Bulgaria has a well-developed renewable energy sources (“RES”) sector, which has expanded rapidly in the period 2023–2026, particularly in solar photovoltaics. Installed renewable capacity now significantly exceeds earlier benchmarks, with solar alone surpassing 3 GW, meaning the previous 2030 target of 3,200 MW has effectively already been met or overtaken several years ahead of schedule. This growth follows a near tripling of solar capacity from just over 1 GW in 2020, driven by merchant projects and strong investor interest.

The development pipeline remains exceptionally large, although increasingly constrained by grid capacity. Applications for grid connection continue to total tens of gigawatts (previously around 40,000 MW in 2023, decreasing to roughly 35,000 MW in 2024), with more recent figures indicating a stabilisation rather than further expansion, reflecting stricter technical screening and limited available connection points.

The RES mix continues to be led by hydropower and wind in terms of legacy capacity and system importance, but solar has become the dominant source of new generation capacity. Typical projects range from small distributed photovoltaic installations to large utility-scale solar parks, increasingly combined with battery storage, while wind development remains more limited and geographically concentrated.

In terms of generation, the share of renewables in electricity production has increased compared to earlier years. While it stood at approximately 19% in 2022, more recent data for 2024–2025 indicates a material rise to roughly 25–30% annually, with higher shares in periods of strong solar output. The internal RES mix has also shifted: although wind and hydropower previously accounted for over two-thirds of renewable generation, solar now represents a significantly larger proportion and is the main driver of incremental production. Biomass and other sources continue to play a relatively minor role.

Overall, Bulgaria’s generation mix remains diversified. Nuclear power continues to provide a large and stable share of electricity supply; coal remains material, although its economic position is under pressure from carbon prices and decarbonisation policy; and renewables are increasing their share, particularly during periods of strong solar output. Solar is now the main driver of renewable generation, with hydropower and wind continuing to play important but more variable roles. Biomass and other renewable sources remain relatively minor in the electricity mix.

Bulgaria is bound by the EU’s climate-neutrality objective under Regulation (EU) 2021/1119 (the European Climate Law), which requires the EU to achieve climate neutrality by 2050 and establishes the EU-wide 2030 climate framework. At national level, Bulgaria has also introduced a long-term target to achieve climate neutrality and net-zero greenhouse gas (GHG) emissions by no later than 2050 through amendments to the Climate Change Mitigation Act adopted in 2025. This makes the objective a legal target rather than a purely aspirational policy statement.

In the medium term, Bulgaria has submitted an updated Integrated National Energy and Climate Plan (“INECP”) to the European Commission, outlining its latest climate-mitigation targets and policies through 2030. The plan sets out key priorities, including promoting the transition to a low-carbon economy, ensuring a competitive and secure energy system, improving energy efficiency and reducing GHG emissions. It also emphasizes reducing dependence on imported energy, maintaining affordability for consumers, and leveraging transitional energy sources such as natural gas.

According to projections in the INECP, Bulgaria aims to reduce total GHG emissions by approximately 78.2% by 2030 and 92% by 2040 compared to 1990 levels, ultimately reaching net zero emissions by 2050.

Yes, “energy from renewable sources” is defined under the Energy from Renewable Sources Act as the energy from renewable non-fossil sources, namely wind, solar (solar thermal and solar photovoltaic) and geothermal energy, ambient energy, tidal, wave and other ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogas.

In Bulgaria, the renewable energy sector is primarily regulated by the Energy and Water Regulatory Commission (EWRG), which serves as the central national authority overseeing the energy market. EWRS plays a key role in ensuring the development of the renewable energy sector by issuing, amending and withdrawing licenses for energy activities, setting and adjusting pricing mechanisms, including determination preferential prices and support schemes designated to encourage investment in renewable energy, as well as by supervising the energy market and preventing abuses.

Alongside EWRC, the Ministry of Energy is responsible for implementing national energy policy by developing the National Strategy for Sustainable Energy Development and adopting short-term, medium-term, and long-term national energy balance forecasts in line with that strategy. The Ministry also acts as the administrator of state aid in the energy sector, including in relation to renewable energy sources. The Minister of Energy is supported in the exercise of these powers by the Sustainable Energy Development Agency (SEDA), which carries out activities and services related to the implementation of state policy on energy efficiency and promotes the production and consumption of energy from renewable sources. This includes electricity, heating and cooling, as well as the development and use of biogas and green hydrogen, and the integration of renewable energy in the transport sector.

