Renewable energy in Bulgaria

Renewable energy Bulgaria. The future.

Solid investment returns guaranteed for the next 25 years....

We are the only company that can guarantee, 20% plus returns year on year after commissioning.

We are the only company that can guarantee energy supply contracts with the energy supply company and government.

We are the only company that has internal contacts throughout Europe monitoring the best markets for renewable energy in Bulgaria.

We are the only company with the depth of experience to provide a fully turnkey renewable energy investment package, with investments ranging from 1,000,000. Euros to 2,000,000,000. Billion.

We are a British lead company that operates to full British and European standards, including, HAZOP, BS2009, total transparency. We build to last, and we have standards we stick to.

We pride ourselves on bringing our projects in on time and in budget.

Please call for a meeting or presentation.

CEO. Pearl Engineering Ltd

Douglas William Jewell

Renewable energy investment proposal Bulgaria. 2009 > 2015.

Wind turbine electrical generation.

14.04.09.

During the last two years there has been an increased Government demand for renewable energy supplies to be fed into the national grid.
At present it is estimated that only 6% of the total electrical supply of Bulgaria is produced from renewable energy sources. The total electrical annual energy usage of Bulgaria is 44,248 Gwh.
Therefore the Bulgarian government has committed to developing an additional 6% (2,212 Gwh) of the total required electrical output to R.E. (Renewable energy) by 2011.
Although progress has been made on a number of small to medium Hydro electric plants that are planned to be online by 2011, it is clear that that the R.E. energy commitment of 12% will not be met.

The Bulgarian government has made only a token 1% commitment of it European Funding allocation to R.E. However the Bulgarian government is very supportive of privately funded R.E. projects and the German owned electrical network and distribution companies (EVN etc) have committed to R.E. with tariff payments guaranteed linked to inflation, in line with those of the G8 countries. All R,E. contracts with private investment companies are signed on a guaranteed 25 year contact basis.

The Bulgarian Government has signed a commitment to the European Union to have a min of 12% of the total electrical energy requirement of Bulgaria supplied by renewable energy sources, by 2011.

The Government of Bulgaria, and utilities companies have a legal requirement to pay agreed cost's per Kw of produced electricity fed back into the grid, these cost's are fixed and guaranteed by the European Union.

Recent example project

Pearl Engineering Ltd has recently gained exclusive right's over the purchase and development of a 12Megawatt, wind turbine project in Mid Bulgaria.

Total funding required 16.4 Million Euro's. Spread over 12 months.

The project which includes:-

• 60,000 m² of prime land in one of the best wind producing corridors in Bulgaria.
• A ready made Bulgarian company with good standing.
• Approved architects plans for 6 x 2 Meg wind turbines.
• Complete full building permissions, including 80 meter mast approvals.
• Full Government approval.
• Full Electrical Utility provider (EVN) contract for the purchase of up to 12 Meg of electricity for 9.5 cents a Kw/h, guaranteed for 25 years linked to inflation.
• Full Government/municipal/EVN, agreement to connect into main electrical grid.(HV cables already overhead on land)
• All local municipal agreements in place.

In summary everything is in place, ready for the turbines to be installed and works to be started immediately.

This is a free hold project, and the commercial investor would own the company and land free hold, in its entirety.

The Land.

The land is a prime located piece of land situated in the middle of Bulgaria's wind corridor. Wind speed measurement has been taken in this area since 1985, and the wind speed average for this location is 5.8 to 6.3 Meters per second at 60 meter's height. The wind turbines suitable for this application are designed to sit at a height of 80 meters, therefore the wind speed for the proposed turbines will be slightly faster. Therefore the turbines will run at their optimum efficiency i.e. 85 >100%.
Access to the land would require cross terrain vehicles, but this would not pose a problem for the earth works and installation.

Each 2 Meg Turbine will require a 80 x 80 meter reinforced concrete base, with special fixing points. Each turbine will need to be spaced at least 400 meters apart for optimum efficiency, and each turbine plot needs to be around 10,000 m² in total area. Therefore 60,000 m² has been purchased for this plot.
As previously mentioned the plot is free hold, and the new owner will own the land 100% without ties.

Wind Turbines and masts etc.

The wind turbines must be supplied by a major proven wind turbine manufacturer. NRG for U already have agreements and good connections with at least two of these, the largest and best known being Vestas, some work has already been carried out with the major suppliers of turbines and approx costings at this time work out at approx 1000 Euro's per Kw power, therefore a 2 megawatt turbine would be approx 2 million Euro's.

