Bulgaria Passes Ordinance Offering International Trade with Guarantees of Origin

This new Ordinance repeals Ordinance No. РД-16-1117 of 14.10.2011, which until now regulated the conditions and procedure for creating, maintaining, and using a system for issuing guarantees of origin.

By definition, the guarantee of origin is an electronic document that serves as proof to the final consumer (i.e. purchaser for own consumption) that a certain share or quantity of the energy supplied is produced from renewable sources, including that a certain share of the energy or quantity of energy in the total energy composition of the supplier and in the energy supplied to consumer under agreements marketed as such with energy from renewable sources included.

The guarantees of origin are issued to a producer for a standard amount of energy produced of 1 MWh and their issuance, transfer, cancellation, and recognition of guarantees of origin is carried out electronically by entry in a single electronic register of guarantees of origin (i.e. the Register) maintained by the Sustainable Energy Development Agency (SEDA).

The guarantees of origin are issued based on an application from the producer and they may be issued for one or more calendar months, but no later than one calendar month after the end date of the period in which the respective energy from renewable sources was produced by facilities with installed 30 kW and above.

New features

Different from the previous Ordinance, the new Ordinance on guarantees of origin regulates the possibility of international trading guarantees of origin issued from Bulgaria.

The Ordinance provides that the guarantees of origin of energy from renewable sources may be transferred to:

• purchasers under an agreement for the purchase and sale of energy from renewable sources;
• purchasers under an agreement for the purchase and sale of guarantees of origin; and
• under an agreement on the transfer of guarantees of origin.

However, according to the stipulations of the new Ordinance on guarantees of origin, the following points must be noted:

• the guarantees of origin issued for the amount of electricity purchased at Feed-In-Tariffs is transferred from the producer to the public supplier (i.e. the final supplier);
• the guarantees of origin issued for the amount of electricity for which premiums are paid to the producer is transferred to the Electricity System Security Fund (ESSF);
• the ESSF transfers guarantees of origin to traders, producers, the operator of an organised exchange market, the supplier of last resort, and the final supplier that transacts with end customers connected to the electricity system – the guarantees of origin must be for the relevant month in proportion to the amount of the funds from the price and/or the fee related to the public service obligations payable by the relevant market participant for the same month.

The guarantees of origin may be transferred regardless of the actual quantity renewable energy for which they were issued, but only once per final consumer. According to the Ordinance, the guarantees of origin can also be transferred to a respective register of another EU member state or to an end consumer in an EU member state.

From procedural perspective, the transfer of the guarantee is carried out by means of an application in a form approved by the SEDA, which must be submitted by the holder of the guarantee of origin of energy from renewable sources. The application can be submitted either electronically or on paper.

After consideration of the submitted application, the executive director of SEDA will issues an order for approval within 14 days upon its submission by which the guarantee subject to transfer will be entered into the Register.

The persons to whom guarantees of origin are transferred are also required to submit a request for registration for the guarantees transfer. This request must contain the data of the legal entity of the natural person and its address for correspondence.

The Bulgarian SEDA also recognises the guarantees of origin issued by the competent authorities in other EU member states and their recognition is done by means of application, followed by issuance of an order for approval or refusal to recognise. In case of refusal, SEDA is obliged to immediately notify the Minister of Energy for the refusal and provide additional information when requested. For his competences, the Minister of Energy is also obliged to notify the European Commission of each effective refusal.

From a market perspective, the Bulgarian Energy Exchange IBEX is obliged under the Energy Act to organise the exchange market for the issued guarantees of origin.

For more information on how this new Ordinance will affect your business in or expedite business with Bulgaria, contact your CMS client partner or these CMS experts: Kostadin Sirleshtov, Borislava Piperkova and Viktoriya Dimitrova.

By Kostadin Sirleshtov, Managing Partner, Borislava Piperkova, Counsel, and Viktoriya Dimitrova, Associate, CMS