Beyond this institutional and regulatory framework, the renewable energy transition in Bulgaria is increasingly driven by a range of key private sector players. Among the most prominent is the Bulgarian photovoltaic association (“BPVA”) – a non-profit organization unifying more than 400 companies from the renewable energy sector in Bulgaria. Its members are companies with different profile – producers of solar panels, designers, installers, investors in the construction of photovoltaic power plants, project developers, financial institutions, investment companies and consultancies. It is suitable for companies with photovoltaic projects or those who have serious and well-founded investment intentions in the development and construction of photovoltaic power plants in the country. BPVA’s mission is sustainable, low-carbon, modern and corresponding to the European standards energy sector.

In the same context, another important example is the Bulgarian Wind Energy Association (BGWEA) – a representative organization for the wind energy sector in the country, which brings together the majority of wind energy producers over 1 MW and companies actively engaged in the sector.

Businesses in Bulgaria are adopting several practical approaches to access renewable energy, with the choice typically depending on cost, complexity, and the desired level of energy independence.

The most straightforward solution remains purchasing “green” electricity from licensed suppliers. This approach is easy to implement from a legal and operational perspective, as it requires no upfront investment or structural changes. However, it offers limited protection against price volatility and does not provide true energy independence.

A more involved, but increasingly popular option is the installation of on-site solar PV systems for self-consumption (prosumers). Many companies are using available assets such as rooftops or adjacent land to generate their own electricity. This model is relatively easy to implement for small and medium-sized projects, particularly due to the declining upfront costs, and it allows businesses to achieve immediate savings on energy costs while increasing their independence from the market.

At the more sophisticated end of the spectrum are direct corporate PPAs. While these arrangements are more complex from a legal and structuring perspective, they are gaining traction among larger consumers. Corporate PPAs enable businesses to secure long-term price stability and effectively hedge against market volatility, which has been a key concern in recent years.

Overall, while purchasing green energy remains the simplest route, self-generation through solar PV is currently one of the easiest and most accessible solutions for many businesses. At the same time, the most notable emerging trend is the growing use of long-term corporate PPAs, which are increasingly seen as an effective tool for managing energy costs and ensuring predictability in an evolving market.

The accelerated deployment of RES projects in Bulgaria in the last few years, particularly solar, produced an aftermath effect that reshapes economic operators’ behaviour. Bulgaria’s solar expansion has continued at pace, with close to 1.5 GW of new solar capacity installed in 2025, which marked the third consecutive year of deployment of over 1 GW bringing the cumulative installed capacity of solar energy production in the country to nearly 6 GW.

Momentum shows no sign of slowing, consequently introducing acute price volatility. Solar overproduction frequently pushes prices into negative territory during peak solar hours on the Bulgarian Energy Exchange, while prices spike sharply after sundown when generation falls away. This instability is accelerating interest in economic operators to use tools such as Power Purchase Agreements (PPAs) as an alternative to day-ahead market exposure. Buyers are seeking price floors and volume adjustment mechanisms to manage volatility risk.

On infrastructure, BESS has become the defining development in Bulgaria’s energy sector. The EU funded RESTORE programme has dramatically exceeded its original targets for Bulgaria, with the first round delivering 9.71 GWh of standalone storage capacity against an initial 3 GWh goal. A second round followed in August 2025, awarding capacity to 31 further projects delivering over 4 GWh of additional storage. The government has set a target of 10 GWh of operating battery storage by end of 2026.

Looking ahead, the postponement of the entry into force of mandatory EU ESG reporting with the introduction of the Omnibus package, did not significantly influenced consumer behaviour. Large number of Bulgarian economic operators continue to further accelerate corporate engagement in both RES production and green energy procurement.

Discussions around carbon reduction are now visible in most large Bulgarian businesses, particularly exporters, industrial consumers, banks and companies within multinational groups. The maturity of those discussions varies considerably. Larger companies increasingly treat decarbonisation as a compliance, financing and customer-retention issue, while many small and medium-sized enterprises remain focused on cost reduction and energy security rather than broader climate strategy.

