energy efficiency strategy to mitigate ghg emissions. energy …€¦ · this information brochure...

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Translator: Anna Dourcheva

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The Global Environment Facility (GEF) is a financingmechanism. It is structured as a thrust fund, operat-ing in collaboration and partnership with its threeexecutive agencies - the United NationsDevelopment Programme (UNDP), the UnitedNations Environmental Programme (UNEP) and theWorld Bank, with the aim to achieve global environ-mental benefits.

The United Nations Development Programme(UNDP) is the UN global network for introducingchange and facilitating the exchange of knowledge,experiences and resources among the states withthe aim to help people build a better life. UNDP ispresent in 166 states and works jointly with them forresolution of global issues and the national problemsthey stumble upon. Until they develop their own localcapacity they may draw on the experience of UNDPand its numerous partners.

UNDP/GEF support environmental projects in thefield of biodiversity, climate change, internationalwaters, depletion of the ozone layer in the atmos-phere, durable organic polluters and soil erosion.

The project is financed by the GlobalEnvironment Facility through the UNDP. It

aims at dissemination among Bulgarianmunicipalities of policies and practices that

can assist them to overcome successfullythe barriers to energy efficiency

improvement and reduction of GHGemissions and other environmental

polluters.

The project comprises two major components:

Local capacity building in Bulgarianmunicipalities in the field of energy

efficiency;

Supporting demonstration projectsin typical energy end-user municipal sites.

The activities incorporated in the first projectcomponent are its core. They comprise

introduction of energy efficiencymanagement in municipalities, training of

local decision-makers and experts andintroduction of financial tools and

mechanisms for implementation of energyefficiency projects.

The demonstrations under the secondproject component aim at supporting the

development of local institutional and humancapacity and consolidating its importance for

and impact on the municipal policy. Theycomprise representative projects in the field

of street lighting, district heating andbuildings. The demonstration projects

illustrate how the local institutions and thenewly acquired knowledge and skills might

be applied under real conditions.

The activities under the two projectcomponents are concentrated in Gabrovo.

This municipality acts as a specificlaboratory in which different management

and technical approaches and solutions areelaborated and tested. In fact, the impact of

the project is spread among all themunicipalities-members of the Municipal

Energy Efficiency Network EcoEnergy andin a number of cases even beyond its

boundaries. The number of municipalitiesinfluenced by the experience of the Energy

Efficiency Demonstration Zone in the city ofGabrovo provides grounds to consider that

the reforms in the field of sustainablemanagement of natural resources are

welcome throughout the country.

Energy Efficiency Strategy to Mitigate GHGEmissions. Energy Efficiency

Demonstration Zone in the city of Gabrovo

Legal, organizational and technical issues related to the investmentprocess in Bulgarian municipalities

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o Investments in energy efficiencyand renewables

Introduction

Potential for investments in energy efficiency and the use of RES National Energy Conservation Programme

Energy efficiency in municipal sites

Energy generation from RES

Legal framework for investments in municipalitiesManagement and ownership rights

Local self-government

Municipal property

Granting of concession rights

Ownership on energy sites

Spatial development

Spatial development plans

Coordination of investment projects

Technical infrastructure

Purchase, sales, privatization

Sales of municipal property

Privatization procedures

Investments in municipal sites

Investment modalities

Sources of financing

Restrictions to investment

Energy efficiency in municipalities

Municipal energy efficiency programmes

Energy audits

Heat and power generation

Co-generation


Institutions and procedures to address climate change

Governmental policy

Institutions

Criteria for selection of JI projects

Specific Investment practicesCo-operation of municipalities with the private sector

JI projects in municipalities

Projects financed by the Kozloduy International Fund

Financing schemes

Who may participate?

Loan allocation terms

Contact with the servicing banks

Municipal Energy Efficiency Network EcoEnergyScope and objectives

Partnerships

Information system

Activities

Impact

3

44

5

6

77

8

9

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11

1313

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Table Of Contents

2 Ånergy Åfficiency Demonstration Zone In Gabrovo

Bulgaria ranks among the countries featuring the highest energy intensity of theGross Domestic Product (GDP) in Europe. Energy consumption is high both in

public activities and in the residential sector. The forthcoming accession ofBulgaria to the European Union calls for urgent measures to improve energy effi-ciency in order to approximate the country's indicators to those of the EU mem-ber-states. The budget of Bulgaria is not capable to finance such a large-scale

national programme aimed at increasing energy efficiency. Attracting privatefinancing for energy efficiency improvement in the public sector and state admin-

istration is becoming a top priority national task.

This information brochure is intended for private and institutionalized investors,who wish to invest in energy efficiency projects in municipalities. It contains infor-

mation about the opportunities for investing in municipal sites and about themajor modalities of public-private partnerships applicable in Bulgaria. The legal

framework, which affects directly the implementation of investment projects inmunicipalities, is presented. Examples are given of projects for energy efficiency

improvement and the use of renewable energy sources implemented in Bulgarianmunicipalities.

Introduction

Investments in energy efficiency and renewables 3

International comparisons show1 that in terms of two majorindicators for energy efficiency - primary and final energyintensity2, characterizing the national competitive capacity -Bulgaria ranks on one of the last places among the countriesapplying for accession to the European Union. For the purpos-es of overcoming the country's lagging behind in this field,drafts of a National Energy Conservation Programme and a 3-year Plan of Action for Energy Conservation have been workedout in the framework of the SAVE II Programme of the EuropeanUnion by the Energy Efficiency Agency (EEA) in cooperationwith the Austrian Energy Agency (E.V.A.) and the InternationalEnergy Consultancy Company (ICE, France).

National Energy Conservation ProgrammeThe studies conducted in the framework of the elaboration ofthe National Energy Conservation Programme have revealedthat the existing technical potential for energy efficiencyimprovement in Bulgaria, identified on the basis of implemen-tation of all possible technical measures, without taking into

Bulgaria possesses a significant potential for energy efficiencyimprovement. There are broad opportunities for energy generation

from renewable energy sources (RES). The country importsapproximately 70% of its demand of primary energy resources, for

which it spends about 20% of its Gross Domestic Product. Theeconomy of Bulgaria is characterized by high level of energy

intensity. The low energy efficiency, however, turns into advantagefor investors, since it ensures high rate of return of the projects.

1 Annual Energy Review -1999 (European Commission), Eurostat, ODYSEE

2 By definition energy intensity is presented as the ratio between an indicator for thequantity of consumed energy expressed in energy units (J, toe etc.) and an indica-tor for economic activity (GDP, BDS) expressed in monetary units.

National Energy Conservation Programme

Energy efficiency in municipal sites


Potential for investments in energy efficiency and the use of RES



account their economic viability, amounts to about 52%. The eco-nomic potential of the energy efficiency measures, taking intoaccount the macro-economic prospects for development of thenational economy, is in the range of 30-35%. The market poten-tial, comprising measures with return-on-investments-periodwithin 3 years, is approximately 12-14 percent.

The draft of the National Programme covers nearly 70 percent ofthe final energy consumption in the country. It envisages 63measures for reduction of energy consumption. The requiredfunds for implementation of the programme have been estimatedto amount to about BGN 5 billion. Upon full implementation of theprogramme the national economy is expected to realize savingsto the amount of nearly BGN 1 billion. The final energy consump-tion is expected to get reduced by about 1,406.85 Kthe and ÑÎ2

emissions - by about 5.6 million tonnes

Energy efficiency in municipal sites In 2003 the Center for Energy Efficiency EnEffect worked out a short-term and a long-term forecast about the required investments forenergy efficiency reconstruction of municipal sites in the top 100municipalities3 in Bulgaria in terms of population size (less the cap-ital Sofia). The long-term forecast (for a period of 10 years) about theinvestment requirements for energy efficiency improvements envis-ages reconstruction of municipal sites to align them to the normsand requirements of the European Union. The forecast has beendeveloped by groups of sites: hospitals, school buildings, adminis-trative buildings and street lighting systems (Table 2).

