CMS CEE Expert Guide to Solar Panel Installation in Bulgaria

Rooftop (as well as facade) PV installations constitute ‘construction’ in the meaning of Bulgarian spatial development legislation. Construction is allowed only to the following categories: the owner of the property, a person who benefits from the right to build, or a person who is entitled by law to build in a third-party property (which last option does not apply to rooftop PVs). Thus, any person different from the owner of the building must benefit from a temporary or indefinite right to build to obtain a construction permit and become the owner of the PV system. As a result, a PV system can be developed and operated either by the building owner or by a third party who has been granted the right to build by the owner of the land. A lease agreement does not entitle the lessee to construct a PV system, unless the PV system is up to 20kW capacity and is placed on a small residential building. 

There may be complications where the landowner is different from the building owner and a third party intends to build and operate the PV system. Based on a recent precedent of the Bulgarian Court of Cassation, the installation of a PV system does not increase the gross built-up area of a building; thus, no right to build must be established by the landowner to the party implementing the installation. This solution generally contradicts the construction permitting regime, which requires that a PV system developer must benefit from the right to build. Arguably, in such scenario the landowner would have to establish the right to build in favour of the third party that is to develop the PV system. 

Rooftop PV systems of up to 1 MW capacity may be built by the building owner (at least formally), who may in turn provide to a third party the right to use and operate them, based on a lease or a similar agreement. In that scenario, the building owner remains the owner of the PV installation. This is would not be an option if the PV system capacity exceeds 1 MW because of the requirements of the energy laws.  

There are several approaches to develop rooftop PV systems based on the purpose of their installation: (i) for self-consumption; (ii) for sale through transfer of the electricity produced to the grid; and (iii) for sale 'behind the meter' through a direct cable line.

Under the first option, end customers may construct and operate the rooftop PV systems connected to the grid or to a closed electricity distribution grid, if the energy will be used only for self-consumption and the total installed capacity of the system is up to twice the amount of the allocated capacity, but not more than 5 MW. A simplified connection procedure applies to these systems. Under the third option, producers may construct and operate rooftop PV systems to supply its clients with electricity through a direct power line. Thus, a building owner may develop and operate a rooftop PV system and supply its tenants through a direct cable line without the participation of any utility (distribution) company.

The first and third options do not require the producer to perform a grid connection procedure. If the producer is willing to sell any electricity surplus in all three options, the producer must complete a grid connection procedure. 

Projects with an installed capacity up to 10 MW are connected to the distribution grid of the respective operator, while projects greater than 10 MW are connected to the national transmission grid operated by Elektroenergien Sistemen Operator ('ESO').

1. The permits vary depending on the category of the rooftop PV systems.                                                                                                                                                                   rooftop PV systems of up to 5 MW capacity may be constructed based on a detailed development plan and a construction permit; 
2. rooftop PV systems of up to 1 MW capacity may be constructed in an simpler procedure involving a construction permit and a construction assessment by a licensed engineer; and
3. rooftop PV systems of up to 20 kW capacity, installed on small residential buildings (houses), which are solely for self-consumption, may be installed based on a construction assessment. 

Certain limitations may apply depending on the planning/zoning status of the underlying land (i.e. if the land is 'urbanised', the development specifics of the zone on the location of the system).

The following authorities regulate the operation of PV plants:

• Ministry of Energy, which has primary responsibility for the regulation of energy matters;
• Energy and Water Regulatory Commission ('EWRC'), which is the independent regulatory authority in the energy sector;
• The transmission grid operator (ESO) or regional distribution grid operators. 

Construction supervision authorities (the National Construction Supervision Authority, its regional offices and the respective Municipality) have competence in development and construction processes.

Various regulatory requirements need to be met to set up rooftop PV systems. The most important permits and arrangements from the energy regulatory perspective include:

1. grid connection with the distribution grid operator or ESO;
2. preliminary and final generation licence for projects over 20 MW issued by the energy regulator EWRC;
3. access to the grid agreement, with the distribution grid operator or ESO;
4. PPA, or a balancing agreement with electricity traders or balancing group coordinators.

Grid connection terms and conditions, including the grid connection point, are determined by the distribution or the transmission grid operator.

Grid connection is granted on a "first come - first served" basis. As a result, there are speculative projects that block capacity without being developed and implemented. 

The grid connection procedure involves the following stages:

1. the submission of an application for and the issuance of a binding grid connection opinion by the distribution/transmission operator for the terms and conditions of the grid connection. Following a review of the application, the grid operator performs a study on the terms and conditions of the grid connection and issues a binding opinion. For projects between 30 kW and 1 MW (including rooftop PV systems), the grid operator is obliged to issue an opinion for grid connection terms and conditions within 40 days after the application;
2. the provision by the producer to the grid operator of a guarantee (deposit or bank guarantee) of BGN 50,000 (approx. EUR 25,000) per MW projected installed capacity within three months following the receipt of the grid connection opinion;
3. submission of an application for the producer to sign a “preliminary” grid connection agreement, which should be made within three months following the payment of the guarantee. Based on the application, the grid connection operator provides a draft of the preliminary grid connection agreement, which is valid for two years;
4. the producer filing a request to sign a “final” grid connection agreement, which should happen within the validity term of the preliminary grid connection agreement, and entry into force of the construction permit. The validity of final grid connection agreement is not limtied in time.