The main drivers are EU regulation, access to finance, customer requirements and energy prices. Voluntary ESG disclosure beyond legal requirements is still less developed than in Western European markets, but CSRD-related obligations, supply-chain due diligence and bank expectations are changing market behaviour. The EU’s Omnibus simplification package may affect reporting timing and scope, but it has not removed the underlying commercial pressure to reduce emissions.

Political and regulatory support exists through the INECP, the Climate Change Mitigation Act, the Energy Efficiency Act, Recovery and Resilience Facility measures, energy-efficiency programmes and grant schemes for renewables and storage. Implementation, however, is uneven. Businesses continue to face administrative delays, fragmented permitting and grid constraints, which limit the practical effectiveness of policy support.

Renewable energy projects in Bulgaria are developed through a combination of land rights, planning status, environmental approvals, construction permits, grid-connection rights and, where applicable, energy licences. There is no single concession-style right for ordinary solar or onshore wind projects. Developers normally secure ownership, lease or a right of construction over the project land, complete zoning and land-use procedures where required, obtain environmental screening or an environmental impact assessment, and then proceed to construction permitting.

A central component of project development is obtaining grid connection rights. The first step is the submission of an application for examination of the conditions and method of connection to the relevant electricity grid operator. The operator then conducts an assessment and issues a statement, including the applicable technical requirements, as well as an estimated cost of connection.

A shorter deadline for issuing such statement applies to energy facilities for the production of electricity from renewable sources with total installed capacity up to and including 1 MW, which are planned to be constructed on roof and facade structures of buildings connected to the electricity distribution or closed electricity distribution network and on real estates to them in urbanized areas.

The next step is for the producer to submit a request to the relevant operator for the conclusion of a preliminary connection agreement in accordance with the issued statement. Following the entry into force of the construction permit for the energy facility, the producer must submit an application for the conclusion of a final connection agreement. The connection agreement specifies, among other things, the connection deadline, the amount and payment conditions of the connection fee, and the parties’ responsibilities in the event of non-compliance with the contract.

It is important to note that within three months from the receipt of the above-mentioned statement, the producer of electricity from renewable energy sources shall provide the operator with a guarantee in the form of a deposit or a bank guarantee in the amount of BGN 50 000 for each MW of a connected capacity in the future energy site. If the producer fails to provide the required guarantee within the prescribed time limit, the statement is deemed invalid and, accordingly, no connection agreement may be concluded.

A simplified procedure applies to energy plant (incl. renewable energy plants) with a total installed capacity up to 20 MW, which are exempt from the licensing procedure, thereby reducing the administrative burden on investors.

The Bulgarian government is actively involved in the renewable energy sector, primarily through support schemes and competitive procedures such as auctions for new capacity. The most important recent examples are the RESTORE and RESTORE 2 procedures under the National Recovery and Resilience Plan, which provide grant support for standalone electricity storage infrastructure. Bulgaria has not yet developed a mature renewables auction framework comparable to some other EU jurisdictions, but EU rules, the Net-Zero Industry Act and RED III implementation are expected to influence future support and procurement design.

In terms of state ownership, Bulgaria fully owns the National Electric Company (NEK EAD), which operates a portfolio of 31 hydropower plants, including both conventional hydro and pumped-storage facilities, with a total installed capacity exceeding 2,700 MW. The company manages dam reservoirs that account for approximately 55% of the country’s-controlled water resources.

Another state-owned entity is the National Energy Operator EAD, which focuses on the development and operation of energy storage systems across different technologies. Its purpose is to support the integration of renewable energy sources by balancing variable generation and demand, improving system flexibility, and reducing costs during peak periods. Through market-based mechanisms, it contributes to the fuller integration of RES into the energy mix and enhances overall system stability.

The key primary laws are the Energy Act, the Renewable Energy Act, the Energy Efficiency Act, the Climate Change Mitigation Act, the Spatial Development Act, the Environmental Protection Act, the Biological Diversity Act and sector-specific water, waste and agricultural-land legislation. The secondary framework includes Ordinance No. 6 on connection to electricity networks, electricity trading and balancing rules, licensing rules, guarantees-of-origin rules and EWRC decisions on prices, premiums and market operation.

