2025.Currently,EDPrenewableshasaportfolioof521MWofsolarandwindassetsinRomania.22RenewableEnergyinSoutheastEuropeBilfingerTebodin,yourpartnerforenergytransitionacrossindustriesIndustrialplayerscurrentlyfaceadoublechallenge:howcantheybattleincreasingenergycostsandreduceemissionsatthesametime.BilfingerTebodinCEE,oneofthelargestconsulting,engineeringandconstructionmanagementfirmsinCentralandEasternEurope,isheretohelpindustrialbusinessesthatwanttomaketheiroperationsenergyefficientorevenself-sufficient.BilfingerTebodinsupportsplantoperatorsfromtheinitialideathroughtoplanningbyprovidingmarketintelligenceandtechnologyscouting,consultingoninvestmentplanning,conductingfeasibilitystudiesandperformingconceptual,basicanddetailengineeringontheirbehalf.SoutheastEuropeisreadyforenergyindependence“Ourexpertiseissharedthroughouttheregion.Wehaveexpertswhoarespecialisedinsolarorwindfarmconstruction,industrialdecarbonisation,energyaudits,hydrogenproductionorwasteheatutilisation,”explainsMartinDittrich,marketleaderforEnergyTransitionatBilfingerTebodinCEE.DedicatedteamshaveworkedontransformativeprojectsforPolishenergygroupPolenergia(constructionofnewwindandsolarfarms),helpedmajorCzechchemicalsmanufacturerSpolchemieGroupassesproductionandtransportationoptionsforitsby-productBilfingerTebodinCEEisamultidisciplinaryconsultingandengineeringcompany.Wedeliverworld-classservicestocustomersinawiderangeofindustrialmarkets,includingchemicals,health&nutrition,oil&gas,automotive,energy&environmentandmore.ContactsMartinDittrichEnergyTransitionExpertmartin.dittrich@bilfinger.comGeorgeCursaruSoutheastEuropeExpertgeorge.cursaru@bilfinger.comhydrogenandprovidedafullscopeofservices(calledEPCM)foranewsecondgenerationbioethanolplantinRomania.AdditionaladdedvalueofBilfingerTebodinCEE,whichhasofficesinRomania,Serbia,Poland,CzechRepublic,HungaryandUkraine,isthattechnicalknow-howiscomplementedbylocalinsight.MarketleaderforSoutheastEurope,GeorgeCursaru,followsthetrendsandisinapositiontoprovideabroaderperspective:“ThenumberofopportunitiesavailableinSoutheastEuropeisincreasing.InRomania,forexample,thereareBlackSeaoperationsplannedfornewgasreserves.Togetherwithplannedoffshorewindprojects-withtheadvantageoffinallyhavingadedicatedlawadopted,theseoperationscansecureRomanianenergyindependenceforalmosttenyears,”GeorgeCursarucomments.Lawsandregulationsarenottheonlyfactorsthatarechanging.Availabletechnologiesarecontinuouslyimproving,withincreasedefficiency,loweroperationalcostsandextensivesolutionstoaddressengineeringchallenges.“Manyofourclientsintheindustrialsectornowstriveforsustainableproductionandhaveeithertransitionedorbeguntransitioningtoacircularbusinessmodel.Wehavetheknowledgeandtheproventrackrecordtosupporttheminthistransformationinthemostcosteffectivemanner,”addsGeorgeCursaru.www.tebodin.bilfinger.comWEMAKECLIMATE-FRIENDLYENERGYTRANSITIONWORKCONSULTANCYENGINEERINGPROJECTMANAGEMENTCONSTRUCTIONMANAGEMENTCOMMISSIONINGBILFINGERTEBODIN23Sloveniahadinstalledrenewablecapacityof1,606MWin2021,whichcorrespondedto41%ofthetotalinstalledelectricitygenerationcapacity,accordingtodatafromIRENA.AsfortheRESshareingrossfinalenergyconsumption,Sloveniareachedashareof25%in2021,thecountry’sstatisticalofficehassaid.Accordingtothecountry’sNECP,Sloveniaaimsfor27%ofgrossfinalenergyconsumptiontobecoveredbyrenewablesin2030.ThiscontributionisdeemednotveryambitiousbytheEuropeanCommission.Nevertheless,spendingonrenewableenergyinSloveniareachednewhighsinthepasttwoyears,asbigsectorSloveniaenergymajorsleadcountry’sgreentransition24RenewableEnergyinSoutheastEuropeplayersinvestedingreenprojectsandincreasedtheshareofrenewablesintheelectricitymix.NuclearpowercouldalsogrowitscontributioninthecomingyearsasaresultofanewgovernmentinitiativetoincreasethecapacityofSlovenia’ssolenuclearpowerplant.Thecountry’sbiggestenergygroupPetrolintroducednewservicesin2021withthefirstultra-fastelectricvehiclechargingstationsandthepilotinstallationofanelectricitystoragesystem.Thesameyear,theenergymajorstartedtheoperationofthe30MWLjubacwindpowerplantinCroatia.In2022,PetrollaunchedaEUR-17-mlnprojectfortheconstructionofthreephotovoltaicplantsnearCroatia'sKninwithacombinedinstalledcapacityof22MW.State-ownedelectricityproducerandtraderHoldingSlovenskeElektrarne(HSE)in2022startedoperationofa3MWsolarplant,thebiggestinthecountrysofar,incentralSlovenia.Thesolarpowerplanthas6,748modulesthatproducemorethan3GWhofelectricityperyear.Alsoin2022,HSE’shydropowerproducerDravskeElektrarneMaribor(DEM)launcheda2.5MWpsegmentoftheZlatolicjephotovoltaicproject,whilein2023itstartedtheconstructionofapilot50kWgeothermalpowerplant.Inabidtomakeitsoperationsmoreenergyefficient,FraportSlovenija,theoperatorofLjubljanaairport,installeda500kWsolarpowerplantworthEUR350,000ontheroofoftheairport’sgaragebuildingandtheadjacentofficeannex.Thesolarpowerplant,whichwasinstalledin2021,iscovering7%oftheairport’stotalelectricityconsumption,reducingitsannualCO2emissionsbyabout200tonnes.ThenuclearenergyindustryispoisedtogathersteaminSloveniaasthecountry’sprimeministerJanezJansain2022announcedplanstostartdiscussingjointinvestmentsintheconstructionofasecondunitattheKrskonuclearpowerplantwithneighbouringCroatia.TheKrskoNPP,locatedneartheborderwithCroatia,accountsforsome40%ofSlovenia'selectricitygeneration.Thecompanyoperatingthepowerplant--NuklearnaElektrarnaKrsko(NEK)--isco-ownedbySlovenia’sGen-EnergijaandCroatia'sHrvatskaElektroprivreda(HEP).Alsoin2022,SlovenianindustrialcompaniesNumip,ElmontandSiprosignedmemorandaofunderstandingwithUS-basedWestinghouseElectricCompanytocooperateinthedevelopmentofpotentialAP1000nuclearpowerplantprojectsacrossCentralandEasternEurope.WindenergywastheprincipaldriverofrecentM&AdealactivityintherenewableenergysectorinvolvingSloveniancompanies.ThebiggestpurchasewasmadebySlovenianenergygroupInterenergo,whichinlate2022signedaEUR-40.6-mlncontracttobuyaplanned25MWwindfarm,IvanSedlo,inBosniaandHerzegovina.Thewindpowerplantwillgenerateabout70GWhannually,enoughtocoverabout6%ofthetotalelectricitydemandintheSarajevocanton.25RBItailorsitsgreenfinancingsolutionsinever-changingRESlandscapeMr.Golkowsky,RBIGrouphascommittedtoimprovingitsgreenfootprint.WithintheCEEcountrieswhereyouarepresent,whatontheprojectandinfrastructurefinancesideisRBI’scurrentapproachtosupportclimateneutrality?AsasignatoryoftheUNPrinciplesforResponsibleBankingandaleadingbankwithregardtoESGinCEE,supportingclimateneutralityisoneofourmaingoalsandisembeddedinourDNA.Bynature,investmentsintoexistingandnewenergyinfrastructurearethemainenablersonthewaytoclimateneutralityandhavealwaysbeenastrongfocusforus.ThedevelopmentswiththecommitmenttotheParisClimateAgreement,theEU’senergytransitionprogramandtheREPowerEUprogramallunderscoretheurgencytoinvestintheenergytransition.Pairedwiththerequiredstructuringknow-how,RBIGroup’sprojectandinfrastructurefinancingexpertssupportinvestmentsintorenewables,energyanddigitalinfrastructure,andelectrification,therebysignificantlycontributingtoRBI’soverallgoalofsupportingclimateneutrality.RaiffeisenBankInternationalAG(RBI)isanAustrianbankinggroupcovering12countriesinCentralandEasternEurope(CEE)withsubsidiarynetworkbanksandanoverallrepresentationspanning24marketsglobally.RBIhascommittedtopromotingsustainableenergythroughaparticularfocusonexpandingitscreditexposureintheareaofwindandsolarenergywhilereducingitscarbonfinanceactivities.PatrickGolkowskyisProject&InfrastructureFinanceLeadwithinRBIGroup’sProject&StructuredFinancedepartment.CanyoutellusaboutthemaintypesofrenewableprojectsthatthebankfinancesinSEEandRomaniaandCroatiainparticular?WithastrongtrackrecordoffinancingrenewablesacrossEuropeandtheregion,wecurrentlyfocusonestablishedtechnologieslikewindpowerandPVinSEEincluding,ofcourse,theboomingmarketsofRomaniaandCroatia.Inordertooffertailoredfinancingsolutions,wedevelopedacomprehensiverenewablesstrategytogetherwithourlocalnetworkbanksthatconsidersmarketspecificsandclearlydefinesstructuringprinciplesforeachcountry.Atthesametime,wecanaccommodateabroadrangeoffinancingsolutionsrangingfromshort-term(constructionbridge/mini-perms)tolong-termprojectfinance,includinglocalprojectsaccounts,projectguaranteesandhedging.Especiallyintimesofquicklychangingparameters(electricityprices,inflation,interest,etc.),wecanrapidlyadaptstructurestonewcircumstancesandfindthebestsolutionsforeachcustomer.PatrickGolkowskyProject&InfrastructureFinanceLead26RenewableEnergyinSoutheastEuropewww.rbinternational.comRomaniaandCroatiainparticularshowasignificantgrowthpotentialandastrongpipelineofrenewablesprojectsindevelopment.Thisisexactlywhereourgroupexpertapproachandour25+yearsofpresenceinthosecountriesprovideourcustomerswiththelargestbenefits.Forlargertransactionsinourcoreregions,wealsooffersyndication,tradeandexportfinanceandportfoliofinancing.Infinancingrenewables,doyouonlybankoncontractedrevenues(e.g.CfDs,PPAs,etc),ordoyoualsoconsiderfinancingonamerchantpricebasis?BenefittingfromsecuredandpredictablecashflowfinancingbasedoncontractedrevenueslikePPAsorCfDsis,ofcourse,stillthemarketstandardwhenitcomestofinancingrenewableenergyprojects.Nonetheless,theEuropeanenergysectorwascertainlyconfrontedwithsignificantchangesin2022thatwillhavealastingimpactonthefutureofourenergyproduction.Asaresult,wewereconfrontedwithskyrocketingelectricitypricesandachallengetoreasonablyprojectpricesintothefuturethatatthesametimeallowfinancingstructuresacceptabletoinvestors.Insuchanenvironmentweoffersolutionsthatgiveourcustomersspacetobenefitfromhigherelectricitypricesandatthesametimepresentanacceptablepropositionforus,asthefinancingbank.WearethereforeabletoofferabroadrangeofstructuresbasedonamixturebetweenPPAandmerchantprices,orinsomecases,evenfullymerchant-based.Doyouseethecurrentpolitical,economic,andlegislativelandscapeofSoutheastEuropeasfertilegroundforfinancingrenewableenergyprojectsandwhataresomehurdlesthatyouhadtoovercomeinthisrespect?WeseeahugepotentialintheregionandasignificantinterestofinternationalplayerstoentertheSEEmarkets.Ithinkitisworthmentioningthattherenewablessectorintheregionwasinthepaststronglyimpactedbyregulatorychangesthatinfluencedtheeconomicviabilityofrenewablesprojects.Nowadays,thankstoasolidfinancingstructure,theimprovementoftechnologiesandtheresultingstrongdecreaseinnecessaryinvestmentcosts,renewablesprojectsarelessdependentonstatesupportandareevenviableonmerchantterms.EspeciallylookingatthedevelopmentofthelevelisedcostofelectricityforPVandwind,weseethatprojectsinrenewablesareprofitablealsounderconservativeelectricitypriceassumptions,whereeventraditionaltechnologieshavedifficultiesbeingcompetitive.Thisgainedindependencefromregulatorysupportsystemsfacilitatesthedevelopmentandfinancingofnewrenewablesprojects.OneofthemaincreditenhancementandriskmitigatingfeaturesutilisedbyinvestorsandfinancingsbanksalikearestructuresinvolvingKfW,ECAcoverage,EBRDorothersIFIs.Alsothere,RBIcanlookbackatastrongtrackrecordandclosecooperationwiththeinternationalinstitutionssupportinginvestmentsinrenewablesintheSEEregion.Inourview,oneofthecrucialrestrictiveaspectsforthefuturegrowthofrenewablesintheregionisgridaccessandthenecessarystrengtheningoftheexistingnetworkinfrastructurethatRBIwouldbehappytosupportonthefinancingside.Yourportfolioincludesfinancingoftherecentacquisitionofa45MWsolarparkinGiurgiu,RomaniabyPortugal’sGreenVolt.WhatareothernoteworthyRENprojectsRBIhasbeenfinancingintheSEEregion?WearequiteactiveintheSEEregion.OneprojectworthmentioningisthefinancingofoneofthelargestwindparksinSerbiaclosedinthebeginningof2023.RaiffeisenBankInternationalAGandRaiffeisenbankaa.d.BeogradareactingasMandatedLeadArrangersandclosedalandmarktransactioninSerbiainthetotalamountofEUR155mlntogetherwithErsteGroup,ErsteBankaSrbija,NLBd.d.,NLBKomercijalnabankaandOesterreichischeEntwicklungsbankAG-OeEB-TheDevelopmentBankofAustria.Thefundsarefinancinga105.6MWwindparkinKrivaca,located120kilometressoutheastofBelgrade.Itisthefirst-evercommercialPowerPurchaseAgreement-based(“PPA”)renewableenergyprojectinSerbia.TheinvestorsbehindtheprojectareSerbia’sMKGroupandSlovenia’sALFIGreenEnergyFund,whichacquiredtheprojectinthefirsthalfof2022.Theprojectunderlinesourpioneerroleintheregionandourcapabilitytostructuredealsonacommercialbasis.OutoftheRESprojectsyoufinanceinSEE,whatistheproportionbetweendomesticanddirectforeigninvestment?DoyouseeforeigninvestorsreachingforgreenfieldorbrownfieldinvestmentswhenitcomestoRESprojects?TheRESprojectswefinanceshowagoodbalancebetweendomesticandinternationalinvestors.WecurrentlyobserveanincreasinginterestfrominternationalinvestorstoentertheSEEmarket.Thisreferstobothbrownfieldandgreenfieldinvestments.Fromourperspective,weseeastrongeractivityingreenfieldinvestments,reflectingtheabove-mentionedneedtobuilduprenewableenergyinfrastructure.Incomparisonwithpreviousyears,wealsonoticeanincreaseinthesizeofsingleprojectsandastronginterestforportfoliofinancingsolutions.Thisrepresentsquiteaparadigmshiftincomparisontothelong-termprojectfinancingbasedonregulatedtariffsthatusedtobethestandardinthepast.27FinancialAnalysis28RenewableEnergyinSoutheastEuropeOperation,MaintenanceandAssetManagementConstruction,EngineeringandProjectDevelopmentManufacturingSolarandwind1489Hydro315Biomassandgasfromrenewables145Other31Solarandwind45575Hydro22Biomassandgasfromrenewables16Other192567TotalDistributionofcompaniesbysegmentFig.1Distributionofcompaniesbysegment2021VendorslandscapeThisreportfocusesonthethreemajorsegmentsoftherenewableenergysectorintheSEEregion:-operation,maintenanceandassetmanagementwithfoursub-segmentslinkedtothetypeoftheenergysourceused-solarandwind;hydro;biomassandgasfromrenewablesources;andother;-construction,engineeringandprojectdevelopmentwiththesamefoursub-segments;-manufacturingofbatteries,engines,panelsandturbinesforrenewablepowerandbiofuel;Ouranalysisencompasses2,567companiesfromRomania,Greece,Bulgaria,SloveniaandCroatiawithofficiallydeclaredmainactivityrelevanttooneofthethreesegmentsoroperatingrenewablefacilitieswithinstalledcapacityexceeding1MW.Operation,maintenanceandassetmanagementwasthelargestsegmentintheregionin2021with1,980entities.Therewasalargegapbetweentheleadingsegmentandtherunner-upastherewere512companiesoperatingintheconstruction,engineeringandprojectdevelopmentsegment.Thethirdstand-alonesegment–manufacturing,encompassedonly75companiesin2021.Amongthecompaniesengagedinelectricitygeneration,solarandwindarethemostcommonrenewablesources,usedby75%ofallentities.Therewasagainalargegap,withhydroenergyrankingsecondamongthesourcesusedwithashareof16%,whilebiomass,biogas,geothermalandotherrenewablesourcestogetheraccountedfor9%.Thistrendwasevenmorepronouncedintheconstruction,engineeringandprojectdevelopment–entitiesactiveintheinstallationofsolarpanelsandwindturbinesanddevelopmentofsolarandwindparksnumbered455,oralmost90%ofallrenewableconstructionandengineeringcompanies.Developersandconstructorsofhydropowerplants,witha4%share,hadtheedgeoverthosebuildingfacilitiesforbiomassandotherrenewablesources.29Thestructureoftheindustryamongthecountriesissimilarsegment-wise–electricitygenerationcompaniesarefarmorenumerousthanthoseengagedintheconstructionanddevelopmentofpowerfacilitiesandthemanufacturers.However,therearenationalpeculiaritiesinthedistributionbysourceofrenewableenergy.Solarandwindwerethemostpopularrenewableenergysourcesinallfivecountries.Romaniahadthehighestshareofcompaniesusingsolarorwindasanenergysource–83%ofallrenewablevendorsinthecountry,justaheadofGreecewith82%.InBulgaria,threequartersofthecompaniesusedsolarorwind,whilethedominanceofthesetwosourceswasmuchlesspronouncedinCroatiaandSlovenia,withsharesstandingat67%and59%,respectively.ThereasonforthecomparativelylowershareofsolarandwindinthelattertwocountriesisthestrongerpresenceofhydropowerinSlovenia(34%ofallentities,comparedwithlessthan15%inallothercountries)andbiomassandgasfromrenewablesinCroatia(24%ofallcompaniesversuslessthan5%intherestofthecountries).Besidethecompanieswithcoreoperationsintherenewableenergysector,therearealsootherimportantplayersinthisareainallfivecountriesinthescopeofthecurrentreport.Theyhavebeenomittedfromtheanalysisduetothenatureoftheiractivities,whichencompassawiderangeofrenewableandnon-renewableenergyoperationsacrosstheelectricitysupplychainandmaketheidentificationoftheexactvolumeofrevenues,costsandnetincome,aswellasthenumberofemployeesengagedstrictlyinrenewablebusinesslines,impossible.Forthisreason,andinordertoshowacompletepictureoftheSEErenewableenergymarket,wearepresentingtheircombinedinstalledcapacitiesandfinancialandemploymentindicatorsseparately.TheseentitiesincludethenationalelectricitycompaniesinRomania,Greece,Bulgaria,SloveniaandCroatia,aswellasmajorprivateenergycompaniesengagedinallfieldsofelectricitygeneration,transmissionordistribution.Theaggregateinstalledcapacityofthesecompaniesexceeded7,350MWin2021,equalling23%ofthetotalrenewableinstalledcapacityofthefivecountries,spreadacrosssolar,wind,hydro,biomass,biogasandotherrenewableenergysources.Hydroenergywasthemostwidelyrepresentedintheelectricitygenerationmixofthesecompanieswithacombinedcapacityofthehydropowerplantsownedoroperatedbytheminexcessof6,000MW.IncountrieslikeBulgaria,CroatiaandSlovenia,thehydrocapacitiesofthenationalelectricitycompaniesrepresentthevastmajorityofthetotalcapacityofallhydrofacilitiesintherespectivecountry.Intermsoffinancialperformance,thecompanieswithdiverseenergyoperations,includingbutnotlimitedtorenewables,generatedacombinedturnoverofEUR11.7blnin2021,almostmatchingtheEUR-12.9-blntotalturnoveroftheentirepurelyrenewablesectoroftheregion.Theircombinedheadcountamountedtomorethan18,000employees,whichisjustoverahalfofthetotalnumberofthoseemployedintheSEErenewablesector.Fig.2Distributionofcompaniesbycountry5906335923632567Total389RomaniaBulgariaGreeceCroatiaSlovenia30RenewableEnergyinSoutheastEuropeItaly81Germany58Cyprus45CzechRepublic45Austria31Luxembourg31France19Switzerland19Hungary15Slovakia15545979734748518464462743395176972101421801882431715272431301327202028271129Pre-1990199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022DistributionofcompaniesbyincorporationdateTheownershipstructureoftherenewableenergysectorinSEEisclearlydominatedbylocalentities–foreigninvestorsownedmajoritystakesinonlyoneinfivecompaniesasoftheendof2022.Investorsoriginatingfromanothercountrywerethemostwidelyrepresentedintheoperation,maintenanceandassetmanagementsegmentwithashareof23%.Lessthan15%ofthemanufacturingcompaniesintheregionwereownedbyentitiesbasedabroad,whiletheshareofforeign-ownedvendorsintheconstruction,engineeringandprojectdevelopmentsegmentstoodat8%.Intermsofsourcesofenergy,solarandwindattractedthemostforeigninvestmentsintheregion,closelyfollowedbybiomassandgasfromrenewables.CompaniesfocusedonhydropowerhadasignificantlysmallershareofforeignownershipwhichcouldbeattributedtotheaforementionedfactthatmosthydropowerfacilitiesinSEEareownedandoperatedbynationalenergycompanies.Country-wise,RomaniaandBulgariahadthemostnotablepresenceofforeigninvestorsinSEE.Theshareofrenewablecompanieswithforeignmajorityownersinthesetwocountriesexceededtheregionalaverageof20%,reaching33%inRomaniaand29%inBulgaria.Investorsfrom41countriesownedmajoritystakesinSEErenewableenergycompaniesatthetimeofpreparationofthereport.ItalywasbyfarthemostactivecountrywhenitcomestoinvestmentintheSEErenewablessectorwithmorethan16%oftheforeign-ownedcompaniesinthesectorhavingmajorityshareholdersbasedintheMediterraneancountry.Italianinvestors’firstplaceintherankingisalmostentirelyduetotheirdominanceinRomaniaandBulgaria,wheretheyhadparticipationin34and33companies,respectively,whiletheirrepresentationintherestoftheregionwasmuchthinner.Germanentitiesownedmajoritystakesin58SEEcompanies,makingGermanythesecondmostimportantforeigninvestorintheregionalrenewablessector.AsinthecaseofItaly,BulgariawasakeydestinationforGermaninvestors,butCroatiarankedsecondattheexpenseofRomania.TwoCentralEuropeancountries–theCzechRepublicandAustria,alongwiththetwomajorEuropeanoffshoreinvestmentlocations–CyprusandLuxembourg,weretheothersignificantinvestorsinSEErenewables,withinvestorsbasedineachofthembeingrepresentedintheownershipof30ormorecompanies.Entitiescomingfromthesesixmarketsaccountedfor58%ofallforeignownershipinSEErenewablecompanies.GreeceandSloveniaweretheSEEcountriesmostactiveininvestingwithintheregion–nineoftherenewableenergycompaniesinSEEhadaGreekmajorityownerandfurthereight-aSlovenianone.Bothleadingregionalinvestorswerepredominantlyfocusedononeneighbouringmarket–whileGreekinvestorstargetedalmostexclusivelyBulgaria,SloveniancompaniesinvestedsolelyinCroatia.TherenewableenergysectorinSEEgrewsignificantlyinthe2019-2021periodonthebackoftheannouncedEuropeanGreenDeal.Afterapeakinthenumberofnewlycreatedcompaniesin2007-2013,whenmorethanhalfoftheentitiesanalysedinthecurrentreportwereestablished,2019markedthebeginningofanewspike.Oneintencompaniesfallingintothescopeofouranlaysisweresetupinorafter2019.In2022alone,27newentitieswereestablished.MorethanthreequartersofthesecompanieswereeitherRomanianorBulgarian.Fig.3Top10investorswiththeirnumberofinvestmentsFig.4NumberofcompaniesbyincorporationdateThenumberofcompaniesinthesectorisexpectedtocontinuegrowinginallfivecountriesatanevenfasterpaceoverthenextfewyearsthankstoacombinationoffactors,includingimprovedandmoreaccessibletechnology,increasingpublicawarenessanddemandforcleanenergy,includingthroughinstallationsforownuse,theneedfordiversificationoftheenergymixinlightofthesanctionsagainstRussia,regulatorychangesandsupportforrenewablesatEUandgovernmentlevel.Distributionofcompaniesbycountryoforiginoftheinvestors31REIBproductsmakesPVprojectsmorebankableMr.Iliev,insuringRESprojectsdoesnotsoundatallthatdifferentfrominsuringanyotherindustrialprojectbutitdoeshaveitsspecifics.CanyoutellusabitmoreaboutREIB’scoreactivitiesandwhythistypeofserviceisgainingincreasingpopularityinSEE?EveryonewhoissupportingandgravitatingaroundthePVindustrylikebanks,lawyers,accountants,contractors,developers,knowsverywellthespecificneedsofthesector.Insurancebusinessispartofthegameaswell.PVprojectshavetheirspecifictermsandconditions–thesolarpowerplantmustbeinsuredduringtheperiodwhentheinstallationiscompleted,butstillnotconnectedtothegrid;higherinsuranceamountforDelayinStartUpduringErectionAllRisksinsurancecomparedtoeveryotherasset;marketadjustableinsurancesums;LossofIncomeinsteadofLossofProfit;defectcover,etc.Alltheabove-mentionedspecificsdifferentiatethesolarpowerplantsfromallotherinsurableassets.WeatREIBhavespecialisedinsolarinsuranceformorethantwelveyearsandwespeakourclients’language.Basedonthisexperience,weadviseourcustomershowtoprotecttheirPVassetsinthemostcosteffectiveway–insurancerequirementsintheEPCcontracts,securitymeasuresfortheoperationalsolarpowerplants,O&Mcontractsrequirementsandtheirannexes.Ourclaimsexperienceisalsoveryhelpfulforourpartnersastheybecomeawareofthebottlenecksforeachsolarprojectattheverybeginningandtrytoavoidthem.Thesearesomeofthefactorsthathaveinfluencetheincreaseddemandforourserviceinthelasttwoyears.AddingtheglobalclimatechangeandthewarinUkraine,themaindriversoftheincreasingpopularityofthesolarindustryinEurope,ourboutiqueserviceisbecomingmoreandmoreindemand.Largerinvestorstraditionallyaimtohedgetheirrisksanduseinsurerservicesbutsomesmalleronesarestillonthefenceaboutthisparticularexpense.DoesREIBprovideservicestoSMEsandwhatwouldbeyouradvicetothosestillhesitatingtoearmarkpartoftheirinvestmentbudgetforinsurancecoverage?WhatpercentagedoestheinsurancepolicytakeintheentirebudgetforfinancingaRESproject?Yes,usuallyallPVplantsover1MWparewellinsuredagainstthetraditionalrisks.Regardingsmallinstallations,weseethatbanksandotherfinancialinstitutionsarethemaindriversofoperationalAllRisksinsurance.ForSMEs,REIBprovidesasimplesolutioncombiningcomprehensivecoverwithcosteffectiveinsurancepremium.Basedonourdiscussionswithclients,weknowthatcompletinginsurancequestionnairesandprovidingallkindsofequipmentdataisatime-consumingactivityandmostofthemprefertheinsuranceprocesstobeaquickandpaperlessprocedure.Fortheseclients,weusuallysetupaso-calledMasterInsurancePolicywhereweneedsomebasicinfoandthenjustissueanRenewableEnergyInsuranceBroker(REIB)isaninternationalinsurancebrokerestablishedin2011andspecialisedinsolarinsurance.REIBhasinsuredphotovoltaicplantswithmorethan3GWponfourcontinents.BasedontheexperienceoftheiremployeesfromtheofficesinSofia,NewYorkandBerlin,REIBisabletoprovidetailor-madeinsurancesolutionsgloballyatanystageofsolarprojectdevelopment.DelyanIlievisManagingDirectorofthecompany.DelyanIlievManagingDirector32RenewableEnergyinSoutheastEuropewww.reib-us.cominsurancecertificateforeachsmallsolarinstallation.Thebenefitsareforbothsides–theclientknowstheirinsuranceconditionsattheverybeginningwhentheysigntheMasterPolicyandpaynothing(paymentisduewhenaPVplantisaddedtothepolicy),whiletheinsureralsohasvestedinterestastheyknowthatthewholeclient’sportfoliowillbeinsured–moresolarinstallationsindifferentlocations,lessriskfortheinsurancecompanyinoneparticularlocation,lessriskexposure.Lookingattheprice,weareveryattractiveonthemarket–forsmallinstallationsofupto100kWpthepremiumisaboutEUR150,forprojectsintherangeof100kWp–500kWp–0,0014EUR/Wpoutoftheinvestmentandforover500kWp–lessthan0,00096EUR/Wp.Oneofyourproductsisfocusedonhedgingagainstreducedyields.Doesthatmeanthatyouarepracticallyguaranteeingreturnsevenifproductionisbelowforecast?Yes,togetherwithourpartnersfromColonnadeInsuranceS.A.weputtogetheratailor-madesolarinsuranceproductwhichguaranteestheperformance(P50)ofeachnewsolarpowerplant.Thismeansthatiftherealproducedenergyislessthan10%oftheprognosticatedone(P50accordingtoPVSystorPVGISreport),thentheinsurancecompanywillcompensatetheinvestor.Thisisasignificantguaranteedsolutionforbanks,leasingcompaniesandinvestmentfunds–thecashflowoftheprojectissecured.Whatwouldthismeanforaninvestorwhoisseekingexternalfinancing,let’ssayfromabank?Doesyourexperienceshowthathavingsuchaninsuranceinplaceleadstoaneasierfinancingprocess?Wehaveagoodexampleofwhatthisproductmeansforinvestorwhentheyneedbankfinancing.Oneofourlong-termItalianclientswantedtobuyanoperationalfour-year-oldsolarprojectusingabank.TheychosethesamebanktheyusedfortheirownnewPVinstallations,sobothpartiesknoweachother,relyoneachotherandthereisnoreasontodeclineanewloanforanoperationalplant.However,thebankwantedsomeonetoguaranteetheperformanceofthis“old”installationinordertoprovidefinancing.TheO&MproviderofourclientatthattimerefusedtoissuesuchawarranteeortosignanO&Mcontractandguaranteetheproduction–theydonotknowwhobuiltthisplant,howitwasmaintained,arethereanyissues,etc.Ourclientthencametousandaskedforaninsurancesolutionthatcanguaranteetheperformanceofthisparticularsolarinstallation.Ofcourse,weprovidedourtailor-madesolarinsuranceproductandthedealwassealed.WecandefinitelysaythatREIBmakesyoursolarprojectmorebankable!33OperatingrevenueanalysisMarketsizeFig.5OperatingrevenuebySEErenewablesegment(EURmln)SEE’srenewableenergysectorsignificantlyexpandeditssizeintermsofoperatingrevenueby30%y/yin2021toEUR12.9bln.Theaggregateoperatingrevenueofthesectorintheregionwassteadilyontheriseduringtheanalysedperiodbetween2019and2021,withacompoundannualgrowthrate(CAGR)of17%.Annualgrowthratein2020deceleratedtoonly5%,reflectingthedecreaseinpowerdemandandpostponementofsomeprojectsinthepipelineduringthestrictlockdownsintheacuteinitialphaseoftheCOVID-19pandemic.However,theslowdownwastemporaryandonceelectricitydemandandeconomicactivitystartedtorecover,therenewablesectorreturnedtostrongdouble-digitgrowth.Thus,theimpressivefiguresrecordedin2021canbeconsideredtoalargeextentapostponeduptrendfromthepreviousyear.TheaggregateoperatingrevenueoftheRESsectorintheregionisprojectedtoreachEUR20.8blnby2024,provideditsustainstheCAGRrecordedinthelatestthree-yearperiod.Thelargestsegment,operation,maintenanceandassetmanagement,reportedthehighestrevenuegrowthrateof32%ontheyearin2021,whilemanufacturingandconstruction,engineeringandprojectdevelopmentincreasedtheirsizesataslowerrateof25%and24%,respectively.TheelectricitygenerationcompaniesthatmakeuptheoperationandmaintenancesegmentalsodominatedinrevenuetermswithatotalrevenueofEUR9.5blnin2021.TheconstructionanddevelopmentsegmentwasfarbehindwithEUR2.2bln,whilemanufacturingbookedrevenueofEUR1.2bln,due,partially,tothefactthatitalsofeaturesthesmallestnumberofcompanies.Solarandwindwasbyfarthelargestsub-segmentbothintheoperationandconstructionsegments.Whileintheoperationsegmentsolarandwindwasresponsiblefor57%ofthetotalrevenuewithEUR5.4bln,intheconstructionanddevelopmentsegmentitsdominationwasmuchmoreexplicitasitsliceda93%shareofthesegment’stotal.Thisisaconsequenceofthestrongemphasisonnewsolarandwindfacilities,includinginstallationofsolarpanelsforownusebyhouseholdsandbusinesses.Ourprojectionsforthemedium-termdevelopmentofthesegmentsintheSEErenewableenergysectorshowthatoperation,maintenanceandassetmanagementofsolarandwindfacilitieswillremainontopandevenexpanditsshareinthesector’soperatingrevenueby2024.ItisprojectedtoexpandbyaCAGRof19%toEUR9.2blnandaccountforalmosthalfoftheentireexpectedrenewableenergymarketsizeofEUR20.8bln.Hydropowerwillremainthesecondmostimportantsourceofrenewableelectricity,withoperatorsofsuchfacilitiesseengeneratingaggregateoperatingrevenueofEUR5.8blninthreeyears’time.Asfortheconstructionandprojectdevelopmentsegment,thestillsecondarysub-segmentsofbiomass,biogasandothersourceswillbethefastestexpandingandwillmorethandoubleinsizeby2024toacombinedrevenueofEUR308mlnfromEUR81mlncurrently.SolarandwindHydroBiomassandgasfromrenewablesOtherManufacturingOperation,MaintenanceandAssetManagementConstruction,EngineeringandProjectDevelopmentManufacturing382841540100020003000400050006000700080009000100002019202020212022f2023f2024f05001000150020002500300035002019202020212022f2023f2024f0200400600800100012001400160018002019202020212022f2023f2024f26243112725466282108264936065435647777189197422749565810158653182027503184401855677483142526824093170020902399275331601011979121813381469161335838342547252434RenewableEnergyinSoutheastEuropeBulgariaCroatiaSIGSolarEuropeSolektraEnergyandDevelopmentCompanyEnergiaNaturalisSolarityBGEnerganaBenkovacGreeceRomaniaGreenlineEnergyA&JBrandConstructionABOWindHellasPortativKieferTekDarcomEnergySolutionsSloveniaSonceTehnosolElektroCeljeOVI0500100015002000250030002019202020212022f2023f2024fBulgaria0200400600800100012002019202020212022f2023f2024fCroatia05001000150020002500300035004000450050002019202020212022f2023f2024fGreece020004000600080001000012000140002019202020212022f2023f2024fRomania02004006008001000120014002019202020212022f2023f2024fSlovenia87216562093267391913237828849309857898442538348938964360264031314390808499201217846816591894112112151319936103744%5%1%7%1%17%19%4%7%41%7%12%11%5%8%44%5%1%7%1%17%19%4%7%41%7%12%11%5%8%Fig.6OperatingRevenuebyCountry(mlnEUR)Fig.7MostdynamiccompaniesbycountryAtcountrylevel,RomaniawasthelargestmarketwithanaggregateoperatingrevenueofEUR6.6blnin2021,orjustoverhalfoftherevenueofthewholeSEErenewablessector.GreecerankedsecondwithanoperatingrevenueofEUR3.1bln,whileBulgariacameinthirdwithaggregateoperatingrevenueofitsrenewableenergysectorofEUR1.3bln.Intermsofannualgrowth,thesector’sperformancebycountryvariedsignificantlyin2021.Bulgariawasthefastestexpandingmarket,atarateof44%y/y,fuelledmainlybyTherenewableenergycompaniesintheregionwiththemostdynamicgrowthofoperatingrevenuethroughouttheperiod2019-2021,calculatedbasedontheirCAGRinthereportingperiod,werealmostexclusivelyrepresentativesoftheconstruction,engineeringandprojectdevelopmentsegment.Althoughthesegment’sCAGRfortheperiodwasslightlybelowthatoftheothermainsegment–operation,theconstruction,engineeringandprojectdevelopmentsegment,whichalmostdoubledinsizewithinayear.Romaniafollowedcloselywitha41%annualincreaseinoperatingrevenue,drivenbyallthreesegments,butledbytheoperationandmaintenancecompanies.TheotherthreeSEEmarketsadvancedatsignificantlylowerrates.WhileGreecestillpostedasound19%growth,SloveniaandCroatiawerefarbehindatthebottomofrankingwithgrowthratesof11%and7%,respectively.maintenanceandassetmanagement,ithosted18ofthe20fastestgrowingrenewablecompaniesintheregion.Country-wise,GreeceenjoyedthehighestnumberofboomingrenewablecompanieswithsevenrepresentativesintheregionalTop10,whiletherunners-upRomaniaandBulgariahadtwoandonerepresentative,respectively.35AxpoBulgaria:SEEcountriesmustpushforcommonEUenergytradingmarketMsVidenova,AxpoGroupisthelargestproducerofrenewableenergyinSwitzerlandandinBulgariaitispresentthroughitsothercorebusiness-energytradingandthemarketingofsolarandwindpower.CanyoutellusabitmoreaboutyourportfolioofservicesforBulgarianclients?AxpoBulgariaEAD,asubsidiaryoftheAxpoGroupwithheadquartersinSwitzerland,hasbeenconductingbusinessactivitiesinBulgariafor16years.AxpoisthelargestproducerofrenewableenergyinSwitzerlandandaninternationalleaderinenergytradingandthemarketingofsolarandwindpower.Morethan6,000Axpoemployeescombinetheirprofessionalexperiencewiththeirpassionforinnovationtodevelopcutting-edgeenergysolutionsforcustomersinalmost40countriesacrossEurope,theUSandAsia.Withaninitialfocusonelectricity,thecompanynowalsofocusesongas,giventheemergenceofnewgasmarketsinSoutheastEurope.AxpoBulgariaisanactivewholesaletraderin15Europeanmarkets.Weofferrenewableproducersinnovative,tailor-madederivativesolutionswithphysicaldeliveryorwithouti.e.onlyfinancially.Weareactiveintradewithguaranteesoforiginandweoffertailor-madepowerpurchaseagreement(PPA)solutions.Ourexpertiseinassetoptimisationservicesforrenewablesisunique,andAxpoBulgaria’spresenceinmanyenergymarketsinEuropemeansweoffermarketaccessandcross-bordersolutionstoourcustomers.IstheAxpoGroupactiveonotherSEEmarkets,eitherthroughRESprojectsortradingoperations?AxpoGroup,throughAxpoSolutionsanditsOriginationWestern&EasternEuropeDivision,isapioneerintheSEEmarketswithbenchmarkPPAtransactionsinRomania,Greece,Croatia,HungaryandSerbia.SinceMarch,2021AxpoBulgariaisofferingoriginationservicestoBulgarianRESinvestorsandcompanies.Incontrasttowholesaleenergytrading,theoriginationservicerelatedtoRESprojectsisalocalbusinessandAxpohasoriginationoperationsinthemainSEEmarkets.Inaddition,AxpoGroupalsooffersaturnkeyRESprojectmanagementsolutionsthroughitssubsidiariesUrbasolarforphotovoltaic(alreadypresentinPoland)andVolkswindforwind(establishedlastyearinRomania).Moreover,Axpohasrecentlyexpandeditsbusinessactivityinlong-termPPAsforrenewableenergyinsouth-easternEuropebysigningitsfirst-everPPAinSerbia.Thelong-termdealhasbeensignedwithIvicomEnergydooZagubica,arenewableenergyprojectco-ownedbySerbia’sMKGroupandSlovenia’sALFIGreenEnergyFund.Underthe10-yearagreement,Axpohedgeswillsupporttheongoingconstructionofthe105MWwindfarminKrivaca.Thefarm,situatedabout150kmeastofBelgrade,willproduceenoughgreenpowerformorethan75,000households,saving115,000tonnesofCO2emissionsannually.DeliverywillbegininJanuary2024.ConstructionoftheKrivacafarmcommencedin2021,withcommissioningscheduledfortheendof2023.Theprojectwillfeature22turbinesfromtheNordexGroup,eachwithacapacityof4.8MW.ThereareconsiderabledifferencesbetweencountriesintheSEEregionwhenitcomestotheadoptionofrenewablesintheenergymixandtheeaseoftrading.SomearguethatthereasonforthisisnationalregulatoryframeworkswhichdonotmatchtheambitionoftheEuropeanGreenDeal.Whatisyourviewonthis?TheEU’sGreenDealIndustrialPlanfortheNet-ZeroAgeiscurrentlyunderrevision.Inaddition,manynationalenergytransitionandgreenstrategieswillbeupdatedandalignedaswell.MyviewisthateverycountryintheSEEregion,includingBulgaria,shouldworkforthefurtherdevelopmentofacommonEUenergytradingmarketbasedonfreetrade.ToboostRESprojects,weneedtoinvestinstrengtheningtheinfrastructureoftheelectricitytransmissionnetworkaswellasinincreasingtheadministrativecapacity,sothatafasttrackcanbeprovidedfortheauthorisationandconstructionoftheseprojects.Forexample,inBulgariathereareextremelyfavorablemetrologicalprerequisitesforsolarprojects,andalsoforhydroandwindincertainregions.Whatisdifficulttopredictaretheregulatorychangesandtheambiguitiessurroundingtheirimplementation,whichnegativelyaffecttheinvestmentclimate.Asyouknow,inDecember2022theparliamentapprovedanupperlimitforRESproducersbasedontheEuropeandirective.Alltheambiguitiesinimplementation,aswellasnewregulations,createuncertaintyamonginvestors.Inaddition,iftheGreenDealisstillhighontheagenda,long-termPPAsshouldbeexemptedfromadditionalcrisistaxation,aswellastheupperlimitsforlimitingprices.Thus,priceswillberegulatedonamarketprinciple.www.axpo.com/bg/en/about-usAxpoBulgariawasestablishedin2006aspartofSwissenergycompanyAxpoGroup.ThegroupcoverstheentireenergyvaluechainandisamarketerofrenewableenergiesinEurope.In2007,AxpoBulgariareceivedapowertradinglicenceandsincethenhasbeenaparticipantinthepowermarketsinBulgariaanditsneighbouringcountries.In2011,thecompanyexpandedbybuildingaservicecentrethatoffersoperationsandvariousback-officeservicestotheAxpoGroup.MilenaVidenovahasbeenAxpoBulgaria’sManagingDirectorsinceAugust2020.MilenaVidenovaManagingDirector36RenewableEnergyinSoutheastEurope0500010000150002000025000300003500040000201920202021Operation,MaintenanceandAssetManagementConstruction/Engineering/ProjectDevelopmentManufacturing131201320712985107951160312068830982148385Fig.8Full-timeemployeesinSEErenewableenergysectorbysegmentEmploymentanalysisTheexpandingheadcountofSEE’srenewableenergysectorreflectsitssuccessfuldevelopmentthroughouttheperiod2019-2021.Nevertheless,aggregateemploymentinthesectorincreasedataCAGRof1.9%,whichissignificantlybelowthatofitsoperatingrevenue.Asof2021,over33,400peoplewereworkinginthesectoror1,200morethanatthestartoftheanalysedperiod.Theconstruction,engineeringandprojectdevelopmentsegmentenjoyedthestrongestexpansionintermsofemployeenumbers,of5.7%,andpracticallydrovetheentireheadcountincreaseinabsoluteterms.Thus,constructioncompaniescontinuedclosingthegapwiththeiroperationandmaintenancepeersandemployedjustabove12,000peoplein2021versusalmost13,000foroperationandmaintenance.Ifthetrendpersists,by2024construction,engineeringandprojectdevelopmentwillbethelargestemployerintherenewablessectorinSEEinabsoluteterms.Atasub-segmentlevel,employmentdistributioninthelargestsegment–operation,maintenanceandassetManagement,wasinstarkcontrasttoitsoperatingrevenuestructure.Whilesolarandwinddominatedthelatter,hydropowercompanieshadbyfarthelargestheadcount,employing7,732peopleagainst3,943forsolarandwindand1,198forbiomassandgasfromrenewables.Thiscanbeattributedtothemuchlargersizeofmanyhydrocompaniesoperatinglargepowerplants,opposedtotherelativelysmalleraverageheadcountofentitiesengagedinoperationofsolarandwindfacilities.Inthefieldofconstructionandprojectmanagement,however,theheadcountstructurereflectedthedominanceofsolarandwind,whichemployedmorethan11,400ofthetotalof12,000employeesinthesegment.Fig.9Full-timeemployeesinSEErenewableenergysectorbycountry020004000600080001000012000140001600018000201920202021RomaniaGreeceCroatiaBulgariaSlovenia16706169155624520829182359168715975518630522355514150752904239937Bycountry,the33,439