All in all, the investment requirements for energy efficiency improve-ment of municipal sites in the top 100 municipalities in Bulgaria hadbeen estimated to be approximately BGN 145-155 million.

Sector

Industry

Households and services

Building stock

District heating

Transport

Agriculture

TOTAL

Investments

(BGN million)

457

446

888

842

2 671

173

5447

Saved fuels andenergy total(Ktíå/year)

228

73

364

419

199

125

1408

Saved energy gen-eration capacities

(MW)

168

253

167

13

0.00

25

626

Annual economiceffect

(BGN million)

123

117

275

119

280

72

986

Saved ÑÎ2

emissions(Êt/year)

982

738

1 587

1 172

613

501

5593

Table 1. Aggregate estimated results from the National Energy Conservation Programme by 2014

3 There are 264 municipalities in Bulgaria, grouped in 28 administrative districts.

Fig. 1. Investment requirements for implementation of the National EnergyConservation Programme by 2014

Fig. 2. Investment requirements for reconstruction of municipal sites

Industry

3000

2500

2000

1500

1000

500

0

Householdsand Services

BuildingStock

DistrictHeating

Transport Agriculture

Multi-profilemunicipalhospital

60

70

80

50

40

30

20

10

0

Kindergartens Schools andcolleges

Administrativebuildings

Streetlighting

BGL

milli

onBG

L m

illion

Energy generation from RESBulgaria possesses significant reserves of renewableenergy sources (RES). Currently they are either not used at

all or their use is scarce. The share of renewable energy inthe total energy balance of Bulgaria is hardly 0.4 percent.Renewable energy comprises energy generation throughsolar collectors for hot water production and through pho-tovoltaic installations for power generation, small hydro-power plants up to 10 MW, wind power generation andenergy production from biomass, biogas and geothermalwater. The volume of energy produced from biomass isexpected to increase considerably in the coming years,whereby in the period till 2010 the share of RES in the totalenergy balance of the country shall reach 4-6 percent.

In the framework of the elaboration of the NationalProgramme on RES in the Republic of Bulgaria during thePeriod 2004-2014 studies have been conducted of theRES potential in the country. The results show that thesaved electricity as a result of the use of RES mightamount to 1,602,128 MWh per annum and the saved ther-mal energy - to 6,973,467 MWh per annum. The avoidedCO2 emissions are estimated at 4,373,000 tonnes. Theforecast has been compiled on the basis of aggregatedata from the proposed investment projects and projectproposals of the municipalities and administrative districtsin Bulgaria.


National RESpotential

1. Solar thermalinstallations

2. Solar photovolta-ic installations

3. Wind powerinstallations

4. Micro and miniHPPs up to 10 MW

5. Geothermalinstallations

6. Biomass-firedinstallations

7.Biogas installations

RES total

Total numberof projects

509

86

30

158

48

41

48

920

Total costs (USD million)

81.09

49.70

162.19

151.77

393.22

559.07

251.96

1647.01

Total powercapacity (MW)

12.43

62.22

101.18

244.26

302.55

Total heatcapacity (MW)

202.72

786.44

372.73

125.98

1487.87

Saved electrici-ty (MWh/year)

43 484.0

373 260

303 531

881 853

1 602 128

Saved ÑÎ2 emissions(thousand tonnes)

248.3

52.5

451.1

366.1

1 100.1

782.7

1372.1

4 373.1

Saved thermal energy(MWh/year)

709 506

3 145 728

2 236 380

881853

6 973 467

Operation of the instal-lations (hours/year)

3 500

3 500

6 000

3 000

4 000

6 000

7 000

Table 3. RES potential in Bulgaria

Fig. 3. Investment requirements by types of RES

Municipal buildings

Multi-profile municipal hospitals

Kindergartens

Schools and colleges

Administrative buildings in the administrative center city

Street lighting in the administrative center city

Number ofsites

54

1900

2200

167

80

Heated area(m2 )

304182

2110013

8225800

56400

Table 2. Forecast investments in municipalities

Investments (BGN million)

40

17

70

7

20

154

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Legal framework of investments in municipalities

Management and ownership status

Spatial development

Purchases, sales, privatization




Management and ownership status

Local self-government

Municipalities in Bulgaria possess full political independence andconsiderable financial autonomy with respect to implementation ofinvestment activities on their areas. Every municipal council com-piles independently the budget of the municipality, separate fromthe republican budget, on the basis of its own sources of revenueand subsidies from the state.(Law on Local Self-government and Local Administration, SG Vol.77/17 September 1991)

The state subsidy for municipalities is distributed among themunder criteria, defined in the Law on the State Budget for therespective year.

(Law on the State Budget of the Republic of Bulgaria for the Year2004, SG Vol. 114/30 December 2003))

Municipal property

Municipalities posses a significant amount of property, divided intopublic and private one. Public municipal property is not subject toexpropriation. Such is the property on important municipal sites andelements of the infrastructure, streets and public squares, and thegreen areas in human settlements. This property cannot be theobject of privatization, however it can be released for use by virtue

Municipalities are the basic administrative-territorial units, in which local self-government is realized. Depending on the ownership status of the investment

object the municipality performs the role of investor, administrative regulator orpartner of the private sector. The different roles played by the municipality in the

investment process are regulated by several groups of laws, which should betaken into consideration in the process of planning and implementation of

investment projects.

of concession contracts under specific conditions. Private municipalproperty comprises construction plots under regulation, agriculturalland, buildings and commercial sites. It can be privatized, used asan in-kind contribution in joint ventures or as collateral on solicitedbank loans or other types of deals, related to crediting and settingup of joint ventures.

(Law on Municipal Property, SG Vol. 44/21 May 1996)

Granting of concession rights

Municipalities may grant concession rights on sites, which are pub-lic municipal property, including on sites, which will be constructedby the concessionary using his own funds. Under the form of con-cession rights it is possible to grant a permit for performance by pri-vate enterprises of activities aimed at meeting public demand,which by definition are the responsibility of the municipality.Examples for such activities are waste collection and treatment,water supply etc.

(Law on Municipal Property, SG Vol. 44/21 May 1996)

Ownership on energy sites

Municipalities are the owners of the facilities for outdoor artificiallighting of streets, public squares, parks, gardens and other realestates. These facilities are public municipal property of the respec-tive municipalities. Energy distribution companies4 are obliged by2006 to transfer onto municipalities free of charge the facilities foroutdoor artificial lighting in human settlements.

(Energy Act, SG Vol.107/9 December 2003)

The Mayors of municipalities are obliged to ensure the construction,operation, maintenance and development of the networks and facil-ities for outdoor lighting on the area of the municipality for realestates, which are public municipal property.

(Energy Efficiency Act, SG Vol. 18/ 5 March 2004)

The Mayors of municipalities require from the energy enterprises onthe area of the municipality to submit forecasts for the developmentof the heat, electricity and natural gas demand, programmes andplans concerning electricity, heat and natural gas supply.

At the proposal of the energy enterprises, the Mayors of municipali-ties shall mandatory envisage in the general and detailed spatialdevelopment plans any public works needed for implementation ofthe energy-related plans and programmes.

(Energy Act, SG Vol. 107/9 December 2003)

Municipalities in Bulgaria, with the exception of Sofia, have no sharein the ownership of the district heating companies operating on theirarea, which are state-owned and are currently in the process of pri-vatization.

There are no legal restrictions for municipalities to be co-owners ofexisting or new energy enterprises, which possess a license issuedby the State Energy Regulation Commission for performing thisactivity on the respective area. The activities subject to licensingunder the Energy Act are as follows:

1. Electricity and/or heat generation;

2. Electricity, heat or natural gas transportation;

3. Electricity or natural gas distribution;4. Natural gas storage;

5. Trade in electricity;

6. Establishment of electricity market;

7. Public supply of electricity or natural gas;

8. Pubic provision of electricity or natural gas;

9. Transit transportation of natural gas.


Spatial developmentMunicipalities possess significant authority in the management ofthe investment process, which creates favorable conditions for pro-viding investment support and conducting of municipal policy fos-tering attraction of investments.

Spatial development plans

In the event of purchase of vacant plots for the purposes of con-struction one should take due account of the fact that according tothe Spatial Development Act the specific designation of the realestate plots is determined by the detailed spatial development plansand may be as follows:

- In urbanized areas or in individual real estates beyond their bound-aries: for housing, public services, manufacturing, warehousing, hol-iday-making, summer-cottage, sports and entertainment functions,for public parks and gardens, for mobility and transport, for techni-cal infrastructure, for special-purpose facilities etc.;

- In rural areas: for arable land and non-arable land.

Changes in the designation of areas and land plots for the purposesof build-up are introduced on the basis of an enforced detailed spa-tial development plan. Permits or refusals related to changes of thedesignation of the plots are issued within two months as from the dateof submission of the application and are subject to contestation.

The Mayor of the respective municipality shall organize the storageof an archive of all the approved spatial development plans andchanges thereof, an archive of the issued building document sets, aregistry of all the decisions on elaboration of detailed spatial devel-opment plans and changes thereof, a registry of the issued buildingpermits and a registry of the commissioned construction sites.

In areas not covered by spatial development plans the actualmodality of use of the land plots is recognized as their designationas far as it does not contradict some law and it may be changed forthe purposes of build-up on the basis of a detailed spatial devel-opment plan.(Spatial Development Act, SG Vol. 1/2 January 2001)

Coordination of investment projects

Investment projects are coordinated with and approved by the ChiefArchitect of the municipality. The coordination of investment projectsconsists in checking their compliance with the projections of thedetailed spatial development plan and the build-up rules and stan-dards.

The technical or working investment design projects are coordinat-ed with and approved by the Chief Architect of the municipality andserve as the grounds for the issue of a building permit. The startingdate of the procedure for approval of an investment project andissue of a building permit is considered to be the date of submissionof the investment project design to the municipal administration forapproval. The availability of a coordinated with the competentauthority conceptual investment project design is also recognizedas an initiated approval procedure.(Spatial Development Act, SG Vol. 1/2January 2001)


4 Until the enforcement of the Energy Act (2003) street lighting systems were proper-ty of the power distribution companies.


Technical infrastructure

The spatial development schemes and plans envisage transmissionand forward lines and facilities to the urbanized areas and commonnetworks and facilities of the technical infrastructure within theurbanized areas. These are constructed, maintained and repairedby and for the account of the state, municipalities or the respectiveoperating companies. Deviations from the common networks andfacilities for connection to the individual real estates in the urbanizedareas, as well as the common metering devices and distributionfacilities to the deviations, including the substations, power substa-tions etc., represent an integral part of the common networks andfacilities.

Real estates are mandatory connected to the common networks andfacilities of the technical infrastructure on the basis of the issuedbuilding documents. Requirements that have not been explicitly indi-cated by the operating companies in their conceptual papers relat-ed to the approval of the investment projects provide no grounds forrefusal of connection.(Spatial Development Act, SG Vol. 1/2January 2001)

Purchases, sales, privatizationThere are no restrictions concerning the acquisition of ownershiprights on buildings and facilities by foreign physical persons or legalentities provided these building and facilities have been erected onplots by virtue of a granted right to build.The Constitution of Bulgariaforbids solely the purchase of land by foreign physical persons andlegal entities. This restriction can, however, be easily overcomethrough registration of a limited liability company as a Bulgarianlegal entity. In the event of such registration there are no limits to theamount of foreign participation in the company's capital stock.

Sales of municipal property

Any sale of municipal property shall be performed in compliancewith the provisions of the Law on Privatization and Post-privatizationControl. The law defines privatization as transfer of ownership rightsthrough the sale of:

- shares or stocks of commercial companies, property of the state orof municipalities;

- independent parts of the property of commercial companies havingmore than 50% state or municipal participation in the capital stock;

- municipal non-residential real estates, which are not included in thematerial stock of municipal commercial companies and are used forbusiness applications (retail shops, warehouses, service shops,manufacturing workshops etc.), as well as unfinished constructionsites, which are not included in the property of municipal commer-cial companies.

Eligible to participate in the privatization are any Bulgarian and for-eign citizens. Exception is made only for legal entities, in which themunicipal share in the capital stock exceeds 50%.

(Law on Privatization and Post-privatization Control, SG Vol. 28/19March 2002)

In the event of sale of stocks and shares, owned by the state ormunicipalities, of commercial companies with more than 50% stateor municipal participation in the capital stock, an analysis of thelegal status of the entity is mandatory. The persons representinglegally the commercial company to be privatized certify the correct-ness of the information contained in the analyses.

Privatization of the municipal share in the capital stock of commer-cial companies or of independent parts of the material stock of com-mercial companies with more than 50% municipal involvement, isperformed by the municipal councils or duly authorized by thembodies. The resulting revenue is remitted to a specific account of therespective municipal council.

The monetary revenue from privatization of independent parts of thematerial stock of commercial companies, in which the municipality isnot the sole-proprietor of the capital stock, is remitted to an accountof the company and remains its property.

Privatization procedures

The privatization method is determined by virtue of a decision of thePrivatization Agency or the respective municipal councils. The deci-sion to launch a privatization procedure is promulgated in the StateGazette and published in at least two central daily newspapers.

The stocks held by the state and the municipalities in commercialcompanies are sold by means of public offer, public tender, publicannouncement of a competition and a centralized public tender.

The shares held by the state and the municipalities in limited liabili-ty commercial companies are sold by means of a public tender andpublic announcement of a competition.

The independent parts of the material stock of commercial compa-nies having more than 50% state or municipal participation in thecapital stock may be sold by means of a public tender and publicannouncement of a competition.

The terms and procedures related to the organization and conduct-ing of public tenders, public announcement of competitions andcentralized public tenders are defined by virtue of ordinances of theCouncil of Ministers.

Commercial companies with municipal participation of 50% andabove obtain concession rights on the operated sites or performedactivities under an open procedure without tender or competition. Inthe event of privatization of an independent part of the material stockof commercial companies with municipal participation of more than50%, which is technologically directly linked to a site or activity sub-ject to granting of concession rights under the provisions of Articles69 and 70 of the Law on Municipal Property, the concession rightsare assigned to the buyer of the independent part under the privati-zation contract.(Law on Privatization and Post-privatization Control, SG Vol. 28/19March 2002)


Investment modalities

The municipality has the right to perform business activities, to setup municipal enterprises and to be party to joint forms of businessactivities, in which its liability does not exceed the amount of itsshare in the capital stock of the respective entity. The investment ofthe municipality in business activities may take the form of in-kindcontribution of real estates and free monetary assets with the excep-tion of the target subsidies from the state budget.The law allows alsofinancial support by the municipal council for municipal and otherenterprises, whose activity is related to meeting the demand of thelocal population.(Law on Local Self-government and Local Administration, SG Vol.77/17 September 1991)

Sources of financing

Municipalities may finance investment projects with equity budget-ary assets, extra-budgetary assets incoming from privatization ofmunicipal sites, bank loans, loans from commercial companies orthe issue of municipal bonds.(Law on municipal Budgets, SG Vol. 33/1998)

Under these modalities of financing municipalities are owners of theprojects, while the implementation is assigned to contractor compa-nies. Depending on the size of the investments, the relationshipsbetween the municipalities and contractors are settled in a manner,which is different from case to case and the requirements put for-ward to the contractors also differ.

The provisions of the Public Procurement Act are mandatory in theevent of assignment of public procurement orders, which by thedate of announcement of the procedure have the following thresholdvalues less V.A.T.:

1. For construction works - BGN 1,800,000 and above; when thelocation of implementation of the order is abroad - BGN 5,000,000and above;

2. For deliveries - BGN 150,000 and above; when the location ofimplementation of the order is abroad - BGN 250,000 and above;

3. For services - BGN 90,000 and above; when the location of imple-mentation of the order is abroad - BGN 250,000 and above;

4. Competition for a project - BGN 30,000 and above.

In the event of assignment of a public order, which comprises bothdelivery of goods and services and the value of the services is high-er than the value of the goods the threshold mentioned in Item 3above is applied.