Amendments to the Renewable Energy Act (REA) were adopted in June 2025, with the aim to streamline administrative procedures, by shortening application and appeal timelines, and broadening support for investors and prosumers. Project developers constructing or modernising renewable energy plants in priority areas can now expect all requisite administrative permits to be issued within one year term, through expedited procedures. This includes administrative and judicial appeals as well as conduct of procedures related to environmental impact assessment. Additionally, consumers implementing PV installations up to 20 kW for own consumption could benefit now from a one-month permit deadline, along with a tacit consent mechanism. That said, if a building permit is not issued within the specified period following confirmation of complete documentation, it is considered automatically granted.

Furthermore, changes in the Electricity Trading Rules were introduced. Key changes included the abolition of the National Electricity Company as public supplier, the abolition of combined balancing groups, and a new methodology for balancing electricity prices

Both of the aforementioned changes were introduced in compliance with transposing the provisions of EU Directive 2023/2413 (so-called RED III). Nonetheless, the full transposition of the stated EU act remains outstanding, even though the deadline expired on 21 May 2025. Currently, a draft bill for revising and amending the provisions for guarantees of origin is yet to be adopted.

With respect to wind energy, revision to the REA introduced a fast-track procedure providing for all administrative permits required for the construction and commissioning of wind farms in priority areas, as well as the related grid connection infrastructure, to be issued within a maximum timeframe of 12 months. In this regard, at the beginning of 2026, the Ministry of Environment and Waters of Bulgaria has published the long-awaited Plan for the Development of Priority Zones for Wind Energy for preliminary public consultation.

At the same time, the legal framework regarding offshore wind continues to be put on hold, with dedicated legislation remaining unadopted. bill establishing priority and non-priority Black Sea wind zones and providing for 30-year concessions and Contracts for Difference (“CfD”) passed its first parliamentary reading in 2024 but has not progressed further due to opposition by fishing, tourism and environmental stakeholders.

Bulgaria’s renewable energy policy is set at national level, primarily through the REA and the INECP, aligned with the EU strategic and legal frameworks. The National Recovery and Resilience Plan (NRRP) reinforced the framework through targeted investments, i.e. reducing administrative barriers to RES installation and grid connection, introduction of a financial and institutional support for BESS projects (mixed and stand-alone).

Bulgaria operates a layered incentive system in order to stimulate projects and energy production by RES through combining administrative, financial and regulatory measures. Feed-in tariffs now apply exclusively to small installations up to 30 kW mounted on rooftop or façade structures in urban areas, or under pre-existing purchase contracts.

For larger RES producers, the prevailing mechanism is a premium scheme administered by the Fund for Security of the Energy System (FSES). Producers with installed capacity of 500 kW and above sell electricity directly on the exchange market and receive a FSES-paid premium determined by the Energy and Water Regulatory Commission (EWRC), based on quantities up to their net specific production threshold. Once that threshold is reached, no premium is payable and producers rely solely on market revenues. The scheme applies only to producers who previously held long-term bilateral purchase contracts and remains in force until those contracts expire.

The Fund for Security of the Energy System (“FSES”) is the authority to pay the premium to producers from high-efficiency combined generation with a capacity of 500kW and above 500kW under the EA and to RES producers with a total installed capacity of 500kW and over 500kw under the REA. The premium is determined by a decision of the EWRC, including for past regulatory periods. However, this refers only to producers who have previously signed a long-term bilateral purchase contract under the preferential price. The premium is granted until the expiration of the term of the contracts. Once the net specific production is reached, no premium is paid to the producers by the FSES; they shall receive as income only the purchase price from the RES energy sold on the electricity exchange market.

To address grid development, the RESTORE and RESTORE 2 programmes (grant schemes for BESS projects) were introduced, backed by nearly EUR 750 million in EU Recovery and Resilience Facility grants.

Natural gas has a limited direct role in Bulgaria’s domestic electricity generation compared with coal, nuclear and renewables as there are no TPPs that use natural gas as primary energy source. However, Bulgaria is part of the interconnected EU electricity market, and wholesale electricity prices can still be influenced by gas-fired generation in neighbouring markets when gas plants set the marginal price. Gas prices therefore affect Bulgarian electricity prices indirectly through market coupling, regional trade and the general marginal-pricing design of the EU electricity market.

