Southeast Europe Energy & Construction Projects: Strategic disinformation? “Japanese consortium to build one of the world’s largest solar power stations in Bulgaria”

From January 22 through January 26, 2011,

Bulgaria

’s Prime Minister Boyko Borisov visited

Japan

as head of a delegation of Bulgarian government and business representatives that also included Miroslav Naydenov, the Minister of Agriculture and Food, as well as Traicho Traykov and Evgeny Angelov, respectively the Minister and Deputy Minister of Economy, Energy and Tourism. Among the highlights of the trip was the signing on Monday, 24 January, of a memorandum of understanding between the firm Bulgarian Energy Holding (BEH) and the Japanese firm Toshiba Corp. regarding collaboration in various energy fields.

One day before the Prime Minister’s arrival in Japan, on the morning of 21 January, the Japanese newspaper Nihon Keizai Shinbun (colloquially “Nikkei”) published a report to the effect that a consortium of Japanese firms, together with the Japanese government and the Czech energy giant CEZ Group, is planning to build a 250 MW solar plant in Bulgaria. An initial article, based on the printed newspaper article, was posted to Nikkei’s web site:

東芝など官民連合、ブルガリアで最大級の太陽光発電所

This article reports (without indicating sources) that a consortium of Japanese firms, backed by an unspecified sort of support from or alliance with the Japanese government, will construct the largest photovoltaic solar park in the world in

Bulgaria

. The four Japanese companies – Toshiba Corp., Tokyo Electric Power Co., ITOCHU Corp., and the public/private partnership Innovation Network Corporation of Japan (INCJ) – will form a joint venture in

Bulgaria

with the Czech power company CEZ. The total cost of the project will be in excess of 100 billion yen (880 million euros), of which total the four Japanese companies will together provide 50 billion yen and CEZ 10-20 billion. The output of the plant is expected to reach 250 MW after five years. The two governments are expected to reach an agreement at the beginning of the following week.

This first web article was followed later in the morning by a longer online article taken from Nihon Keizai Shinbun’s morning edition:

東芝など官民連合、最大級の太陽光発電、２５万キロワット、ブルガリアで

(Only the first part of this article is available to non-subscribers, but the entire article can be found at another site.)

This fuller article adds some details and strategic background not found in the earlier report. The photovoltaic plant will be located in the city of Yambol in eastern

Bulgaria

. Plans are to build an initial plant of 50 MW by the end of 2011, and gradually invest more money year by year through 2015 to expand the plant. An accord is to be signed at the beginning of the following week between

Japan

’s minister of Economy, Trade and Industry and

Bulgaria

’s minister of Economy, Energy and Tourism. The Japanese government will contribute funding via the Innovation Network Corporation of Japan (INCJ), and the Bulgarian government will assist the effort by establishing a fixed solar feed-in tariff and by implementing other improvements to the transparency of the system.

The article goes on to analyze the advantages of this deal for the various participants. The advantage for

Bulgaria

will be in boosting its share of energy from renewable resources from the present 7% towards its target of 16% by 2020. For

Japan

the advantage will be the comparatively high prices paid for renewable energy in

Bulgaria

, which are 60% higher than those in

Romania

. Toshiba, for its part, is hoping that by 2015 its annual revenue from photovoltaic solar power will reach 150 billion yen, out of a target of 200 billion yen for total company revenue. As for Tokyo Electric Power Co., that firm has been operating a photovoltaic solar park in

Korea

since 2008, and in the autumn of 2010 announced plans to contruct a photovoltaic solar park in California.

These two news reports from Nikkei have been picked up and echoed around the world, but no details have been forthcoming beyond those published by Nikkei on the morning of 21 January. On Monday, 24 January, there was in fact a signing of an agreement in Tokyo regarding energy, but it was between Toshiba Corp. and

Bulgaria

’s publically owned energy holding company, Bulgarian Energy Holding EAD, for energy cooperation in a number of areas, and news reports of the signing did not mention any specific solar projects.

Likewise, on the day of the Nikkei articles – 21 January – a journalist for Yahoo contacted Toshiba about the story:

Toshiba to build 'huge solar plant' in Bulgaria

The Yahoo article reports the following:

"It is true that Toshiba is carrying out various activities for developing solar power in

Bulgaria

," a Toshiba spokesman said. "But we cannot comment on a specific project and nothing has been decided yet."

In fact, back on 30 August 2010 it had been announced that Toshiba had obtained a permit for the construction of a solar plant in Yambol:

Слънчевата централа на "Тошиба" край Ямбол получи разрешение за строеж

Specifically, the permit was for a photovoltaic plant of 10 MW to be built on about 300 decares (30 hectares) of land in Bezmer Village, Tundzha Municipality, Yambol District,

Bulgaria

. The investment was expected to be in excess of 30 million euros, and the August news report goes on to mention that “the Japanese” (presumably Toshiba) planned to build 8 solar parks in Europe by 2015, and that Toshiba expected to see its experience in solar energy and in smart grid serve to position the company well in the Italian and American markets, so that in the end “these investments” would come to generate about 1.8 billion dollars of revenue annually for Toshiba by 2016.