When the assignors of public procurement order (governmentalinstitutions, municipalities and district authorities etc. specified in thelaw) finance more than 50% of a contract for construction works, thepersons assigning the contract are obliged to comply with the PublicProcurement Act in the cases when the total value of the contractless V.A.T. exceeds the threshold stated in item 1 above. When thecontract is for services coupled with a contract for constructionworks the threshold stated in Item 3 is applied.

The terms and procedures for assignment of public procurementorders below the above stated thresholds are determined by virtueof an ordinance approved by the Council of Ministers at the jointproposal of the Minister of Economic Affairs and the Minister ofForeign Affairs.

The Public Procurement Act sets out in detail the rules for calcula-tion of the value of a public procurement orders in the event of adelivery contract under the conditions of leasing, rental or excludingthe right of purchase, as well as in the event of delayed paymentpurchases, periodically recurring contracts for delivery and/or serv-ices, contracts for insurance services, etc.(Public Procurement Act, SG Vol. 28/6 April 2004, in force as of 1October 2004)

Restrictions to investment

There are no strict restrictions with respect to the amount of the cap-ital expenditure of municipalities during the budget year. The solecondition to be met by the municipalities is that the deficit laid downin the process of compilation of the municipal budget should notexceed 10 percent of the expected revenue.(Law on Municipal Budgets, SG Vol. 33/1998)

The Law on the State Budget for 2004 permits municipal budgets tomake capital expenditure above the allocated target subsidies forcapital costs only provided the sources of funding of the extra costsare funds accumulated from local taxes and charges and other non-taxation revenues and the total equalizing subsidy.

(Law on the State Budget of the Republic of Bulgaria for 2004, SGVol. 114/30 December 2003)


Municipal energy efficiency programmes

Municipalities conduct independent policy with respect to energyefficiency improvement. The energy efficiency retrofit of municipalsites is the responsibility of local administrations. The major tools ofthe energy efficiency policy are the municipal energy efficiency pro-grammes, which are elaborated by the local administration andapproved by the municipal councils. They aim at enhancing theimpact of investments in energy efficiency. Municipal energy effi-ciency programmes make possible the attainment of better co-ordi-nation of the retrofit of municipal sites. In these programmes muni-cipal energy efficiency projects may be grouped in a manner, whichconverts them into bankable investment packages, attractive forcommercial financing. The programmes cover the following types ofaction:

- retrofit of the building stock, administrative and business buildingson the area of the municipality, and implementation of measures forimprovement of energy efficiency;

- introduction of energy saving control panels for outdoor publiclighting in human settlements and inside public buildings;

- miscellaneous other measures for energy efficiency improvement.

The programmes lay down the energy efficiency objectives andmeasures, the actions of the executive authorities, the sources offinancing, the deadlines for implementation, the indicators forachievement of the estimated results, as well as other required data.The responsibility for organization and implementation of the meas-ures, envisaged in the municipal energy efficiency programmes, isvested with the Mayors.(Energy Efficiency Act, SG Vol. 18/5 March 2004)

Energy audits

Every project for construction and reconstruction/upgrading of sitesis subject to preliminary energy efficiency assessment as an integralpart of the evaluation for compliance with the major requirementsconcerning construction works performed under the terms and con-ditions of the Spatial Development Act. Subject to mandatory ener-gy efficiency auditing is also every state-owned or municipal site inoperation, having a total floor area above 1000 m2.

The assessment of the projects shall be performed in compliancewith the requirements concerning the technical rules and standardsfor annual energy consumption of the different types of sites, definedby Regulation on Energy Performance of Sites.(Regulation on Energy Performance of Sites, SG Vol. 108/10December 2004)

Heat and power generation

Energy generation is performed on the basis of a license issued bythe State Energy Regulation Commission. No license is required forelectricity generation by individuals, possessing a power generationplant of a total installed capacity of less than 5MW and for heat gen-



eration by individuals possessing a heat generation plant of a totalinstalled capacity of less than 5 MW. When for the purposes of per-forming the activities related to heat and power generation alicense is issued prior to the actual construction of the energy gen-eration facility, the license shall contain also the conditions relatedto the construction of the site and the deadline for starting thelicensed activity.


Co-generation

The Energy Act promotes combined heat and power generation (co-generation). In the event of declared demand for heat supply, thenew natural-gas-fired installations of more than 5 MW installedcapacity should mandatory be constructed as co-generation facili-ties. The public supplier and/or municipal suppliers are obliged topurchase out the total quantity of electricity produced by the highlyefficient combined heat and power generation facilities, registeredby virtue of a Certificate for Origin, except for the quantities used bythe manufacturer for his own needs, for which there are contractssigned at freely negotiated prices and with which he is participatingon the balancing market. Electricity is purchased as follows:

1. At preferential prices in accordance with the respective ordinancefor any quantities produced by each power plant of that manufac-turer, which has a capacity below 50 MW/h;

2. At negotiated prices and/or prices on the balancing market forquantities produced by each power plant of that manufacturer,which has a capacity above 50 MW/h;

The mandatory purchasing out of the electricity at preferential priceswill be applied until the setting up of a system for issue of and tradein "green" certificates. The Minister of Energy and Energy Resourcesrules on the minimum quantities of electricity, produced from thehighly efficient co-generation facility, for each producer individuallyas a percentage of the total annual production output of electricity ofeach producer by years for a total period of 10 years as from thedate of introduction of the system for the issue of and trade in"green" certificates.



The Energy Strategy of Bulgaria and the Energy Act envisage anumber of measures for promotion of production and consumptionof energy from renewable energy sources (RES). The nationalindicative objectives for promotion of the use of renewable energyare set by the Council of Ministers at the proposal of the Minister ofEnergy and Energy resources as a percentage from the gross annu-al electricity demand in the country for the next ten years. For thepurposes of attaining the national indicative objectives energy gen-eration from RES will be promoted through:

1. taking proper account of the principles governing the electricitymarket;

2. taking into account of the characteristics of the different renew-able energy sources and technologies for electricity generation;

3. ensuring to energy producers at least an equivalent effect ofpreferential treatment with respect to their revenue per unit of gen-erated electricity in the event of changes in the promotional mech-anisms;

The Energy Act obliges the public provider and/or public suppliers,who possess a license for supply of electricity, to purchase out thetotal quantity of electricity produced by a power plant using RES,

with the exception of the quantities for which the producer hassigned contracts at freely negotiated prices or with which he partic-ipates in the balancing market. They are also obliged to purchaseout the electricity produced by power plants using RES, includinghydro-power plants with installed capacity below 10 MW, at prefer-ential prices in compliance with the provisions of the specific ordi-nance to that effect.

The transmission and distribution companies are obliged to connectto the transmission, respectively to the distribution network, allpower plants using RES, including hydro power plants with installedcapacity below 10 MW. The costs for connection of the power plantto the respective network up to the boundary of the property of thepower generation facility are borne by the producer.

The mandatory purchasing out of electricity at preferential prices willbe applied in Bulgaria until the setting up of a system for issue ofand trade in "green" certificates. The Minister of Energy and EnergyResources will set minimum mandatory quotas for electricity pro-duction from RES as a percentage from the total annual electricityproduction by each producer by years for a period of 10 years asfrom the date of introduction of the system for issue of and trade in"green" certificates.


Governmental policy

The governmental policy in the field of addressing climate changeis developed and conducted by the Ministry of Environment andWater (MoEW). The Minister is responsible on the part of theGovernment for co-ordination and application of the country'scommitments as signatory of the United Nations FrameworkConvention on Climate Change (UNCCC) and the Kyoto Protocol.The flexible mechanisms (Emissions Trading and JointImplementation), envisaged in the Kyoto Protocol, are viewed bythe Government as a favorable opportunity to attract externalfinancing for projects leading to reduction of GHG emissions,technology transfer and expert assistance.

