PHD THESIS-DISTRIBUTEDELECTR Photo Credits Totheauthor Ifnototherwisestated

CEU eTD Collection A DissertationSubmittedtotheDepartme

POLICIES, BARRIERSANDPR In partialfulfilmentoftheDe Prof. DianaÜrge-Vorsatz, Ce DEVELOPING SUSTAINABLE ENERGY SYSTEMS: Prof. Alexios Antypas,Centr Prof. Alexios ELECTRICITY GENERATI Dr. Christian Jardine,UniversityofOxford Dr. Christian Central EuropeanUniversity Gergana Miladinova February, 2008 Supervisors: Budapest By:

gree ofDoctorPhilosophy nt ofEnvironmentalSciencesandPolicy ntral EuropeanUniversity OSPECTS FORDISTRIBUTED al EuropeanUniversity

ON INBULGARIA CEU eTD Collection PhD Student: GerganaMiladinova prospects fordistributedelectr Miladinova, G.2007. For bibliographicandreferencepurposes (3) University, whichwillprescribe theterms may notbemade availableforusebythirdpa vested inthe CentralEuropean University,subject toanyprior agreement tothecontrary,and The ownershipofanyintellectualpropertyrightswhichmay be (2) (in writing)oftheAuthor. of copiesmadeinaccordancewithsuchinstru Librarian. This pagemust form partofanysuch lodged intheCentralEuropeanUniversity full, orofextracts,may bemade inaccord only (1) Copyright intextofthisthesisrestswith Notes oncopyrightandtheownership ofintellectualproperty rights: PHD THESIS-DISTRIBUTEDELECTR Photo credits totheauthor ifnototherwisestated. Central EuropeanUniversity. place isavailable fromtheHeadofDepa Further information ontheconditionsunderwh Environmental SciencesandPolicy,Cent Developing sustainable energy systems:policies, barriersand icity generation inBulgaria. ICITY GENERATIONINBULGARIA ral EuropeanUniversity,Budapest. and conditionsofanysuchagreement. this thesisshouldbereferredtoas: Library.Detailsmay theAuthor.Copies(by ctions maybemadethepermission not without rtment ofEnvironmental SciencesandPolicy,

ance withinstructions given bytheAuthorand copiesmade. Furtherco rties without thewrittenpermission of the ich disclosuresandexploitationmay take Dissertation,Department of described inthisthesis is be obtainedfrom the any process)eitherin pies (byanyprocess) ii

CEU eTD Collection contained inthisdocument. The authoracceptsnoresponsibility orliability over theperiodofresearchandwriting. represent inanywaytheopinionoforganiza The soleresponsibilityforthec Legal Disclaimer of learning. application for another degree or qualification of thisor anyother university orother institute No portion of theworkreferred tointhisthesishasbeen submitted insupport of an Author’s declaration PhD Student: GerganaMiladinova PHD THESIS-DISTRIBUTEDELECTR ontent ofthisDissert ICITY GENERATIONINBULGARIA tions forwhichtheauthorhasbeenworking whatsoever withregardtotheinformation ation lieswiththe Gergana MILADINOVA author. Itdoesnot (signed) iii

