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The future of green hydrogen in Bulgaria

The future of green hydrogen in Bulgaria

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Thanks to its qualities - environmental friendliness and a wide range of applications, hydrogen occupies an increasingly central place as an energy carrier. Focus on its use, and in particular on the use of green hydrogen, is also placed at European Union (“EU”) level, where in a number of acts, it is considered an important factor for decarbonization, fulfillment of the global goals of the Paris Agreement and achievement of carbon neutrality until 2050. The reason is that both hydrogen and electricity can be generated from greenhouse gas neutral sources addressing climate change and air quality issues. To deploy green hydrogen and turn it into a viable solution to decarbonize, a lot of investments and a favorable regulatory framework are required.

In accordance with the set goals, green hydrogen is already an integral part of the policies developed by the Bulgarian authorities. Hydrogen production from renewable sources is among the policy measures provided in the Integrated Energy and Climate Plan of the Republic of Bulgaria 2021–2030 (“IECP”). According to IECP, steps will be taken to launch hydrogen production via Power to X plant solutions, as the surplus electricity generated from solar and wind power is expected to be used for hydrogen production. As a basis for the development of hydrogen capacities in Bulgaria, IECP foresees a pilot project for a hydrogen plant with a total installed capacity of 20 megawatts by 2030 to be developed.

The production of green hydrogen occupies a leading place in the Bulgarian Recovery and Resilience Plan (“BRRP”). One of the reforms provided for in part “Green Bulgaria” in the BRRP is aimed at preparing and approving National Roadmap to improve the conditions for unleashing the potential of hydrogen technologies and mechanisms for producing and supplying hydrogen. As a result, the barriers to developing and implementing these technologies shall be identified and proposals for regulatory changes shall be prepared accordingly.

Taking into account that currently, there are no green hydrogen production plants built in the country, in the BRRP, a Scheme to support green hydrogen and biogas pilot projects (the “Scheme”) is developed. It is foreseen that the efforts will be directed to the launch of projects that can be implemented in close cooperation between scientific research and industry. The aim is the Scheme to enable the introduction of green hydrogen with application in industrial production, as well as its future use in transport and for the production of electricity and heat energy. The provision of funds under the Scheme shall be made on the basis of a project proposal selection procedure, in which the criteria for the selection of project proposals will be determined. The financial resource is intended for purchase of new machinery, facilities and equipment representing tangible fixed assets. As per Regulation (EU) No. 651/2014, the aid intensity shall be 45% to 65% depending on the type of undertaking (micro, small, medium or large) and will not exceed EUR 15 million per undertaking. The aim until 2026 is for 65 megawatts of green hydrogen production capacity to be installed. 

The specific requirements under the Scheme are yet to be announced. Implementing the above-presented projects is expected to be a significant incentive for investments in the field, which will positively impact economic growth and create job positions. Investments in hydrogen are also in line with the EU taxonomy for sustainable finance, which should not be overlooked. They will also stimulate the low-carbon development of the economy and reduce dependence on fuel and import of energy which is of crucial importance nowadays. 

By Mihaela Dimitrova, Associate, PONTES 

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