For the purposes of realizing its intentions to implement JI projectsthe Government of the Republic of Bulgaria signed in the year 2000a Memorandum of Understanding with the Government of TheNetherlands Kingdom. Bulgaria participates successfully in theEmissions Reduction Units Procurement Tenders (ERUPT). In com-pliance with the Memorandum of Understanding it is envisaged totransfer emissions reduction units (ERU) corresponding to about 3million tonnes of CO2 equivalent during the period 2008-2012. Thedecision for transfer of emissions is made separately in each casein compliance with the procedures of international tenders for ERU.

Another partnership programme in compliance with Article 6 of theKyoto Protocol is the Prototype Carbon Fund of the World Bank. ThePrototype Carbon Fund finances projects in Bulgaria, which areexpected to lead to significant reduction of GHG emissions. Theseemissions will be registered in compliance with the UNFCCC andthe Kyoto Protocol. The carbon emissions reductions produced as aresult of the projects will be validated, verified and certified in com-pliance with the enforced international rules in this field.

In 2002 Bulgaria signed Memoranda of Understanding with theRepublic of Austria, the Danish Kingdom and the SwissConfederation for implementation of JI projects.

Institutions

The operative management of the activities related to the imple-mentation of JI projects is performed by the JI Unit with the Ministryof Environment and Water, which was created in the year 2000 withassistance from the Dutch Government. The Unit is responsible foradministering the cooperation with all countries, with which Bulgariahas signed Memoranda of Understanding concerning the imple-mentation of JI projects, and performs preliminary evaluation of theproposals for JI projects submitted to the MoEW. The Unit assists theelaboration of criteria for evaluation of the projects and coordinatesthe JI-related activities within the Ministry. The main task is toincrease the number and quality level of the Bulgarian projectsimplemented through the JI mechanism.

The Steering Committee on JI projects is an evaluation body forArticle 6 projects (CDM and JI) set up in compliance with Article 6of the Kyoto Protocol. It is composed of representatives of theMinistry of Economy, the Ministry of Finance, the Ministry of Energyand Energy Resources, the Ministry of Environment and Water, theMinistry of Regional Development and Public Works, the Ministry ofAgriculture and Forests, the Energy Efficiency Agency, the ForeignInvestments Agency and the Technical University. Chairman of theSteering Committee is a Vice-Minister of Environment and Water. TheCommittee evaluates the proposed JI projects in compliance withthe established national evaluation criteria on the basis of a ProjectDesign Document. Whenever necessary, additional position papersby the concerned ministries are requested. The Steering Committeecomes out with a decision on each submitted proposal and recom-mends to the MoEW to issue (or not) a Letter of Approval.

Criteria for selection of JI projects

The main requirements with respect to all project proposals relatedto reduction of GHG emissions are reliability, transparency, simplici-ty and predictability. Apart from these most general requirementswith respect to the projects, the evaluation of the project proposalsis performed on the basis of the following specific criteria as envi-ronmental and social impact of the project technology transfer, etc.

I. Requirements related to the eligibility of the project

The process of project evaluation comprises an introductory phaseaimed at discarding of some of the project proposals, which do notcomply with some major requirements for any JI project. They takeinto account the criteria for ERU tender procedures (ERUPT) andspecific formal and legal provisions.

1. Requirements related to the project

- The application should comply with the required format and shouldcontain all the mandatory elements, whereat the procedures anddeadlines for submission of the JI project proposal should be prop-erly observed.

- The effect of the project should be reduction of GHG emissionsduring the first commitment period under the Kyoto Protocol (2008-2012).

- The project should comply with the national legislation.

- The project should propose a justified baseline scenario and a real-istic assessment of the emissions reduction in the event of imple-mentation of the project.2. Requirements related to the implementing company (criteria fordisqualification of the company). A company will not be eligible toparticipate if it;

- Has been declared insolvent or is in the procedure of beingdeclared insolvent;

- Has been declared bankrupt;

- Is iin the process of liquidation;

- Has been deprived of the right to exercise trade;

- Has unsettled overdue monetary liabilities to the state or to someinsurance funds;

- Has been convicted for crimes against the property rights or thenational economy.

II. General criteriaUnder the general criteria falls the compliance of the project with thepriorities of the host-country (Bulgaria):

1. Priorities declared in the:

- Governmental programmes (for instance, the National Plan forEconomic Development during the Period 2000-2006)

- Plan of Action on Climate Change

- Other national and regional environmental programmes

- National Energy Efficiency Programme

- Other programmes affecting the individual project

2. Bulgarian partners and local materials

3. Potential for replication



Specific investment practicesCo-operation of municipalities with the private sector

JI projects in municipalities

Projects financed by the Kozloduy International Fund

Co-operation of municipalities with the private sector Attracting the private sector in the implementation of municipal ener-gy efficiency projects is an important component of the municipalenergy conservation policy. The major objective of the latter is cre-ation of favorable conditions for private investments for energy effi-ciency improvement in sites, which are municipal property.

Investment in municipal energy efficiency projects has a number ofadvantages. In the first place, municipalities perform, along withtheir primary function of local self-government, also certain delega-ted functions of state administration at the local level. These func-tions are particularly well manifested in the fields of education,health care and social insurance. This means that municipalities arereliable partners, possessing guaranteed by the state adequatesources of financing of their activities. As compared to commercialcompanies, municipalities as partners have the undoubted advan-tage of being safeguarded against going bankrupt.

Most often municipalities take on themselves the financing andimplementation of energy efficiency projects. Partners of the muni-cipalities in these cases are the suppliers of energy efficiencyequipment and the subcontractors, performing certain kinds ofbuilding and assembly works. Different varieties of flexible schemesfor delayed payment and leasing are applied.

Local space heating systems for gasification of municipal sites

In 2003 the Municipality of Dobrich implemented a large-scaleproject for gasification of local space heating systems inmunicipal sites in the city of Dobrich. The project wasimplemented through a public procurement order. The offeredequipment had to meet mandatory all the project parameters, toensure minimum environmental pollution and to be compatible

Attraction of investments in municipalities and development of themechanisms for financing of municipal

projects represent a continuousprocess. Local authorities and the

private sector upgrade on a permanentbasis the modalities of their

co-operation, so that both parties to theinvestment process can derive the

maximum benefit from their involvement.

The ratification of the Kyoto Protocol byBulgaria provided an opportunity for the

country to apply the JointImplementation mechanism. The sale of

ERUs makes possible to minimize theinvestment costs for the projects and to

achieve transfer of modern technologies to the benefit of the coun-

try. Bulgaria has already accumulatedsome experience with successful imple-mentation of JI projects for utilization ofwaste biomass, energy production from

RES and energy efficiency.

The EBRD Fund for decommissioning ofcapacities at Kozloduy NPP is a favorable opportunity to procure

for projects for improvement of energyefficiency and the use of RES.

with the European standards for the respective technologicalequipment. An additional condition, aimed to guarantee thehigh quality of the equipment, was the requirement that thecontractor should possess an ISO 9001 Certificate.

The selected company, Technoterm Engineering Ltd., delivered,re-equipped and commissioned into regular operation localspace heating systems in 31 municipal sites (schools,kindergartens and culture facilities). In compliance with thesigned contract the reimbursement for the performed deliveriesand installation works had to be paid by the municipality within aperiod of three years according to the schedule approved bythe parties.

The energy services companies (ESCo) offer a further developmentof the idea for co-operation between municipalities and the privatesector. This type of transactions offer all the advantages of municipalleasing, together with the commitment on the part of the ESCo toimplement the project, to operate it during the period of validity ofthe leasing contract and performance guarantees. The energy effi-ciency services are provided by the ESCos on the basis of writtencontracts between them and the energy consumer. The EnergyPerformance Contracts should obligatory define the baseline con-sumption, the guaranteed savings and the procedure for their iden-tification.