CEU eTD Collection Keywords: if ahighershareofDGistobesought. penetration andprovidesdecision-makers inBu The researchcontributesto pathways, dependingongovernment employment andsocialjustice,market-b policy frameworkaremade, andfivescenar experience ofotherEUMember States,reco Based onanalysisoftheexistingpolicyand complicated administrative procedures, andco number ofpolicyandregulatoryba favourable environment forinvestments inDG The researchrevealsthatalt but most datahavebeenupdatedasofMay2007. ofthe wascarried investors inDG.Theresearch PhD Student: GerganaMiladinova interviews withanumber ofexperts,investors, qualitative, meso-level andinduc from variousfields (policyanalysis,economics Due tothe interdisciplinary character of thei penetration. identify thebarriers,andtoproposeacompre research istoassesstheexistingpublicpolicysupportingDGpenetra significant potential–thoughtodate social, environmental, andeconomic. DGcanbe way towardsachievingsustainabledevelopment bycontributing toallthreeof itspillars– and combined heatandpower(CHP)units (mai Distributed electricitygenera Abstract PHD THESIS-DISTRIBUTEDELECTR Bulgaria,energypolicy,distributed tion (DG)(i.e.basedonsmall- hough therehavebeenadvancements inthesettingupofa better understandingofthe tive. Theresearchwasbasedonextensiveliteraturereview; rriers thatstillneed tobeaddressed. al objectives,areoutlined. hashadratherlimited utiliz ICITY GENERATIONINBULGARIA out betweenSeptember 2003andFebruary2008, ased, andoptimal) forpossibledevelopment ssues related to DGtheauthoruses approaches rruption furtherdiscourageDGinvestors. mmendations forimprovement oftheexisting andotherstakeholders hensive policyframework tosupportitswider and environmental protection).Theanalysisis generation, renewables,CHP,barriers nly upto10MW)) canhelpoursocietyonits lgaria guidanceonthene the barriers,andonacomparison withthe bytheBulgarianGovernment, therearea ios (presentpolicy,highDGshare, a viableoptionforBulgariaasthereis problems relatedtowiderDG and medium-scale renewables ation sofar.Theaim ofthis ; andaquestionnairefor Economic limitations, tion inBulgaria,to eds andalternatives iv

CEU eTD Collection PhD Student: GerganaMiladinova strongly supportedandpressured me bydiligentlyreading andcommentingoneach individual chapter. Dr.BrendaBoardman great professionaltraining.Dr.ChrisJardinefrom OxfordUniversityhasimmensely helped European University (CEU)for friends. Iamverygratefultomy main superv the supportofmy supervisors,contributionof The writingofthisthesishasbeenalongjour Acknowledgements PHD THESIS-DISTRIBUTEDELECTR father Eng.Vladimir Miladinovto My motivation andinspiration to workin the fi assisted me withsome organizationalaspects. key chaptersandAlanWattprovidedme with of hardship.RexBaileyassistedme alotin EU officialandtoAndreyDa mentoring me duringmytraineeshipinBrussels and encouraging me topursueacarrier ofan particularly gratefultoIsmo Grönroos-S carrier andtomy friendsa I am verythankfultomymother andsister earlier drafts,andforprovidingvaluable Radulov from theBlackSeaRegionalEnergyCe Seventh Framework ResearchProgrammeoftheEuropeanUnion).ManythankstoDr.Lulin Part ofmy researchhasbeencarriedout assistance from theUK’sForeign and Commonworld OfficetodoayearresearchinOxford. society’ inthepost-communist countriesandar financier, philanthropistandph European University.Istronglyadmire thee This researchwouldnothave their insightsonthechallengesofdistribu gratitude alsogoestoallexpe who wasmy‘opponent’onthedefense,forhi highly appreciate.Iam alsoverythankfulto nd colleagueswhowereverysu minov whowasalwaystheretosupportandcheerme intimes rts andinvestorswhoreadily also beenpossiblewiththege ilosopher GeorgeSoros,tos her guidanceandcriticalcomment me towriteitbeforestarti whom Idedicatethiswork. insights intoBulgarianenergysector. ICITY GENERATIONINBULGARIA ted generationinBulgaria andEurope. within theDIGENASproject(fundedunder aikkala from theEur improvement oftheEnglishlanguage several Prof. LutzMez from FreeUniversityof Berlin, isor Prof.DianaÜrge-Vor ney andIcouldnothave for stimulating me topursueaninternational experts, andencouragement bymy family and very helpfulcommentsonmy prospectusand ound theworld.Ihavealsoobtainedfinancial fforts ofitsfoundera eld ofsustainable energy s time andinteresting questions.Mydeep ntre forguidingme andcommentingonthe pportive andunders ng averydemanding jobwhichI upport thebuildingof an‘open provided mewithinformation, nerous supportoftheCentral s, andforgivingme sucha opean Commission for nd main funder-the completed itwithout satz from theCentral comes from mylate tanding. Iam v

