Data centres in Bulgaria: What AI offtakers expect from developers

Bulgaria has attracted grid connection requests for more than 9 GW of data centre capacity. Whether these projects are built will depend not on land but on whether developers can meet the requirements of the companies that will take the capacity: hyperscalers, specialised AI cloud providers (neoclouds) and AI laboratories. These offtakers expect a firm path to power, a site that can be permitted for a data centre and a design that meets their technical, security and sustainability standards before they move to a term sheet.

Background

In our previous update, we outlined the EU and Bulgarian legal framework for data centres, including energy efficiency reporting, the new EU rating scheme, the proposed Cloud and AI Development Act, NIS 2 and foreign direct investment screening. This update looks at the same market from the perspective of the offtaker. It sets out how AI capacity is contracted, what offtakers expect from a facility, and which steps a developer in Bulgaria should complete before committing material capital to a project.

How AI offtakers contract

AI capacity is let on long-term, take-or-pay terms. Our experience points to the following structures:

1. hyperscale build-to-suit or turnkey leases, under which the developer delivers the full facility to the tenant's basis of design, for terms of about 15 years with renewal options;
2. neocloud turnkey leases of powered, liquid-cooled halls, in which the tenant installs its own GPUs, for terms of about 15 years with extension options;
3. high-performance computing colocation, where the tenant's obligations are backed by a hyperscaler guarantee, for initial terms of about 10 years;
4. split powered shell arrangements, under which the developer funds the building and the tenant funds the fit-out;
5. GPU-as-a-service contracts, under which the developer or a neocloud operates the GPUs and sells compute, for terms of about 5 years, in many cases with part prepayment; and
6. joint ventures in which a financial investor owns the campus and the hyperscaler leases it and guarantees its residual value.

The structure the offtaker chooses determines what the developer must build. The credit quality of offtakers differs as well. Hyperscalers are investment grade and provide parent guarantees. Neoclouds are, as a rule, sub-investment grade and depend on a small number of large customers.

Technical and sustainability expectations

In our experience, offtaker requirements cover the following areas:

1. Rack density and cooling. Current GPU systems require about 120 to 140 kW of cooling per rack, and next-generation systems announced for 2027 are expected to reach about 600 kW per rack. Facilities should be designed for direct-to-chip liquid cooling, with a path to higher densities and to 800 VDC power distribution.
2. Resilience. Offtakers require a concurrently maintainable facility, equivalent to Uptime Tier III or EN 50600 Class 3. Backup power is becoming a matter for agreement per data hall, as some training facilities operate with reduced or no on-site generation.
3. Security and certification. Offtakers expect controlled perimeters, multi-factor access to server rooms, extended CCTV retention and separate zones under their control. Operating companies should plan for ISO 27001 and SOC 2 Type II certification.
4. Carbon-free power and water. Major offtakers have committed to carbon-free or renewable electricity and to water-positive or replenishment targets by 2030. A water-stressed site or a supply strategy based on older generation assets will be difficult to place.

These expectations interact with EU law. Under the common Union rating scheme adopted by the European Commission in September 2026, power purchase agreements with plants commissioned within the last ten years improve a facility's published rating, and guarantees of origin count where they come from the same bidding zone and are matched in time to consumption. Developers should structure their power procurement with both the offtaker's commitments and the EU rating in mind.

Grid access: from "first come" to "first ready"

In Bulgaria, a load of 100 MW or more connects at 110 kV or 400 kV through the Electricity System Operator (ESO) under Ordinance No. 6 on connection to the electricity grid. ESO issues an opinion on the conditions for connection, valid for one year, and does not conclude preliminary contracts with consumers. According to ESO's ten-year network development plan for 2026 to 2035, connection contracts, including those for data centres, have used up the existing transmission capacity in all regions. New 400/110 kV substations are planned, among other locations, in Rakovski near Plovdiv and in Pleven.

At present, consumers in Bulgaria are not subject to a grid bond or a maturity test. In 2026, the Energy and Water Regulatory Commission prepared draft amendments to Ordinance No. 6 aimed at stopping speculative capacity reservations. It remains to be seen whether, and in what form, these will be adopted.

Other European markets have moved to allocating grid capacity on a "first ready, first served" basis:

1. in Germany, since 1 April 2026 transmission system operators have assessed connection requests on the basis of site control and permits, the technical concept, the applicant's capability and the benefit to the grid;
2. in Norway, from 1 July 2026 projects of 100 MW or more need an adopted zoning plan before they obtain a place in the queue;
3. in Denmark, rules in force since 12 October 2026 place ordinary data centres in the lowest priority category for connection; and
4. in Great Britain, the energy regulator has proposed a commitment fee per MW for data centres of 40 MW or more.