According to the Energy Efficiency Act the ESCo should ensure rea-lization of these services entirely or partially by its own funds orundertake the obligation to procure third party financing, if nothingelse has been agreed. The ESCo bears the technical, financial andcommercial risk related to the implementation of the energy efficien-cy projects. The reimbursement of the ESCo for the energy efficien-cy services is for the account of the achieved savings.

Thermal energy management in municipal buildings

Since 2002 the Energy Conservation Joint-stock Company,which is owned by the German energy giant RWE, isimplementing an ESCo project under the title TEMOS (ThermalEnergy Management in Municipal Buildings) for application ofenergy conservation measures aimed at reduction of energyconsumption and energy costs of the municipal building stockon the area of the capital city of Sofia. The project covers 309municipal buildings, including 119 schools, 143 kindergartens,12 hospitals, 21 creches and 14 administrative buildings. Theproject duration is seven years. Its implementation comprises arange of energy conservation measures, including energy auditof the building structure, the in-house systems for space heatingand domestic hot water, and the DH substation, as well asidentification and application of a package of indispensablemeasures.

Municipalities can play successfully the role of partners in joint ven-tures. Projects for natural gas distribution, energy generation fromconventional sources and RES, are implemented in the municipalitiesmost often as joint ventures, registered under some of the formatsenvisaged by the commercial legislation.There are no restrictions withrespect to the specific legal form of the joint trade company.

The most frequently encountered case is participation of the muni-cipality in the joint venture capital stock with an in-kind contributionunder the form of ownership rights on buildings and facilities. Thisform of partnership is particularly appropriate in the case of con-struction of small co-generation DH plants to meet specific demandon the area of the municipality. The Energy Act exempts from thelicensing regime heat and power production by facilities withinstalled capacity below 5 MW.These capacities are suitable for pro-viding heat supply to several closely located municipal sites.

Construction of a natural gas fired DH power plant in the city of Stamboliyski

The idea to construct a district heating power plant inStamboliyski emerged in 2001, when the new management ofpulp-and-paper producer Tselhart JsC ceased heat supply tothe district heating transportation network in the city. For therealization of this idea the company TEGE-21 Ltd. was foundedwith participation of private companies and the Municipality ofStamboliyski. The construction of the power plant started in thesummer of 2001. The Municipal Council approved a decision toconcede in favour of the company the right of ownership on theland plot, the right to build the district heating power plant andthe right to free use of the existing heat transportation network.The building of the plant was constructed with funding providedby one of the private investors.

In January 2002 TEGE-21 Ltd. assigned the Center for EnergyEfficiency EnEffect to work out a business plan for the project forthe purpose of applying for a bank loan for financing theactivities on construction of the power plant and its connectionto the gas and heat transportation networks. The loan forconstruction of the plant was lent by the First EasternInternational Bank under very favorable terms and conditions.The power plant was constructed and prepared forcommissioning within a very short time and in December 2002the State Energy Regulation Commission passed a decision togrant the company a license for heat and power production andheat transportation on the area of the city of Stamboliyski.


Production of cheap biomass fueled boiler systems for appli-cation for space heating of public and residential buildings inBulgaria

In 2002 EnEffect, jointly with its Dutch partners from the BiomassTechnology Group, initiated a project under the title Productionof Cheap Biomass Boiler Systems for Application for SpaceHeating of Public and Residential Buildings in Bulgaria, whoseprimary objective was to increase the share of biomass asenergy source in the country. The Executive Agency SENTERwith the Dutch Ministry of Economic Affairs provided the projectfinancing under the PSO Programme for co-operation with thecountries from Central and Eastern Europe. The other partnersunder the project were the Dutch company KARA EnergySystems, ERATO Holding from the city of Haskovo, theMunicipality of Gotse Delchev and the Ivan Skenderov MunicipalHospital.

In the framework of the project ÊÀRÀ and ERATO created inHaskovo a joint company KARERA for manufacture of modernhigh-tech boiler systems fueled by waste biomass. Theproduction range of KARERA comprises boiler systems fueledby waste biomass and featuring broad opportunities forapplication for space heating of public buildings (hospitals,schools) and multi-family buildings (apartment blocks, hotels).These boilers of 100 to 500 kW capacity and attractive pricesare able to replace the existing at many locations low-efficiencyand obsolete naphtha-fueled boilers, the source of graveenvironmental pollution.

The first boiler manufactured by the Dutch-Bulgarian companywas installed at the Ivan Skenderov Multi-profile Hospital forActive Treatment in the city of Gotse Delchev. The boiler features400 kW rated heat capacity and is designated to provide spaceheating for the main building of the hospital, which is the largestheat consumer. Since many years the hospital has been usingnaphtha for heat generation. The four coal-fired steam boilers,installed some 40 years ago, had been reconstructed to run onliquid fuel. Measurements taken during the last heating seasonhave revealed that the total coefficient of efficiency of theheating supply at the site was about 55%.

"Chauffage (heating) Contracts" are a suitable modality of co-opera-tion with ESCOs in the cases when the municipality wishes to bereleased from its responsibilities to maintain the energy equipment.They represent an energy service, in which the object of the deal isthe supply of energy specified by quantity, quality and price. Underthis type of deals the private company undertakes the obligation to

provide the energy service for a long period of time, for instance 15-20 years. The municipality is entirely released from any responsibili-ty with respect to the project. The contract signed by it envisagesthat it shall obtain a specific energy service (for instance spaceheating of certain buildings) at a preliminary negotiated price, whichis lower than the currently effective one. The deals of this type helpachieve also a lower price per unit of energy, since the price reflectsalso the long-term interest of the supplier.

The modalities of trade co-operation between municipalities and theprivate sector are developing further all the time. The objective isthat both parties - the public sector and the private capital - shallidentify those parameters, which correspond most accurately totheir organizational and financial capacities, so that each of themcan gain maximum benefit from this co-operation.

JI projects in municipalitiesMunicipalities offer significant opportunities for realization of JI pro-jects. Through this mechanism they can attract funding, which willdiminish their investment costs. JI projects can be implemented inthe field of energy efficiency improvement in public buildings andstreet lighting systems. There are considerable opportunities forimplementation of such projects also in the field of treatment and uti-lization of solid urban waste and waste biomass from the urbanwastewater treatment plants. These activities are the responsibility ofthe local authorities and the official directly in charge is the Mayor.By now in Bulgaria there are no operating installations for energygeneration from biogas from landfills and wastewater treatmentplants, which is one more proof of the existence of a significantuntapped potential.

Although the district heating companies in Bulgaria, with the excep-tion of Toplofikatsiya (District Heating) Sofia, are state-owned, theyplay an important role for the space heating of public and residen-tial buildings in municipalities. Erected prior to 1988, the existing 21DH companies are in grave need of comprehensive energy efficien-cy reconstruction of the heat distribution network and introduction ofco-generation technologies at the heat source, which makes themextremely suitable for JI projects.

Development of the district heating systems of Sofia and Pernik

The project for energy efficiency reconstruction of the heatdistribution network of the district heating companies wassubmitted as a proposal for financing as a JI project from thePrototype Carbon Fund of the World Bank. Its value is expectedto amount to USD 6 million and its implementation is estimatedto lead to reduction of carbon emissions to the amount of 1.5million tonnes. This will be the first JI project to be realized in amunicipal company in Bulgaria. Toplofikatsiya-Sofia ispredominantly municipal property, while Toplofikatsiya-Pernik isentirely state-owned. The two enterprises implement a large-


scale project for energy efficiency improvement, which is financedby a World Bank loan. At present the project is in the phase ofvalidation by an independent institution. Upon confirmation of itseligibility by the validator it will be possible to go to the next step -signing of a contract for transfer of the reduced carbon emissionunits to the Prototype Carbon Fund of the World Bank.

