Camden Advisory

A tale of 3 countries: renewable energy financing in Bulgaria, Romania and Serbia.

The Green agenda for the Western Balkans adopted in Sofia in November 2020 targeted full decarbonisation by 2050. Behind this apparent potential bonanza for renewable energy investors, the real situation is much less rosy, as Governments have been slow to take the necessary steps. However, things are moving in the right direction, although at different speed throughout the region. In this article, we aim to provide an overview of the situation in 3 Western-Balkan countries and analyse the opportunities opened to investors over the next 5-10 years. 



In 2020, installed renewable energy capacity amounted to 5 233 MW (40.3 % of the total), including hydro for 3 207 MW (24.7%), photovoltaic for 1 246 MW (9.6%), wind for 701 MW (5.4%) and biomass for 78 MW (0.6%), out of a total of 12 986 MW all sources included. In 2021, wind generated 1 434 190 MWh (3% of total generation) and photovoltaic 1 487 946 MWh (3.1%).

The Bulgarian Energy strategy 2020-2030 defines the main objectives of the country for the energy sector, in alignment with the integrated plan on energy and climate for 2021-2030 which envisages Renewable Energy to provide for 27% of the gross end consumption. Between 2020 and 2030, the net installed capacity of renewable energy sources is expected to increase by 2,645 MW, from which photovoltaic plants will contribute 2,174 MWp, wind capacities 249 MW and biomass 222 MW. 

Support schemes  

Government Support to renewable energy projects have encountered different phases. The 2007 Renewable and Alternative Energy Sources and Biofuels Act established a feed-in tariff (FiT) scheme. The eligible producers could enter into PPAs with the public utility EAD or other end-suppliers which guaranteed to producers the sale of all their generated output. The FiTs were to be reviewed by the Bulgarian Energy and Water Regulatory Commission (EWRC) according to a formula defined by law and which limited the any decrease in FiTs by 5% per year. This was not an extremely advantageous scheme as per international practice PPAs usually guarantee a certain level of price stability throughout the contract duration.

In 2011, given the new EU obligation to reach 16% of energy consumption generated by RES by 2020, a new law- Energy from Renewable Sources Act (ERSA)- improved the investment climate through the obligation to maintain the FiT specified in the PPA for its whole duration (20 years for solar, geothermal and biomass, 15 years for hydro up to 1MW and 12 years for wind).  These amendments had such a major positive impact that Bulgaria rapidly reached its targets, followed by a pause decided by the Government in 2013.

From 2012, regulatory instability slowed down investors’ appetite: retroactive temporary grid access fee (2012); 20% fee on FiT (2014), which was later declared unconstitutional; reduction of output that can be sold with the benefits of FiT to the average production of plants of the same category (under deduction of auto consumption); compulsory monthly Fit revenues payment of 5% to the ESSF (2015, lifted in 2021). These measures resulted in many legal proceedings and disarray on the market.  The situation progressively stabilized after 2015.

In 2018, producers with installed capacity above 4 MW were allowed to terminate PPAs and enter into feed-in premium agreements to be paid under the Bulgarian Energy Security System Fund (ESSF), with the ESSF compensating the difference between the FiT and the market price as determined by the Regulator and depending on the energy source.  Since 2019, FiT applies only to small producers (installed capacity under 1 MW).



Total electricity generation installed capacity amounted in 2020 to 20,696 MW, of which 31.4% in hydropower (6,703 MW), 14,6% in wind power (3,023 MW), 6,7% in solar power (1,391 MW) for a total of 21,3% of renewable installed capacity out of the total capacity.  However, a significant part of this capacity is theoretical as it corresponds to aged facilities that are no longer in position to function effectively and should be decommissioned. More accurate is the energy output breakdown: it climbed by 5.3% in 2021 to 59 TWh, with 38% thermal, 29% hydro, 19% nuclear, 11% wind, and 3% solar.