In addition to the Yahoo report, another piece of contrary evidence is an official press release published on 24 January by

Bulgaria

’s Ministry of Economy, Energy and Tourism:

"Тошиба" инвестира 37.6 млн. евро в соларен парк край Ямбол (24.01.2011 г.)

This press release makes no mention of any specific photovoltaic projects involving Toshiba except for the 10-MW project at Yambol for which Toshiba had already received a permit back in August. The press release says that Toshiba will be investing about 4 billion yen (€ 35 mln) to develop this solar park, which will be operational in 2011.

The press release goes on to note that “[t]his is part of a major project of the Japanese corporation to build solar parks in Bulgaria, other European countries, and the USA”, and that Toshiba “is considering the implementation of other similar projects in Bulgaria as well as the acquisition of local firms with experience in building such facilities.”

Most significantly, however, the press release states the following: “Despite initial plans to attract other co-investors, Toshiba announced plans to carry out the investment alone.”

Another item worthy of attention is Toshiba’s official press release of 24 January, issued after the signing ceremony held at Toshiba headquarters in Tokyo earlier that day:

ブルガリア国営企業とのエネルギー協力に関する覚書の締結について

The press release makes no mention of any specific solar projects in

Bulgaria

, but merely notes that the MOU with the Bulgarian power company BEH represented an “opportunity” for Toshiba to carry out in

Bulgaria

, among other things, “the development of mega-solar projects”. (The expression “mega-solar project” (メガソーラープロジェクト) is used in crowded Japan for anything over 1 MWp, and in fact Toshiba had used the term in May 2010 to refer to its 10 MWp project at Yambol, so the expression need not necessarily refer to a project on the order of 250 MWp.)

Finally, the website of Tokyo Electric Power Co. mentions no projects in

Bulgaria

except for a geothermal project at Sofia Pernik and a biomass project at Svilosa (see the 2007 file “今回日本政府の承認を受けた 23 事業”).

To sum up, there has been no corroboration from any source of the details leaked to Nikkei, neither from Toshiba itself, nor from Bulgarian authorities, nor from Japanese authorities, nor from local journalists on the ground in Yambol,

Bulgaria

. The investment amounts given by Nikkei are vague: no specific amounts are provided for the four individual Japanese companies, and only a vague figure of 10-20 billion yen is given for the firm CEZ in Prague. And not only do subsequent news reports and press releases fail to add any additional details to Nikkei’s information, they even fail to corroborate what had been leaked to Nikkei. Thus we have Bulgaria’s energy ministry on Monday stating only that Toshiba has “confirmed” that it will go ahead with the 10-MW project at Yambol, and noting that the firm has decided not to include other investors even in that small project. As for Toshiba itself, its press release of 24 January makes only one vague reference to “mega-solar projects”, and this term is merely repeated in passing in the joint statement between the Bulgarian and Japanese ministries issued on 25 January. Likewise the websites of Tokyo Electric Power Co. and BEH EAD give us no indication that these two companies have any knowledge of a specific large solar project being contemplated for

Bulgaria

In conclusion, one gets the impression that someone close to Toshiba in Tokyo leaked to a Nikkei journalist some details of a very preliminary idea for a Japanese consortium for one or more photovoltaic parks somewhere in Bulgaria (perhaps at Yambol, but perhaps not).

What could have been the motivation for this leak? If it had come from the Bulgarian side, we would have reason to suspect land speculation in the area around the announced project site, or else local elections.

But since the leak apparently came from the Japanese side, one possible motive that comes to mind would be an attempt to temporarily boost the stock price of one or more of the Japanese companies involved. Yet this seems rather doubtful, given the large size of the companies involved – Toshiba, Tokyo Electric Power Co., and ITOCHU.

Another possible motive might be a boost to the ruling party in nationwide elections, yet no such elections are coming up in the near future.

Perhaps the only remaining possibility would be a disaffected Toshiba staffer or Toshiba-related consultant who, seeing his pet project in danger of being sidetracked and forgotten due to the recession, tries to jump-start the process by using a leak to Nikkei in the hours before the Bulgarian delegation’s arrival as a way to generate media enthusiasm and present the Bulgarian and Japanese dignitaries with a fait accompli, forcing them to publically acknowledge the project as alive and realistic rather than risk embarassment by denying it.

If that was the motivation, then the attempt would seem to have failed. All of the governmental and corporate press releases regarding the accords reached in Tokyo between the Bulgarian delegation and their Japanese counterparts steered clear of giving the slightest support to the Nikkei leaks published on Friday morning, and with no additional details forthcoming over the weekend and apparently no interactive press conferences at which the representatives of the two sides could be questioned, the news of the “biggest solar park in the world” had already vanished from the radar screens by the time the last comuniqués were being issued on Tuesday, 25 January.

Was the story simply invented out of nothing? Probably not. The sorts of details provided to Nikkei do seem to indicate some kind of plan for a real project, but their vagueness gives the impression that the project has not moved very far beyond the stage of daydreaming and wishful thinking.

Only time will tell, but the lack of any supporting news – not to mention permits, land purchases, or requests for grid connections – makes it seem unlikely that between now and the end of 2012 we will see anything from this beyond a Toshiba-only photovoltaic plant of 10 MW or perhaps 50 MW capacity.

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