However we have a specialist purchasing team and would envisage gaining a significant discount for a order of this size, therefore I have reduced the initial budget for the 6 wind turbines by 1.2 million Euro's on the average quoted price. It is however very important that top quality wind turbines are installed as these will be guaranteed from major faults for fifteen to twenty years, therefore ensuring guaranteed income for at least ten plus years after the initial investment has been paid for.

The reality of the situation is that wind turbines of this nature, provided they are maintained properly will continue indefinitely, there are several cases of wind turbines today still operating at 90% efficiency after 25 years continuous service. Early negotiation with two manufacturers has already begun.

Government and Municipality.

The Government of Bulgaria is committed to supporting greater efforts being made to produce greater quantities of renewable energy. They have to ensure approx 12 % of their current supply, is produced by renewable energy sources by 2012, at this time they are falling far short of this target and will be penalized if they do not meet the European targets.
Bulgaria is a member of the European Union and therefore depends heavily upon European grants and funding, this funding is dependant upon the Government meeting its promises with both projects and directives.

It is therefore not surprising that the Government has signed the permanent contract with the project owners for both permission for this project but also for the purchase of the 12 Meg supply generated by these new Turbines, indefinitely.
The tariffs paid are fixed by the Government and the European Union at 8Euro cents below 4 megawatts supplied to the National grid, and 9 Euro cents for above 4 Megawatts supplied. Therefore this project would be guaranteed 9 Euro cents per Kw /hour 95% of the time.

The local Municipality has also fully approved the project and Bulgaria does not have some of the local issues that sometimes bog down such developments in G8 Europe.
There have been some 39 separate documents signed and sealed to make this project complete and ready to go, and they all have been signed a sealed.

Project Management.

Professional project management is essential for the timely completion of this project, and someone who understands the Bulgarian system. Time and time again investors have a bad experiences in Bulgaria, due to the fact that they have employed Bulgarian companies to manage a project for them, or have employed a British or European team who have no little or know experience of Bulgaria. In most cases this gas turned a good project into a disaster. In essence Bulgarian's as a whole are still emerging from communist times and will always look at any business on the basis of what they can get out of it now... Never what can they build for the future.

We are an English based team who have lived and worked in Bulgaria for the last 5 years and understand very well every trick and scam that has ever been conceived. We have successfully Project managed many different project's here from Green field to completion, on time and in budget.

We are also supported by our own land and real estate company which is professionally run, and supported by an English qualified lawyer with 6 years experience in Bulgaria, and has practiced Real Estate law for the last 15 years. Pearl property routinely carries out land, company, and property purchases for many English and European clients, and takes out the risk factor for them.

Fully conversant with due diligence and has worked with many main line Bank trust's. We have three offices in Bulgaria including a tourist and information centre in Pamporovo. The website is www.pearlproperty.net. A basic senior engineer's CV for your information, our most senior staff will Project manage this project as I believe this would be the first of many more to come and we have a reputation to carry out projects better than other's and this would be an excellent opportunity to demonstrate that.

Our normal Project management fee's are 5 to 10% of project value. This is a unique project of great personal interest. I have attached some information about my company.

Summary and predicted questions.

In effect this is a unique project that is ready to go now. When a new owner/investor is confirmed, we could literally start the earth works and concrete bases and utilities in two weeks. Once Turbines have been confirmed it would be possible for the whole project to be completed and online within 12 months.

The starter budget I have put together will be guaranteed, and it is possible that reduction's can be made due to good management and purchasing skills. All monies spent will be fully accountable and transparent to the investor. A proven top accountant would be employed to run the Bulgarian company account's. All monies invested in the project would be recorded as a personal loan to the Bulgarian company owned by the investor/owner.

Therefore during the first four years of operation when the investment monies are being returned to the investor, no business tax would be liable, as the initial investment would be recorded as a business loan (offshore) being repaid plus interest.
Thereafter, a 10% business tax (lowest in Europe)would be payable to the tax authorities on profit made after costs, maint, and asset de-valuation.
In effect, this would amount to 6-7% tax in reality.

It would be envisaged that NRG4U Ireland (Dermott Nugent) would take on the maint contract for the wind turbines and the costs for this would be in line with any main line wind turbine maintenance companies in Europe. I would continue to provide assistance where big cranes etc were required.
Although in Bulgaria these turbines would be monitored and maintained by a European team of specialist's.

All turbines would be online so that they would be constantly monitored for there efficiency and any issues that may arise.

Payment for the electricity supplied to the national grid would be paid directly from the government body to the company account which would be controlled by the investor owner, and a manager of his choice. Please see attached, spread sheets and project plan.

Question.