CEU eTD Collection PhD Student: GerganaMiladinova 56 GENERATION INBULGARIA...... 4. 35 ...... BULGARIA 3. 19 ...... DISTRIBUTEDGENERATION AND POTENTIALFOR 2. 1. CONTENT TABLE OF PHD THESIS-DISTRIBUTEDELECTR 2.6. C 4.5. S S 4.1. S 3.1. O 2.3. T 2.2. O 2.1. B 1.8. S 1.4. A 1.3. B 1.2. D 1.1. F 4.4. C 4.3. I 4.2. S 3.3. S 3.2. P 2.9. R 2.8. B 2.7. P 2.5. C 2.4. P 1.7. M 1.6. R 1.5. A TRUCTURES ACTORS, INSTITUTIONS AND STRUCTURES RELATED TO DISTRIBUTED TODISTRIBUTED RELATED ANDSTRUCTURES ACTORS, INSTITUTIONS IN GENERATION DISTRIBUTED SUPPORTING POLICIES PUBLIC CURRENTSHARE SECTOR, OFTHEBULGARIANENERGY OVERVIEW 1 ...... THERESEARCH INTRODUCTION TO NTERNATIONAL OREWORD AND OREWORD UMMARY OCIAL TATE UMMARY UBLIC OTENTIAL FOR RIVATIZATION INTHE TRUCTURE OFTHE HE OOPERATION AND ECOMMENDED THE ON ULGARIA URRENT OST OF ASIC ESEARCH ENEFITS FROM VERVIEW OF VERVIEW NALYTICAL IMS AND EFINITION OF BJECTIVES AND ETHODOLOGY E ...... 71 ...... LECTRICITY AND C A P S HARACTERISTICS OF CTORS AND E OLICY OLICY TRUCTURES AND AND TRUCTURES P LECTRICITY O ...... 73 ...... 54 ...... L ENETRATION OF BJECTIVES IMITATIONS F E RAMEWORK D I ...... 14 ...... LECTRICITY D W D NSTRUMENTS P A ISTRIBUTED G ISTRIBUTED ROBLEM ISTRIBUTED CTORS AND CTORS IDER E OALS D D UROPEAN UROPEAN I NSTITUTIONS IALOGUE BETWEEN THE ISSERTATION G ...... 7 ...... B N D ENERATION FROM ULGARIAN ULGARIAN ...... 36 ...... 13 ...... ATURAL EPLOYMENT OF A S ...... 8 ...... D CTORS G TATEMENT S G ISTRIBUTED ENERATION G UPPLY AND M I G ...... 40 ...... ENERATION NSTITUTIONS ICITY GENERATIONINBULGARIA ENERATION IN ENERATION AP G ...... 17 ...... 61 ...... 56 ...... AS E –

NERGY C M OMPARISON OF ...... 1 ...... ARKETS G...... 4 DG...... G C S ...... 3 ...... D ECTOR ONSUMPTION ENERATION IN T ...... 69 ...... IFFERENT S A ECHNOLOGIES FOR ECTOR B CTORS ULGARIA ...... 21 ...... 20 ...... 22 ...... , F

P I NSTITUTIONS AND UEL OTENTIALS ...... 19 ...... 24 ...... B ULGARIA S OURCES IN B ULGARIA ...... 32 ...... 23 ...... B ULGARIA ...... 34 ...... vi 22