Offtakers will expect Bulgaria to follow a similar path. Developers should assume that a maturity test will apply before energisation and should be in a position to show site control, zoning and a design. A case for flexible or phased connection, including on-site storage or generation that can reduce demand on request, may become a competitive advantage.

Site, permitting and regulatory steps

Offtakers expect ownership or a long-term lease of land zoned for the intended use. Bulgaria has no specific permitting regime for data centres, so projects follow the general planning, environmental and energy legislation. In the projects we see, the period to the start of construction is 12 to 18 months. The key steps include:

1. Land use. Agricultural land requires a change of designation before a detailed development plan can be relied on. Sites in existing industrial zones avoid this step. Developers should check whether the wording of the applicable spatial plan permits a data centre, as courts in other jurisdictions have held that "industrial" zoning does not cover this use.
2. Environmental assessment. A positive environmental impact assessment decision, or a screening decision that no assessment is required, is needed before the building permit. Sites near Natura 2000 areas require a compatibility assessment.
3. Building and use permits. The building permit is issued after approval of the design. On completion, a use permit is issued following acceptance by a state commission.
4. Backup generation, water and fire safety. Backup generators are subject to the rules on medium combustion plants. Water abstraction and discharge require permits under the Water Act. Fire safety approval of the design is needed, and lithium-ion UPS and battery systems can be on the critical path.
5. Waste heat. New or refurbished data centres with a total rated energy input above 1 MW must carry out a cost-benefit analysis of waste heat reuse, which makes district heating operators relevant counterparties.
6. Investment Promotion Act. Projects may qualify for a certificate for a class A investment or for priority investment project status, which offers shorter administrative deadlines. The application must be filed before works start.
7. Foreign direct investment screening. Investments by investors controlled from outside the EU that exceed EUR 2 million or involve the acquisition of at least 10% of a Bulgarian company require prior approval. As data storage counts as critical infrastructure, developers should file in the early stages of a project.
8. Merger control and foreign subsidies. Joint venture structures may require clearance by the Commission for Protection of Competition, and investors with non-EU state financing may need to notify under the Foreign Subsidies Regulation.

Contract terms

The terms with the greatest impact on a developer concern delivery risk and credit support. Offtakers tie rent to a ready-for-service date for each data hall, with a grace period of 60 to 90 days, followed by rent credits, which in many cases are capped at 3 to 12 months' rent. After an outside date, the tenant may step in or terminate. In the transactions we have advised on, neocloud and GPU-as-a-service customers have sought the right to terminate without a fee where delivery requirements are missed. Late-delivery penalties have increased in 2026, and delay-in-delivery insurance has become available.

Other terms that developers should expect include:

1. credit support from the tenant in the form of a parent guarantee for hyperscalers, and letters of credit, deposits or third-party backstops for neoclouds;
2. credit support from the developer in the form of a parent guarantee for the landlord vehicle;
3. reimbursement by the tenant of the cost of long-lead equipment ordered before the lease is signed;
4. annual rent escalation of 3% to 4%, pass-through of metered power and caps on power usage effectiveness of 1.3 to 1.4;
5. service level commitments, audit rights and termination for persistent failure;
6. rights of first refusal or first offer over adjacent land and later phases; and
7. restrictions on transfer to competitors.

Developers should align the delay damages under the construction contract with the delay credits under the lease. Investors in GPU-based services should ensure that their ownership chain is free of jurisdictions subject to US export control restrictions.

What is next

Capital should follow evidence. We recommend that developers of AI data centres in Bulgaria commit funds in stages, with each stage supported by the following:

1. Site screen: land under option, title and easements checked, zoning confirmed or a rezoning path mapped, access to an existing or planned 400/110 kV substation, and water, flood and Natura 2000 screens clear;
2. Grid and site secured: ESO opinion for the full campus load, title secured, development plan and change of land use filed, environmental screening opened, foreign direct investment and Investment Promotion Act filings made;
3. Offtaker-ready design: basis of design for liquid-cooled racks of 130 kW or more, a power procurement plan, reserved production slots for transformers and switchgear, and a clean ownership and compliance file;
4. Signed offtake: a lease or term sheet with ready-for-service and outside dates, capped delay credits, agreed tenant credit support and a cost reimbursement agreement; and
5. Final investment decision: environmental decision and building permit issued, grid connection contract signed, and construction delay damages matched to lease delay credits.

The third stage is the offtaker test: without it, no hyperscaler or neocloud will move to a term sheet. With the legislator expected to tighten the rules on grid connection and the EU rating scheme applying from 2027, developers that prepare for these requirements in the early stages of a project will be in the strongest position to secure an offtaker.

For further information and to stay up to date on forthcoming developments, contact your usual CMS contact or our local CMS Sofia experts, Ivan Gergov and Anna Philcheva.