Why has this opportunity come up and why do the Bulgarians who have put all of this together with their own money, or a loan. With a return on investment in just over 4 years worst case, and after this a guarantee 3 plus million Euro's a year net profit indefinitely surely this should not even be available for sale ??

Answer.

Yes, I to thought exactly this, because I already new that permissions, and Government agreements were so difficult to get, I had a number of meetings with these people. The reality is that they have been to every Bank possible in Bulgaria to borrow this money, but because of the current world economical climate, and the fact that so many Bulgarian Bank loans to Bulgarian Businesses have gone bad (in effect it is very common here for a Bulgarian to get a several million Euro loan here on the back of a project and land, with the business plan to build and complete and sell a complex, and when the money has been released by the bank they immediately go out and buy expensive cars, boats, etc and end up not completing the project, defaulting and the bank being stung.

For whatever the reason, this is the Bulgarian mentality, and it has resulted in Banks here no longer wanting to do business with Bulgarian's !!!! I don't blame them.

Therefore they were unable to secure a loan with any bank here, and have been unable to find a private investor, and have therefore got down to cutting their losses and selling off the project for what they can. They initially were asking 1,5 million Euro's, and I have already reduced this to 1.2.

This opportunity would not come up in G8 Europe, but Bulgaria is different. To our advantage.
This will need to be acted on very quickly as it will obviously no be around for long. I am looking to finalize a deal with these people very soon, and am currently preparing to talk other UK/European investor’s who we have known and worked with in the past.

In effect this would represent a pilot project which would inject some badly needed confidence in the Bulgarian energy market, and would lead to a continuation of the same theme on a greater scale.

Vision Statment.

There is a strategic opportunity within Bulgaria to form a private, government and European Union assisted company which can dominate the R.E. requirement for Bulgaria. This would equate to approximately 6% of total national electricity requirement over the next 5 years approx 2,212 Gwh of electrical generation. This would represent a combination of Wind turbine and Solar PV generation. Investment required for this would be in the region of 2 Billion Euro's over 5 years, of this investment currently 1% would be met by the Government and approx 10% by the European Union. Return on capital investment would be staggered over a 6 year period starting from year 2.
The Bulgarian natural landscape and average sunlight hours, lends itself to this vision.
Financial return would be guaranteed, over a 5 year period with monthly payments being returned to the investor on a monthly basis from year 1.
This would guarantee for the investor a 20 year min 20% continuous annual return on initial investment, index linked to inflation.

It would also put the company in a strategically strong position for increases in quota’s of R.E. in Bulgaria and other emerging countries of the EU.

Douglas W Jewell. MSc Emec.

Overview Bulgaria.

• Country Profile
• Latest Developments
• Projects
• Policy/Regulatory

Currently, there is about 12,668 MW of installed capacity in Bulgaria including thermal, nuclear, and hydroelectric resources. Despite the current excess of capacity, Bulgaria is actively seeking outside investment to expand because 40 percent of the current generation is to be retired by 2010. Bulgaria also imports over 70 percent of the fuel required for energy production and is interested in developing indigenous resources. On January 1, 2002, Bulgaria passed the Ordinance on Setting and Applying Prices and Rates of Electric Energy.

This is a significant incentive that requires transmission and distribution enterprises to purchase renewable power at preferential rates. A system of Green Certificates combined with base tariffs is planned to replace the current system in 2007. As part of their obligation to the European Union, Bulgaria will have 11 percent of their gross electricity consumption generated from renewable energy sources by 2010.

Except for solar, Bulgaria has very promising renewable development opportunities. Bulgaria is one of the top countries identified for wind energy development (3,400 MW mid term potential). Despite limited legal and economical framework, Bulgaria has tremendous wind energy potential and state-of-the-art wind data supporting development. Bulgaria has a sizable reserve of geothermal energy and is rich in low enthalpy geothermal waters used for space heating, greenhouses, drinking water, and balneology. In addition, there may be the potential for up to 200 MWe electricity generation from geothermal wells, but more conclusive reports must be completed for verification.

Considering that approximately 90 percent of the country's land is arable, agricultural land, or forests, the potential for the development of biomass projects looks promising with about 3,400 MWe of technical potential identified. The Bulgarian government believes that in upcoming years there will be a great interest on the part of investors in the field of hydroelectric power, specifically small and micro hydropower plant projects. As part of the National Energy Strategy till' 2020, the State envisages efficient water resource utilization as one of its main objectives. The State anticipates this can be achieved in two ways: through the privatization and rehabilitation of existing hydro plants and the construction of new hydro plants. Although Bulgaria resides in an area with medium solar insolation the current low cost of heat and electricity may make the overall capital costs of solar energy uneconomic.

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