employeesintherenewableenergysectorinSEEwereunevenlydistributed.Thelargestregionalmarket–Romania,accountedforjustoverhalfoftheoverallheadcountwith16,871employees.GreeceandCroatiaweretheothertwomostsignificantemployerswithsharesof18%and16%,respectively,whilerenewableenergycompaniesinBulgariaandSloveniatogetheremployed5,400people,or16%oftheregionalsector’sworkforce.Labourmarketdynamicsdifferedbetweencountriesduringthe2019-2021period.Allbutonemarketsreportedapositivethree-yearCAGR,albeitvaryinginawiderange,incorrespondencewiththerenewablesector’sdevelopmentandthegeneralworkforcetrendsintherespectivecountry.GreecereportedthefastestgrowingemploymentnumbersinSEE,withlocalrenewablecompaniesaddingmorethan850peopletotheirheadcountduringtheperiod,correspondingtoaCAGRof7.8%.BulgariawastheSEEcountrywiththesecondfastestgrowingemploymentinthegreenenergysectorwithCAGRof2.5%.ItisworthnotingthatBulgariawasalsotheonlyregionalmarketwithanacceleratingannualgrowthinemploymentin2021incomparisonwith2020,withtheratereaching4.6%.Amongtheotherthreecountries,Croatiapostedahumble1.1%cumulativeincreaseinheadcountduringtheperiod,whilefiguresinRomaniaandSloveniabarelychanged.Thestructureofemploymentbysourceofelectricityfollowedtwomajorpatternsatcountrylevel.Whilesolarandwindhadtheedgeinallmarkets,inafirstgroupofcountries,includingBulgaria,RomaniaandSlovenia,companiesengagedintheconstruction,developmentandoperationofhydropowerplantswerethesecondmostsignificantemployerintherenewablessector,atashortdistancebehindsolarandwind.InGreeceandCroatia,ontheotherhand,hydropowerplayedamuchsmallerroleinemployment,heavilyoutnumberedbybiomassemploymentinCroatiaandapproximatelyequaltoitinGreece.Thisstructureistheresultofmainlygeographicalfactors,suchastheextentofavailabilityofinlandwaterresources,whichinturndeterminestheweakerdevelopmentofthehydropowersub-segmentinGreeceandCroatia.38RenewableEnergyinSoutheastEuropeEvklipsEnergyseesbrightfutureforBulgarianPVmarketMrs.Rasheva,canyourevealthetotalcapacitywhichEvklipsEnergyhasinstalledinits12yearsofoperationandtellusmoreaboutthetypesofprojectsthatthecompanyhasworkedon?EvklipsEnergyhasaportfolioofaround1GWinstalledpowerwithprojectsrangingbetween1MWpand150MWp.AlthoughwithourTurkish,JordanianandChileanentitieswehavecompletedprojectsaroundtheglobe,wehavebeenfocusedontheEuropeanmarketoverthepastfouryears.Themarketsegmentsthatthebusinesscoversincludegroundinstallations,rooftops,carport,agri-PVandfloatingprojects.WeofferawidevarietyofEPC(engineering,procurement,andconstruction)services,includingnotonlygeneralconstruction(civil,mechanicalandelectrical),butalsomeasurements,testinganddeliveriesofcomponents.EvklipsoperatesinvariouscountriesandyoualreadymentionedthatEuropehasbeenyourfocusoverthepastcoupleofyears.Aretheremarketsthatyouconsiderstrategicandareyoulookingintoenteringnewones?PolandandtheNetherlandshaveundoubtedlybeenourkeymarketsoverthepastfewyears.Weareverywellestablishedinthosecountrieswhichisduetotheexcellentworkofourlocalemployeesandteams,aswellasthestrongpartnernetworkwehavemanagedtocreate.Ourcorporatestrategyisindeedverystructuredandfocusesonastrongpresenceinparticularmarkets.Havingmultipleprojectsinonecountryfacilitatesthelogistics,thepeoplemanagement,thepaperwork.Theemphasisonaspecificplacealsoallowsustocloselymonitorthelocalrequirementsandlegalframeworksandremainfullycertifiedtooperatethere.Ofcourse,asagrowingcompany,ourbusinessdevelopmentdepartmentisconstantlyresearchingnewmarketsandmarketsegments.EvklipsEnergy’sagendafor2023isalreadyoutlined,andIamhappytoconfirmthatwewillbeincreasingsignificantlyourpresenceinFranceinthenext12months.Inthesecondquarterwewillalsoexecuteseveralprojectsinanewlocationwhichisnewforus-Belgium.HowistheBulgarianmarketdifferentfromotherEVklipsEnergyisaprivately-ownedBulgariancompanyspecialisinginallstagesofthedesign,engineeringandconstructionofdifferenttypesofsolarphotovoltaicinstallations.ActiveinEuropeanmarketssuchasFrance,PolandandtheUK,itssubcontractorturnkeyservicescovercivilengineering,mechanicalandelectricalworksonfreeland,rooftopandagri-PVsolarsystems.ElenaRashevaisco-founderandCEOofEvklipsEnergy.marketsEvklipshasbeenoperatingin?Ingeneral,theaverageprojectsizeinBulgariaisconsiderablysmallerthantheprojectsweareworkingonabroad.Thisis,ofcourse,understandable:althoughthefirstphotovoltaicprojectswerecompletedyearsago,themarketisyettodevelop.Weseegrowingdemandforsmallerdomesticinstallations,aswellaslargerscaleprojects(over5MWp).Thedeficitofcleardefinitionsandgeneralunderstandingofthetermsandregulationsamongthecontrollingauthorities,however,makethesuccessfulcompletionoftheprojectsmoredifficultandtime-consuming.WiththerecentchangesintheBulgarianlegislationcoveringtherenewableenergysector,togetherwiththeincreasingdemandofalternativeenergysources,IamconfidentthattheBulgarianPVmarketwillflourish.Onthebrighterside,asaBulgaria-basedcompany,working“athome”ismucheasier,intermsoflogisticsandin-depthprojectmanagement.Youspecialiseinground-mounted,rooftop,building-integratedphotovoltaics(BIPV),smallgenerationandoff-gridsolutions.WhatareyourexpectationsofimpendingchangesindemandinBulgaria,withaviewtorecentlegislationfacilitatingtheinstallationofsmall-scalesolarsystemsforownuse?ThenewchangesmarkthefirststepstowardsfacilitatingthewholeprocessofPVprojectcompletionandpointtothewillingnessofthestatetocreateafavourablebusinessclimate.Andthefirstresultsarealreadyhere-asmentionedabove,wearewitnessinggrowingdemandamonginvestors,aswellashomeowners.IamcontenttoseethatBulgariansarebecomingmoreawareoftheimportanceofmovingtowardsalternativeenergysources.ThenewlegislationremovesagreatdealofbureaucracyfromtheprocessandnodoubtopensthedoorforPVinstallationtomorebusinessesandindividualclients.Wereceivenewrequestsforquotationsonadailybasisandclientsshowrealinterestininvestinginthemarket.InJanuaryalone,westartedfourprojectsinBulgariawhichisagreatstartto2023.www.evklipsgroup.com392.522.452.472.462.462.481.171.211.431.591.771.980.800.780.991.101.221.350.001.002.003.004.005.006.007.002019202020212022f2023f2024fOperation,MaintenanceandAssetManagementConstruction/Engineering/ProjectDevelopmentManufacturingFig.10MaterialandlabourcostsandamortisationbySEErenewablesegment(EURbln)Theoverallmaterial,labourandamortisationcostsamountedtoEUR4.9blnin2021,markinganannualriseof10%.Duringtheperiodunderconsideration,theCAGRofthecostsintherenewableenergysectorstoodat4.3%.Theincreasewasdrivenononehandbyrisingpersonnelcosts,matchingthegrowingemploymentandsalarylevels,andontheotherhandbytheexpandingsizeandcomplexityofwindturbines,large-scalehydropowerplantsandsolarparks.Thus,theaggregatecostsofcompaniesprimarilyengagedintheconstructionanddevelopmentofnewfacilitiesroseatamuchfasterpace-of18.5%in2021andataCAGRof10.4%forthewholeperiod,thanthoseofpowergeneratingcompanies,whichsawtheircostsnotchupby0.9%y/yin2021andataCAGRof-0.9%forthethree-yearperiod,duetotheslowdownin2020.Manufacturingremainedthesegmentwiththelowestoverallcostsinabsoluteterms,however,theyexpandedatthefastestannualrateinthesector,of26%,andalsoatthehighestthree-yearCAGRof11%,drivenupmainlybyglobalsupplychainissues.Trendinthecostsstructurealsovariedbysourceofenergy.Whilecompaniesengagedinoperationandmaintenance,aswellasinconstructionanddevelopmentofhydropowerplantssawtheiroverallcostsshrinkbothonanannualandthree-yearbasis,thosefocusedonbiomass,biogasandotherlesswidelyusedalternativeenergysourcesreportedajumpincosts,duemainlytosurgeinconstructionactivitiesandinstalledcapacitiesintheseareas.CostanalysisThemajoroperatingcostsincurredbyrenewableenergycompaniesincludelabourcosts,materialcostsandamortisation.Sincedifferentcostshavevaryingweightindifferentsub-segments,inordertoensuremaximalcomparabilitybetweensegments,thethreetypesofcostsareanalysedtogether.40RenewableEnergyinSoutheastEuropeFig.11CostsbySegmentandCountry(mlnEUR)In2021,GreecewastheleadingcountryinSEEintermsoflabour,materialandamortisationcosts,withanaggregateofEUR2.3bln.Thisconstitutednearlyhalfofthetotalcostsintheentireregion.RomaniancompaniestookthesecondspotwithEUR1.1bln,whileCroatia,SloveniaandBulgariaallreportedaggregatecostsintherangebetweenEUR0.4blnandEUR0.7bln.Intermsofyearlygrowth,theperformanceofthesectorvariedgreatlyamongthecountriesin2021.GreeceandBulgariawerethetwomarketswiththefastestexpansion,of24%y/yand16%y/y,respectively,mainlydrivenbytheconstruction,engineering,andprojectdevelopmentsegment,closelyfollowedbythemanufacturingcompanies,whilethepowergenerationsegmentlaggedbehind.AggregateoperatingcostsinCroatianotchedupatafarlowerannualrateof1.1%.ThetrendwassimilarinRomania,whileSloveniawastheonlySEEcountrytobookadecrease–of14%,causedentirelybytheslowdowninthelargestsegment–operation,maintenanceandassetmanagement.Operation,MaintenanceandAssetManagementConstruction/Engineering/ProjectDevelopmentManufacturing19721624126729632822322717916114412923821324224524724901002003004005006007008009002019202020212022f2023f2024f899908102010861157123260660882295711141297336358484580696835010020030040050060070080090010001100120013002019202020212022f2023f2024f68275972374576879124325929332135238739354142444501002003004005006007008009002019202020212022f2023f2024f5543852992201621199410011412614015413131617192001002003004005006007008009002019202020212022f2023f2024fBulgariaCroatiaGreeceRomaniaSlovenia18618318919019219391524396410517416520322023725601002003004005006007008009002019202020212022f2023f2024f41AfinancialadvisorhelpsbusinessescommunicatebetterwithlendersCanyoutellusaboutyourbackgroundandhowyoustartedyourboutiqueadvisoryfirm?Mybackgroundisininsurance,leasingandbanking,andIwasalwaysinchargeofcorporatecustomers.Asanemployee,Ialwayschosetoworkatthecompany'sheadofficebecauseIlikebeingatthecore,wheredecisionsaretakenandwhereyoucanchangeandimprovethings.In2007,Icreatedmyboutiqueadvisorycompany,whichspecialisedincapitalraising.Eightyearsago,IrebrandeditintoAlindaBanicaBusinessConsultancy.ThedecisiontocreatethecompanywasbasedonthefactthatInoticedamissinglinkbetweenentrepreneursandfinancialinstitutions.Theentrepreneursknewtheirpartofthebusinesswellandlessthewayafinancialinstitutionapproachesriskdecisions.Incontrast,thefinancialinstitutionswereexpertsintheirarea.Still,theirintentiontoworkwithacustomeronthefieldandunderstandtheirchallengeswasnotfirm.Whatareyourclients'mostcommonchallengeswhenraisingcapital,andhowdoyouhelp?Themainchallengeformostcompaniesisnotunderstandingtheirfinancials.Donotforgetthataccountingisonlyaproxywiththestate.Supposetheheadofaccountingdoesnotentirelyunderstandtheeconomicprocessoftheenterprise.Inthatcase,thefinancialswillnotreflectreality.Iseeithappeningoften.Inthesecases,wemakesurethatthecorrectregistrationsarebeingmade.Anotherobstacleisthatbusinessesoftenlackatransparentdiscussionwiththefinancingentitiesandareunawareofhowtopreparetheirprojectdocumentationtoattractfinancing.Inthecaseofrenewableenergyand,inparticular,thesolarpanelsbusiness,whichisbecomingincreasinglyimportant,Iwouldliketosharewithyouandyourreaderstwothings:whatdatashallabusinessplancontain,andwhatarethegeneralconditionsontheRomanianmarkettofinanceasolarpanelproject.Tomakeabusinessplanforasolarpanelproject,youwillneedthefollowingdata:1.Marketanalysis:thisincludesinformationonthecurrentandprojecteddemandforsolarenergy,competitionintheindustry,andtheregulatoryenvironment;2.Technicalspecifications:thisincludesinformationonthetypeofsolarpanelsyouplantouse,theirefficiency,thesizeoftheinstallation,andanyothernecessaryequipment;3.Financialprojections,includinginformationontheproject'sprojectedcosts,costsofthesolarpanelsandinstallation,aswellasprojectedrevenuefromthesaleoftheelectricitygenerated;4.Fundingrequirements:thisincludesinformationontheamountoffundingyouwillneedfortheprojectandthesourcesoffinancingyouwillexplore,suchasloans,grants,orinvestments;5.Marketingandsalesstrategy:thisincludesinformationonhowyouplantomarketandselltheelectricitygeneratedbythesolarpanels,aswellasanypartnershipsoragreementsyouwillform;6.Operationsandmaintenanceplan:thisincludesinformationonhowyouplantooperateandmaintainthesolarpanelinstallation,includingtheresponsibilitiesofanycontractorsoremployees;7.Riskanalysis:thisincludesanassessmentofanypotentialrisksassociatedwiththeprojectandthemeasuresyouwilltaketomitigatethoserisks;8.Lastbutnotleast,thefinancialanalysis:thisincludesacomprehensiveanalysisoftheproject'seconomicviability,includingadetailedprofitandlossprojectionandacashflowanalysis;Inadditiontothesespecificdatapoints,yourbusinessplanshouldalsoincludeaclearandconcisedescriptionofthebusinessidea,theobjectivesoftheproject,andthetimelineforimplementation.GeneralconditionsontheRomanianmarkettofinanceasolarpanelproject:1.Aminimumdownpayment(owncontribution)ofbetween25%and30%oftheprojectvalue(thisisaminimumthreshold,acontributionofbetween35%and40%mayberequired);2.Relevantexperienceofthedeveloper/teamimplementingtheproject;3.Oneyeargraceperiodisusuallygranted;4.Thefinancingperiodisusuallyseventoeightyears;5.APowerPurchaseAgreement(PPA)ismandatorilyrequired.Itisanagreementbetweentheproducerandtheenergybuyerthatspecifieshowmuchenergywillbepurchased,atwhatprices,andforwhatperiod.Theminimumperiodsacceptedatfinancingforthesecontractsarethreeyearswithanautomaticrenewalofanotherthreeyears;Nofinancialinstitutiontakesthemarketrisk(themarkethasfluctuatedverymuch),whichiswhythesePPAsarerequired.AlindaBanicaPrincipalConsultant,AlindaBanicaBusinessConsultancywww.alindabanica.com42RenewableEnergyinSoutheastEuropeProfitabilityanalysisFig.12NetincomebySEErenewablesegment(EURmln)TheSEErenewableenergysectorreportedaggregatenetprofitofEUR1.7blnin2021,ajumpof30%onanannualbasis.Forthewholeperiod2019-2021thesector’snetprofittotalledEUR4bln.Thesectorwasconsistentlyprofitable,asallthreemajorsegmentspostedpositivefinancialresultsthroughouttheperiod.Operation,maintenanceandassetmanagementcompanieshadacombinednetprofitofEUR1.5bln,upby27%ontheyear,whileconstruction,engineeringandprojectDevelopmentprofitsadvancedfaster,atanannualrateof42%in2021,reachingEUR148mln.Manufacturingprofitssoaredby71%y/yin2021,followingaslowdownin2020,whentheywerebelowthe2019levels.Atsub-segmentlevel,hydropowerplantoperatorsimprovedtheirprofitabilityfasterthansolarandwindfacilitiesoperators,atarateof50%y/yversus10%y/y,respectively,andthetrendintheconstructionanddevelopmentsegmentwasthesame,withhydrocompaniesincreasingtheiraggregatenetprofitby44%against29%forthoseengagedinsolarandwindfacilities.201920202021492Solarandwind371Hydro2OtherOther-5BiomassandgasfromrenewablesOperation,MaintenanceandAssetManagementConstruction,EngineeringandProjectDevelopmentManufacturing681Solarandwind485Hydro04BiomassandgasfromrenewablesOther747Solarandwind728Hydro110Biomassandgasfromrenewables201920202021201920202021102Solarandwind-10Hydro-1Biomassandgasfromrenewables118Solarandwind-13Hydro-5Biomassandgasfromrenewables152Solarandwind-19Hydro12Biomassandgasfromrenewables25341396743Turkey’sDoguhanEnerjisetssightonEuropeanexpansionMr.Ildas,canyoutellusaboutthecompany’scoreoperationsinTurkeyandabroad?DoguhanEnerjiisoneofthewell-knowncompaniesinTurkey’srenewableenergysector.Experience,qualityandearlydeliveryofconstructionwithourskilledemployeesareourstrongesttraits.Ourabilitytomeetthedemandsandsolvetheproblemsofourcustomersstandoutasthemostimportantfactorsforthemtochooseus.Weprovidecivilandelectricalworksservicesforalltypesofpowerplants,mostlywindfarmsandsolarpowerplants,includingconstructionandcommissioning.Accessroadsleadingtothesiteandthetransportationofbladesareoneofthebiggestchallengesinwindfarmconstructionbutourteamhastheexperiencetoresolvetheseissuesinacost-effectivemannerthankstoourcraneplatformsandreinforcedconcretefoundationsfortheturbines.WearenowexpandingandusingourexperienceinEurope,startingin2022withRomania’sbiggestsolarparktodate.Itisthebeginningofaneweraforusandwearegladwewereabletocompleteourfirstcontractontime.In2023,weplantoenterotherEuropeancountrieswiththeconstructionofbothwindandsolarpowerplants.CanyouwalksusthrougharecentsuccessfulprojectthatDoguhanhascompleted?WehavemanylargeprojectscompletedsuccessfullyinTurkey.Themostimportantinrecentyearsincludethe310-MWSomawindpark,theKaraburunwindparkwithacapacityof268MWandthe112-MWGoktepewindpark.Weprovidedconstructionservicesforalloftheseprojects,includingaccessandtransportationroadstothesite,craneplatforms,reinforcedconcretefoundations,undergroundcablesandsubstations.Themostrecentoftheseprojects,Goktepe,wasfinishedineightmonths.Itincluded27turbinefoundationsandaccessroadswithatotallengthof32kilometres.TheprojectwascompletedinDoguhanEnerjiwaslaunchedin1996.Sincethen,thecompanyhasbuiltrenewablepowerplantswithacapacityofover2500MW,includingTurkey’sfirstwindfarm.ItalsoprovidesconsultingservicesforthenationalgridsinTurkeyandtheMiddleEastandNorthAfricaregion.In2022,thecompanyestablisheditssubsidiaryHeliosEnergytoprovideservicestotheEuropeanrenewablesmarket.BatuhanIldasisManagingPartneratDoguhanEnerji.recordtimeandunderextraordinaryweatherconditions.Itisnowoperationalandprovidingcleanenergytomorethan150,000households.YouworkcloselywithlocalcommunitiesinstakeholdersinTurkey.Whatisyourapproachinthatregard?Welovenatureandouraimistoservecleanenergyforhumanity.Ifyoutellyourstakeholdersthatyourgoalistodoagoodjobforhumanity,everyonewillhelpyou.Basedonthisunderstanding,yourbusinesswillbemucheasiertorun.Workingwithlocalsintheregionswhereweoperateandemployingthemalsogivesthesepeopletheopportunitytocontributetotheirsurroundings.Thus,wearebeneficialtoboththeenvironmentandthepeople.YourecentlyestablishedaEuropeansubsidiaryandalreadyhaveprojectsinRomania.Arethereanyotherexpansionprojectsintheworks?Yes,in2022wesuccessfullyfinishedasolarpowerplantinRomania.Thisisthelargestfacilityofthiskindinthecountry.Shortlyafterthefinalisationthisproject,wesignedtwomorecontractsinforprojectinnorthandwestRomaniawhichwillbecompletedinthelastquarterof2023.WealsohaveanongoingundergroundcablelineprojectinGermany.Undoubtedly,2022wasamilestoneformanycountrieswhenitcomestoreducingtheirdependencyonforeignenergy.Webelievethatthegreenenergyevolutionwillhappendaybydayandweareproudtobeatthecentreofitall.Wehavebeeninvitedtocarryouttheconstructionofnumerousvaluableprojectsindifferentcountriesbutforusitisimportanttoestablishasustainableorganisationandhavecontrolledsitesinplace.ThatiswhywearetryingtobeselectiveintheEuropeanenergysector.However,wewilldefinitelyexpandouroperationstootherEuropeancountriesinthecomingmonths.doguhanenerji.com44RenewableEnergyinSoutheastEuropeOperation,MaintenanceandAssetManagementConstruction/Engineering/ProjectDevelopmentManufacturingBulgariaCroatiaGreeceRomaniaSloveniaTotal121132231251174413014124601002003004002019202020212512493022497316623711301002002019202020211392461613751412832502033292520100200300400201920202021483652936283956-3-3-6508688987-1000100200300400500600700800900100020192020202190128110-4-11-933390120104-100010020020192020202120192020202112.7%5.6%5.8%6.6%4.1%4.0%5.5%16.3%15.7%0510152013.2%in2021...comparedto10.5%in2019ManufacturingConstruction/Engineering/ProjectDevelopmentOperation,MaintenanceandAssetManagementFig.13NetprofitmargininSEErenewableenergysectorbysegment(%)Fig.14NetIncomebySegmentandCountry(mlnEUR)AllfiverenewableenergymarketsinSEEboastedpositivenetfinancialresultsin2021,butsignificantdifferencesatnationallevelwereregisteredbothinabsolutetermsandasahistoricaltrend.RomaniaaccountedformorethanhalfofthetotalnetprofitofthesectorintheregionwithEUR987mln.GreekandBulgariancompaniesfollowedwithEUR252mlnandEUR246mln,respectively.However,whiletheoverallbottomlineoftheGreekrenewablesectorshrankby24%onDespitethedouble-digitannualgrowthoftheaggregatenetprofitofSEE’srenewableenergysectorin2021,thenetprofitmarginremainedunchangedduetothealmostidenticalpaceofgrowthofprofitsandoperatingrevenue.Thus,thenetprofitmarginofthesectorin2021stoodat13.2%,equaltothatinthepreviousyearandupfromthe10.5%recordedinthebeginningoftheanalysedthree-yearperiod.Operation,theyear,Bulgaria’saggregatenetprofitskyrocketedby75%y/y,drivenbythesolidperformanceofboththeoperationandmaintenanceandtheconstructionanddevelopmentsegments.DespitepostingoneofthelowestaggregatenetprofitsinabsolutetermstogetherwithSlovenia,Croatiasawnetincomeofitsrenewableenergysectormorethantriplein2021toEUR113mlnfromEUR37mlninthepandemic-hit2020.maintenanceandassetmanagementretainedthehighestnetprofitmarginatsegmentlevelof15.7%versusthe6.6%reportedbyconstruction,engineeringandprojectdevelopmentandthe5.5%bymanufacturing.Onanannualbasis,however,thepowergenerationsegmentsufferedaslightsetbackcomparedwiththepeakof16.3%in2020.45TotalEnergieslookingatfirstdirectinvestmentinBulgariaMr.Ilijevski,TotalEnergieshasoperationsinanumberofcountriesbutseesBulgariaasamarketofstrategicimportancewhenitcomestorenewables.Whatareyourplansforthebusinesshere?Indeed,BulgariarepresentsoneoftheprioritymarketswhenitcomestodevelopmentofTotalEnergies’renewablebusinessactivity.Inthecomingyears,thestrategyofthecompanyinthecountryistostayfocusedonspecificprojects,suchaslarge-scalesolarfarms,offshoreoronshorewind,orbatteries.Wearelookingintothedevelopment,co-developmentoracquisitionofrenewableprojects,ideallystartingfromthegreenfieldstage.Oncethisfirststepisachieved,thecompanymaygobeyonditsinitialambitionbut,fornow,let’sgoonestepatatime.ArethereanyactiveprojectsonBulgarianterritoryalready?Whenitcomestodirectpresence,TotalEnergiesisactivelyprospectingnewgreenfieldprojectsinthecountry.ItiswellknownthatfindingarenewableprojectinBulgariaTotalEnergiesisamulti-energycompanythatproducesandmarketsfuels,naturalgasandelectricity.Thecompanyiscommittedtobetterenergythatismoreaffordable,morereliable,cleanerandaccessibletoasmanypeopleaspossible.InBulgaria,TotalEnergiesisactivethroughitsretailactivities.Itisalsoactivelylookingatnaturalgasexplorationopportunitiesinthecountryandalsoaimstoestablishitselfasakeyplayerinthelocalrenewableenergymarket.MiroslavIlijevskiisthecompany’sCountryChairinBulgaria.isnotdifficult.Thedifficultyliesinfindingagoodone,forallstakeholders.Atthepresentmoment,thecompanyisanalysingthepossibilityofenteringintooneofthefewprojectswehavebeenworkingoninthepastfewmonths.Ontheotherhand,TotalEnergiesalreadyhasanindirectpresenceinthecountrythroughitsinterestinTotalErenanditssubsidiaryNovenergia.Since2012,NovenergiaoperatestwoPVplantsinthecountry–a10,3MWpplantinDabovoand4,1MWpinVinogradets.Oneofyourlong-termstrategicgoalsistobecomecarbonneutralby2050,inlinewiththeEU’sambitions.WhatstepsisTotalEnergiescurrentlymakinginthatregard?Toachievethisambitiousgoal,TotalEnergiesmustactontwofronts:avoidandreduceouremissionswhileofferingalesscarbon-intensiveenergymix.Thecompanyisintegratingthisshifttowardslesscarbon-intensiveenergyintoourstrategy,amongotherthingsbydedicatinganimportantpartofourinvestmentstosolarandwindpower,withtheaimofjoiningtheworld’stopfiveproducersofrenewablesby2030.Moreover,itisalsopromotingnaturalgas,hydrogen,andbiogastodecarbonisetransport,withsignificantinvestmentsinbiofuelsaswell.Ontheotherhand,inavolatilehydrocarbonmarket,TotalEnergies’strategyistoinvestselectivelyandatcompetitiveproductioncostswithonegoal:toprioritisethequalityofourinvestmentsoverthequantityofprojects.Sustainabletransformationalsomeansinvolvingourcustomersinourambitiontobecomecarbon-neutralinordertocollectivelyreduceouremissions.Inotherwords,itisamatterofofferingthemproductsandenergysolutionsthatarelesscarbon-intensivetohelpthemreducetheirowncarbonfootprint.Finally,thecompanyisawarethatonlyfocusingondecarbonisingtheenergymixwillnotbeenoughtoachieveourtargets.ThatiswhyTotalEnergiesalsoinvestsincapturingresidualcarbonthroughcarbonsinks,whethertheyare“natural”,orviacarboncaptureandstorage(CCS)facilities.Asaconclusion,inourvision,TotalEnergiesin2050isacompanyforwhichrenewableelectricityaccountsforhalfofitsproduction,newcarbon-freemoleculesfrombiomass(biofuelsandbiogas)orrenewableelectricity(hydrogenande-fuels)representaquarter,andhydrocarbons(oilandgas)theremainingquarter,withresidualemissionsfullycaptured,recycled,oroffset.TotalEnergiesGlobalHomepage-RenewablesandElectricity,NaturalGasandGreenGases,OilandBiofuelsTotalEnergies.comMiroslavIlijevskiManagingDirectorandCountryChairmanatTotalEnergiesinBulgaria46RenewableEnergyinSoutheastEuropeRegulatoryupdatebycountry47BulgariaI.CurrentnationalregulatoryframeworkfortherenewablesectorThenationalstrategicdocumentssuchastheNationalDevelopmentProgrammeBulgaria2030andtheIntegratedEnergyandClimatePlanoftheRepublicofBulgaria2021-2030provideforthenecessarystepstoarchivetheambitiousgoalsoftheEuropeanGreenDealforgradualdecarbonisationwhichimplysignificanteffortstoincreasetheshareofenergyfromrenewableenergysources(RES)ingrossfinalenergyconsumptionandtoreduceemmissionsfromgreenhousegases(GHG).StateincentivesforstimulatingtheproductionofelectricityfromRESplayacrucialroleinreducingtheadministrativeburdenonrenewableinvestmentswithregardtotheinstallation,connectionandoperationofthefacilitiesinindustrialareasandurbanenvironments.Overtheyears,variouslegislativeamendmentsaswellassupportschemesandfacilitatedmechanismshavebeenintroduced,aimingtoensurethatRESenergywillmakeasignificantcontributiontoenergysecurityanddiversifysupplyaswellasboostcompetitiveness,environmentalprotectionandclimate,regionaldevelopmentandtheuseofnewtechnol¬ogies.•NationalRecoveryandResiliencePlanTheBulgarianNationalRecoveryandResiliencePlan(NRRP)providesfortheadoptionofnumerousamendmentsinandsupplementstoexsistinglegislationinordertoboosttheshareofRES.Itsmaingoalsarerelatedtosimplifyingtheprocedureforinstallingrenewableenergyinstallationsforownconsumptionaswellasthelicensingandpermittingprocedures;avoidingunnecessarydelays;reducinggridconnectiontimes,etc.•SpatialDevelopmentActAccordingtothemostrecentamendmentsintheSpatialDevelopmentAct,publishedintheStateGazetteon20January2023,approvalofdevelopment-designprojectsshallnotberequiredfortheissuanceofabuildingpermitforRESinstallationswithatotalinstalledcapacityofupto1MWonroofandfacadestructures,theiradjacentlotsetc.Nodetailedplanshallberequiredinthecaseswheretheinstallationsarelocatedoutsideurbanisedterritories.Inaddition,nobuildingpermitshallberequiredfortheconstruction,majorrepairandreplacementofinstallationsfortheproductionofenergy,thermalenergyand/orenergyforcoolingfromREStoexistingsingle-familyresidentialandvillabuildingsandintheiradjacentlandproperties,iftheyareusedforownconsumptionandtheirtotalinstalledpowerdoesnotexceed20kW.Inthesecases,beforethestartofconstruction,theassigneeoftheinstallationmustsubmitanotificationtothechiefarchitectofthemunicipalityattachingtheretothedocumentsrequiredbylawdocuments.Aftertheinstallation,anewnotificationVictorGugushev,SeniorPartneratGugushev&Partners,memberofPONTEStheCEElawyers;KostadinkaDeleva,PartneratGugushev&Partners,memberofPONTEStheCEElawyers;MihaelaDimitrova,AssociateatGugushev&Partners,48RenewableEnergyinSoutheastEuropeshallbesubmittedbytheownerofthebuildingandtheassigneenotifyingthechiefarchitectofthemunicipalityandtheoperatoroftheelectricitydistributionnetworkthattheinstallationisplacedundervoltageandisperforminginlinewithtechnicaldocumentation.Theamendmentssignificantlyshortentheadministrativeprocedure.•EnergyActFurthermore,theexistinglegalgapregardingtheregulationofenergystoragehasbeenfilledbyamendmentsintheEnergyActthatwereadoptedonJanuary27th2023(publishedintheStateGazetteonFebruary2nd2023).EnergystoragenowqualifiesasoneoftheenergyactivitiesandisdefinedinaccordancewiththedefinitioninArt.2,para.59ofDirective(EU)2019/944.theactivityofenergystorageshallbecarriedoutfreelyinthemarket,i.e.nolicenseshallberequired.Thebasicconceptsrelatedtotheactivitysuchasoperatorandstoragefacilityareregulated.Bymeansofthesameamendments,thepowergenerationsubjecttolicensingofenergyprojectshasbeenincreasedfrom5MWto20MWofinstalledcapacity.Inaddition,guaranteesoforiginexchangemarkethasbeenintroduced.Undertheamendments,theentitywhichhasbeenissuedalicensetoorganiseanexchangemarketforelectricityisalsoresponsiblefororganisinganexchangemarketofguaranteesoforigin.•RenewableEnergySourcesActTwobillsforamendmentsoftheRenewableEnergySourcesAct(RESA)havebeensubmittedtotheNationalyAssembleyonJanuary16thandJanuary17th2023.BothbillsaredraftedforthepurposesoffulfillingtheobjectivesrelatedtothetranspositionoftheharmonizationoftheDirective2018/2001thetermforwhichexpiredin2021.Thedraftproposalsaimatregulatingtheenergycommunities,providingadefinitionfor“producingend-consumer”andprovidingforincentivesapplicabletothem.Onaseparatenote,theamendmentsaimtocreatethenecessaryconditionsfortheimplementationofthereformsprovidedforintheNRRP.AsubsequenteasingoftheconnectionproceduresforRESprojectsisalsoplanned.Thedraftproposalsaresubjecttopublicdiscussions,asaresultofwhichtheymaybeamended.TheycanenterintoforceonlyafteradoptionbyananactiveNationalAssembly.II.IncentivesforinvestmentsinrenewableenergyprojectsTheBulgarianlegislationprovidesforasystemofincentivesandmeasures(administrative,financialandregulatory)thatisusedtostimulatenewlybuildRESprojectsinBulgaria,namely:•‘Feed-intariff’(‘FIT’)contractsprovidingobligatorypurchaseoftheelectricityproducedbyRESpowerplantswithaninstalledcapacityoflessthan500kWunderpreferentialpricesforalong-termperiod;•Asimplifiedprocedureforgridconnectionisprovidedtopowerplantswithatotalinstalledcapacityofuptoandincluding30kW,whichareplannedtobebuiltonroofandfacadestructuresofbuildingsconnectedtotheelectricitydistributionnetworkandonrealestateinurbanareas;•Asimplifiednotificationregime(totheelectricitytransmissionnetworkoperator,therelevantelectricitydistributionnetworkoperator,ortheclosedelectricitydistributionnetworkasthecasemaybe)inthecaseswhereanendcustomerinstallsapowerplantwithatotalinstalledcapacityof5MWonarooforfacadesofstructuresofbuildingsandonrealestateinurbanareas,theenergyfromwhichwillbeusedonlyforownconsumption.Tothecontrary,priortoentryintoforceoftheamendments,theinvestorshadtofollowtheprocedureforconnectingtothegrid,which,insomecases,couldhavetakenconsiderabletime.Theprocedureoptimisesthedeadlinesfortheconstructionofpowerplantsforcoveringownconsumptionandoptimisationoftheelectricitycosts;•NewRESorgreenhydrogenprojectsthatenteredintoexploitationafterJanuary1st2021areexemptedfromtheobligationtocontribute5%oftheirfutureincometotheFundforSecurityoftheElectricitySystem;•Taxincentivesareprovidedtocompaniesthatsupplythemarketwithliquidfuelsfrompetroleumoriginmixedwithbio-componentsatacertainpercentage;Currently,discussionsaretakingplacewiththeaimtoadoptaspecialregulationonenergyfromRESinmarinespaces(draftshavealreadybeenprepared),whichwouldbeabasisforattractinginvestorsinoffshorewindfarms.TheNRRPenvisagespreparingandapprovinganationalroadmaptoimprovetheconditionsforunleashingthepotentialofhydrogentechnologiesandmechanismsforproducingandsupplyinghydrogen.Asaresult,amorefavorableregulatoryframeworkshallbeintroduced.Furthermeasureshavebeenproposedintherecentlypublisheddraftversionof‘StrategicVisionforSustainableDevelopmentoftheEnergySectoroftheRepublicofBulgariawithahorizonof2053’whichreflectsthestate’svisionforthedevelopmentoftheelectricitysectorinBulgariauntil2053.Amongthekeymeasuressetoutinthedraftaretheconstructionofnewenergycapacitieswithafocusonnuclearandgreenenergy;theconstructionofgreenhydrogenproductioncapacitiesasasubstituteforgasandameansofbalancingtheenergysystem;andtheconstructionofnewenergystoragecapacitybasedonusageofnationalresources.By2050,itisexpectedthat12GWofsolarand4GWofwindcapacityshouldbebuildonthebasisofprivateinvestments.Furthermore,5GWofelectrolyzersand1.5GWofseasonalstoragesystemsshouldbedeployedthroughfinancingfromMFIandstrategicinvestorsfinancing.Geothermalenergyisforeseenassuitableforlocalheatingpurposes.Inaccordancewiththeapplicablerules,theproposedstrategymustbepresentedtotheNationalAssembly.III.FinancingprogrammesatstateandlocallevelsforrenewableenergyprojectsInlinewithEUprioritiesfortheaccelerateddeploymentofREStohelpachievethesetgoalofa32%shareofRESenergyinthegrossfinalenergyconsumptionintheEU,theBulgariangovernmenthasundertakenmeasurestoencourageandconcentrateinvestmentsinthefieldsofefficientproduction,RESenergyuse,resourcesandenvironmentalinfrastructure,thuscontributingtothegradualdecarbonisationoftheeconomy.Partofthesemeasuresincludeensuringfinancingforprojectsforenergyefficiencyandrenewablesources,schemesforsupportofgreenhydrogenandbiogasproductionprojects,and49schemestosupporttheconstructionofbatteries.MostofthefinancingisprovidedfromEUstructuralfunds.Financialinstitutionsalsohaveanessentialroleinrealisingthegreentransition,andtheyareincreasinglyworkingtowardsincludingintheirportfolioattractiveproductstosupportenergyefficiencyandRESprojects.TheBulgarianDevelopmentBankoverseesthecontributionofsmallandmediumenterprisestosustainablegreengrowthandwillfinanceviableRESprojects.TheEuropeanInvestmentBank,theEuropeanDevelopmentBankandtheWorldBankalsoprovidebudgetsandinstrumentsaimedentirelyatfinancingprojectsrelatedtoenergyefficiency,transitiontocleanenergyanduseofRES.TheapplicablefinancialinstrumentsandaidfundsatanationallevelareprovidedintheNationalEnergyandClimatePlan(NECP)fortheperiod2021-2030andtheNRRPunderwhichBulgariaisallocatedEUR5.6blningrantsrelevantinseveralfieldsincludingRESandenergyefficiencythroughthefollowingfundsandmechanisms:•NationalDecarbonisationFund(NDF)TheNDFaimstosupportlow-carboninvestmentsthroughsustainableandtargetedfinancingtoabroadgroupofbeneficiaries–end-usersofenergy,inordertoachieve,toamaximumextent,thegoalsfordecarbonisationoftheBulgarianeconomy.TheNDFisexpectedtoinvestinallareasofsustainableenergydevelopment–fromtherenovationofbuildingsandtheinstallationofREStoprovidingbusinesssupport.ItwilluseexistingEUfundsandoffergrant-in-aidfinancialandtechnicalassistancecombinedwithfinancialinstruments,includingcreditlinesandguaranteesand/oracombinationthereof.AkeyelementforthesuccessofNDFistheplannedparticipationoflocalbanksandfinancialinstitutionsintheirroleasfinancialintermediaries,astheirparticipationwillnotolycontributetotheco-financingoftheschemebutitshouldalsosignificantlysimplifythefinancingprocessofprojects.•ModernisationfundIntheperiod2021-2030,BulgariawillbenefitfromtheinvestmentsupportthatwillbeprovidedundertheModernisationFund.Itfacilitatesinvestmentsinthegenerationanduseofenergyfromrenewableenergysources,energyefficiency,energystorage,modernisationofenergynetworksandthejusttransitionincarbon-dependentregions.Bulgariawillreceivenearly6%ofthefund’stotalresourcesoraboutEUR16mln.Asignificantshareoftheresources(atleast70%)shallbeinvestedinareasdefinedasaprioritysuchasthegenerationanduseofelectricityfromRES.•EnergyFinancingMechanism(EFM)EFMisaspecificfinancialinstrumentprovidedintheNRRPthataimstoexpandthepossibilitiesforimplementingmeasuresandprojectstoincreaseenergyefficiencyanduseofenergyfromRESintheconditionsoflimitedfinancialresources.EFMshallcontributetotheimprovementoftheenergyefficiencyofvariousprojectsandwillhelpbusinessesinstalltheirelectricitygenerationsystemsincombinationwithlocalenergystoragefacilitieswithaneffectonenergyconsumptionandreflectingontheelectricitycosts.ItisexpectedthatBulgariawillreceiveEUR100mlnfinancingsupportingrantsunderEFM.•GrantforRESconstructionThegrantaimstointegrateintothegridahigherpercentageofRESwithaminimumcapacityof1.4GWcombinedwiththeminimumrequiredelectricitystoragecapacity(batteries).ThegrantshallbeavailablethroughCAPEXsupportaimingtoprovidethehighestcapacityatthelowestCAPEXsupportperMWhofproducedelectricity(accordingtothep50simulationfortheplant’sannualaverageannualproductioninthefirsttenyearsofproduction).Theexpectedresultsareforatleast54MWofbatterycapacityinstalledinthesystemsby2026.Thesolarpowerplantswillprobablyreachacapacityofatleast300MW.•StructuralfundsAsanEUmember,BulgariahasaccesstoprojectfinancingintheformofEUstructuralfunds.InlinewiththeEuropeanGreenDealandthesignedPartnershipAgreement,tocontributefinanciallyrenewableprojects,BulgariacanbenefitfromseveralfundsandprogrammesliketheEuropeanRegionalandDevelopmentFund(ERDF),theCohesionFund(CF),theJustTransitionFund,andotherfundsmostlysubjecttocentralisedmanagementbytheEuropeanCommission.AtotalofEUR2.4blnfromtheERDFandCFwillsupportBulgariainachievingitsclimatetargets.Inparticular,EUR600mlnwillhelpincreasetheshareofrenewableenergyto27%ofthetotalenergyconsumptionaswellasreduceenergyconsumptionandgreenhousegasemissionsinpublicbuildings.TheERDFfundingwillalsobeusedtorecycle70%ofallpackagingwaste.•InnovationandCompetitivnessAvarietyofoperationalprogrammesfinancedbyEUfundsareimplementedatanationallevel.