Energy Policy, Legislative Background

The main objectives of the energy policy are

the liberalization of the energy market
the establishment of a privatization program
the reduction of costs
the promotion of renewables
the energy efficiency
nuclear safety

As was stated in a Concept Paper on the National Energy Strategy 2002, the situation is characterized by high dependence on imports (over 70% of the country's primary energy resources), by an above-average energy intensity, and competing goals of ensuring security of energy supply and of meeting environmental requirements, particularly because of the direct relation between the emissions of sulphur dioxide and the increased consumption of coal lignite. The paper states, that efforts focused on the reliability of supplies can be successful only if they are backed up with energy saving policy. And while in the case of supply the possibilities of Bulgaria are limited, in the case of energy efficiency the potential is high.

National Strategy for Development of Energy and Energy Efficiency until 2010

This plan called for eventually shutting down Units 1 through 4 at the Kozloduy nuclear power plant and modernizing Units 5 and 6; in addition, a second nuclear power plant, the 600 megawatt (MWe) Belene facility, was to be built by 2010. The plan also called for construction of 1,500 MWe of coal-fired generating capacity, 430 MWe of hydroelectric power with a pumped storage plant, and the restructuring of the Bulgarian state-owned electricity company, Nationalna Elektricheska Kompania (NEK), to improve the economy of its operations. These plans to position Bulgaria to capture an increasing share of regional demand and increase its electricity exports by about four times within 3-5 years, were among the differences to the findings of a World Bank Study (Energy-Environment-Review, 2001), which recommended lower cost rehabilitation investments and priority reforms to be implemented first.

Energy Strategy 2002

A new national energy strategy was adopted by the Parliament in July 2002. This lays down the basis for introducing market mechanisms and transforming the sector, including improving Bulgaria's energy efficiency. The revised Energy Strategy also plans to strengthen the autonomy of the State Commission for Energy Regulation.

The Energy Strategy 2002 states as overall principles of the energy policy:

Introduction of market relations in the energy sector, based on cost-reflective tariffs and free contracting
The active role of the state in the creation of a clear and stable legal and regulatory framework for investments, commercial activity and protection of public interests.
Creation of a legal, regulatory and market environment prior to the implementation of new large-scale investment and privatization projects.
Pro-active energy efficiency policy as a means for improving the competitiveness of the economy, security of energy supply and environmental protection
Efficient social protection through shifting government subsidies from the producer to the consumer, through energy efficiency measures and introduction of socially-oriented tariffs
Positioning of Bulgaria as a reliable country for the provision of future transit of oil, natural gas and electric power and as a dispatching and market center in the region.

Legislative background

Energy Act (as of 2006)

Promulgated in the State Gazette No. 107 of 9 December 2003, amended in the State Gazette No. 18 of 5 March 2004, amended in the State Gazette No. 18 of 25 February 2005, amended in the State Gazette No. 95 of 29 November 2005, amended in the State Gazette No. 30 of 11 April 2006, amended in the State Gazette No. 65 of 11 August 2006, amended in the State Gazette No. 74 of 8 September 2006.

It contains provisions for (selected chapters):

Energy policy,
Regulation of energy sector activities,
Licenses,
Public obligations,
Electricity industry
Heat supply,
The promotion of production of renewable electricity from renewable energy sources and from cogeneration,
Gas supply, etc.

The principle purposes of the Energy Act are:

High-quality and secure supply of electricity and heat energy and natural gas to the general public;
Energy development and the energy security of the country through efficient utilization of energy and energy resources;
The generation, import, export, transmission, distribution and trade in electricity, heat, natural gas, crude oil and petroleum products shall be carried out while guaranteeing the protection of the life and health of citizens, property, the environment, the interests of consumers, and national interests;
Creation and development of a competitive and financially stable energy market;
Supply of energy at minimal costs;
Sustainable development in the utilization of renewable energy sources, including generation of electricity from renewable energy sources in the interests of environmental protection;
Promotion of the cogeneration of electricity and heat energy;
Development of infrastructures for the transmission of electricity, natural gas, crude oil or petroleum products within and through the national territory.

The Energy Act is available in English on the website of the Ministry of Economy and Energy.

Energy Efficiency Act (as of 2007)

Promulgated in the State Gazette N 18/5 March, 2004, amended SG. 74/8 September 2006; amended SG 55/6 June 2007.

The energy efficiency policy shall be implemented by the Minister of Economy and Energy. The measures and activities on energy efficiency enhancement shall be implemented by the Executive Director of the Energy Efficiency Agency.

The Energy Efficiency Act provides for:

national long- and short-term programs for energy efficiency
the preparation of measures for the harmonization of the Bulgarian legislation with EU legislation in the area of energy efficiency
the international collaboration of the Republic of Bulgaria in issues of energy efficiency and renewable energy sources, etc.

The Act further lays down the provisions for Energy Efficiency Programs, Energy Efficiency Measures, and the establishment of an Energy Efficiency Fund.

The Energy Efficiency Act is available in English on the website of the Ministry of Economy and Energy.

Renewable and Alternative Energy Sources and Biofuels Act (2007)

Prom. SG. 49/19.06.2007

This new act on RES was adopted in June 2007 for diversifying energy supply, environmental protection, to set the terms for sustainable local and regional development, and to increase the capacity of SMEs and RES producers etc. Suppliers are required to purchase all renewable electricity that has a certificate of origin. The public utility company and the end suppliers, respectively, shall purchase the entire quantity of energy generated from renewable and alternative energy sources, except for the power generated by hydroelectric power plants with installed capacity of over 10 MW, at preferential prices.

Selected chapters:

State policies towards encouragement of use of renewable and alternative energy sources, biofuels and other renewable fuels;
Production of energy from renewable and alternative energy sources;
Encouraging production of electricity generated from renewable energy sources;
Encouraging the use of biofuels and other renewable fuels in the transport sector;
Prices of electricity generated from renwable energy sources; etc.

The basic objectives are:

to promote development and implementation of technologies for production and use of energy generated by renewable and alternative energy sources;
to promote the use and development of technologies for production and consumption of biofuels and other renewable fuels in the transport sector;
to diversify energy supplies;
to increase the output of small and medium-size enterprises generating energy from renewable and alternative energy sources, and producers of biofuels and other renewable fuels;
environment protection;
to set the grounds for sustainable local and regional development.

The Renewable and Alternative Energy Sources and Biofuels Act is available in English on the website of the Ministry of Economy

Ordinance on Setting and Applying prices and Rates of Electric Energy

Beginning Jan. 1, 2002, the "Ordinance on Setting and Applying prices and Rates of Electric Energy" goes into effect in Bulgaria. According to the Ordinance, renewable power enjoys preferential pricing, moreover transmission and distribution enterprises must purchase all quantities of renewable power that independent producers make available.

Important contracts between Austria and concerning energy issues

Environmental co-operation agreement

Signed April 5th, 2002. The agreement lays down the legal framework for the development of partnership in waste management, water management and ground water protection, air pollution by the energy sector and industry, climate change, environmental protection, ecological training, education and science, and the legal, institutional and economic aspects of environmental management.

Memorandum of Understanding Regarding Bilateral Co-Operation for the Realisation of Joint Implementation Projects Between the Republic of Austria and the Republic of Bulgaria

A memorandum of understanding regarding bilateral co-operation for the realisation of Joint Implementation Projects between the Republic of Austria and the Republic of Bulgaria was signed in September 2002.

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