CEU eTD Collection PhD Student: GerganaMiladinova 185 ...... ANNEX IV.LISTOFINTERVIEWEES 176 ...... INVESTORS FOR QUESTIONNAIRE ANNEX III. 170 ...... ANNEX II.ADIMINISTRATIVEPROCEDURES THEBULGARIANENERGYSECTOR166 OF ANNEX I.BASICCHARACTERISTICS 135 PROMOTION OFDISTRIBUTEDGENERATIONINBULGARIA...... 7. 6. 75 INVESTMENT COSTSINBULGARIA...... 5. PHD THESIS-DISTRIBUTEDELECTR 7.4. I 7.1. B 6.6. S B 6.5. N 6.2. E 6.1. P 5.4. S 5.3. I 5.2. A 5.1. I 7.8. C 7.7. DG 7.6. M 7.5. M 7.3. R 7.2. P 6.4. E 6.3. T ULGARIA CONCLUSION: RECOMMENDATIONS CONCLUSION: 112 ...... BARRIERS TODISTRIBUTEDGENERATIONINBULGARIA AND ADMINISTRATIVEPROCEDURES PROCESS, INVESTMENT NFORMATION NFORMATION NVESTMENT NVESTMENT OLICY UMMARY OLICY UMMARY NVIRONMENTAL AND NVIRONMENTAL ECHNICAL LIMITATIONS CONOMIC ONCLUSIONS ECOMMENDATIONS FOR ENEFITS ANDPOTENTIALFOR UCLEAR DMINISTRATIVE EASURES FOR EASURES FOR ...... 132 ...... ?

F UTURES , , REGULATORY AND ADMINISTRATIVE RECOMMENDATIONS ADMINISTRATIVE AND REGULATORY R P AND EGULATORY ...... 134 ...... 109 ...... L OWER ASA OWER IMITATIONS P C – B ...... 162 ...... ROCESS

OSTS AND S O O ASED CENARIOS VERCOMING VERCOMING VERCOMING P ROCEDURES M ...... 76 ...... S M EASURES OCIAL ...... 119 ...... P AJOR AJOR ...... 129 ...... F AY INANCIAL AND INANCIAL ,

A P OLICY -B DMINISTRATIVE DMINISTRATIVE E T B DG C ICITY GENERATIONINBULGARIA ...... 88 ...... NVIRONMENTAL NVIRONMENTAL ECHNICAL ACK ARRIER TO ONSIDERATIONS ...... 151 ...... IN O T B BJECTIVES IMES ULGARIA AND SCENARIOS FORTHE ANDSCENARIOS F L ISCAL ISCAL D ...... 106 ...... IMITATIONS ISTRIBUTED B ARRIERS , B ...... 130 ...... 135 ......

O S ARRIERS UPPORT UTCOMES ...... 112 ...... 152 ...... G ...... 153 ...... M ENERATION IN ...... 154 ...... ECHANISMS ...... 136 ...... 144 ...... vii

CEU eTD Collection Figure 4.ShareofDGinelectr Figure 3.Structureandparticipatingentitie Figure 2.Totalelectricitygeneration Figure 1.Phases oftheresearch List ofFigures: Table 16.Specificprices forsome Table 15.Basicelectricity generationindicators Table 14.Energy usetrendsinBulgaria Table 13.Maincriteriaforonshorewindz Table 12.Maininstitutionsand Table 11.Minimum maximum and administrative tim Table 10Administrative proceduresandth Table 9.Internationalactorsandinst Table 8.Politicalandresearch structures Table 7.Socialactorsandinstitut Table 6.Stateactors andin Table 5.Feed-intariffsinBulg Table 4.Publicpolicyinstruments usedinBu Table 3.Expectedresultsandinvestment require Table 2.Comparisonoftheestimated potentialinMtoe Table 1.DifferenceintheDGdefin List ofTables: Figure 9.Summaryofthemain authorizati Figure 8.Projectphases Figure 7.PotentialforrenewableenergysourcesinEurope Figure 6.Mapoftheoreticalsola Figure 5.Mapsofwindenergydensity, PhD Student: GerganaMiladinova PHD THESIS-DISTRIBUTEDELECTR of powerplantandtheexternalitie practice various applicationsforDGdevelopments generation, asofMay2007 and actionplans Bulgaria invariousstudies projects ...... 142 ...... 103 ...... 39 ...... 76 ...... stitutions relevanttoDG promotion inBulgaria icity generation in Bulgaria aria for electricity producers ...... 14 ...... 25 ...... 41 ...... r energy potential inBulgaria ions relevant to DGinBulgaria actors involvedinadministra fuels andenergy carriersasof fuels itions usedinvariouspublications itutions relevant toDGin Bulgaria by powerplantinBulgaria2006 s arenottakenintoconsideration) zones, andpotentialinBulgaria ...... 166 ...... andactors relevant toDGinBulgaria ICITY GENERATIONINBULGARIA ons requiredforDGprojectsinBulgaria eir relevanceforvariousDGtechnologies s inthe electricity market inBulgaria oning of a country, basedonDutch planning oning ofacountry, ...... 101 ...... 166 ...... d forthevariousenergy efficiencyprograms lgaria to promote distributed electricity e-lags (inyears)forconsiderationof