In addition, as only less than 10% of the households use natural gas for heating.

There are clear policy steps indicating that existing coal-fired plants may remain in operation beyond the earlier near-term retirement pressure created by the original recovery-plan framework. The National Assembly resolved in January 2023 that the government should amend the energy part of the National Recovery and Resilience Plan, rather than proceed on the basis of the earlier coal-related commitments. That position was reinforced by the October 2023 political agreement under which the government undertook not to freeze or reduce the production capacity of BEH-group coal plants, provided they continue to operate on a market basis.

In its October 2025 report to Parliament, the government stated that it had imposed no administrative restrictions on coal-fired operators and that those plants continued to function entirely on market terms. At the same time, the current legal approach is framed as decarbonisation rather than unconditional preservation, with the European Commission recording legislation introducing a CO2 emissions cap for lignite- and coal-fired power plants from 2026. Accordingly, the better view is that Bulgaria is seeking to keep existing coal capacity available in the medium term, while still maintaining a longer-term coal exit trajectory, which recent strategy documents continue to place in 2038.

The most significant barriers affecting both the renewables industry and businesses’ access to renewable energy in Bulgaria can be summarized in the following manner:

(i) Persistent regulatory, permitting and land-use barriers in project development;

Renewable energy projects in Bulgaria continue to face lengthy and fragmented permitting procedures involving multiple authorities, particularly in relation to environmental assessments, zoning and construction approvals.

(ii) Grid connection constraints and limited network capacity transparency;

Grid congestion and delays in connection procedures, combined with limited transparency on available capacity and queue management, remain a key constraint for new renewable projects.

(iii) Administrative burdens and inconsistent interpretation of licensing and registration procedures;

Licensing and registration processes remain administratively burdensome in practice, with limited digitalisation and inconsistent application of rules across competent authorities.

(iv) Underdeveloped corporate offtake structures and market constraints for renewable energy trading;

The corporate PPA market remains underdeveloped, with limited standardisation, perceived counterparty credit risk and market design constraints affecting long-term renewable procurement.

(v) Regulatory uncertainty and evolving market rules;

Frequent changes and evolving interpretation of energy legislation create uncertainty for investors, particularly in areas such as storage, self-consumption and energy communities.

(vi) Institutional capacity limitations and uneven administrative practice;

Regulatory and permitting authorities often face capacity constraints, resulting in inconsistent decision-making and reduced predictability for project developers.

A new-build renewable energy project in Bulgaria will typically include land documentation such as ownership title, lease agreements, easements or a right of construction, together with development services or co-development agreements where a project is acquired from an originator. Grid documentation is central and usually includes the connection statement, preliminary and final connection agreements, construction and access arrangements with the relevant network operator, and balancing-group arrangements.

During construction, the core contracts are the EPC contract or separate design, procurement, supply, construction and installation contracts, equipment-supply agreements, grid-connection works agreements, construction-supervision arrangements, technical-management contracts and insurance policies. For wind, hydro, biomass, biogas and BESS projects, additional technology-specific supply, testing, performance-warranty and O&M arrangements are usually required.

In addition, power purchase agreements (PPAs) have become increasingly popular as the country seeks to diversify its energy mix and reduce its dependence on fossil fuels. The Bulgarian government has implemented several initiatives to encourage the adoption of renewable energy and the use of PPAs. These include the introduction of feed-in tariffs, which provide a guaranteed price for renewable energy generation, and the establishment of the FSES, which provides financial support for renewable energy projects.

PPAs are helping to accelerate the adoption of renewable energy and reduce the country`s reliance on conventional fossil fuels. As such, they present a significant opportunity for investors, developers, and other stakeholders looking to participate in Bulgaria`s renewable energy sector. There is one good example for adopting a businesswise engaging in renewable energy business. A client of ours is currently operating the largest biomass RES facility and using the whole produced energy quantities for its own use (prosumer), while it has concluded a very specific agreement for delivery of electricity from RES facilities, excluding the conventional coal energy supplies. This is probably the brightest example in Bulgaria for complying with Paris Agreement, ESG, carbon neutral policies, providing sustainable development in the plants, etc.