“InnovationsandCompetitiveness”2021-2027isoneoftheprogrammeswithawideapplicabilityinthefieldofenergyandclimateaimedatthestorageandconversionofrenewableenergy,efficientmethodsforthecaptureandutilisationofcarbondioxide,hydrogen-basedtechnologiesandecomobility,suchasthetransitiontoalow-carboncompetitiveeconomy,etc.Theprogrammeshallfinanceinfrastructureprojectsinthefieldofenergyandenergyefficiencyandalsolargeenterprisesthataimtoimplementenergyefficiencymeasurestoachievesustainablegrowthandcompetitivenessoftheeconomy.Theereisanurgentneedofdecisivetransitionfromfreefinancingofenergy-efficientprojectstoimplementingmechanismstoattractprivatefinancing.ThiswillbethecrucialreformthatwillacceleratetheenergytransitionthatBulgariawillinevitablyfaceinthecomingmonthsandyears.Acommonvisionforco-financingwithfinancialinstrumentsandaidfundsneestobefurthersupportedatthestatelevelandpopularisedamongthekeymarketsegments.1P50isastatisticallevelofconfidencesuggestingthatit’sexpectedthatthepredictedRES/energyyieldmaybeexceededwith50%probabilitywww.gugushev.com50RenewableEnergyinSoutheastEuropeBulgarianRESsectorbecomingincreasinglyattractiveforforeigninvestorsMr.Gugushev,Bulgaria’sRESsectorispredominantlydominatedbylocalcapital-SeeNextdatashowthatin2022about14%ofREScompaniesoperatinginBulgariawereownedbyforeigninvestors.Whydoyouthinkthatis?ThepredominanceoflocalcapitalinBulgaria’sRESsectorcanbeattributedtoseveralfactors.Firstly,theBulgariangovernmenthasimplementedvariousmeasurestoencouragelocalinvestmentinrenewableenergy.ThisincludesprovidingsubsidiesandincentivesforlocalcompaniestoinvestinRESprojects.Additionally,thereisagrowingawarenessoftheimportanceofrenewableenergyamongBulgariancitizensandbusinesses,whichhasencouragedmorelocalinvestmentinthesector.Atthesametime,itisimportanttonotethatforeigninvestorshavebeenattheforefrontoflargeRESprojectsintheregion,providingsignificantcapitalandexpertisetothesector.Theseprojectsoftenrequiresignificantupfrontinvestmentandadeepunderstandingoftheenergymarket,whichforeigninvestorsarewell-positionedtoprovide.ElBonusisalicensedenergytraderfocusedonpurchasingelectricityfromRESplantsandbalancingthem.Withover15yearsofexperienceinthefreeelectricitymarket,thecompanygrewtobeoneofthelargeststandardbalancinggroups,entirelyconsistingofrenewableelectricityproducerswithacapacityof400MW.VictorGugushevisalegalexpertinthefieldofenergyandapartneratElBonus.Likeyounoted,foreigninvestorsusuallyareattheforefrontofbigRESprojectsinSEE.DoyouthinktheBulgarianrenewablessceneisdrivenforwardbycompaniescomingfromabroadortrendsaredictatedbylocalinvestorsandcontext?TherenewableenergysceneinBulgariaisdrivenbyacombinationoflocalandforeigninvestors.Ontheonehand,localinvestorsbringanunderstandingoftheBulgarianmarketandcontext,whichisessentialforthesuccessfulimplementationofRESprojects.Ontheotherhand,foreigninvestorsbringcapitalandexpertise,whichiscriticalforthegrowthanddevelopmentofthesector.ItissafetosaythattrendsintheBulgarianrenewablesscenearearesultofacollaborationbetweenlocalandforeigninvestors.ThebeautyofitisthatmanyBulgariansworkingabroadarenowestablishingbridgesforforeigninvestmentswithfundamentsofcooperationandtrust.WhatisElBonus’experiencewithforeigncapital,haveyouadvisedclientsfromabroad?Wehaveextensiveexperienceinworkingwithforeigncapital.Overtheyears,wehaveadvisednumerousclientsfromabroadonavarietyofenergy-relatedmatters,fromthecommissioningofpowerplants,EPC,relationswithstateauthorities,ESOEAD,distributioncompanies,publicproviders,conclusionofnecessarycontracts,issuanceoflicensesfortradingandproductionofelectricity,furtherO&Mservices,electricitytradingontheregulatedandfreemarket,relationswithcoordinatorofbalancinggroups,energyexchangeandmore.Whatarethemainadvantagesand,ontheotherhand,themainobstaclesthatforeigninvestorsencounterinBulgaria?ThemainadvantagesofinvestingintheBulgarianRESsectorforforeigninvestorsincludefavourablegovernmentpolicies,agrowingmarketforrenewables,andafast-developinginfrastructure.Atthesametime,foreigninvestorsmayencounterseveralobstacles,includingbureaucraticredtape,limitedaccesstofinancing,andfindingatrustedlocalpartnerasmanynew“professionalconsultants”continuetopopup.Overall,investingintheBulgarianRESsectorisbecomingincreasinglyattractiveasthemarketcontinuestogrowandmature.Byworkingcloselywithlocalpartnersandleveragingtheirexpertiseandknowledgeofthemarket,foreigninvestorscanovercomemanyofthechallengestheymayencounterandreapthebenefitsofthefutureofenergy.www.elbonusbg.com/enVictorGugushevPartneratElBonus51CroatiaGeneralOverviewTheRESsectorinCroatiahasbeencontinuouslydevelopingoverthelastfifteenyears.Thereisanever-growinginterestinthedevelopmentofgreenfieldandbrownfieldRESprojects,withanexponentialriseespeciallyinsolarinvestmentsoverthelastcoupleofyears.AccordingtomostrecentdataprovidedbyEurostat,Croatiareached31%ofenergyfromRESinitsgrossenergyconsumptionin2022,surpassingits20%targetfor2020andalmostreachingits2030targetof36.4%.Thissharestemsmostlyfromthecountry’shydropowerplants,constructedinthesecondhalfofthe20thcentury.TheEnergyDevelopmentStrategyoftheRepublicofCroatiauntil2030,withanoutlookto2050,foreseesfortheshareofrenewablesinthetotalenergyconsumptiontogrowto65.6%in2050,thusoutreachinggoalssetintheEU’sFitfor55strategy.By2030,windenergyisexpectedtoaccountfor21.3%ofpowergenerationfromRESsources,solarenergyfor6.1%andgeothermalfor0.8%.Hydropowerwillstillaccountforthemajorityofelectricityproductionfromrenewableswitha44%share,whichislessthantoday’s46%.Biomassandtheuseofbiogashasalsobecomemorepopular,however,therearestilldebateswhethertheyaretobeconsideredasrenewablesornot.Asmentioned,hydropowerplantsaccountforthelargestproportionofinstalledRESpowerinCroatia,followedbywindpowerplants,biomasspowerplantsandsolarpowerplants.ConsideringtheimportanceofenvironmentalaspectsofdevelopingRESprojects,especiallyhydropowerprojects,andwithalmostallCroatianriversplannedtobeincludedintheEU’sNatura2000systemofprotectedhabitats,itisquestionabletowhatextenttherewillbeleewayforfurtherdevelopmentofCroatianhydropower.Currently,theconstructionofanewadditiontotheexistinghydropowersystemontheriverLikaisunderwaywithacapacityof412MW(expectedtobecomeoperationalby2028).Croatiahasitsownorganisedelectricitymarket–CroatianPowerExchangeMarket(CROPEX)–acentralplacefortradingelectricitybetweenbuyersandsellers.Inrecentyears,CROPEXhasbeenpartofseveralprojectsformulti-regionalday-aheadcouplingandhassuccessfullycoupledwithBSPSouthPoolEnergyExchange(i.e.,SlovenianandSerbianpowerexchangemarkets)andHungarianPowerExchange(HUPX).In2022,theEuropeanEnergyExchange(EEX)andCROPEXannouncedtheintroductionofpowerderivativesfortheCroatianmarket.TheCroatianpowerfutureswillbelaunchedinagradualstep-by-stepapproachstartingfromQ12023.IvanaSverak,PartneratIleJ&Partners,memberofKaranović;BorisDvoršćak,SeniorAssociateatIleJ&Partners,memberofKaranović;MiaĐurđevac,JuniorAssociateatIleJ&Partners,memberofKaranović;52RenewableEnergyinSoutheastEuropeI.CurrentnationalregulatoryframeworkfortherenewablesectorThebasicprinciplesoftheenergysector,themainpermittingprocedureswithrespecttoproductionandsupplyofelectricity,aswellascompetencesandpowersofregulatorygovernmentalbodiesaredefinedbytheEnergyActastheumbrellalawoftheenergysector.ThemainaspectsapplicabletotheorganisationoftheelectricitymarketandproceduresofconnectingtothegridaredefinedbytheElectricityMarketAct(“EMA”)anditsbylaws.ElectricityproductionfromRESisregulatedbyaseparatelexspecialis–RenewableEnergySourcesandHigh-EfficiencyCogenerationAct(“RESAct”)–introducedforthefirsttimein2015andsubsequentlysubstantiallyamendedin2021.TheCroatianenergyregulatoryframeworkandstrategiesarealignedwiththeEUlegislation,i.e.,CroatiahastransposedtheDirective(EU)2018/2001oftheEuropeanParliamentandoftheCouncilof11December2018onthepromotionoftheuseofenergyfromrenewablesources(“REDII”)andDirective(EU)2019/944oftheEuropeanParliamentandoftheCouncilof5June2019oncommonrulesfortheinternalmarketforelectricityandamendingDirective2012/27/EU(“EnergyMarketDirective”)inthenewRESActandEMA.•EnergyMarketActEMAtransposedtheEnergyMarketDirectiveandamongotherthingsintroducednewenergyactivitiesandservicesrelatingtoaggregationsystems,energystorage,electromobility,aswellasnewpossibilitiesforproductionofelectricitybyendconsumers(activeconsumers)ortheenergycommunitiesofcitizens.ThenewactincludednoteworthychangestothedevelopmentprocessofRESprojects,withtheenergyapprovalbecomingoneofthefirstadministrativeactsaprojectcompanyhastoacquire.Eventhoughnotyetfullyimplementedduetolackofanumberofby-lawstobeadoptedinduecourse,inrecentmonthstherehasbeenasignificantriseinpopularityofproductionofelectricitybyendconsumers(definedasrenewableenergyself-producersintheRESAct).Agrowingnumberofcompanies(includinginthefoodproductionandhospitalitysectors)arecontemplatingtostartorhavealreadystartedconstructing(integratedrooftop)solarpowerplantsforproductionofelectricityfortheirownneeds.Thesystemallowssuchproducerstoselltheexcesselectricitytotheelectricitysupplier.Withthevolatilityoftheenergymarket,thiskindofself-productionofelectricityisbecomingevermorepopular.•EnergyapprovalUntilthemostrecentchangestotheEMAin2021,theenergyapproval(energetskoodobrenjeinCroatian)wasissuedatalaterstageofthedevelopmentprocess.ItnowrepresentsthefirstenergysectorpermittobeissuedinthedevelopmentprocessofaRESprojectprovidingbasicinformationabouttheprospectiveRESprojecttotheMinistryofEconomyandSustainableDevelopment(“Ministry”).Basedontheenergyapproval,anenergyprojectisregisteredintheCroatianRESRegistrythusregisteringtheprojectcompanyasanofficialprojectholder,and,inprinciple,securingthelocationofaprojectforthedurationoftheenergyapprovalandprovidingasortofexclusivitytotheprojectholderwithrespecttoaspecificlocation.Thenecessarybylawsregulatingtheprocessofapplyingfortheenergyapprovalandconditionsforawardingsuchapprovalareyettobeadopted.Ingeneral,theenergyapprovalisawardedafteraprojectcompanyexpressesinteresttodevelopaspecificprojectataspecificlocation,afterwhichtheMinistrypublishesapublictenderwiththecallforapplications,if,forexample,thereismorethanoneinterestedpartyortheland-relatedmattershavenotbeenresolved.Afterbeingawardedtheenergyapproval,theprojectholderhastodelivertotheMinistrythelocationpermitoranyotherdocumentbasedonwhichtherespectivepowerplantcanbebuiltwithinthreeyears,constructthepowerplantandobtaintheusepermitwithinfiveyears(whichisalsothevalidityperiodoftheenergyapproval).OneoftheobligationsisalsothepaymentofthefeeforissuanceoftheenergyapprovalwhichiscalculatedatEUR6,6361/kW.WhenadoptedinOctober2021,thenewEMAprovidedinitstransitionalprovisionsanexceptiontoa“regular”processofawardingenergyapprovalsthroughpublictenders.Projectsthatreachedacertainlevelofdevelopment(e.g.obtainedthelocationpermitand/orgridconnectionagreementand/ortheelectro-energyconsentand/ortheEIAdecision)intheperiodbeforeEMAenteredintoforcewereeligibletosubmitarequestexpressinginterestforcarryingoutofapublictenderfortheawardoftheenergyapprovalwithinaspecificdeadline(bytheendofJanuary2022).Atotalof216projects,amountingtoapprox.6GW(withthemajoritybeingsolarandwindprojects)applied.UntilJanuary2023,theMinistryrejected33(outof216)applicationstotalling2.5GWduetoalackofrequireddocuments,andissuedaroundtwentyenergyapprovals.TheprojectsthatwerenoteligibletoapplyfortheenergyapprovalunderthetransitionalprovisionsoftheEMA,arestillwaitingforthenecessarybylawstobeadopted.•RenewableEnergySourcesandHigh-EfficiencyCogenerationActInJanuary2016,anewRESActcameintoforce,introducinganewincentivesystemforRESandhigh-efficiencycogenerationinCroatia,aswellasamarketpremiumandaguaranteedpurchasepriceforRESpowerplantswithupto500kWconnectioncapacity.Oneofthenoveltiesofthe2015RESActwastheintroductionoftheendconsumerwithownproduction.ThedefinitionwasthenfurtherdevelopedwhenthenewRESActin2021introducedrenewableself-consumeroractiveconsumerdefinitionsasalreadymentionedabove.•Feed-in-TariffsThefeed-in-tariffs(FiTs)havebeentheprimarymethodforstimulatingtheproductionofelectricityfromRESintheearlystagesofdevelopmentofRESprojectinCroatiapriortoentryintoforceofthe2015RESAct,andthemajorityofcurrentlyactive(wind)powerplantsarestillparticipatingintheFiTmodel.FiTmodelisanenergyproductionincentivepolicyfocusedonsupportingthedevelopmentofRESprojectsbyofferingproducersofRESelectricitylong-termpowerpurchaseagreements(PPAs)forthesaleoftheentireproducedelectricityatatotalfixedcompensation.Suchproducerswithinthesystemarenotexposedtochangesinthe1Registryofrenewableenergysources,cogenerationandeligibleproducers,uniquerecordsofRESandhigh-efficiencycogenerationprojects,powerplantsusingRES,highefficiencycogenerationfacilitiesandeligibleproducersintheterritoryofCroatia53electricitymarketbutareratherprotectedunderthePPAsconcludedwiththemarketoperator.However,duetotheenergycrisisof2021and2022,andvolatilityontheenergymarket,someelectricityproducersdecidedtoleavetheFiTschemeandexitPPAspriortotheirexpiry.BytheendofNovember2022,almostathirdoftheoverallrenewableenergyportfolioinCroatiahadabandonedtheFiTmodelandindependentlyconcludedcorporatePPAswithprivatecompanies.•MarketpremiumOneofthekeychangesintroducedbytheRESActinrecentyearswastheabandonmentoftheFiTmodel,andtheintroductionofanewmethodofsupportingelectricityproducersfromRESthroughthemarketpremiummodel.ContrarytotheFiTmodel,wheretheentireelectricityproducedbyacertainproductionplantispurchasedbytheCroatianEnergyMarketOperator(Hrvatskioperatortržištaenergije,“HROTE”)atapredefinedprice,themarketpremiummodelrepresentsashifttomarketprinciples.Themarketpremiumisawardedthroughapublictender,whichispreparedandcarriedoutbyHROTEatleastonceeverythreeyearsandispayableontopofthenetamountofelectricityreleasedbytheproducerintothegridandsoldontheenergymarket.Themarketpremiumisdefinedasadifferencebetweenthereferencevalue(price)ofelectricityandthereferencemarketpriceofelectricitywithinaspecificaccountingperiod(publishedbyHROTEonamonthlybasis).Thereferencevalues(price)ofelectricityaresubjecttothepublictender,i.e.,marketpremiumauctions,wherethebidderthatoffersthelowestreferencevalueisdeclaredasthemostfavourable.TheamendedRESActfrom2021introducedaso-callednegativemarketpremium.Incaseonamonthlybasisthemarketpriceishigherthantheamountofthereferencepricedeterminedbythemarketpremiumagreement,theprojectholderwillbeobligedtopayHROTEthedifferencebetweenthemarketpriceandthereferenceprice.ThemarketpremiumauctionheldinJune2022intendedtoawardpremiumsforpowerplantswithatotalcapacityof638MW,butonlybidscoveringonly150MWwerereceived.Thereasonforthislowinterestisconnectedtothehighelectricitypricesachievedontheopenmarketatthattime.ConsideringtherecentcapofEUR180/MWhimposedbytheEuropeanCommission,itisdifficulttosaywhatwouldhavebeentheresultifthetenderiscarriedoutnow.II.IncentivesforinvestmentsinrenewableenergyprojectsAsalreadymentioned,long-awaitedinvestmentsinsolarpowerareontherise.CroatiahasoneofthehighestamountsofsolarradiationinEurope(amountingto3.4–5.2kWh/m2perday),butoneofthelowestphotovoltaiccapacitiespercapita.Incomparison,solarradiationinSwedenamountstoapprox.1–1.3kWh/m2perdayandthecountryhasalmost1.6GWofinstalledsolarpowercapacity.AlmostahalfofSweden’ssolarenergyisproducedfromsmall-scaleplantsofresidentialandcommercialnature(namely20kVto1MW),incentivisedwitharabatschemefromthegovernment.AmodelwhichshouldalsobeusedinCroatia,withtheexceptionoflarge-scaleinvestments.ilej-partners.comInanefforttoencourageinvestmentsinsolarenergy,theCroatiangovernmentadoptedin2022adecisionoutliningtherecommendationsfortheadoptionandamendmentsoftherelevantlegislation,e.g.,thespatialplanningact.Thisdecisionaimstoutilisemorespacefortheconstructionofsolarpowerplants(includingsolarpowerplantsonagriculturallandandanyareadesignatedtohaveindustrialorbusinesspurpose)andspeed-uptheoverallpermittingprocess.Furthermore,themeasuresimplementedtomitigatetheimpactoftheenergycrisisincludedabolishingthevalue-addedtaxonsolarpanels,whichisexpectedtoboostinvestmentsinsmall-scalesolarpowerplantsbyendconsumers.In2022,CroatiaalsoadopteditsNationalHydrogenStrategyuntil2050whichfollowstheadoptionoftheEU’shydrogeninitiativefrom2018.By2030,70MWofhydrogenproductionfacilitiesareexpectedtobeinstalledwiththeambitiousaimof2,750MWby2050,thusincreasingthetotalshareofenergyconsumptionfrom0%to0.2%and11%respectively.Consideringthattheuseofhydrogenatthispointisnon-existent,itwillbeinterestingtoseehowandifitwillbecomemorewidelyaccepted.OneofthepossibilitiestoboostproductionofelectricityfromRESisgeothermalenergy,whichisyettobedevelopedonalargerscale,especiallygiventhatnorthernCroatiahassignificantgeothermalpotential.If(andwhen)usedtoitsfullpotential,geothermalsourcescouldproduceenergytoheattheentirecityofZagreb.Inthisrespect,oneofthemoretalked-aboutprojectsthatintendstoutilisegeothermalpowerforbothproductionofelectricityandheatinghasbeenthenewregionalhospitalinZagreb.Atthispoint,thereisonlyonegeothermalpowerplantoperationalinCroatia.Inanoptimisticscenario,Croatiaaimstoconnectapprox.1.5GWofRESprojectstothegridby2024,andmorethan2.5GWby2030.Currently,thereareapprox.980MWofinstalledwindcapacity,100MWofsolarcapacityand100MWofbiomasscapacityconnectedtothegrid.Thecountry’sgridinfrastructureisnotreadytoutilisetheanticipatedwindandsolarpotential,especiallyconsideringthatthemajorityofelectricityfromRESisproducedinthesouthofCroatiabutusedinthenorth,resultinginsignificantissuesintransmission.CroatianTransmissionSystemOperator(Hrvatskioperatorprijenosnogsustava,“HOPS”)announcedinitsten-yearplantheintentiontoinvestEUR213mlnintherevitalisation,construction,digitalisationandmodernisationofthetransmissiongrid(includingconstructionoftwomajorsubstations)by2026,andadditionalEUR2blnuntil2050withthesamepurpose.Anyshort-terminvestmentsinRESprojectsshouldbeconsideredinthenorthofCroatiawherethegridismoreavailable.Intheperiodto2050,anexpectedEUR17.8blnwillbespentonCroatia’senergysector,ofwhich75%fordirectimprovementstotheelectricitysystem.Expertspredictthatbetween2020and2050,approx.2.3%ofCroatia’sGDPwillgotowardsenergyefficiency.54RenewableEnergyinSoutheastEuropeCasestudy:choosingrightfinancingbringslong-termbenefitstosolarpowerprojectsAsafinancialadvisorexperiencedintherenewableenergysector,duringthepastyearaloneourteamhasbeenengagedinmorethan400MWpsolarpowerplantprojectsinBulgariaandtheregion.OurprimaryfocusisonstructuringandsourcingfinancingforgreenfieldprojectsandfacilitatingM&Atransactionsinthespace.However,forsomeprojectsouradvisoryroleextendstoawiderrangeofservicesfromtheearlyphaseofdevelopment.Wesharemoredetailsonthescopeofourservicesinthecasestudybelow.ThebeginningWhenourclient,apubliclylistedcompanyengagedinmanufacturing,inquiredaboutourservice,onlythelandplotforthe25MWpsolarprojectwassecured.Weimmediatelytookalikingtotheprojectdeveloper’splanforthesolarparktosupplythenearbyenergy-intensivemanufacturingplantwithafractionofitsgeneratedelectricity.Inthisway,themanufacturingplantwouldbeabletodrasticallyreduceitsemissions,loweritsenergycostsandretainitsworkforceinageographicalareawithhighunemploymentrateandlimitedopportunities.Theprojectalsoutilisesalegacyindustrialzonewhichwouldotherwisebedifficultandeconomicallyunviabletorepurpose.PreparationWestartedoffourworkandanalysisinthedevelopmentphasewithapreliminaryfinancialmodel,usingtheinitiallyavailableinformation.Speakingoffinancialmodels,xFigureisabletodrawuponanextensivelibraryofinsightsandlessonslearnedfromournumerousrecentprojects.Thus,evenatthepreliminarystage,weprovideadequateinputandbenchmarksonkeyassumptionslikecapitalexpenditures,solaryield,operatingexpenses,marketpricecurvesanddebtstructure.ThisinformationshowcasestoourclientatanearlystagekeyindicatorssuchasrisksandexpectedKPIsoftheproject,equityandprojectinternalrateofreturn(IRR),paybackperiod,netpresentvalue(NPV)underweightedaveragecostofcapital(WACC)andmore.Ourfinancialmodelturnedintoaninstrumentforinvestmentdecisions.Theclientwasabletoseetheeffectoftheirselectedoptionsforcapitalstructure,engineering,procurementandconstruction(EPC)partners,operationandmaintenance(O&M)offerandpowerpurchaseagreement(PPA)ontheexpectedoverallreturns.Intruth,wekeptonusingandupdatingthefinancialmodelthroughoutthedevelopmentandconstructionphasesup„Frankly,thereisplentyofcapitalavailableforqualityassets.AtxFigureFinance,westructurerenewableenergyprojectsinawaythatmeetstherequirementsofcapitalproviders,thusenhancingtheiroverallreturnsoninvestment.untilcommercialoperation.TheprocessbeyondthenumbersxFigureFinance’srole,afterassessmentoftheprojectviability,wastoadviseontheoptimalcapitalstructurechoosingbetweenmultipleoptionsfordebtfinancing,mezzanine,greenbonds,andpureequity.Knowingthestrategyandgoalsofourclient,weproposedalimitedrecourseprojectfinancingstructure.Wepresentedthefinalversionofourfinancialmodeltoseveralfinancialinstitutions.Afterreviewingtheirinitialproposals,wenarroweddownourchoicetotwolendersandafterseveraliterations,wewereabletoreachaconclusiveofferwiththepreferredone.TheachievedresultsHavingbeenactiveinthelocalrenewables’sceneformorethantenyearsandtakingtheappropriatestepstolimittheperceivedrisksforbanks,wewereabletolimittherecourseoftheprojecttothelanduponwhichthePVparkwasbuiltandasponsorguaranteeuntiltheturnkeyphasehasbeenreached.Duetothat,wenegotiatedalimiteddrawdownamountevenbeforereachingconstructionpermitsoastocoverongoingexpensesandsecureequipment(modules,invertersandsubstation)atfavourableprices.Furthermore,wenegotiatedlesspunitiveloancovenantsandincreasedthefinancialleverageoftheprojectwithoutalteringtheriskofdefaultunderthetestedscenarios.Finally,wesecured100%dividendreleaseuptothelegallypermittedamountforequityshareholdersaftercompletionofannualreviewbythebankandnegotiatedaseparateVATfacility.InanutshellStructuringprojectssoastoattractbankfinancingrequirestheabilitytoleadandclosecomplextransactions,thoroughknowledgeofbankrequirementsandregularpresenceonthelendingmarket.Theresultsforourclientbeyondcomplexfinancialdocumentationdemonstratethecomforttohaveadequatecapitalontime,repaymentplanbasedonlyontheplantcashflow,allowancetogetdividendsevenduringthefirstoperationalyearsandthereforesecureadouble-digitreturnontheirinvestment.www.xfigure.euRositsaChopevapartneratxFigureFinance55GreeceI.CurrentnationalregulatoryframeworkfortherenewablesectorTheGreekRenewablesSectorisgovernedbyaregulatoryframeworksupervisedbytheMinistryofEnvironmentandEnergyandtheRegulatoryAuthorityforEnergy(‘RAE’).Infact,RESproductioninGreeceismainlyregulatedbythefollowinglaws:•Law3468/2006(GGIA’129/27.06.2006),asamendedandinforce,settingoutthemainlicensingframeworkfortheproductionofRES;•Law4014/2011(GGIA’209/21.09.2011),asamendedandinforce,settingoutthemainframeworkretheenvironmentallicensingforRESprojects;•Law4685/2020(GGIA’92/7.5.2020),pursuanttowhichtheframeworkfortheenvironmentallicensingofprojectsandactivities,includingRESprojects,wasredefined;•Law4951/2022(GGIA’129/04.07.2022),whichsimplifiedthelicencingprocessforRESproduction;and•Law4964/2022(GGIA’150/30.07.2022)settingouttheframeworkforthelicensingandoperationofoffshorewindfarms.Theabovelegalframeworkiscomplementedbynumerousministerialdecisions,decrees,ordersandcircularsissuedbytheministryandRAE,aswellasbyotherenergystakeholders,suchastheIndependentPowerTransmissionOperator(‘IPTO–ADMIE’),theHellenicEnergyExchange(‘HEnExSA’),andtheRenewableEnergySourcesOperator&GuaranteesofOrigin(‘DAPEEPSA’).EmmanouilSavoidakis,PartneratPolitis&PartnersLawFirm;DimitriosTheodoropoulos,SeniorAssociateatPolitis&PartnersLawFirm;56RenewableEnergyinSoutheastEurope•MajorrecentdevelopmentsinlicensingprocessforRESprojectsLaw4951/2022(GGIA’50/30.07.2022),whichcameintoforceon04.07.2022,broughtsignificantamendmentstothepreviouslicensingregimeforpowergenerationprojectsusingREStechnology.Inparticular,Law4951/2022introducedsomekeyamendmentsaffectingthelicensingprocess,inanefforttomakeitquickerandmoreefficientreducingthetotaldurationofthelicencingprocessfromfiveyearstofourteenmonths.Morespecifically,themainreformsofthelicencingprocessforRESprojectsintroducedbyLaw4951/2022arethefollowing:•DigitisationofthelicencingprocessOneofthemostinnovativeandlong-awaitedchangesthatLaw4951/2022introducedisthedigitisationoftheentirelicensingprocess.Thisincludes,amongotherthings,electroniccorrespondencewiththepublicauthorities,applicationfilingthroughe-platformslinkedtogov.gr,onlinepublicationofpendingapplicationsfortheissuingofgridconnectionofferandconnectionagreements,andotherprojectdevelopmentinformation.Asingleinformationelectronicsystemwasalsoestablished,whichisanticipatedtomakeiteasierforinvestorsandauthoritiestodotheirdailyoperations.