for renewableenergygenerationin ...... 24 ...... 33 ...... 44 ...... 31 ...... tive proceduresrelatedtoDG October2005(theefficiency ...... 61 ...... 3 ...... 69 ...... 30 ...... 21 ...... 167 ...... 56 ...... 66 ...... 21 ...... 90 ...... 91 ...... viii

CEU eTD Collection PhD Student: GerganaMiladinova Table 21.Locationswithhighpotentialforwind Table 20.Distributionofthetechnicalpotential Table 19.Theoretical potentialforbiomass usebyregions Table 18.Potentialforbiomass wasteinBulgaria Table 17.ShareofDGinelectricityge PHD THESIS-DISTRIBUTEDELECTR Table 32.Procedureforissuingofalicence Table 31.Procedureforrequestingastudycond Table 30.Procedureforissuingperm Table 29.Procedureforissuing‘complex permit’ Table 28.ProcedureforthedecisiononEIA Table 27.Procedureforassessment oftheneed Table 26.Proceduresre Table 25.ProcedureforchangingofaDeta Table 24.Procedureforchangingof Table 23.Procedureforchangingof Table 22.Potential forbiomass-fuelled CHP,ex 10 m aboveground(inbrackets regions heat generation signing ofconnectioncontract or ‘complex permit’ production ...... 168 ...... 169 ...... 175 ...... lated toconstruction ...... 173 ...... 175 ...... the designationofforestrylands designation ofagriculturallands its forwaterandbodyuse extrapolations for50m) neration from RESandCHPinBulgaria ICITY GENERATIONINBULGARIA iled Territory Development Plan(PUP)* ...... 173 ...... 172 ...... forEnvironmental Impact Assessment (EIA) cluding biomass already for small hydropowerplantsinBulgariaby ...... 168 ...... 173 ...... electricity generationan energy inBulgaria (windspeedmeasured at itions forconnectionto ...... 168 ...... 169 ...... 174 ...... 170 ...... 170 ...... exploited forenergy d forelectricityand electricity gridand ...... 167 ...... 171 ...... ix

CEU eTD Collection WB WADE USAID TPES TFC MEE UCTE UCTE TPP ssHPP SG SEWRC SEEA RES RIEW PV PSHPP OP NSRF NPP MRDPW MOEW MEER M LW LSpD LPAL LF LEP LE lsHPP JI IEA HPP GDP EUR EU EIA EEF EEA EE EBRD DOE DHC CHP CEE IBA B PhD Student: GerganaMiladinova AAU List ofabbreviations: PHD THESIS-DISTRIBUTEDELECTR (former SEEA)E

World World U T T M U T s S S see EEA R R P P O N N M M (former) M M L L L L L L l Joint I H G Eur E E E E E US D C C I B Agency) A arge mall nternational nvest tate tate hoto umped otal otal hermal aw onWaters aw onS aw forthe aw onF aw onE aw onE uropean nvironmental nergy nergy nergy E uropean illion nited nion forthe enewable egional ational uclear P istrict ombined entral and ssigned A perational ydro ross inistry of inistry of inistry of illion D o -s -s epartment G E I voltaic P F B A P D mplementation S cale B cale nergy andWater E E rimary inal azette

ulgaria H omestic P

ower ank tates S lliance for S fficiency fficiency fficiency fficiency patial I orestry nvironmental nergy ower ower eating torage U B trategic ower nspectorate of H fficiency H E H inistry of E mount U C ank for E R E nion P P

eat and ydro nergy E onsumption conomy and nvironment andWaters ydro egional reservation of astern A rogrammes C P E nergy A A I P gency for lant o-ordination of D C of P nergy mpact P lant H gency ICITY GENERATIONINBULGARIA evelopment lant P roduct P ompany R E D ydro F S R A ower eference nits ower nergy E und P