All of these steps may be completed before the start of the actual construction.

The PV system is connected to the grid once the power plant and the connection facilities are ready and put into operation. 

The simplified connection procedure applies to rooftop PV systems of end customers for self-consumption up to 5 MW. The end customer notifies the respective grid operator of the construction of the PV system. Within 14 days, the operator provides a draft grid access agreement setting out the technical requirements of the PV system. The facilities specified in the grid access agreement must be in place for the PV system to be put into operation based on a permit for use.

There are three different permitting regimes based on the capacity of the rooftop PV system: up to 5 MW, up to 1 MW and up to 20 kW capacity (for self-consumption). PV systems of up to 20 kW capacity or up to 1 MW capacity can be constructed within 14 days to two months. The construction of rooftop PV systems of up to 5 MW capacity may take from three months to one year (the time for judicial appeal of the detailed development plan, if any, is not included).

The right to build is established in the form of a notary deed and is subject to mandatory registration in the Property Register. Easements required by RES plants or the linear connecting infrastructure, such as the right to lay cables or pass through third party’s land, arise by operation of law. The owner of the RES system (beneficiary to the easement) may register the easements in the Property Register.

There may be lease agreements for part of buildings—the rooftop and the PV system—signed by the owner of the PV system as the lessor and a third party (that would operate it), as the lessee. Such lease agreements, to the extent they relate to the parts of buildings, may be registered in the Property Register if the parties’ signatures are verified by a notary and they are signed for more than one year. Notary certified and registered lease agreements would be binding on any new owner of the building for their entire duration. If the lease is certified but it is not registered, it would bind the new owner for one year from the acquisition. It is important to note that a lease agreement does not entitle a lessee to perform any construction of a rooftop PV system, but only to use and operate the existing system.

If the lease agreement is notarised and registered in the Property Register, it would be valid vis-à-vis the new owner.

If the lease agreement is notary certified, it would bind the new owner for its term, but not for more than one year after the transfer of the property. 

Under Bulgarian law, an investor cannot develop and operate a rooftop PV system based on a lease agreement; the investor must secure the right to build instead. The right to build is subject to mandatory registration in the Property Register and remains valid vis-à-vis any new owner of the property.

The owner of the PV system must benefit from the right to build established in its favour. The right to build can be granted either for a fixed or for an indefinite period. If the right to build is granted for an indefinite duration, the holder of the right to build remains the owner of the PV system. If the right to build is granted for a fixed term, the grantor of the right to build becomes the owner of the PV system by operation of law on the term’s expiry. On the other hand, if the right to build is granted for a definite time, after the expiration of the said term (termination of the right to build), the grantor of the right to build becomes the owner of the PV system by operation of law.

There are no specific statutory requirements in this respect. Any sharing of costs or benefits depends on the parties’ mutual agreement.

Currently, no legal regulation imposes obligations to install PV systems on buildings. However, as of 1 January 2024 an ordinance entered into force pursuant to which most new buildings (as well as the old ones, if subject to full restoration) must comply with the 'nearly zero-energy' criteria, so that at least 55 % of the energy consumed for heating, cooling, ventilation, domestic hot water and lighting is produced from renewable sources either on-site or near the building.

An obstacle to the development and implementation of a RES power plant, and particularly rooftop PV systems, is grid connection. Since the grid connection terms and conditions and grid connection point are determined by the grid operator, uncertainties may relate to the grid connection costs. 

Another important topic is the sale of the electricity produced. The legal framework introduces several types of transactions for electricity in the liberalised part of the market applicable to RES producers: (i) at freely negotiated prices by means of bilateral contracts, RES producers with plants commissioned after 1 January 2019 may execute corporate PPAs to sell the electricity produced; (ii) on an electricity exchange market; (iii) on the balancing market of electricity (PPA/balancing agreement)—the most common approach for producers with plants commissioned before 1 January 2019 is to sell a part or all the electricity produced through a coordinator of a balancing group; (iv) direct power line—an uncommon approach that secures a supply of electricity through a direct power line by a producer or by an electricity trader.

Currently, electricity traders are reluctant to offer long term PPAs due to fluctuations in the electricity price. Therefore, if the feasibility of a rooftop PV system is based on sale of the electricity produced, uncertainties may relate to securing long-term PPAs.

Bulgaria has migrated from feed-in-tariffs. Under the legal framework, currently only RES projects up to 30 kW benefit from feed-in-tariffs determined by EWRC for a regulatory period from 1 July–30 June.                                                                                          

The law does provide certain tax exemptions to building owners for much longer periods for which buildings have renewable energy sources installed.