Although the construction of solar systems for covering enterprises' electricity needs is economically viable and is already being done on a large scale, one of the big questions for businesses is where and how to secure funding for such projects.
Investments in solar power plants for industrial consumers' own use depend on the size of the company. Their cost is in the range between 10 and 20 thousand levs (5-10 thousand euro) for offices, shops, and small workshops. The price can top 1 million levs if we speak of medium-sized industrial enterprises and hotel complexes, and can exceed 10 million for large factories.
Ask the bank
Usually, these projects are well accepted by banks, as they guarantee return on investment and are sustainable in the long run. Also, they do not depend on external factors such as changing prices - for example, fuel prices. That is why loans for renewable energy sources (RES) for a company's own use are granted relatively easily and under good conditions.
Moreover, there are already several offers for the full implementation of projects, in which the bank not only provides funding for it but also offers a company to implement it. This way, customers can save a lot of time and effort, but pay a little more. The loan is to be repaid in five years, with the installments typically equivalent to the saved electricity costs in the respective month. In other words, for the first 5 years, the net effect of the solar power plant will cover the construction costs, after which - for at least 20 years - it will provide a net profit for its owner.
There are some examples:
For a fixed monthly installment of 1,500 levs for 60 months, ProCredit Bank provides a complete solution for the construction of a 50 kW photovoltaic plant on a rooftop.
United Bulgarian Bank (UBB)'s offer is for larger projects, with installed capacity of up to 2 mW. The maximum loan amount is up to 2 million euro with a repayment period of up to 120 months and a grace period of 9 months before the start of the project.
UniCredit Bulbank has similar conditions under its investment loan for the construction of a photovoltaic (PV) plant for the production of electricity for the company's own needs. The difference here is that a minimum participation of 10% of the borrower in the project is required.
One of the main elements of the Recovery Plan is the stimulation of investments in RES. Several different projects are planned, which include both larger investments in solar power plants with batteries and small roofing projects for households. There is also a grant scheme that will help businesses install their electricity generation systems in combination with local energy storage facilities.
The grant programme for businesses under the plan amounts to 200 million levs (100 million euro). Their investments are expected to equal the same amount. The Plan says that the installed capacity of an individual project should not exceed 1 mW, which is quite enough for most companies in the country. The most common projects currently underway are for 600 - 800 kW installations mounted on the roofs of industrial enterprises and warehouses.
Such installations can cover between 10 and 50%, and sometimes even more, of the energy consumption of a company. This reflects in electricity costs.
The expected results set in the Plan are for at least 54 mW of battery capacity installed in the systems by 2026. The solar power plants themselves will probably reach a capacity of at least 300 mW.
This funding support scheme is expected to open later this year. It is estimated that about 1,000 companies will be able to benefit from it.
BDB offers investment loan financing
State-owned Bulgarian Development Bank (BDB) already offers financing for the construction of photovoltaic power plants for the needs of businesses, as well as for the sale of the produced electricity. The new financial product was launched in response to the growing concern of companies about the rising price of electricity in Bulgaria and Europe and the increased demand for electricity. "The switch to solar energy is a workable solution in the context of depleting non-renewable sources and the EU's carbon neutrality targets," the BDB says.
Similar to the Recovery Plan's conditions, BDB also accepts projects with an individual capacity of 1 mW.
The loans from BDB will have a term of up to 15 years (with an average redemption of such investments of 6-7 years) and will be able to cover up to 95% of the value of solar power plants. A project for 1 mW of installed capacity costs nearly 600 thousand euro, and typically the implementation takes between 12 to 18 months, which is mainly due to the time needed for obtaining the relevant permits.
The conditions are for the companies to be micro, medium, and large. The BDB allows the constructed installations to supply both enterprises and office buildings, as well as shopping spots.
Contracts with suppliers
An alternative option for credit financing of rooftop solar power plant projects is Contracts with Guaranteed Result with a contractor company. Perhaps the most famous project of this kind in Bulgaria is the copper mining and smelting company Aurubis Bulgaria. Last year, a 10-megawatt photovoltaic plant was built on its territory. The project was implemented by CEZ ESCO Bulgaria (part of Czech energy group CEZ) based on the so-called contracts with a guaranteed result, according to which the investment is repaid from the savings achieved during a certain period of time. The great advantage of such renewable projects for own consumption is that in addition to supplying the company with electricity, it also saves fees, which significantly increase the price.
Such projects are being developed by state and municipal enterprises. For example, Vik-Stara Zagora, the water supply and sewerage company serving the city of Stara Zagora, has an ESCO contract with local private company Water and Energy Savings, which implements energy efficiency measures at its own expense and after this, it receives the savings from electricity bills for several years. Thus, the water supply and sewerage operator has a guarantee that the quality is good, while the contractor relies on its work if it wants to have a return. Both sides win.
Another solution, especially for companies that do not have suitable areas for the installation of solar panels, is long-term contracts for the supply of green energy at a fixed price. These Power Purchase Agreements (PPAs) guarantee the supply of energy at lower prices than energy exchanges.
PPAs may also include complete supply solutions combining energy obtained directly from renewable energy sources and those traded on the open market. In this way, the needs of all business users can be met, regardless of their consumption profile.
The main logic of the PPA is to conclude an energy supply agreement with a term of 7, 10, 12, or 15 years at a fixed price for the entire period. Against the background of the volatile, and in recent months extremely high prices of electricity, this provides security for business and saves costs.
An example of a company with such a contract is the A1 Bulgaria telecommunications company which signed a ten-year contract with Renalfa (the publisher of Capital Weekly Ivo Prokopiev is a shareholder in Renalfa) for the supply of 20,000 mWh of green energy per year. In this case, the energy comes from a solar park with an installed capacity of 33 mW in southern Bulgaria, and the 20,000-megawatt-hours for A1 represent nearly half of the plant's annual output capacity.
"Corporate contracts for long-term electricity supply are the backbone of energy transition and we are very happy to announce the first such contract by transforming the production schedule of the renewable energy producer to the customer's needs," Renalfa CEO Yuri Katanov told Capital Weekly.