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Bulgaria, Axpo is preparing pilot power purchase agreements (PPA)

28.Oct 2021.

CEO of the Bulgarian subsidiary of Swiss energy company Axpo Milena Videnova said in an interview that the company is preparing pilot power purchase agreements (PPA), which should be officially announced between 2022 and 2025.

In the absence of a renewables support scheme in Bulgaria, PPAs are considered crucial for the expansion of the country’s renewable capacity and reaching decarbonization goals. However, the PPAs market in Bulgaria is not yet developed.

Videnova said that the project is usually leveraged and the lenders would like the project’s cash flow to be very well protected. Due to the lack of liquidity of the Bulgarian electricity market, currently the usual tenor is 3-year stag and roll over and/or 5 years. The challenges in front of the PPA market in Bulgaria are liquidity, debt and credit risk. She added that to generate pilot projects, the European Union could cover the construction risk via the European Investment Fund or other guarantee lines.

The company has already experience in neighboring Romania. In August, it has signed a seven-year PPA with CEZ Romania.

She added that the day-ahead market coupling between Bulgaria and Romania, planned to go live on 27 October, will also have a positive impact on PPAs, especially on the country spreads and the PPAs tenor.