•AbolitionoftheprovisionalgridconnectionofferPursuanttoLaw4951/2022,theprovisionalgridconnectionofferisrepealed.Thismeansthat,incontrasttothepreviouslicencingregime,producersareabletoapplydirectlyfortheissuanceofaFinalGridConnectionOffer("FGCO")andsubmitthenecessaryGridConnectionAgreement("GCA").ThecompetentOperatorisobligedtorespondtotheaforementionedapplicationbyeitherapprovingaFGCOorrejectingitwithintwomonthsasofthedateofcompletionoftheapplication.•InstallationlicenceAnothersignificantaspectofLaw4951/2022isthatinvestorsmustmeetanextramilestoneorrisklosingtheproject.Thismilestoneisthefilingofanapplicationfortheissuanceoftheinstallationlicence.Thedeadlinesfortheapplicationsvary.Morespecifically,theyareasfollows:twelvemonthsforphotovoltaicandhybridstations,aswellasonshorewindfarms;eighteenmonthsforotherRESandCHPstations,and/orenergystoragestations;twenty-fourmonthsforspecialorhybridprojectsinvolvingtheconstructionofunderseaconnectionsoftwoormorenon-interconnectedislands.Itshouldbenotedthattheaforementionedperiodsrespectivelymaybeextendedbyafurthertwelvemonths,butonlyifamonthlycostofEUR1,000/MWispaid.Iftheaforementioneddeadlineisnotmet,theProducer'sCertificatefortheprojectisautomaticallywithdrawn.Iftheinvestoraskstoextendtheinstallationlicenceforanadditionaltwelvemonths,thesamepricewillalsoneedtobepaid.II.IncentivesforInvestmentsinRenewableProjects–NewLaw4964/2022onOffshoreWindfarms•Law4964/2022On30.07.2022,theGreekParliamentenactedLaw4964/2022(GGIA’50/30.07.2022)settingouttheframeworkforthelicensingandoperationofoffshorewindfarms.Thenewlaw,whichwaseagerlyawaitedbythemarketandtheinvestmentcommunityinGreeceandabroadintheaftermathofthemajorgeopoliticalandenergycrisisofthelastmonths,aspirestosignificantlychangetheenergymapofGreece,exploitingthecountry'sgreatenergypotentialinthewindenergysector.Law4964/2022ismeanttobeareferencepointfortheimplementationofsignificantinvestmentsinafieldofanimportantinvestmentactivitythathassofarremainedunexploited.PursuanttoArticle66ofLaw4964/2022,theGreekStatehastheexclusivecompetencefortheresearchanddesignationoftheareasfortheorganiseddevelopmentofoffshorewindfarmsandareasfortheirinstallationofoffshorewindfarms,whichismanagedonitsbehalfbythesociétéanonymeunderthecorporatename"HellenicHydrocarbonsandEnergyResourcesManagementCompanyS.A.”andthedistinctivetitle“HEREMA”providedinArticle145ofLaw4001/2011.HEREMAactsasamanagemententitywithregardtotheoffshorewindfarmsandisresponsiblefortheplanningoftheirdevelopment.Themanagemententityshallberesponsibleforthepreparationoftechnicalstudiesforthedesignationoftheareasinwhichtheoffshorewindfarmswillbedeveloped.Eachoffshorewindfarmorganiseddevelopmentareawillconsistofmorethanoneoffshoredevelopmentareas.HEREMA,takingintoaccountthenationaloffshorewindfarmdevelopmentprogrammeandthespecificconditionsofeachorganisedoffshorewindfarmdevelopmentarea,shalldeterminetheminimumandmaximumcapacityoftheoffshorewindfarmprojectsthatcanbeinstalledineacharea.Subsequently,apresidentialdecreeissuedfollowinganopinionoftheMinisterofEnvironmentandEnergyandtheCentralCouncilforSpatialPlanningandDisputesshalldesignateoneormoreareasoforganisedoffshorewindfarmdevelopmentandshalllaydowntheconditionsforthedevelopmentofoffshorewindfarmsintheseareasaswellasthespecificconditionsfortheprotectionoftheenvironment.•LicensingprocessforoffshorewindfarmsThelicensingofOWFsiscarriedoutintwostages:(a)thestageofgrantingaresearchpermitwithinthedesignatedorganiseddevelopmentareasand(b)thecompetitiveprocessforselectinganinvestorfortheinstallationofOWFs.•IssuanceofanOffshoreWindFarmResearchPermitEligibletoapplyforaresearchpermitforOWFsareNaturalpersonsorlegalentitiesestablished:i)inamemberstateoftheEuropeanUnion(EU),ii)inthirdcountrieswhichhaveconcludedmultilateralorbilateralinternationalagreementswiththeEUinthefieldofrenewableenergysources,providingforreciprocalmarketopeningandtotheextentthattheauthorisationtobeissuedfallswithinthescopeofsuchagreements.•Criteriaofprofessional,technicalandfinancialcompetenceThecriteriaofprofessionalandtechnicalcompetenceandfinancialandeconomiccompetenceoftheinvestorsshallbedeterminedbyadecisionofthemanagemententity.Law4964/2022requiresatleastasregardsprofessionalandtechnicalcapacity:i)provenexperienceduringthelastten57yearsinthedevelopmentandoperationofOWFsprojects,includingatleastoneOWFsprojectwithacapacityofonehundred(100)MW;andii)provenexperienceintheoperationandmaintenanceofOWFsprojectswithacapacityofmorethantwenty-five(25)MW.•Withrespecttofinancialandeconomiccompetence,thebelowminimumcriteriaarerequired:(i)anannualturnoverofthenaturalorlegalpersonoritsshareholders(inthatcasethecumulativeturnoveristakenintoaccount)applyingforaOWFsResearchPermitofmorethanEUR2bln(averageofthelastthreeyears);incasetheapplicantisaninvestmentfund,fortheeligibilityofitsparticipationwhencalculatingtheabovesum,thetotalfundsmanagedbytheinvestmentfundmayalternativelybetakenintoaccount;(ii)anequitytodebtratioofmorethantwentypercent(20%);and(iii)thesubmissionofaletterofguaranteeintheamountofEUR10,000/MW.Ifalltheabovecriteriaaremet,theManagementEntityissuestheResearchPermitorrejectstheapplicationwithinthirty(30)daysasofthedateofitssubmission.ThedurationoftheResearchPermitshallbespecifiedthereinand,inanycase,shallautomaticallyceasetobevalidafterthreeyearsasofitsissuance,andshallbenon-transferable.•CompetitiveSelectionProcessTheManagementEntity,withintwo(2)yearsasoftheendofthefirstcycleofapplicationsforthegrantingofaOWFsResearchPermit,postsforpublicconsultationtheOWFsinstallationareasineachOffshoreWindFarmOrganizedDevelopmentArea.TheparticipantsineachdiscretecompetitiveprocessmustpossessanOWFsResearchPermitfortherespectivearea.EachparticipantshallsubmitdistinctbidsforeachOWFsinstallationarealocatedwithintheOffshoreWindFarmOrganizedDevelopmentAreaforwhichithasobtainedaResearchPermitandforwhichhewishestoinstallaOWFsProject.ThecompetitivebiddingprocessisannouncedbyadecisionoftheRegulatoryAuthorityforEnergy("RAE")settingoutthespecificcriteria.Untilthetotaltenderedcapacityiscovered,uponcompletionofeachcompetitivebiddingprocess,RAEshallissueandpostonitswebsite,aresulttableforeachOWFsArea,thesuccessfulbidderfortheimplementationoftheOWF’sProjectineachOWFsArea,announcingtheparticipantwiththelowestandthehighestbid.•LicensingofOffshoreWindFarmsPotentialinvestorspossessingresearchpermitsintheoffshorewindfarmorganiseddevelopmentareassubsequentlysubmittoRAEanapplicationfortheissuanceofaProducer’CertificateofSpecialProjects,pursuanttoArticle11ofLawNo.4685/2020andtheProducer’sCertificatesRegulation.Afterwards,RAEissues,withinthreemonthsasofthesubmissionoftheapplicationofthepotentialinvestor,aProducer’sCertificateforSpecialProjectsforaperiodofuptothirtyyears,whichmayberenewedforanequalperiod.OWFsinvestorswhoreceiveaProducer’sCertificateofSpecialProjectsareobligedtoobtainallnecessarypermitsandapprovalswithinthetime-limitssetoutintheProducer’sCertificatesRegulationandLaw4685/2020.TheOWFsinvestorisrequiredtoputtheprojectintooperationnolaterthansixyearsasofthedateofthecompetitiveprocessinwhichtheywereselected.Otherwise,allrelevantpermitsandauthorisationsshallbeautomaticallycancelled.III.StateProgrammessupportinginvestmentsinRESprojects•RecoveryandResilienceFacilityPursuanttothepressreleaseoftheEuropeanCommissiondated5.09.2022,theCommissionhasapproved,underEUStateaidrules,aGreekschemewithanestimatedbudgetofEUR341mlntosupporttheconstructionandoperationofstoragefacilitiesintheelectricitysystem.ThemeasurewillbepartlyfundedbytheRecoveryandResilienceFacility(“RRF”),followingtheCommission’spositiveassessmentoftheGreekRecoveryandResiliencePlananditsadoptionbytheCouncil.ThemeasureaimsatallowingasmoothintegrationintheGreekelectricitysystemofanincreasingshareofrenewableenergycomingfromwindandsolarsources.TheschemewillalsocontributetotheEU’sstrategicobjectivesrelatingtotheEU’sGreenDeal.TheschemenotifiedbyGreecewillpromotetheestablishmentofseveralelectricitystoragefacilities,withajointcapacityofupto900MW,connectedtothehigh-voltagenetwork.Theprojectswillbeselectedthroughatransparentandnon-discriminatorybiddingprocess.Theawardofthecontractstotheselectedprojectsshouldtakeplacebeforetheendof2023andthestoragefacilitiesshouldbecompletedbytheendof2025.Theaidwillbegranted,cumulatively,intheformof:(i)aninvestmentgrant,whichwillbepaidduringtheconstructionphaseofallsupportedprojects;and(ii)anannualsupporttobepaidduringtheoperationsphaseoftheprojects,fora10-yearperiod.PhotovoltaicparksaswellasothertypesofRESprojectsareincludedintheinvestmentpillar"GreenTransition"ofRRF.Inthiscontext,thepossibilityoffinancingthroughRFFisprovidedfortheconstructionofphotovoltaicparksinGreece.Inparticular,theinterestrateoftheseloansisextremelylowforGreekstandards,providingthenecessaryfundsforthefasterimplementationoftheseinvestments.•Greece-StrongDevelopmentReferenceshouldbealsomadetotherecentdevelopmentLaw4887/2022(GGIA’16/04-02-2022)underthetitle"Greece-StrongDevelopment",whichelaboratesontheprovisionofgrantsandincentivesrelatingtospecificprojectsoftheenergysector,providedthattheconditionsoftheLawaremet.IV.ConclusionThelegislativedevelopmentsoverthelasttwoyearshavecreatedamomentumattractingdirectforeigninvestmentsintherenewableenergysector.Infact,thelicensingprocesshasbecomeconsiderablyfasterandmoreefficient.ThishasresultedindomesticandforeigninvestorsdemonstratingaheavyinterestindevelopingRESprojects,afactorthatsignificantlyhelpsboosttheGreekeconomy’scompetitiveness,particularlyinthecurrentmarketconditions.www.politispartners.gr58RenewableEnergyinSoutheastEuropeRE-SourceSoutheastexploresoptionsforSEEindustrialstoprocurerenewableenergyTheyear2022maymarkitsplaceinhistoryastheyearinwhichenergytransitioninvestmentsreachedparitywithcapitaldeployedinsupportoffossilfuelsupply.AccordingtodatacompiledbyBloombergNEF,thehugeaccelerationof31%year-on-yearcamemainlyonthebackoffasterdeploymentofcleanenergytechnologies,inturndrivenbytheenergycrisisinEurope.TheEuropeanElectricityReviewofthink-tankEmbershowedthatwindandsolargenerated22%ofEUelectricityin2022,overtakingfossilgas(20%),forthefirsttime.The1.5%uptickincoalgenerationwillalsoappeartobequiteshort-livedifthepaceofnewrenewablesinstallationholdsandevenacceleratesastargetedbytheambitiousREpowerEUplan.Abigchunkofthewindandsolarassetsthatcameonlinein2022wasdrivenbycorporatepowerpurchaseagreements(PPAs).Developerssigned161dealsforatotalof8.4GW,accordingtodataofSwissconsultancyPexapark.OneofthetopbuyersinPexapark’schart-Microsoft(900MW)isamongthekeysupportersoftheRE-SourceSoutheasteventinanefforttobringawarenessofcorporatesourcingofrenewableenergyinSouthEastEurope(SEE)aswellastheroleoftheGreenTaxonomyandESGpoliciesinfuelingrenewableenergydevelopment.TheSEEregionhassubstantial,largelyuntappedrenewableenergypotentialandironically,thewarinUkraineandsky-rocketingpricesofenergyderivedfromfossilfuelsacceleratedtheenergytransitiontorenewablesinSEEmuchmorethanyearsofBrussels-ledpoliticalnudges,climatechangeawarenesscampaignsandnet-zerogoalsofinternationalcompanies.Thepowermarketvolatilityandpricehikesoverthepastyearforcedenergy-intensivecompaniesintheregiontoinvestashardandasfastaspracticallypossibleinlong-termenergysecurityandpricepredictability,eitherviaon-sitegenerationorcorporatePPAsforrenewableenergysupply.Whileself-consumptionandon-sitegenerationisstilltheprevailingchoiceforSEEcorporates,thePPAmarkethasthepotentialtocatchupfast,asfirstdealshavealreadybeenannouncedinBulgaria,GreeceandRomaniaandmostrecentlyinSerbiaandNorthMacedoniatoo.AcrossEurope,highmarketpricestemptedpowerproducerstoshifttowardsshort-termPPAsandmoreactiveenergytradingstrategieswitharisingfocusonshort-termhedges.DoestheSEEregionbenefitfromthistrendandwhatPPApricing&hedgingstrategiescanbeappliedwillbeakeytopicfordiscussionattheeventinSofia,bringingonstagetheleadingEuropeantradersACTCommoditiesandAxpo,amongothers,toofferkeymarketinsightsandadvice.Confirmedspeakersfromoriginalequipmentmanufacturers(Jinko),distributors(Photomate),experienceddevelopers(CWP),andEPCcompanies(hecsolar),willdiscussprocuringstrategies,bestpracticequalitychecksandhowtoachievebetterreturnoninvestmentforRESprojects.Marketleadingcompaniesonthebuyersidewilloffershiningexamplesfortheirdecarbonisationspathsandwhatittakestomakeanet-zerostrategyworkinSEE.Top-downpoliciesencouragingrenewableshavealwayslaggedbehindtheSEEmarketbutthehighenergypricesandvolatilityonthemarketpushedpolicymakerstotakeaction.Greeceisaclearleader,revisingupwardsits2030renewableenergytargetto28GWofnewrenewablesplus8GWofenergystorage.Romaniaannouncedplanstolifttheshareofrenewablesinthepowermixto34%,inotherwordstargeting10GWofnewcapacitybytheendofthedecade.OnlyBulgariaislaggingbehind,paralysedbyapoliticalcrisiswhichhasseenthecountryfacefiveelectionsovertwoyearsbuta‘silent’revolutionistakingplacewithaboomofself-consumptionprojectsintheC&Isectorandplentyofutility-scaleprojectsinthepipeline,someofwhicharealreadystartingtocomeonline.Nationalrenewableenergyassociationsandkeypoliticalfigureswilldiscussthelatestpolicyandmarketdevelopmentsattheevent,whilesustainablefinanceinstitutionswillshedlightontheavailableEuropeanandnationalfundingschemes.Assolarandwindtakeupanever-increasingshareofthepowergeneration,theroleofenergystoragebecomesevermoreimportantandversatile.Apanelgatheringtransmissionanddistributiongridoperators,storagesystemintegratorsandtechnologyproviderswilldiscusstheevolutionofenergystorage,smartgrids,virtualpowerplantsandlong-durationstoragetechnologiestosolvethegridflexibilitychallengeinSEE.Joinustolearnmore,shareexperienceanddobusinesswithcompaniesthatareactiveorinterestedintherenewableenergymarketinBulgariaandSoutheastEurope.www.resource-southeast.euThethirdeditionofRE-SourceSoutheast,thebiggestregionaleventdedicatedtocorporaterenewableenergysourcinganditsroleinindustrydecarbonisationstrategieswilltakeplaceonMay18-19inSofia,Bulgaria.Author:MariyanaYaneva,Policy&CommunicationsDirector,APSTELearnmoreabouttheeventandregisteratTheeventisorganizedbytheRE-SourceSEEHubinBulgaria,foundedbytheAssociationforProduction,StorageandTradeofElectricity(APSTE)andtheBulgarianWindEnergyAssociation(BGWEA),withthekindsupportoftheRE-SourcePlatform,theleadingEuropeanforumforcorporaterenewableenergysupply.59RomaniaI.CurrentnationalregulatoryframeworkfortherenewablesectorIntheaftermathoftheCOVID-19pandemicandRussia’sinvasionofUkraineaswellastheenergycrisisthatensued,Romaniaisrevisingitsenergypolicy,consideringnotonlytheEU’sdecarbonisationobjectivesbutalsotheneedtoattainenergyindependenceandsecurityandensureasustainableenergymix.Inthiscontext,in2022,Romaniafinallyadoptedbylawa10-yeartargetforcoalphase-outandtookfurtherstepstoensurethattwonewnuclearreactorswillbebuiltby2030inthecountry’ssoutheast,basedonthestrategicpartnershipsandloanscontractedfromtheUS.UponitsNationalRecoveryandResiliencePlan(NRRP),Romaniaalsoagreedtofacilitatethroughreformsandinvestmentsthefurtherexpansionofsustainableenergyproduction,byacceleratingthedevelopmentofrenewables,upgradingenergytransmissiongridsandincreasinginterconnectionwithneighbouringmemberstates.Inviewtotheabove,towardstheendof2022,theRomanianEnergyRegulatoryAuthority(ANRE)announcedaforthcomingupdateoftheNationalEnergyandClimatePlan(NECP),withtheincrementoftherenewableenergytargetfrom30.7%shareingrossenergyconsumptionto34%beingexpected,alevelwhichisclosetothecountry’spotentialcost-effectivedevelopmentofRES.Thisnew2030target–onceapproved–willbeachievablebyadding10GWinrenewablecapacity.Afteradelayofacoupleofyears,Romaniaisalsoexpectedtofinaliseitslong-termnationalstrategy,detailingthecountry’sgradualcontributiontotheEU’sgoalforclimateneutralityby2050.HopesarethatnewambitionssetbyFit-for-55andREPowerEUwillbethoroughlyconsideredandRomania’sstrategywillcompriserobustscenariosandarticulatedactionstoensurethatbuilding,transportandindustrialenergyconsumptionwouldbemainly(ifnotentirely)sourcedfromrenewableenergyby2050.