Bulgaria possesses considerable reserves of waste biomass. Forestsoccupy 35 percent of the country's territory and 55 percent of thenational territory is used for agricultural activities. Agricultural waste isestimated at about 7.4 million t/year, however it is not used for energygeneration as yet. The large woodworking enterprises in Bulgaria alsopossess significant reserves of waste biomass, which is not put toeconomic use and requires considerable costs for storage and dis-charge, while producing methane emissions in the atmosphere.

JI project at Sviloza, the city of Svishtov

The first JI project, based of the Framework Agreement signedin 2002 between Bulgaria and the International Bank forReconstruction and Development in the latter's capacity ofTrustee for the Prototype Carbon Fund, is the project "BiomassUtilization at Sviloza JsC". The achievement of the objectives ofthis project will lead to significant and lasting reduction of GHGemissions through the replacement of part of the so far usedprimary energy source - coal - by biomass from waste wood.The major reduction of GHG emissions will, however, beachieved from the liquidation of the huge quantities of wastewood stored on the area of the company, which emit significantquantities of methane as a result of the decompositionprocesses, and often self-ignite. The use of alternative, cleanerenergy, produced from biomass, will lead also to reduction ofother polluting emissions, such as sulphur dioxide, nitric oxides,carbon oxide and dust. The commissioning of the biomass-fueled boilers will result in reduction of coal consumption (morethan 100 thousand t/year). The project will be financed withequity assets of the company and in the event of successfulimplementation the World Bank will provide about USD 3.5million in exchange for the reduced emissions.

Projects financed by the Kozloduy International Fund The Fund for Decommissioning of the Capacities of Kozloduy NPPwas set up with the aim to alleviate the consequences from thedecommissioning of part of the nuclear power generation capacities inBulgaria. It also aims at promoting the measures for energy efficiencyimprovement and the use of RES. Donors to the Fund are the EuropeanUnion and some individual European states and Switzerland, whichmake their financial contribution on a bilateral basis.

The credit line is allocated by the European Bank for Reconstructionand Development (EBRD) in favour of Bulgarian commercial banks.EBRD will lend money to the total amount of Euro 50 million duringa period of 5-7 years. These loans will be lent to the private sectorthrough local banks. Six partner-banks have been approved: UBB,Post Bank, UNIONBANK, ProCredit Bank, Bulbank and HVB BankBiochim, which have signed co-operation agreements.

In the process of elaboration by the EBRD are also other projects for financing of energy efficiency projects in the public sector as well.Programmes for consumers will also be worked out. A detailed pro-gramme for the district heating companies in the country is alreadyat hand.

Financing schemes

The Fund lends targeted financing and financing for technical assis-tance to the companies in the form of consultations on how to

improve their capacity in the field of energy management and grantsas incentives for the implementation of the project. The borrowersshould implement the project and upon its completion, once theenergy savings and the environmental benefits are certified, theyshall obtain the grant. For successfully implemented energy effi-ciency projects the grant shall amount to 7.5 percent of the loanamount and for projects involving the use of RES - 20 percent.

Who may participate?

The borrowers should be companies from the private sector, aboveall small and medium-size enterprises. Larger companies can alsotake advantage of the credit line. The servicing Bulgarian banks arethose responsible to evaluate to whom to lend a loan and what per-centage of the project costs to finance. The criteria to be met by theprojects are related to the requirement that the investment should bepaid off from the achieved energy savings. This concept is of keyimportance. The concept applied with respect to RES is the use ofsmall, however numerous and accessible RES.

Loan terms and conditions

The local banks shall determine the interest rate on the loansdepending on the project-related and customer-related risk. It isenvisaged that these rates shall be competitive to those of the cur-rent financing. The terms for payoff of the obtained loans will bebetween 3 and 7 years. The banks shall lend loans on the basis oftheir in-house procedures. Depending on the amount of risk they willalso decide on what collateral to request.

Contact with the servicing banks


UBB Head Office: 5, Sveta Sofia St ,1040 Sofia Tel. (+359 2) 811 + Ext., Fax: (+359 -2) 988 08 22 Telex: 25092 E-mail: [email protected], SWIFT: UBBSBGSFwww.ubb.bg

Post Bank Head Office: 1, Bulgaira Sq., 1048 Sofia Tel.: (+359 2) 963 21 06, 963-21-05, 963-21-04, 963-20-96Fax: (+359 2) 963 04 82 Òelex: 22290 bpb bgÅ-mail: [email protected], SWIFT: BPBIBGSF, www.postbank.bg

ProCredit Bank Head Office: 131, Hristo Botev Blvd.1233 Sofia Tel.: (+359 2) 921 71 00 Fax: (+359 2) 921 71 [email protected], www.procreditbank.comwww.prokreditbank.bg

BULBANK Head Office: 7, Sveta Nedelya Sq., 1000 Sofia Tel.: (+359 2) 923 2111 Fax: (+359 2) 988 4636Telex: 22031, SWIFT: BFTBBGSF, www.bulbank.bg

HVB Bank Biochim Head Office: 1, Ivan Vazov St., 1026 SofiaTel.: (+359 2) 9269 430, (+359 2) 9269 210, Fax: (+359 2) 9269 440Telex: 23862 CBB BGS.W.I.F.T. CBBI BGSFE-mail:[email protected], [email protected], www.biochim.com

UNIONBANK Head Office: 10-12, Damyan Gruev Street, 1606 Sofia,Switchboard: (+359 2) 9153 333 Fax: (+359 2) 9802004 [email protected], www.unionbank.bg


Scope and objectivesPooling their efforts, in 1997 a group of municipalities created theMunicipal Energy Efficiency Network EcoEnergy as a non-formal vo-luntary non-profit association. In the years after EcoEnergy estab-lished itself as a reliable partner in the development and imple-mentation of energy efficiency projects in municipalities. Thefounding of the Network and its first steps were supported by theUS Agency for International Development and later the activities ofEcoEnergy were assisted by the Global Environmental Facility(GEF) and the United Nations Development Programme (UNDP).The Network contributed to local human capacity building and theimplementation of a number of energy efficiency projects in munic-ipal sites.

The Municipal Energy Efficiency Network EcoEnergy has threestrategic objectives:

- To coordinate the efforts of the member-municipalities forestablishment of energy efficiency as a tool for resolution ofimportant national issues in the field of sustainable develop-ment, the energy policy and the policy of environmental protec-tion;

- To create conditions for alleviation of the burden of energy costs onmunicipal budgets and utilization of the achieved savings for mee-ting other priority needs in municipalities;

- To reduce the energy costs at the end-users in municipalities andto broaden the public support for the municipal policies aimed atefficient energy use.

In 2003 the Network had a membership of 56 member-municipalitiesand 6 associations of municipalities as associated members or atotal of 159 municipalities, which account for more than 50 percentof the total number of municipalities in Bulgaria and 59 percent ofthe country's population. By the end of the same year EcoEnergywas formally registered as a non-profit legal entity and currently hasa membership of 30 municipalities.

PartnershipsThrough its activities EcoEnergy is striving to attract partners fromthe private sector and to assist the development of the investmentclimate for energy efficiency projects in municipalities. In its activi-ties it is guided by the awareness that only through joint efforts andrespect for the interest of all actors in the process of elaboration andimplementation of energy efficiency projects it will be possible toachieve the goals of the country's Energy Strategy for energy effi-ciency improvement and to meet the requirements of the interna-tional agreements related to addressing climate change, to whichBulgaria is a party.

Municipal energy efficiency networkEcoEnergy

Scope and objectives

Partnerships

Information system

Activities

Impact

Information systemEcoEnergy maintains an information system on energy efficiency. Itkeeps adequately selected and systematized objective information,which serves for assessment of both the energy sector in eachmunicipality as a whole and of the individual sectors or sites on itsarea.