There are no Bulgarian restrictions that specifically prohibit the import or export of renewable electricity. Bulgaria participates in the EU internal electricity market, including cross-border trading and market coupling, and renewable electricity can be sold domestically or across borders subject to the general trading, balancing and capacity-allocation rules. There are also no generally applicable local-content obligations or domestic-supply obligations for renewable energy projects in Bulgaria.

The Net-Zero Industry Act is expected to have an indirect effect. It does not impose a Bulgarian local-content rule for ordinary private renewable projects, but it introduces EU-level tools to support net-zero technology manufacturing, strategic projects and non-price criteria such as supply-chain resilience in public procurement, renewable auctions and other public-support schemes. As a result, future Bulgarian support procedures may place greater emphasis on resilience, sustainability and diversification of technology supply.

U.S. foreign entity of concern rules have no direct legal effect in Bulgaria. Their impact is commercial and indirect: they may reshape global solar, battery and critical-minerals supply chains, influence equipment availability and pricing, and affect investors or lenders with U.S. exposure. Bulgarian projects should therefore monitor supply-chain representations and sanctions/export-control provisions in procurement and financing documents.

The RES project development in the European region, and particularly in Bulgaria, relies heavily on imported components for their implementation, sourcing critical materials predominantly from other regions, most notably, China. This dependency has rendered renewable deployment vulnerable to the ongoing geopolitical instability in the Middle East, which has introduced significant logistics shocks across global supply chains. Key input materials, such as polysilicon, silver paste, aluminium frames, and rare earth elements used in solar panels and wind turbines are facing persistent shortages, as at the same time, transportation uncertainties and rising fuel costs further inflate their prices and extend delivery time. Bulgaria is materially affected by these circumstances, with several major renewable energy projects as a result experiencing delays, postponements, or outright halt.

Financing costs and revenue volatility have become as important as module availability. Higher interest rates, negative solar-hour prices and balancing exposure make lenders more conservative and increase the importance of PPAs, hedging, storage and grant support. Developers are increasingly required to demonstrate robust downside cases, grid deliverability and credible route-to-market arrangements.

An indirect consequence of the same logistics disruption is the slowed adoption of next-generation energy storage technologies. The implementation of high-energy lithium-ion systems and solid-state battery configurations, which are critical for the green transition depends on supply chains that are subject to the same pressures, delaying the availability of higher energy-density storage systems at the scale necessary for integration in the grid connection system.

At EU level, the cumulative weight of these disruptions has prompted a broader reconsideration of the Green Deal’s regulatory architecture. Stakeholders across member states are pushing to extend decarbonisation timelines and reconsider implementation targets and goals. Bulgaria has been among the leading voices calling to weaken and delay the EU Emissions Trading System 2 (ETS2), advocating for postponement to 2028 alongside modifications to the market stability reserve. Concurrently, there are also major calls for conceding the expanded scope of the Carbon Border Adjustment Mechanism (CBAM), which entered its definitive phase in January 2026 and applies carbon tariffs to imports of steel, cement, aluminium, fertilisers, hydrogen and electricity.

Changes to U.S. clean-energy incentives, including foreign entity of concern restrictions and reduced or reshaped tax-credit availability, do not directly regulate Bulgarian projects. They can nevertheless affect global demand for batteries, modules and critical minerals and may redirect manufacturing and investment flows. EU industrial-policy measures, including the Net-Zero Industry Act and CBAM-related supply-chain adjustments, are likely to be more directly relevant for Bulgarian procurement and offtake strategies.

The most active area is battery storage. The RESTORE and RESTORE 2 programmes together support more than 13 GWh of standalone storage capacity, and several large private BESS projects have already entered or are approaching operation. The Lovech BESS, developed by Advance Green Energy, is reported as Bulgaria’s first and largest operational battery storage system, while Enery’s Nova Zagora project is a 150 MW / 600 MWh standalone BESS financed with a virtual PPA-based revenue structure.

Hybrid renewable projects are also emerging. The Tenevo project in southern Bulgaria is one of the most visible examples, combining large-scale solar PV with substantial battery storage and planned hybrid optimisation. Such projects illustrate the market shift from plain merchant solar to assets designed around grid access, storage and revenue management.

