* Bulgaria set for solar boom if cabinet fixes prices
* E.Europe's leader Czech Republic likely to reduce tariffs
By Tsvetelia Ilieva
SOFIA, Nov 16 (Reuters) - Bulgaria can outshine the Czech
Republic as east Europe's most lucrative solar energy market if
the government quickly removes legal pitfalls now blocking
investment in the country's strong sun potential.
Investors are on the lookout for new opportunities in
central and southeastern Europe after Spain and Germany, the
global industry leaders in photovoltaics (PV) that turn sunlight
into energy, have either cut or plan to curtail incentives.
The Czech Republic has so far attracted the lion's share of
investment in eastern Europe due to generous subsidies. But
Prague is now expected to reduce the feed-in tariffs from 2010,
a move that could make Bulgaria a more promising market in the
medium to long-term, analysts say.
The Balkan country has already attracted applications for
1,000 megawatts of new solar parks thanks to its incentives.
"Bulgaria has the potential to become a larger market than
the Czech Republic in the long term because of its natural
conditions," said Martin Simonek, London-based solar energy
analyst with consultants New Energy Finance.
"Once the economic crisis is over, the growth rates there
will be faster, so there will be demand for energy," he said.
Some industry officials say solar can help recession-hit
countries like Bulgaria to return to growth, though Spain offers
a warning to those who do not weigh tariffs' impact carefully.
Tariffs are the solar industry's lifeblood as long as the
so-called grid parity -- the point at which renewables cost the
same as fossil fuel-based power -- has not been reached.
Generous tariffs in Spain caused a bubble and Madrid slashed
subsidies and introduced caps on qualifying plants in 2008,
which hit the worldwide PV industry that had come to reply on
the Spanish market. []
Former communist EU member states rely mainly on coal and
nuclear power to meet energy consumption needs. Their renewable
energy comes mainly from hydro power plants. []
The need to raise the green energy share to 16-20 percent by
2020 to meet EU targets on reducing emissions, has prompted some
governments in the region to offer support schemes to attract
investors in energy from wind, solar and biomass.
Incentives and lower technology costs than the ones for
solar have already created a wind power boom in Bulgaria and
Romania. []
PITFALLS
To match its own wind success, Bulgaria must fix the feed-in
tariff for already installed solar parks as opposed to the
current system, which allows an annual 5 percent drop in prices
for both old and new installations, investors and analysts say.
The previous Socialist-led government doubled the duration
of guaranteed preferential power purchase prices to 25 years but
the varying price in times of crisis makes investors hesitant.
"If there is a change in the law in the light of
guaranteeing the price, the interest of both banks and its
clients will jump," said Assen Yagodin, executive director at
the Bulgarian unit of Greek EFG Eurobank <EFGr.AT>.
Germany's Phoenix Solar <PS4G.DE>, Italy's Petrolvilla,
Austrian EVN <EVNV.VI> and dozens of smaller local companies as
well as from Spain, Austria and the Netherlands are among those
who have already tabled projects.
Bulgaria's new cabinet, which took power in July, pledges to
amend laws to boost green energy but did not give a timetable.
"We will be looking into all possible incentives that can be
offered to investors," said Kostadinka Todorova of the economy
and energy ministry.
The lack of fixed prices has kept the installed solar
capacity at just 1.4 MW in 2008 compared with 54 MW in the Czech
Republic out of a total of 63 MW in eastern Europe, data from
the network of photovoltaics in new EU member states showed.
By contrast, Bulgaria's wind energy capacity jumped to 330
MW so far this year from 103 MW last year.
Analysts say the solar capacity can reach 20 MW this year
and up to 140 MW in 2010 if Sofia moved quickly to clear
hurdles, including problems of connecting new parks to the
existing grids whose demand far outweighs current capacity.
The Czech capacity could reach 200 MW this year as investors
rush to connect solar parks to the grid before the government's
likely decision to limit tariffs for new parks, they say.
(Additional reporting by Michael Kahn in Prague; Editing by
Anna Mudeva and Angus MacSwan)