The first component of the database contains technical informationabout the baseline of the energy sector in the municipality. This por-tion of the energy database is the most voluminous and the mostdynamic. The second component of the database comprises infor-mation about the regulatory, institutional, human and financialresources of the municipality. The majority of this non-technicalinformation is of descriptive, non-quantified nature.

The information system created so far covers the first component ofthe energy database. It comprises two layers - database and analy-ses and assessments. The information system summarizes the infor-mation at several levels: by sites, target groups, sectors and muni-cipalities. For all sites basic information about their general physicaland functional characteristics is collected only once. The data aboutthe type, quantity and costs of the used energy carriers is collectedon a periodical basis. The work of data collection, entry and pro-cessing is performed by the municipalities.

The design of the database in municipalities provides opportunitiesfor conducting a variety of analyses and forecasts about eachmunicipality and for comparing the state of the different municipali-ties. In the period 2000 - 2003 the software was distributed in 54Network member-municipalities and 60 municipalities members ofassociations of municipalities, which are associated members ofEcoEnergy. By the end of 2003 the database contained informationabout more than 2200 municipal sites and about their energy con-sumption since 1998 to date. The analysis of this information pro-vides an opportunity to identify their energy conservation potentialand to determine correctly the priority sites and actions on the partof the local authorities. This data is used for elaboration of municipalenergy programmes and specific energy efficiency projects, as wellas for observation and management of energy consumption inmunicipalities.

Activities EcoEnergy contributes to overcoming of the barriers to improvementof energy efficiency in municipalities, which are the result of theweakness of the responsible institutions and the shortage of finan-

cial means, knowledge, skills and information, by performing the fol-lowing main tasks:

- To render assistance to municipalities to identify the opportunities for ener-gy conservation and to formulate municipal energy efficiency projects;

- To assist the exchange of experience among the Network member-municipalities in the field of efficient energy management;

- To contribute to the development of institutional and human poten-tial for development and management of energy efficiency pro-grammes and projects in the member-municipalities;

- To contribute for the elaboration of joint proposals for institutionaland legislative measures aimed at energy efficiency improvement incompliance with the needs and requirements of municipalities;

- To support pooling of the efforts for influencing the governmentalpolicy related to financing of municipal energy efficiency projectsfrom the specialized public funds;

- To collect and disseminate information about achievements in thefield of energy efficiency improvement and innovative technologiesfor energy conservation.

The tasks of the EcoEnergy Network are implemented throughexchange of information, training and education, conferences, sem-inars and business meetings, joint studies, programmes and proj-ects, and initutional contacts at the national and international levels.The activities of the Netework are reported in and supported by theEcoEnergy Magazine, published by EnEffect.

Impact The collaboration of EcoEnergy with the state bodies, the NationalAssociation of Municipalities in the Republic of Bulgaria, the regio-nal associations of municipalities and the private sector create favo-rable opportunities for overcoming of the regulatory barriers to theinitiatives launched by Bulgarian municipalities.

Since 1998 EcoEnergy has been co-operating actively with the net-work of European municipalities Energie cites, and since 2003 it isits regular member. The co-operation of EcoEnergy with Energiecites and the International Council of Local Environmental Initiatives(ICLEI) ensures its access to the valuable experience of Europeanmunicipalities. Municipal Networks for Energy Efficiency (MUNEE)conducts activities similar to those of EcoEnergy in the countries ofCentral and Eastern Europe and the former Soviet Union. TheRegional Network for Efficient Use of Energy and Water Resources(RENEUER) is coordinated by the Secretariat of EcoEnergy andmakes active use of the experience of the Bulgarian network.


Fig. 4. Territorial coverage of EcoEnergy

EcoEnergy is a voluntary non-formal network of Bulgarian municipalities willing to improve the efficiency of fuel and energy end-use on their area. Founded in 1997 in Gabrovo,by 2004 the Network had a membership of 54 municipalities and 6 regional associations of municipalities or a total of 159 municipalities as regular and associated members

To contribute to promotion of energy efficiency as an integral part of theoverall policy for sustainable development of each municipality

To contribute to reduction of municipal budget energy costs and cre-ation of conditions for utilization of the money saved for other priorityactivities in municipalities

To encourage energy end-users in municipalities (households and busi-ness entities) to diminish their energy costs

EnEffect is a non-profit NGO, founded in 1992, with the aim to support the efforts ofthe central and local authorities for attainment of sustainable development of thecountry through more efficient energy use.

EnEffect, Center for Energy Efficiency - www.eneffect.bgTel.(+359 2) 963 1714 / 963 0723 / 963 2169;Fax:(+359 2) 963 2574 E-mail: [email protected] address: 1606 Sofia, P.O.Box 85Office: 1164 Sofia, 1, Hristo Smirnenski Blvd.www.ecoenergy-bg.net

OBJECTIVES

To contribute to the formulation of a policy for efficient use of energyresources at all management levels.

To support local institutional and human capacity building as a prerequisitefor initiation, development and implementation of energy efficiency programs.

To promote the development of a local market for energy saving tech-nologies, products, materials and services.

To assist the exchange of experience and information aimed at improve-ment of energy efficiency.

OBJECTIVES

State bodies, local authorities, research and training centers, univerities,companies and NGOs in Bulgaria. Consultancy companies, institutes andNGOs from Europe and the USA. The Global Environment Facility, theUS Agency for International Development, the European Commission,the UN Economic Commission for Europe, the United NationsDevelopment Programme, the Regional Environmental Centre, WestEuropean governments.

PARTNERS AND DONORS

Unification of the efforts for impact on the national energy policyand elaboration of proposals for institutional and legislative meas-ures aimed at improvement of energy efficiency in municipalities

Interaction in and support for identification and overcoming of thebarriers to efficient energy use in municipalities

Identification of energy conservation opportunities in municipali-ties and assistance in the design of municipal energy efficiencyprogrammes and projects

Creation of institutional framework and local human potential fordevelopment and management of municipal energy efficiencyprojects

Establishment and development of collaboration among member-municipalities to the benefit of exchange of knowledge and expe-rience in the field of efficient use of fuels and energy

Collection and dissemination of information about achievementsin the field of cost-effective energy use and about new technolo-gies, products and materials

PRIORITIES

Overcoming of all barriers to energy efficiency in Bulgarian municipalitiesand creation of incentives for energy conservation.

Development and management of investment and demonstration pro-jects for energy conservation.

Development of municipal and regional energy efficiency programs.

Provision of education and training in the field of rational use of energy.

Collection, processing and dissemination of information on energyefficiency.

PRIORITIES

EnEffect is acting as Secretariat of the Regional Network for Efficient Useof Energy and Water Resources in Southeast Europe (RENEUER).Members of RENEUER are municipalities, NGOs and companies fromAlbania, Bosnia and Herzegovina, Bulgaria, Chroatia, Macedonia,Moldova, Romania, Serbia and Montenegro.

EnEffect is acting as Secretariat of the Municipal Energy EfficiencyNetwork EcoEnergy, whose membership by 2004 comprises 159 munici-palities as member minicipalities or associated members.

EnEffect is part of a network of similar energy efficiency centers in Poland(FEWE), the Czech Republic (SEVEn), Russia (CENEf), China (BECon)and Ukraine (ArenaECO).

NATIONAL AND INTERNATIONAL NETWORKS

EcoEnergy maintains an information database on energy sources andenergy consumption in Network member-municipalities. The informationis used in the process of development of municipal energy efficiencystrategies and programmes and for identification, design and implemen-tation of specific investment projects. The members of the Network setup specialized Municipal Energy Efficiency offices, which are the firststeps towards the development of a modern institutional base of rationaluse of resources in Bulgarian municipalities

DATABASE

Secretariat:

EnEffect, Center for Energy Efficiency - www.eneffect.bgTel. (+359 2) 963 1714 / 9630723 / 963 2169; Fax: (+359 2) 963 2574E-mail: [email protected]; Mailing address: 1606 Sofia, P.O.Box 85Office: 1164 Sofia, 1, Hristo Smirnensky Blvd., fl. 3

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