E ources ecentralized econstruction and

D S urope ower (orco-generation) nergy and

gency A evelopment and P gency P upply

R P ssessment E rotection P ower I egulatory E nternational nvironment and lant (above10MW) lant (below10MW) nergy A F

gricultural ramework P T (former StateEnergy Efficiency lant ransmission ofE E E

nergy

nergy C

ommission D D P R L evelopment

ublic evelopment ands esources (nowMEE) Waters

orks lectricity

CEU eTD Collection PhD Student: GerganaMiladinova PHD THESIS-DISTRIBUTEDELECTR Nevertheless, therehas been enormousprogres taken intoaccountandthe penetrationofDG for electricitysystems upgrades(Strabac In addition,introductionofDGunitsinsome lo DG technologiesarealsostille units (Bradley2001;Bunge environmental impacts thatshould be taken technologies areconsideredmore environmentall countries. Apartfromallthesebarriersit people’s perceptions,thereisnosignifican up-front costsandlongpaybacktimes forso generation systems) (Reisinger and administrative challenges; increasing popularityduetothe Distributed generationisan 2003a; ESD2001). opportunities canbecreatedlocall with supporttowiderintegrationofdi Pepermans energy bills(2003;EC2003a;IEA2002;Jorss as renewablesoroflesspollu significant reductionoftransmission anddistributionlosses,utilisation of localsources such Some ofthe benefitsofgeneratingpoweronalocalscaleinclude:securitysupply, development bycontributingtoal consumers themselves, whichcanhelpoursoci energy generation,orpr fundamentals ofourenergygenerationindustry.On can beaddressedsuccessfullybytechnological waste areonlysome oftheproblems associated Global climate change,resourcedepletion,ur 1. 1.1. THERESEARCH INTRODUCTION TO etal. FOREWORD ANDPRO 2003;Reisinger oduction ofelectricityandheat etal. old conceptofenergygenerati ting conventionalsourcessuchas etal. xpensive andtheirpromotion can technical constraints (such as various benefitsitoffers.Unfortunately,duetopolicy,legal etal. l threeofitspillars–social 2003;CBD2004;Jorss y thatcanleadtohelpfost 2002;Strabac BLEM STATEMENT 2002;Uyterlinde ICITY GENERATIONINBULGARIA etal. into accountwhenpla shouldalsobementioned thatalthoughDG stributed generation technologies promoted inacost-effective way. t penetrationofDG me andlimitations DGtechnologies); dueto 2002).Theseandotherconstraintsshouldbe s inDGtechnologies thelast fewdecades withenergygeneration.Whilesome ofthese ban airpollution,acidification,andnuclear ety onitswaytowards improvements, othersrequirerethinkingthe y benignthantraditiona cations might beassociatedwithhighcosts etal. etal. e possibleapproachisthatofdistributed 2002; Koeppel 2003; Ofgem 2002; 2002;Koeppel2003;Ofgem 2002);economic limitations (suchas etal. etal. close toconsumers orevenby on whichnowadaysisgaining , environmental, andeconomic. 2002;WADE2002).Further, traditionaldesignofpower er regionaldevelopment (EC naturalgas,andreductionof 2002; WADE 2003). Some 2002;WADE2003).Some have veryhighsocialcosts. nning andconstructing DG (DG), new employment (DG), newemployment technologies inmanytechnologies achieving sustainable l ones,therearestill 1