Grid reinforcement is a parallel priority. ESO’s investment plans include 400 kV and 110 kV upgrades, interconnection and internal transmission reinforcements, and the Greenabler programme for transmission-network modernisation. In hydrogen, Bulgartransgaz is advancing the first phase of Bulgaria’s hydrogen backbone through the Sofia-Kulata route, forming part of the South-East European Hydrogen Corridor. Offshore wind remains a major prospective opportunity, but no commercial offshore wind project can proceed at scale until the dedicated legal framework is adopted.

Finally, Bulgaria is also advancing hydrogen and just-transition projects: the first phase of the national hydrogen backbone is being developed through the Sofia–Kulata route, while substantial transition funding is being deployed in Stara Zagora, Pernik and Kyustendil for retraining, industrial conversion, mine-site rehabilitation and new energy capacities.

In Bulgaria, business models in the renewable energy sector are adapting quickly to the accelerated deployment of battery energy storage systems (BESS), but the market is still in an early, rapidly evolving phase. As a result, a few clear structural trends can already be identified.

(i) Shift toward standalone BESS as the dominant early model

Current deal flow indicates that standalone BESS projects are the leading model, largely driven by state support schemes and grid-balancing needs. For example, a recent financed portfolio of seven projects included six standalone BESS and only one co-located project. This suggests that, at least in the initial wave of deployments, standalone projects account for a clear majority (often c. 70–90% in observable transactions). This is largely explained by:

• targeted subsidy programmes (e.g. RESTORE) specifically supporting standalone storage
• the role of BESS as an independent grid asset providing balancing and ancillary service
• simpler structuring compared to hybrid projects

At the same time, large standalone assets (e.g. 150 MW/600 MWh projects) are increasingly being developed as merchant or quasi-merchant infrastructure with dedicated grid connections.

(ii) Gradual emergence of co-located and hybrid models

Despite the dominance of standalone systems, co-located and hybrid (solar + storage) projects are rapidly gaining traction. Several examples illustrate this trend:

• large hybrid projects combining solar PV and BESS (e.g. 238 MW solar + 760 MWh storage) – portfolios of co-located assets sharing grid connections and optimized jointly
• retrofitting of existing PV plants with batteries

These models are becoming more attractive because they optimize grid connection capacity, while also allow capture of multiple revenue streams (arbitrage + ancillary services + renewable firming) and improve bankability of renewable generation assets.

However, they remain more complex from a regulatory, technical, and commercial standpoint, which explains their still smaller share compared to standalone projects.

(iii) Impact on financing structures

The rise of BESS, especially particularly standalone assets, is already reshaping financing approaches in Bulgaria:

• Revenue stacking becomes essential – Standalone BESS projects increasingly rely on multiple revenue streams (e.g. intraday trading, balancing services, capacity-type mechanisms), rather than a single contracted income source. Co-located systems go further by combining storage revenues with renewable generation optimization.
• Emergence of quasi-contracted structures (e.g. virtual PPAs): To address merchant risk, innovative structures are appearing. For instance, a major standalone BESS project is backed by a virtual PPA arrangement securing predictable revenues, enhancing bankability.
• Increased role of public support and blended finance: Many standalone projects benefit from subsidy programmes, which effectively de-risk early-stage investments and enable project finance structures.
• More complex financing for hybrid assets – Co-located and hybrid projects require more sophisticated structuring, including: integrated cash flow modelling across generation and storage; more complex security packages and advanced operational and optimization agreements.

From a financing perspective, the key shift is from traditional single-asset, contracted renewable projects toward multi-revenue, partially merchant infrastructure, requiring more sophisticated risk allocation and contractual frameworks. This transition is still ongoing, but the direction is clear as the market matures and regulatory clarity improves, co-located and hybrid models are expected to increase their share relative to standalone projects.

In Bulgaria, confidence in offshore wind and hydrogen will depend less on policy ambition and more on whether the legal framework becomes genuinely bankable in practice. For offshore wind, the main requirement is still a dedicated, workable regime for maritime site allocation, permitting, grid connection, environmental review and project build-out; Bulgaria’s 2025 NECP says the relevant legislative changes are still under development, and the dedicated bill on renewable energy in maritime spaces was reported as having passed only first reading in Parliament.

