The European Commission has opened an in-depth investigation into whether Bulgaria can pay €61.04 million plus interest to ACF Renewable Energy Limited under an arbitration award linked to changes in Bulgaria’s support scheme for renewable electricity.
Bulgaria introduced a scheme in 2011 to support electricity production from renewable sources and changed it in 2013, 2014 and 2015, the Commission said in a statement on Wednesday.
The scheme in place was notified to the Commission in March 2016 and approved under EU State aid rules on 4 August 2016.
ACF, a Malta-based company, invested in Bulgaria’s renewable energy sector in 2012 by purchasing a solar photovoltaic power plant that benefited from the 2011 support scheme.
After Bulgaria changed the scheme in 2013 and 2014, ACF continued to receive support under the modified scheme and started arbitration proceedings seeking compensation for support it said it would have received under the earlier terms.
An arbitration award dated 5 January 2024 found Bulgaria had breached the Energy Charter Treaty and ordered it to compensate ACF for losses linked to the scheme changes, the Commission said.
The compensation totals €61.04 million plus interest, and Bulgaria has notified the award to the Commission under State aid rules but has not paid any money so far.
Questions over state aid and EU law
The Commission said its preliminary view is that paying the award, and implementing it, would amount to State aid under Article 107(1) of the Treaty on the Functioning of the EU and would be incompatible with the EU’s internal market.
It stated it will examine the measure further, including whether it may breach EU treaty rules that protect the role of the Court of Justice of the European Union as the final authority on EU law.
The case stems from an “intra-EU” dispute — meaning an investor from one EU country bringing a case against another EU country — and the Commission said it will assess whether the award conflicts with EU law on jurisdiction, including Articles 267 and 344 of the treaty.
Bulgaria and other interested parties will be able to submit comments during the investigation, and opening the procedure does not pre-judge the final outcome.
The Commission also pointed to court rulings that have found investor-state arbitration within the EU to be contrary to EU law, including the 2018 Achmea judgment and the 2021 Komstroy judgment, and noted that the EU’s withdrawal from the Energy Charter Treaty will take effect on 27 June 2025.