CEU eTD Collection PhD Student: GerganaMiladinova (70% ofBulgaria’senergyneed for biomass andtheopportunitiesitcanoffer to localdevelopment, highenergydependence can offeranumber tothecountry,es ofbenefits included provisionsonthesupportofDGinva Government, aswelloneoftheEU’sacc Ecotherm -EngineeringLtd.1997).DGpromotion biomass, hydro,andfrom wind, CHPinBulgaria(Black&Veatch There issignificant potential for powergenera order tofacilitatefurtherdeployment ofDG support mechanisms arestillneeded,andind that hasledtocostreductionandminimiza PHD THESIS-DISTRIBUTEDELECTR process, and administrative procedures. investors, asitgivesa detail systems (i.e.communisttomarket-based). Fu problems foracountry stillundergoingatrans internationally well-established scientists, andin identifies and analyses DG-relatedpolicyandba detailed overviewofthecurrentpenetration alternatives ifwiderDGisto penetration andprovidesdecision-makers in The researchcontributestoabetterunders governmental objectivesdrawnup. social justice, market-based, andoptimal) made,framework andfivescenarios(prese are experience ofEuropeancountries,recommenda technical evokedbriefly.Onthebasisofth regulatory, administrative andeconomic onesarest functions, andwhicharethemain actors,a recommendations forovercoming them. Ita The presentresearchrevealsthelimitations However, theDGshareisstillinsignif gradual closureofsome conventionalunits,andthenegative be sought.Itcontributestoth ed accountofthepotentials, s arecoveredbyimports mainly icant (withtheexcep ICITY GENERATIONINBULGARIA tion ofthenegativeimpacts (IEA2003).However, for possibledevelopment pathwaysdependingon technologies andtoha ssesses howtheexistingDG policyframework nd barriers.Among theconstraints,policy, eed arebeingadoptedbymany in governments tanding oftheproblems relatedtowider DG nt policy,highDGshare, ession requirements, andtheGovernment has Bulgariawithguidanceontheneedsand toDGinBulgaria,andproposespolicy DG inBulgaria andthe availablepotential. It is analysis, and of a comparisonis analysis,andofa withthe pecially takingintoaccountthehighpotential tion from energysourcessuchas renewable rious legalactsandstrategicdocuments. DG tions forimprovementtions oftheexistingpolicy thiswayprovidesanexampleof ofresearch rther, theresearchmay alsobeusedby rriers inBulgaria, combining approaches of ition betweentwofundamentally different udied indetailandtheenvironmental and is oneofthepriorities oftheBulgarian tion ofhydropower). e knowledgebyprovidingthefirst problems duringtheinvestment from Russia),theneedfor consequences ofcoaluse. rvest their benefits. etal. highemployment and 2003;ESDand 2

CEU eTD Collection Table 1.DifferenceintheDGdefiniti there areexceptions wherewi supplied tothedistribution rather thantoth RES technologiesorsmall-scal meanssources, itis agreedthatDG thatenergyisgeneratedclosetoorbytheconsumer from 2002; WADE 2004))some ofwhicharesummarisedin 2003;IEA2002;Jenkinsetal. ENIRDGnet PhD Student: GerganaMiladinova following: legislation, theworkingdefinitionofdistributed Based onthereviewofvariousdefinitionsus Various definitionsof the relevantissuesinse as economics, policyanalysis,andenvironmenta proposed researchborrowsassumptions andmet Due tothefactthatproblems ofDGpenetr PHD THESIS-DISTRIBUTEDELECTR (WADE 2004) 2004) (WADE DG WADE Survey of 1999) (Jenkins et al. workshop CIRED for Report (Jorss et al. Final report Decent project– (Ofgem 2002) Markets factsheet and Electricity OfficeUK of Gas (IEA 2002) Generation’ book IEA ‘Distributed Publication (source) 1.2. 2002) 2002) DEFINITION OF DISTRIBUTED GENERATION GENERATION OFDISTRIBUTED DEFINITION

generation Distributed energy Decentralised generation Dispersed generation Decentralised generation embedded generation, Distributed generation Dispersed Term used veral Europeancountries. distributed generationcan nd powerplantsareincluded. e CHP(co-generation),andwhen network adistribution to support providing or connected Not Near the point of use the point of Near Not specified connected Usually meter the consumer side ofthe on or connected always Not Connected Yes independent ofthe grid . completely or network connected to a distribution distributed network Connection tothe ons used invariouspublications ICITY GENERATIONINBULGARIA 1999;Jorss e high-voltagetransmission network.However, ed, andontherequirementsofBulgarian hods from differentareasofknowledgesuch generationused inthepresent study isthe ation haveinterdisciplinarydimensions the l protection,aswellfrom experienceof befoundinthelitera