Romania set the 2030 renewable energy end consumption target at 30.7% (excluding hydro), despite the European Commission recommending 34%, as Romania has a great unused renewable potential (wind potential is estimated the highest in Europe with 14 GW). To reach this target, Romania intends to install around 7 GW of new capacity, of which around 3.7 GW of solar projects. The phasing out of coal mines by 2030 should also provide the opportunity to install 735 MW of solar PV plant on depleted mines and disposal sites as per Just Transition plans.

Support schemes

Wind farms developed rapidly between 2008 and 2013, through an advantageous subsidy scheme based on green certificates issued according to yearly quotas and that green electricity producers could sell to electricity providers through market mechanisms. The system was changed in 2013, as Romania seemed on track to reach its 2020 targets and also to prevent fraud and increase predictability. These changes ended the attractiveness of renewable energy investment in the country and new capacities were no longer installed after 2015. The poor state of the transmission network is also a limiting factor for the development of renewables, especially in the western part of the country.

Politically the Government put the emphasis on the development of gas and nuclear energy rather than of renewable. As heating, which is currently 40% derived from wood, should be replaced with gas (large gas fields are to be developed in the Black Sea), gas receives far more political attention than renewables.

The situation may evolve in the right direction with the EU 2021–2027 Multiannual Financial Framework and the Recovery and Resilience Mechanism, possibly triggering access to EUR 80 bn for Romania and linked to the Green Deal and the concrete steps to reach full decarbonisation by 2050.

Concretely new schemes have been introduced in 2021 to replace the green certificates mechanism, notably authorization of long term PPAs and introduction of Contracts for Difference (CfD). CfD could mobilize before 2024 3.5 GW of solar PV and onshore wind with auctions to be held by end 2023. Offshore wind projects should also receive some kind of support.



Total installed capacity amounts to 8,500 MW.  Electricity generation of 34 028 GWh in 2020 is mainly sourced with coal (70% of the total), followed by hydro (25,3%) and wind (2.3%). Other sources are negligible.

Serbia currently has more than 550 MW of newly-built renewable capacity on the grid, all in wind farms.

Although Serbia is not a member of EU, it has to apply EU rules in the energy sector as a necessary step on the road to EU accession. The 2016 Energy sector development strategy which did not put much emphasis on renewable has been updated in February 2022 with the Energy Security of Serbia Plan aiming to reach full decarbonisation by 2050, with a share of renewable of about 50% compared to 26% in 2020. The national Energy and Climate Plan (NECP) is still at draft stage, but it contains the preliminary target of 40% emission cut by 2030.

Support schemes

The State utilities ElektromreĹža Srbije (EMS) and Elektroprivreda Srbije (EPS) have so far played a dominant role in electricity generation. No support has been available to solar IPPs after 2016, although the capacity has remained to a paltry 10 MW.

In general, reforms have been slow due to the reluctance of EPS to move toward renewable and the lack of interest of the general public in renewable energy. Limited implementation of EU regulation, artificially low energy prices for end consumer and lack of transparency also tend to deter investors.

However, the Government intends to develop renewable IPPs. A March 2021 renewable energy law should help to unlock some barriers. According to this law, small scale facilities (power plants below 500 kW and wind power plants below 3 MW) can benefit from feed-in tariffs. For larger projects, auctions based on feed-in premiums will be held according to quotas. 

A first auction is scheduled in 2023 for 400 MW and over 1,000 MW in the next 3 years, with a goal to reach 2 GW capacity in 5 years. Government would provide the land to the investors. 650 MW of floating solar power plants are also planned.

In parallel to IPPs and possibly in cooperation with strategic investors, the government plans to create a State-owned company called Green Energy of Serbia in charge of generating renewable energy.


The rapid survey shows that after several years of stagnation, a momentum is starting to take place although at different pace in all 3 countries. Ambitious capacity development programs have been announced and should be implemented from 2023. For sure, obstacle and barrier remain as Governments have to establish their credibility beyond the financial opportunity to access EU subsidies, and the investment climate require improvements. But these are overall good news for investors.   






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