Regional cooperation is moving in the right direction: Bulgaria, Greece and Romania signed a trilateral declaration to prepare cross-border projects in offshore wind and renewable hydrogen and to work toward a more harmonised regulatory framework. That is helpful for investor signalling, but it does not replace a clear domestic concession, seabed-use and connection regime, which is what lenders and developers will ultimately need for project execution.

Hydrogen is somewhat further advanced legally. Bulgaria’s Energy Act already defines “green hydrogen”, the 2023 National Roadmap is intended to remove key barriers across the hydrogen value chain, and the 2024 guarantees-of-origin regulation created the basis for traceability through a single electronic register, including for green hydrogen.

In Bulgaria, renewable energy projects are typically financed through a combination of equity and debt, with structures evolving as the market shifts from subsidised models to more market-based mechanisms.

Utility-scale renewable projects (particularly solar PV and, increasingly, storage) are most commonly financed on a limited recourse project finance basis. Debt is usually provided by commercial banks, often alongside international financial institutions (such as the EBRD or similar lenders), with sponsors contributing equity. Financing structures rely on the project’s cash flows, with security packages covering shares, receivables, and project assets.

As Bulgaria has moved away from feed-in tariff regimes, projects are increasingly exposed to market risk. To mitigate this, many developers enter into long-term corporate power purchase agreements (PPAs) with industrial or commercial customers. These agreements enhance bankability by ensuring predictable revenue streams. However, a portion of projects, particularly smaller or more opportunistic ones, operate on a fully or partially merchant basis, accepting exposure to wholesale electricity prices.

For smaller-scale installations, especially commercial and industrial solar PV systems for self-consumption (prosumer model), projects are often financed directly by the end-user. Due to relatively low upfront costs, many companies fund these projects on balance sheet, without external debt, prioritising quick payback through reduced electricity costs.

Public funding plays a significant role, particularly for newer segments such as battery storage. Grants and support programmes under EU-backed instruments (e.g. the Recovery and Resilience Facility) are frequently combined with private financing, resulting in blended finance structures that improve project viability and reduce risk for lenders.

With the rise of battery energy storage systems (BESS) and hybrid (solar + storage) projects, financing structures are becoming more sophisticated. These projects often rely on:

• revenue stacking (e.g. arbitrage, balancing services, capacity-type revenues),
• hybrid contractual arrangements (including virtual PPAs or optimisation agreements), and
• more complex financial modelling and risk allocation.

As a result, lenders are adopting more conservative assumptions and requiring stronger contractual frameworks compared to traditional renewable projects.

Overall, while traditional project finance backed by contracted revenues remains the cornerstone of renewable energy financing in Bulgaria, the market is clearly transitioning toward more flexible, market-driven and hybrid financing models, reflecting increased price volatility and technological diversification.

In Bulgaria, rising data-centre demand is likely to affect the system first through grid access and reinforcement, rather than through an immediate nationwide shortage of power. Across Europe, data-centre electricity demand rose by 17% in 2025 and the IEA says total data-centre consumption could double by 2030, while expansion is already being slowed by grid-connection bottlenecks and shortages of key equipment such as transformers and turbines.

For Bulgaria specifically, the pressure point is whether very large, concentrated loads can be connected without expensive network upgrades: electricity consumption rose in 2024, around 4.1 GW of projects were already queued for grid connection at the start of 2025, and ESO/NRRP-backed grid modernisation is still ongoing.

The effect on consumer prices in Bulgaria is uneven. Тhe household electricity market remains regulated and prices are fixed in advance for each regulatory period, so any data-centre-related cost pressure is more likely to appear indirectly and with delay. For businesses and other market-exposed users, however, the effect can be faster, because network charges are already a visible part of end-user bills and reinforcement costs are ultimately recovered through tariffs.

So, the practical answer is that, in Bulgaria, data centres are pushing the market toward prosumer-orientated model, storage and structured grid connections. That is also why Bulgarian industry argues that very large data-centre projects should add their own energy capacity rather than rely only on existing baseload generation, otherwise the price effect on the wider market could be significant.