•Reformsregardingpermit-grantingproceduresWithregardtotheRES-Einvestments,afteraslightdecreaseoftheshareofrenewablesinthepastsevenyears,anewwaveofinvestmentshasstartedinRomania,inthecontextofthe2030targets,theEUfundingopportunitiesintheenergysector,thedecreaseofCapExforREStechnologiesadjoinedbythehopethatanewsupportingschemeforE-RESwillbeimplemented.Thehugeinvestmentinterestinthissectorisprovenbythelargecapacitycurrentlyholdingagridconnectionpermit(atotalcapacityof33GW),outofwhichonlyasmallrateofprojects(about10%)isdeemedtohaverealchancestomaterialiseandgoonline.Accordingtotheestimationsoftheenergyregulator,RES-Egeneratingunitsamountingroughlyto1GWwillbecommissionedstarting2023,theirdevelopmentbeing,atthepresentdate,fullyauthorisedorveryclosetoreachingtheready-to-builtstatus.By2027,theRomanianenergyregulatorexpectsatotalinstalledcapacityofrenewablesof10GW.Withthescopetoimprovetheregulatoryenvironmentandby-passsomeoftheadministrativeburdens,butalsotoallowforRES-EprojectsstillawaitingpermittomeetthetightdeadlinesforEUfunding,variousregulationswererevisedorimplementedin2022andtheverybeginningof2023,suchas:·Anewregulationwasadoptedinmid-2022tosupportthedevelopmentofE-RESproductionunits,storageprojectsandtransformersonagriculturalland(encompassingcertaincategoriesofuseandsoilfertilityclasses),alsoallowingthedualuseoftheland,forpowergenerationandagriculturalactivities.Asacounter-effect,theapplicationofthesenewregulationshaspracticallyblockedalllarge-scaleArianaPantea,SeniorAssociateatJingaAsociatii,memberofPONTEStheCEElawyers60RenewableEnergyinSoutheastEuropeprojectscoveringmorethan50hectares,someofthematanadvancedstageofdevelopment,holdingapprovalsforgridconnectionandhavingtheprojectlandsecuredbyin-remrights(e.g.ownership,concession,superficies).·ArelatedregulationtotheabovewaspassedbytheparliamentinJanuary2023,clarifyingthatbuildingpermitsforE-RESpowerplantsspanningunder50hectarescouldbeissuedeveninlackofanapprovedpriorurbanplanninginstrument.Anothersimilarlegislativeproposalsubmittedlastyeartotheparliament,butnotyetadopted,aimstofacilitatethisprocessalsoforlargeprojectscoveringmorethan50hectares,includingEurope’slargestsolarfarmof1,044MW,whichisplannedinwesternRomania.·Amoreflexibleregulatoryframeworkregardinggridconnectionwasalsointroducedin2022.Forexample,connectionsolutionscouldbeacceptedbygridoperatorsevenincaseswherethetemporaryoperationallimitationoftheenergyoutputisrequireduntilreinforcementofthegrids;thetermforprovidingthefinancialsecurityforupstreamworks(whenrequiredforconnection)hasbeenprolonged(newprovisionsdatedFebruary2023);theEPCisallowedtorepresenttheinvestorduringthewholeconnectionprocess,includingfortheconclusionofthegridconnectionagreement.·Adedicatedsimplifiedprocedurewasputinplacefortheconnectionofprosumers(households,businessesorinstitutionsoperatingrenewableenergygenerationsystemsofupto400kW).Thecertificationofthesepowerproducingsystemsisensuredbythegridoperator,withnoadditionalauthorisationsorlicencesbeingrequired.Verysmallsolarsystemsofupto10.8kWwillonlyneedtobenotifiedtothedistributorbeforeinstallation.Prosumersmayinstallphotovoltaicpanelsinseverallocationsandconsumetheenergyatadifferentplacefromwhereitisproduced.Inaddition,land-basedandroof-topsolarprojectsofupto400Kwaimedtoserveprosumersareexemptedfromtheobligationtoobtainabuildingpermit.·Amandatewasconferredtothegovernmenttoensure,bywayofsecondarylegislation,thatthepermittingprocesswillbeadditionallysimplifiedduring2023(e.g.dedicatedcontactpointswillbedesignedtoprovideguidanceandadministrativesupporttoinvestorsinrenewables).Thesesubstantialreformssignificantlyshortenedtheadministrativepermit-grantingprocessforRES-Ecapacities.TheyarealsoinlinewiththeREPowerEUActionPlanandthedecisionoftheEuropeanCommissionfromlate2022demandingtheaccelerationofrenewableenergydeploymentinviewoftheenergycrisisandtheknock-oneffectsofRussia’sinvasionofUkraine.Improvementoftheregulationsisalsoexpectedinregardtotheuseofhydrogenfromrenewablesourcesandforstorage.Inthelattercase,thelegislationwasrecentlyimproved(attheendofJanuary2023thesenormswereadopted)byasetoftechnicalrequirementsandadedicatedconnectionprocedure,afterbeingdiscussedbytheenergyregulatorandrelevantinvestororganisations.Ontheotherhand,thecurrentdraftlawforoffshorewindfarmsreceivedanegativeopinionfromthegovernmentin2022andthechancestointroduceoffshorewindintheenergymixby2030areverylow,withthestrengtheningofthetransmissiongridsbeinganabsoluteprerequisiteforthedeploymentofoffshorecapacities.Notably,thelegalprocedureforscreeningofforeigninvestmentsfromnon-EUinvestors(endbeneficiariesofinvestments)wasentirelyrevisedin2022,withaninter-ministerialcommissionbeingappointedtoassesswhetherenergyinvestmentsproposedbynon-EUinvestorsposethreatstonationalsecurity.•NewrulesfortradingofgreenenergyInthepastcoupleofyears,theelasticityoftheproductsonthecentralisedenergymarketsinRomaniahasbeenensured,includingmoreflexibledeliveryprofilessuitableforRESpowerproductionfacilities.Adedicatedtradingplatformwascreatedin2020inordertoenableproducerswithgreenfielddevelopmentstoconcludelong-termPPAsevenbeforeholdingaproductionlicence.However,thisplatformhasnotbecomeoperationalyet.Finally,animportantamendmenttotheEnergyLawwasintroducedin2022torepealtherestrictionsimposedin2013onpowerproductionfacilitiesexceeding3MWtoconcludedirectlynegotiatedpowerpurchaseagreements.Untilthislegislativechange,energytransactionswerecarriedoutsolelyonthecentralisedwholesalemarket,abarrierinthewayofnewRESinvestments.TheintroductionofdirectlynegotiatedPPAshasmadeRES-Eprojectsmorebankable.Anamendmentofthelawpromotinggreenenergy,introducedinearly2023,guaranteestheoutputofpowerproducedbyREScapacitiesandcontractedontheenergymarket.AllRESprojects,regardlessoftheircapacity,willenjoytheprioritydispatchregimebasedontransparentandnon-discriminatorycriteria,withthelimitationorinterruptionoftheirpowerproductionbeingorderedonlyinexceptionalcases,whenthesecurityorstabilityofthenationalenergysystemisendangered.II.Incentivesforinvestmentsinrenewableenergyprojects•Newrenewablessupportschemeannouncedfor2023Withlessonslearned,especiallyafterinitialrulingfromtheInternationalCentreforSettlementofInvestmentDisputes(ICSID)infavourofseveralenergyproducersfurthertoRomania’sdecisionsfrom2013-2014toaltertheprecedentgreencertificatessupportscheme,thecountrycurrentlyplanstoshiftfromfixedsubsidiestoacompetitiveandmoresustainablesupportmechanism.Announcedfor2023,theContractsforDifference(CfD)shouldoperateasarevenuestabilisationmechanismtoencourageprivateinvestmentsinnewgreenenergyproductionunits.TheRomanianCfDschemeisdesignedfora15-yearperiodandproposesatwo-waysupportpayment,whichwillbethedifferencebetweenthestrikepriceandthemarketreferenceprice.ThemechanismallowsenergyproducerstobecompensatedbytheCfDcounterpartywhenthemarketreferencepriceisbelowthestrikepriceortopaythecounterpartywhenthemarketreferencepriceishigherthanthestrikeprice.Themechanismwillremoveexposuretowholesaleelectricityprices,thusstabilisingprojectrevenues.Theschemewillalsoimprovefinancingconditions,byprovidingguaranteestolenderswithregardtoachievablerevenues.TheCfDlegislationisintendedtobeinplacebymid-2023inorderforthefirstauctiontoberunbeforetheendoftheyear.61RomaniaisalsoconsideringincludingfundingfromtheModernizationFundintheCfDsupportscheme,subjecttofavourablerulingfromtheEuropeanCommission’sCompetitiondirectorate.Inthefirstauction,whichwillprobablytargetacapacityofaround750MWinonshorewindand750MWinsolar,eligibleprojectswouldbenewprojectsthatarestillinthedevelopmentphase,startingfrom5MWandholdingavalidgridconnectionpermit.•OtherincentivesfornewrenewableenergygeneratorsOtherincentivesandmeasuresadoptedbyRomaniatosupportnewlybuildRESprojectsinclude:•NewpowergeneratingprojectscommissionedafterApril1st,2022areexemptedfromthetemporaryrevenuecapimposedonenergyproducersintheformofacontributiontotheEnergyTransitionFundandcalculatedasthedifferencebetweenthemonthlysalepriceandareferencepriceofRon450perMWh.•Prosumersupto200kWbenefitfromquantitativecompensation,whileforunitswithaninstalledpowerofbetween200kWand400kW,thesuppliershavetoacceptafinancialoffsetforthevalueoftheelectricityextractedanddeliveredtothegridsbytheprosumers.Suppliersmustpayprosumersatleasttheaveragepriceontheday-aheadmarketandalsoacceptallbalancingobligations.Alternatively,prosumerscanchoosetosellthesurplusofelectricitythroughdirectlynegotiatedPPAs.•Prosumersarealsoexemptedfromtheobligationtopurchasegreencertificatesfortheelectricityproducedandusedfortheirownfinalconsumption,whileprosumerswhoarenaturalpersonsareadditionallyexemptedfromthepaymentofallfiscalobligationsrelatedtotheelectricityproducedforself-consumption,aswellasforthesurplussoldtosuppliers.StrongincentivesforstoragemayalsobeintroducedinRomaniatosupportabettermarketintegrationforrenewablesandadditionallysolvetheincreaseingridabsorptioncapacitybythetimesignificantinvestmentsinthegridsareimplemented.III.FinancingprogrammesforrenewableenergyprojectsEUsupportschemeswillbethemaindriverforthesurgeinrenewableenergyprojectsinRomania.Manyfinancialprogrammesareavailable,suchas:•NationalRecoveryandResiliencePlan(NRRP)RoughlyEUR1.62blnfromtheNRRPfundingisallocatedforenergy,throughtheC6Component-Energy.ThecleanenergyproductioncomponentisestimatedatEUR855mlnandisaimedatsupportingmeasuresforcoalphase-out,thedeploymentofrenewablesandtheintroductionofhydrogen.Thefirstpubliccallfor950MWinwindandsolar,launchedinMarch2022,attractedapplicationsforhundredsofprojects.TheselectedoneswillsoonreceivefundingundertheNRRPandwillhavetogoonlinebymid-2024.Thereareothercallsforprojectsontheproductionofgreenhydrogen,high-efficiencycogenerationforthedistrictheatingsectorand,recently,forenergystorage.Furthercallsareexpectedin2023forsolarandwind,withtherestoftheREStechnologiestobefinancedthroughtheModernisationFundintheperiod2021-2030.•ModernisationFundRomaniawillreceivefinancingofoverEUR13blnby2030fromtheModernisationFund,anEUprogrammethatsupports10EUstatesbyfinancinginvestmentsconsistentwiththe2030climateandenergyobjectivesoftheUnion,aswellastheParisAgreement.Thefirstfinancingcontractsweresignedin2022androughly10%ofthetotalavailablefundsforRomaniaweredisbursedforpriorityprojects.PartoftheEUfinancinghasbeendirectedtothenationaltransportoperator,forworksthattargetanincreaseinthecapacityofthetransmissionsystembynearly1.7GW.Anotherchunkofthefundingwillbedirectedtowardssolarunitsthatwillreplacetheuseofligniteaswellasforthereinforcementofthedistributiongrids.InOctober2022,theMinistryofEnergylaunchedpublicconsultationsfortwoothercallsthatcouldrunin2023.Thefirstonewillsupportelectricityproductionfromrenewablesources(withoutstorage)andhasatotalallocatedbudgetofEUR300mlnforwindandsolar,whilethesecondoneisaimedatrenewablepowerplantsforownconsumption.Bothschemeswillbebasedoncompetitivebiddingprocedures,wheretheawardingcriteriaisfocusedonthelowestsubmittedbids,andstateaidcouldcover100%oftheeligibleexpenses.•EuropeanRegionalandDevelopmentFundandCohesionFundRoughlyEUR6.75blnfromtheEuropeanRegionalandDevelopmentFundandCohesionFundareallocatedtoRomaniaandistobeinvestedingreenenergy,thereductionofcarbonemissions,environmentalinfrastructure,biodiversityconservation,greenspaces,riskmanagementandurbanmobilitymeasures.Outofthisamount,EUR2.3blnisearmarkedfortheimprovementoftheenergyperformanceofresidentialandpublicbuildings.FollowingtheEuropeanCommission’sadoptioninDecember2022ofRomania’sJustTransitionOperationalProgramme,thecountrywillalsoreceiveEUR2.14blnthroughtheJustTransitionFund,whichwillassistRomania’scommitmenttophaseoutcoalby2032.•StatefinanceforprosumersForprosumers,financingprogrammessuchasElectricUP(forcompanies)andCasaVerdeFotovoltaice(forhouseholds)encouragetheinstallationofrooftopphotovoltaics.Bothprogrammeswillcontinueoperatingin2023,withsimplifiedmechanismswhichshouldshortentheprocessofinstallation.•ConnectionEuropeFacilityEnergyProgrammeForthe2021-2027fundingperiod,anewcategoryofeligibleprojectshasbeenintroducedintheenergypartoftherevisedConnectingEuropeFacility(CEF)programme,namelycross-borderprojectsinthefieldofrenewableenergy.AsecondcallforprojectslookingtoobtaintheCBRESstatusisopenuntilthebeginningofMay2023.Itsscopecoversrenewableenergyprojectsthatinvolveaphysicalornon-physicalcross-bordercooperationbetweenEUMemberStates,orbetweenMemberStatesandnon-EUcountries.www.ja.ro62RenewableEnergyinSoutheastEuropeProsumerstoaccelerateRomania’senergytransition,PATRESsaysMr.Moise,howhastheincreasingvolatilityofthelegislativeframeworkgoverningRomania’senergysectoraffectedtheareaofrenewableenergyandwhatisneededonthisfronttoacceleratethecountry’sgreenenergytransition?Romania’srenewablesectorhasalonghistoryofnegativelegislativechanges.About5,000MWofwind,solar,smallhydroandbiomasscapacitieswereputintooperationduringthefirstwaveofinvestmentsbasedonlaw220/2008untilendof2013.Sincethen,therehavebeenalmostconstantnegativechangesintheframeworkbythestate.Asadirecteffect,startingfrom2014-2015,therewasalongperiodwithnonewcapacitiesbuilt.Asecondwaveofinvestmentsshylystartedin2021,withtheinitialdevelopmentphasesofnewprojects.Unfortunately,duringtheenergycrisisin2022,thestateagainshowedlimitedpredictability,changingtheframeworkandtheentireenergymarketfundamentallybyenactinginabout17legislativechangesinaboutayear.Themostcrucialonesaretheovertaxationmechanism,thepracticalsuspensionofanycompetitivemarketinthefinalcustomerssupplysectortill2025andtherestrictivelegislationconcerningtheusageofagriculturallandforrenewableenergyprojects.PATRESrecentlysoundedthealarmontheimpactofadraftenergybillunderwhichenergypurchasesmadewhenrenewableenergysourcesarenotavailableareonlyrecognisedasdeductibleexpensesforupto5%ofthevalueoftheelectricitysold.Howhavegreenenergyproducersreceivedthisbillandwhatwasthelegislators’responsetoyourorganisation’sconcerns?Therootcauseofthissituationliesintheinadequatelegislationconcerningtheenergymarket.Allproducers(renewableornot)hadonlyoneoptionwhensigninglong-termPPAs–sellingenergyeitheronabaseloadcontractoronapeakhourscontract–butalwaysatconstantpowerhourbyhour.Thismeansthatwhenthereisnosunorwind,inordertofulfilthecontract,aRESoperatorhastobuyenergyfromtheday-aheadorbalancingmarket.Thenewlegislationregardingovertaxationhoweverisnotrecognisingthesepurchasesandproducersareforcedtopayovertaxonavirtualincomethuspotentiallyendinginanetloss.Thisisfundamentallywrong,asthestateshouldnotovertaxprofitsthatwherenotrealised,nottomentionovertaxinglosses!Wehaveaddressedthisabnormalsituationtotheparliamentandtotheenergyministryandhopethatinthenextbill,whichwillagainchangetheenergyenvironment,acorrectionoftheproblematicarticlewillbeenacted.Howdoyouseetheroleofprosumerswithinthecountry’senergymixandwhatcanbedonetofurtherincentivisealargerprosumerparticipationintheenergytransition?Overthelastseventoeightyearstherewereabsolutelynoinvestmentsinnewproductioncapacities,withRomaniabecominganetimporterofelectricityfrom2019.Developmentsintheprosumerssegmentaretheonlypositivechangeduringlastyear.Small-scalePVinstalledcapacitiesreachedalmost500MWinover50,000installations,andIwouldbetthatbytheendof2023Romaniawillbeclosetothe1000-MWthreshold.Thisisremarkable!Citizensandcompanieshavefinallyrealisedthatthisisthemostpracticalandfastwaytoreducetheirenergybillsasopposedtothegovernment,which,inmyview,isstillseeingrenewableenergyasaburdenandnotanopportunity.Prosumerstodayarefacedwithtwobigproblems.Ononehand,thequantitativecompensationmechanism,enactedbyanemergencyordinanceatendof2021,isinfactafinancialcompensationwhereonlytheactiveenergyiscompensated,leavingittoprosumerstopayalltaxesassociatedwithenergy.Thisfullyopposesthelaw’stext,inourperspective.Thisisalsohamperingconstructionsastaxesrepresentoverhalfoftheenergybill,extendingthenumberofyearsneededforrecoveryoftheinvestment.Ontheotherhand,evenifthesecondarylegislationenactedbytheenergyregulatorforconnectingprosumerstothegridisimposingshortenedandsimplifiedprocedures–andANREhasdoneagreatjobhere–inreality,thedistributionoperatorsarenotrespectingtheprocedureandtherealperiodforconnectingtothegridsometimesisoutrageous.PATRESstronglybelievesthattheonlywaytoacceleratetheenergytransitionisbysupportingprosumers.WhatisyourforecastregardingRomania’schancesofreachingits2030targetfora30.7%shareofrenewableenergyingrossfinalconsumptionandisthebarsettoolowgiventhecountry’sgeographicpotentialforrenewablepower?Thebarisdefinitelysettoolow,consideringourextraordinarypotential.However,ahardtargetisnotthatimportant,itismoreimportantforpeople,companiesandofficialstounderstandthatrenewableenergyisahugeopportunityforRomaniaandnotaburden.ProsumerswillforcethischangeandIamconvincedthattherealshareofRESingrossfinalconsumptionachievedin2030willbemuchhigher.www.patres.orgMoiseMartin,FirstVicePresidentatPATRES.TheEmployersOrganisationoftheProducersofEnergyfromRenewableSourcesinRomania(PATRES)isoneofthekeyvoicesoflocalrenewableenergyproducersandasoundingboardforthelocalauthoritiesthatshapethecountry’senergylandscape.PATREStalliesover100members,representingproducersofrenewableenergy(solar,wind,hydroandbiomass)withatotalinstalledcapacityof1.8GWandinvestmentsintheRomanianenergysectorofroughlyEUR2.7billion.WithrepresentativesintheSocialDialogueCommissionsofseveralministries,PATRESisanactiveparticipantinthepubicconsultationprocessthatshapeslegislationandregulationsintheenergysector.MartinMoiseisFirstVicePresidentatPATRES.63SLOVENIAI.CurrentnationalregulatoryframeworkfortherenewablesectorThegeneralregulatoryframeworkfortheenergysectorinSloveniaissetoutbytheEnergyAct,whichdeterminesthebasicprinciplesoftheenergysector,andpermittingVesnaLožakPolanec,AttorneyatLawincooperationwithKetler&Partners,memberofKaranovićŽigaDernič,JuniorAssociateatKetler&Partners,memberofKaranovićprocedureswithrespecttoproductionandsupplyofelectricity.Itincludesprovisionsontheprinciplesofenergypolicyandthecompetences,organisation,andoperationoftheEnergyAgency,andofotherbodieswhichperformtasksundertheAct.64RenewableEnergyinSoutheastEuropeTheimplementationoftheenergypolicywithrespecttotheuseofrenewableenergysources(“RES”)issetoutinthenewActonthePromotionoftheUseofRenewableEnergySources(“ActonRES”),adoptedin2021,whichrepresentslexspecialisintherenewableenergysectorandhasderogatedallprovisionsoftheEnergyActinthisregard.TheActonRESfullyimplementstheEUenergyframeworkasittransposesDirective(EU)2018/2001(alsoknownas“REDII”),aswellastheEnergyEfficiencyDirective2012/27/EUaslastamendedbyDirective(EU)2019/944intoSlovenianlegislation.TheActincludesseveralprovisionssettingouttheregulationoftheRESsector,asit:-includesthemeasuresforachievingahighershareofRESinthefinalgrossconsumptionandthemethodsoftheirfinancing,theregulationofself-supplyofelectricityfromrenewablesources,theuseofenergyfromRESandexcessheatintheheatingandcoolingsectorandthetransportsector,-detailsthecertificationofrenewableenergyandelectricityfromhigh-efficiencycogeneration(combinedheatandpoweror“CHP”),namely,howtodeclareandregisterRESinstallations,andthesupportavailablefortheproductionofelectricity,gaseousfuels,heatforheatingandcoolingfromRES,wasteheatandhydrogen,liquidandgaseousbiofuelsandhigh-efficiencycogenerationenergy,-grantstherighttoself-supplyofelectricityproducedfromRESofend-usersfortheirownconsumption,aswellastostoreit,selltheirsurpluselectricityproduced,fedintothedistributionnetwork,includingbasedoncontractsforthepurchaseofelectricityfromrenewablesources,throughelectricitysuppliersandinaccordancewiththerulesofreciprocalexchange,-obligesthecompetentministrytoadoptaprogrammeeverythreeyearstopromoteandfacilitatethedevelopmentofself-supplyofenergyfromRESwiththeaimtoaddressandremoveunjustifiedfinancingandregulatorybarriers,-grantsend-userstherighttoestablishacommunityforRES,asalegalpersoninordertoexercisetheirstatutoryrightsregardingtheself-supplyofelectricity.InordertoincreasetheshareofRESinthefinalgrossconsumptionofenergy,theActonRESimposesspecificmeasuresfortheheating,cooling,andtransportsectors,respectively,suchasprohibitingthedesignandinstallmentofcertaintypesofboilers,andthepossibilityofareductionofthecontributionforthepromotionoftheproductionofenergyfromRESandCHPforenergy-intensivecompaniesmeetingcertainrequirements.Thereareseveralby-lawsimplementingindetailtheprovisionsofthetwoActs,suchastheDecreesontheself-supplyofelectricityfromrenewableenergysources,theDecreeonsupportforelectricitygeneratedfromrenewableenergysourcesandfromhigh-efficiencycogenerationandtheDecreeonenergymanagementinthepublicsector,tonameafew.AfewotherRES-relevantprovisionsarealsoincludedintheEnvironmentalProtectionAct,suchasprovisionsregardingtheuseoffundsacquiredthroughthesaleofemissioncoupons.TheabovementionedlegislativeframeworkiscomplementedbytheIntegratedNationalEnergyandClimatePlan(“NECP”),thekeyaction-orientedstrategicdocumentadoptedin2020thatsetsgoals,policiesandmeasuresregarding1)decarbonisation,2)energyefficiency,3)energysecurity,4)theEUinternalmarketand5)research,innovation,andcompetitiveness.TheNECP’sdefinedgoalsaresettobeachievedby2030andinaddition,andtheplanfurtherforeseesSlovenia’senergyandclimategoalsforthedecadeafter.Thereareseveralstrategicandpolicydocumentsinplacewhichdefinestrategiesregardingthecountry’sgreentransitionanditsomissionoffossilfuelinrespecttocertainspecificsectors,suchastheNationalCoalExitStrategyandrestructuringofcoalregionsinaccordancewiththeprinciplesofajusttransition,theActionPlanforNearlyZero-EnergyBuildings,andtheLong-TermStrategytoPromoteInvestmentintheEnergyRenovationofBuildings.Slovenia’sRESregulatoryframeworkisalsoincludesdocuments,guidelinesanddecisionsadoptedandpublishedbythreemainregulatorybodies:theEnergyAgencywhichactsastheprincipalregulatoryauthorityandisresponsibleforpromotingrenewableenergy,thepreparationofpublictendersinthisfield,monitoringandreporting;powerexchangeBORZEN,whichoperatesthefeed-insupportschemeandsupportsthedevelopmentoftherenewableenergysourcesandCHPsectors;andtheMinistryofInfrastructure,whichistheprincipalregulatorycoordinatorandproposerofvariousstrategicpolicies.II.IncentivesforinvestmentsinrenewableenergyprojectsSlovenianlegislationprovidesforseveralsourcesofincentivesandfinancingprogrammesdedicatedtotheRESsector,suchasthesupportschemeforelectricityproducedfromRESandCHP,theincentiveactivitiesoftheEcoFund,investmentaidforself-supplyinstallationsandotherbudgetarysources.ThesefinancialresourcesareaimedatstrengtheningtheproductionanduseofRESinordertoachievethesetrenewableenergytargets.TheuseofavailablefundsforthepromotionofrenewableenergyisstrategicallyguidedandplannedthroughtheLong-termplanforachievingthetargetsforthepromotionoftheproductionanduseofrenewableenergyforthenextfiveyears(“Plan”),adoptedbytheSlovenianGovernmentinSeptember2022,whichrepresentsakeydocumentthatisbothacomprehensiveoverviewofallavailablemeasuresandincentivesandabasisforensuringthestabilityoffinancialsupport,includingthroughthe65earmarkingoftherenewableenergycontribution.AccordingtothePlan,theincentivesandmeasuresincludethefollowing:•SupportschemeforelectricityfromRESandCHPThemostimportantfinancingschemeinthefieldofrenewableenergyisthesupportsystemfortheproductionofelectricityfromRESandCHP,asprovidedforbytheActonRES(“Supportsystem”),astateaidinstrumentintheformofsubsidiesthatenablesinvestmentsinenvironmentallyfriendlyelectricitygenerationtobemadeinordertomeetnationaltargetsfortheshareofRESinfinalenergyconsumption.Thesupportsystem,whichisoperatedbyBORZEN,isopentoallnaturalandlegalpersonswhohavetheiractivitiesregisteredwiththeAgencyoftheRepublicofSloveniaforPublicLegalRecordsandRelatedServices(“AJPES”),haveobtainedadeclarationforaRESorCHPproductioninstallationissuedbytheEnergyAgency,andasupportdecisionissuedbytheEnergyAgencyonthebasisofasuccessfulapplicationinacallfortenders.Thesupportmaybeintheformofaguaranteedpurchaseofelectricity,whereBORZENpurchasestheelectricitythatisfedintothepublicgridandtakenoverbytheEco-BalanceGroupatthepricessetinthesupportdecisionissuedbytheEnergyAgency,oranoperatingsupport(financialsupportforday-to-dayoperations),whereBORZENonlypaystheoperatingsupportonthebasisofthenetquantitiesofelectricitygenerated.Inaddition,productioninstallationswitharatedoutputofmorethan500kWarealsoeligibletobecomepartofthesupportschemeuponacompetitiveprocedurebasedonacallbytheEnergyAgency.Insuchcases,theapplicantsproposetheprices(feed-intariffs)themselvesandifsuccessful,concludeagreementswiththeEnergyAgency.•Investmentaidforself-supplyofelectricityfromRESEligiblenaturalandlegalpersonscanapplyforone-offfinancialaidforinvestmentinself-supplyRESinstallations.InvestorswhoundertakecommercialactivitiesaretobegrantedaidinaccordancewiththeEUdeminimisrules,therefore,aidfundsmuststayrelativelylowinordertoavoidanyviolationsofstateaidrules.•EcoFund,SlovenianEnvironmentalPublicFundTheEcoFund’smissionistopromotetheuseofrenewableenergythroughlendinginstrumentsandgrantsinthecontextofvariousenvironmentalinvestments.Thestrategicplanfortheperiodupto2025istoprovidesoftloanstolegalentitiesgovernedbyprivateandpubliclaw,soletradersandothernaturalpersonscarryingoutregisteredactivitiesforinvestmentsintheincreaseduseofRES.ItalsoprovidesforgrantstocitizensandRESinvestmentsinresidentialbuildingsandincludesself-supplyandtheobjectiveofreducingenergypoverty.OnceanadequateproposalonthefunctioningofthenewgrantmechanismprovidedinActonRESisadopted,thesegrantsshallbeawardedbythenewlyestablishedCentreforRES/CHPundertheumbrellaofBORZEN.•OthermajormeasuresandsourcesoffundingThereareseveralothermeasuresandsourcesoffundinginplace,suchassimplificationoftheprocedureforsmallinstallationsfortheproductionofelectricityfromRES,theClimateChangeFund,theContactPointforthePromotionofRenewableEnergy,etc.III.SOLARISTHEFUTUREAccordingtothepubliclyavailableinformation,thecurrentgovernmenthasambitiousplansregardingthecountry’senergyself-sufficiency,wherebysolarisationofallsuitablesurfacesisapriorityintheenergysector.Legislativeproposalslayingthegroundworkforanacceleratedsolarisationofthecountryhavebeenpreparedandarecurrentlyinthephaseofinterdepartmentalcoordination.Slovenia’ssolarcapacityhasseenanincreasebyawhopping55%inthelastyear,accordingtosomeprojections,andaplantoincreasethecountry’ssolarcapacitybyanother1GWby2025hasbeenannounced.Severalcompanieshavealreadymadeuseoftheinitiativeandtookactionbybuildingsolarpowerplantsthesizeof1.5footballfieldsontheroofoftheirpremises,andasEUR10mlnworthofnewgrantstosupporttheinstallationofsolarplantswereannouncedatthestartof2023,manymoreareexpectedtofollowtheirexample.www.ketler-partners.com66RenewableEnergyinSoutheastEuropeGreece’sshakyroadtobecomingSEE’sRESstarWhenbackintheearly1980’saforward-lookingresearchteamattheUniversityofPatrasreleasedapioneeringstudyonthefutureofrenewableenergysourcesinGreece,manypeople,includingthesocialistgovernmentatthetime,dismisseditaspurefantasy.Thisvisionarystudy,headedbyProfessorRigasRigopoulos,awell-respectedformernuclearphysicist,estimatedinconsiderabledetailhowthebulkofGreece’senergyneedsin2000andbeyondcouldbemetalmostentirelybywindandsolarenergy,hydropowerplants,biomassandgeothermalenergy-acombinationofalternativeenergysourcesknownas“variablerenewables”.Thestudy,whichhadplacedspecialemphasisonthewindyislandareasofGreecewhichenjoyalmostconstantandhigh-speedwindstreams,wasforeseeinganambitiouselectricityinterconnectionprogrammeformostislands.Solarthermalsystemsforutilityhotwaterandspaceheatingapplicationswerealsofeaturedintheground-breakingstudy.Amongthestudy’smainfindingswastheconclusion,backedbydetailedmathematicalcalculations,thatGreececouldbecomealmostentirelyenergyself-sufficientifitmanagedtoexploitafractionofitsvastrenewablespotential.Fast-forwardto2023andrenewablesformpartofthecountry’scoreenergyresources.Variablerenewablesarebeingdevelopedtotheextentthattodaytheycoveralmost20%ofGreece’stotalenergyneedsandprovidemorethan35%ofitselectricityconsumption.AccordingtoIENE’sannualenergyanalysisreportfor2022,solar,windandbiomassproducedsome17.5TWh,largehydropowerplantsaccountedfor2.8TWh,19.1TWhcamefromnaturalgas,while6TWhcamefromligniteand6TWhfromelectricityimports.Inaggregate,variablerenewablesandlargehydropowerplantscovered41%ofGreece’selectricityrequirementsin2022.Today,thebulkofrenewableselectricitycontributioncomesfromsolarPVandwindsystemswithsomeminorinputsprovidedbybiomassplantsandsmallhydrounits.Asoftheendof2022,thetotalinstalledREScapacityinGreecewas10.04GWexcludinginstallationsontheislandswhichamounttoaround600MW)andifweweretoaddlargehydroplants,thissharesstoodat12.94GW.ThebreakdownofthisfigureconsistsofcumulativesolarPVcapacityof4.4GWand4.7GWforwind,0.7GWcorrespondingtosmallhydroand0.014GWcomingfrombiomassandbiogasunits.Tothatwemustaddanother2.9GWfromlargehydro.Intermsofinstalledcapacity,renewablesaccountedfor45.3%ofthetotalelectricitygeneratingcapacityofthecountry,withouttakingintoconsiderationlargehydroplants.Countingthemaswell,theRESsharejumpsto59%.Ittookagood25yearsforGreecetoreachsuchanimpressiverecordasitwasonlyin1997thatthefirstwindfarmsstartedfeedingelectricityintothegrid.MarketdevelopmentforREShasnotbeenthatlinearandtherehavebeenmanyinstanceswhentheadditionofnewcapacitycametoacompletestandstill.Today,theinstalledREScapacityinGreeceisthehighestinabsolutenumbersintheBalkansandonlysecondtoTurkey,whichhasthelargestRESmarketinthatpartofEurope.Greece’scurrentgovernmentisfullycommittedtowhatitcalls“greendevelopment”andthereforeitcomesasnosurprisethatintherevisedNationalEnergyandClimatePlan(NECP),nowunderpublicconsultationandtobesubmittedtoBrusselsbeforesummer,muchhighertargetshavebeenset.Overthenexteightyears,GreecewillneedtoinstallthreetimesasmuchrenewableenergycapacityasintheprevioustwodecadesinordertomeettheupgradedtargetsintherevisedNECP.Accordingly,theenergyministry’stargetsfortheRESshareinpowergenerationwillbeadjustedfrom65%,asstatedintheexistingNECP,to80%soastoincludethenewdirectionoftheEU’sREPowerEUplan.Basedonthatscenario,whichseemsmostlikelytobeadopted,thetotalcapacityofRESin2030shouldreach28GW,againstatargetof19GWintheexistingNECP.SincethecurrentRESinstalledcapacityinthecountry’sinterconnectedsystem-excludinglargehydroplantsandRESonislands-is10GW,some17.8GWofadditionalREScapacitymustbeinstalledoverthenextsevenyears,whichisanincreaseof178%.Thiscapacityalsoincludesabindingtargetof20to2.5GWofoffshorewindpower.Thegovernment’srevisedNECPhascomeundersometoughcriticismbecauseitcompletelyignoresthefossilfuelsectorwhichatpresentcoversmorethan75%ofthecountry’selectricityneeds.WithsomeEUR2.5toEUR3.blnofinvestmentsinthegasinfrastructuresectoralonecurrentlybeingimplemented,marketplayersaredemonstratingtheirresolveinkeepingnaturalgasasaprimestrategicfuelinthedecadestocome.However,theNECPforeseesarapiddeclineofgasuseafter2030.“Hence,theplanlacksforesightandcohesionandthrowsallitsweightonRESatatimewhenthereareseriousdoubtsastotheabilityoftheelectricitygridtobeabletoshoulderallthenewprojects”,notemarketsources.MaybethevisionoftheUniversityofPatras,formulatedalmost40yearsago,hasnotbeenfullyrealised,buttodayGreeceisontherighteouspathofrenewablesdevelopmentwithRESformingasolidpartofthecountry’senergymix.www.iene.euByCostisStambolis,ExecutiveDirectorandcurrentchairmanoftheInstituteofEnergyforSEEurope(IENE)67TrendsandforecastsTherenewablessectorinthefiveEUmemberstatesontheBalkanPeninsula–Greece,Romania,Bulgaria,CroatiaandSlovenia,hasbeenthefastestdevelopingenergybranchintheperiod2019-2021andhaspromisingperspectivestooffsetelectricitygeneratedfromfossilfuelsinthemediumtolongterm.ThedevelopmentoftherenewableelectricitysectorinSEEinthenextyearswillcontinuetobedefinedbytheprocessoftransitiontonet-zeroeconomyandtheEU’stargetforaRESshareof32%intheenergymixby2030.Inordertoachievethisgoal,renewableenergywillbefurtherscaledupwiththeregulatorysupportofpolicymakersintheregion.InlightoftheRussianinvasionofUkraine,whichraisedthequestionofenergysecurityespeciallyinSEE,wheremostofthecountrieswereheavilydependentonimportsofnaturalgasandcrudeoilfromRussia,renewableshavebecomemoreimportantthaneverforthediversificationofthenationalenergysystemsofallfiveanalysedcountries.AccordingtodatafromtheEuropeanNetworkofTransmissionSystemOperators(ENTSO-E),2022wastheyearofrecord-highelectricitygenerationfromsolarandwindinEurope,withannualrisesinthefivecountriesinthescopeofthecurrentreportrangingbetween33%inGreeceand3%inSlovenia.Takingintoaccountthefactthatnewlyinstalledsolarandwindcapacitiesalsohitrecordheightsin2022,thisupwardtrendisexpectedtointensifyin2023andbeyond.ThisconclusionissupportedbytheacceleratingPPAmarketinSEE.Threeofthecountriesinscope–Bulgaria,GreeceandRomania–havebeenincludedinthe2022editionofEY’sRenewableEnergyCountryAttractivenessIndexCorporatePPA,withBulgariaandRomanialandingspotsforthefirsttime.Basedonthefinancialanalysisofthecompanies’performancebetween2019and2021,therenewableenergysectorinGreece,Romania,Bulgaria,CroatiaandSloveniaisprojectedtoexpanditssizetoEUR20.8blnby2024fromEUR12.9blnin2021,increasingitsannualoperatingrevenueatanaverageannualrateof17%.Intermsofemployment,however,thesectorisexpectedtogrowatamuchslowerpace,facingshortageofhighlyskilledlabour,andaddaround2,000newemployeestoitsheadcountinthenextthreeyears.Furtherahead,withthegradualphase-outofcoalinthefivecountries,allofwhichoperatelargethermalpowerplantsemployingthousandsofpeople,anadditionalpoolofworkforcecouldbeavailablefortherenewablesectors.Theattractivenessofthesectorintheregionisfurtherhighlightedbytheacceleratingmergersandacquisitiondynamicsinthelastthreeyears.Furthermore,alargenumberoftraditionalenergyproducersandlargeplayersintheoilandgassectorinallfivecountrieshaveembarkedonsweepingoverhaulsoftheirportfoliosinthedirectionofrenewables,withsolarbeingtheclearfavouriteasthemostsuitablewaytoutiliseindustrialandminingsites.FacilitatedbytheeasieraccesstofinancingforrenewableprojectsmainlythroughtheNRRPs,anever-growingnumberofindustrial,transportation,logistics,agricultural,retailandrealestatecompaniesarealsoturningtosolarfacilitiesforownuse–atrendthatwillpersistinthenearfuture.GiventhegeographicallocationoftheSEEregionandthecurrentstructureofitsrenewableenergysector,solarwillbethemajorsourceofexpansionofrenewablecapacities.Hydropowerplantswillcontinuetodominatethetotalinstalledrenewablecapacityintheregionforawhile,butmostofthefacilities,especiallythelargeonesofnationalimportance,werebuiltdecadesagoandnewinvestmentsarefewandfarbetween.Atanationallevel,thesurgeinrenewableswillbedrivenbydifferentsources–solarwillmostdynamicallyexpanditspresenceinGreece,RomaniaandBulgaria,whileCroatiacouldbenefitfromsuitableconditionsforonshoreandoffshorewindfacilities.68RenewableEnergyinSoutheastEuropeMethodologyThecurrentreportsummarisesthedevelopmentsintherenewablessectorinfivecountries–Greece,Romania,Bulgaria,CroatiaandSloveniainthethree-yearperiod2019-2021andprovidesreliable,comparable,comprehensiveandindependentdataaboutthemarketstakeholders.ThefinancialanalysisofthisreportisfocusedonthethreemainsegmentsoftherenewableenergysectorasdefinedbySeeNext:-operation,maintenanceandassetmanagement;-construction,engineeringandprojectdevelopment;-manufacturing;Companiesoperatinginthefirsttwosegmentsarefurtherdistributedinoneoffoursub-segments,dependingonthetypeofelectricitysourceused:solarandwind,hydro,biomassandgasfromrenewablesorothersources.Inaddition,companieswithrelevantactivitiesthathavenotbeenincludedinthenationregisterofRESfacilitiesoperatorswereverifiedindividually.Inordertoincludecompanieswithstrategicsignificanceforthesector,allentitiesincludedintheanalysisweresubjectedtoaminimumthresholdofEUR1mlnforrevenuesin2021and1MWforcapacity.Individuals,state,municipal,educationalandreligiousinstitutionsoperatingrenewableenergyfacilitiesareexcludedfromthepool.Additionally,wehaveexaminedandpresentedinaseparatesectionthecombinedinstalledcapacitiesoftheenergyprovidersineachofthefivecountriesinthescopeofthereportthathaverenewableenergyfacilitiesintheirportfolio,buttheirsecondaryrolefortheoperatingrevenueandtheotherfinancialindicatorsofthevendorsdidnotallowmeaningfulparticipationinthefinancialandvendorslandscapeanalyses.Thefinancialanalysisconsistsoffourchaptersdefinedbythesetofindicatorsused–Operatingrevenueanalysis,Employmentanalysis,CostanalysisandProfitabilityanalysis.Wehaveusedtheofficialnon-consolidatedcompanyrecordsofallvendorstocollectinformationaboutfinancialindicatorssuchasoperatingrevenue,averageannualfull-timeemployees,salarycosts,socialsecurityexpenditure,materialcosts,amortisation,andnetprofitandlossforthreeconsecutiveyears-2019-2021.Timeanalysisisbasedontheaggregatedindicatorsofallcompaniesfor2020and2021.Forecastsfortheperiod2022-2024arecalculatedbasedontheCAGRofthecompaniesintherespectivesegmentorsub-segmentinthethree-yearperiod2019-2021.Thefinancialanalysisisprecededbyextractionoffinancialdataforthelastthreeyearsfromourdatabases.Theanalysisincludescalculations,suchassumbysegmentandsub-segment,ratios,rankings,calculationoftimechanges,forecastingusingcompoundannualgrowthrate(CAGR).Netprofitmarginiscalculatedasnetprofit/lossoveroperatingrevenue.Allcalculationsareineuro.Dataforcountrieswithnationalcurrencyotherthaneuroisconvertedattheaverageexchangerateofeachcurrencytoeurofortherespectiveyear,whileindicatorsforBulgariaareconvertedatthefixedBulgarianlev(BGN)toeuroexchangerateofEUR1=BGN1.95583.Mostdynamiccompaniesrankingisbasedontheyear-on-yearchangeinoperatingrevenue.Thetop3companiesbycountryarerepresentedgraphically.Operatingrevenuefromtheofficialindividualfinancialreportsofthecompaniesisusedforcalculation.Therankingexcludes:-companiesestablishedinorafter2019-companieswithnineorfeweremployeesinthelastyear-companieswithlessthanEUR50,000inoperatingrevenueinanyofthelastfouryears.Itincludesonlycompanieswithpositivefinancialresultsineachofthelastthreeyears.Thechangeiscalculatedastheaverageannualgrowthrateintheperiod2018-2021.ForeachcompanyintheVendorslandscapechapterwehaveidentifiedownershipstructurebasedonthelatestavailableofficialdatafromthetraderegistersofthecountriesandincorporationdatebasedonthedateofofficialentryintothetraderegisteroftherespectivecountry.Dataaregrouped,analysedandgraphicallyrepresented.Updateontheregulatoryenvironmentispreparedbylocalpartnersineachofthefivecountries.Investmentsandmergersandacquisitionnewsaretakenfromonlineandprintedmedia,newsintegratorsandcompanywebsites.ThereportpreparationtookplacebetweenDecember2022andFebruary2023.69References1.DeutscheWelle(2021).IsBulgariareadytogiveupcoal?Retrievedfrom:https://www.dw.com/en/is-bulgaria-ready-to-give-up-coal/a-597168112.MinistryofEuropeanInvestmentandProjects,Romania.(2022).PNRR-Component6.Retrievedfromhttps://mfe.gov.ro/pnrr/(targettable,page2)3.EuropeanCommission.(2020).Ahydrogenstrategyforaclimate-neutralEurope.Retrievedfrom:https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020DC03014.EuropeanCommission.(2022).EUfundingprogrammesandfunds2021-2027.Retrievedfrom:https://single-market-economy.ec.europa.eu/industry/strategy/hydrogen/funding-guide/eu-programmes-funds_en5.EnergyMinistry,Romania.(2020).The2021-2030IntegratedNationalEnergyandClimatePlan.Retrievedfromhttps://energy.ec.europa.eu/system/files/2020-06/ro_final_necp_main_en_0.pdf6.EnergyMinistry,Bulgaria.(2020).IntegratedEnergyandClimatePlanoftheRepublicofBulgaria(p163).Retrievedfromhttps://energy.ec.europa.eu/system/files/2020-06/bg_final_necp_main_en_0.pdf7.EnergyMinistry,Bulgaria.(2020).IntegratedEnergyandClimatePlanoftheRepublicofBulgaria(p192-193).Retrievedfromhttps://energy.ec.europa.eu/system/files/2020-06/bg_final_necp_main_en_0.pdf8.CouncilofMinistersofTheRepublicofBulgaria.(2022).NationalRecoveryandResiliencePlan(p14).Ret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