Table 1 etal. excluded Generally wind onsite Only Yes 50-100 Yes 10MW Yes Wind Size limit . Inalloftheabove-mentioned 2002;Koeppel2003;Ofgem fed into the system, itis

400MW) 1kW- CHP of size(fo Irrespective MW

ture (forexample, r

efficien H 70% M

efficiency ighly ighly ore tha CHP t

3 n

CEU eTD Collection reduces theoverallinvestment risk(Datta PhD Student: GerganaMiladinova require lowerinvestments coststhanthe conven DG unitsareflexiblein theirinstallationa by usingwasteheat(Datta fuels (asmost renewablesourcesare)(IEA2002), areas (Reisingeretal. distribution systems (Datta price (EC2003a)),andthecostsofexpansion a and distributionlossescosts the consumerseveralcomponents less financialrisks. Thisreductionof energybi DG canreducethecost ofelectricitygeneration, aresummarizedinthefollowingtext. some ofwhich 2007) asitcanofferanumber ofeconomic, so DG ispromotedbythegovernments ofmany count case ofgasturbines). of flywheels,fuelcells andmicr technologies usingnaturalgaswe therefore allpossibilities for information ga of upto60MW, arestudiedasthereisavery limited numberofprojectsinthisareaand is asitprovidedinBulgaria solar thermal andgeothermal heating, butthese are notafocusoftheresearch.Thesize limit of CHP)generationapplications Due tolimitations of resources PHD THESIS-DISTRIBUTEDELECTR 10MW) highly-efficientsmall-scale CHPtec distribution network,andus to 50MWh). . electricity and/orheat(in Distributed ElectricityGenera 1.3. 1.3.1. BENEFITS FROM WIDER DEPLOYMENT OFDG FROMWIDERDEPLOYMENT BENEFITS 2002).Anothereconomic benefitof DG istheuseofcheaporno-cost Economic Opportunities etal. etal. n legislation.Insome cases,larg the caseofCHPunits)production, 2004). and time, only electricityand el andpolicyarestudied.Therearesignificantopportunitiesfor o-turbines) orthe fact thatthey 2004;IEA2002).DGcanalsoprovideelectricity toremote re notstudied,duetotheirlim (in theEU-15theyareabove of thecostcanbereducedor tion (orDG)comprisesallgene e renewableenergysources ICITY GENERATIONINBULGARIA etal. nd operation,anddue to theirsmall sizethey thering areexplored.Apartfrom CHPother lls ispossiblebecauseby producingcloseto tional large-scalepower 2004). Some of them (especiallyCHP)can 2004).Some ofthem nd/or rehabilitationofthetransmission and andduetothesmall sizeofunits,itbears cial, environmental andtechnicalbenefits, and theimprovement offueluseefficiency hnologies (withproduction ries andattheEuropeanUnionlevel(EC er projects,suchaswind farms avoided,suchastransmission are wellestablished (as inthe ited application(asisthecase ectricity and heat(in thecase 30% ofthetotalelectricity (including hydroofupto are usuallyconnectedtothe ration installations used for ration installationsusedfor plants, whichinturn of electricityup 4

CEU eTD Collection reliability in thecaseofblackouts. DGcanalso jobs/GWh. Anothersocial benefit is theincrease of comfort byimproved powerquality and fired powerplantis0.01-0.1 jobs/GWh, while ESD (2001)forPolandithasbeencalculated thatthelabour intensity of atraditional coal- local scalecancontributetojobcreationand EC 2003a;IEA2002;Jorss The social benefits of DGarereferred toin many publications (for example: Datta backup powertobeusedincaseof shortageorsystem failures. their components thatcancauseblackouts, (CHP), (iv)reductionofvulnerabili fuels andmoreefficient useofnaturalga reliance, (iii)reductionofdependencyonthefluc diversification offuelmix by acknowledged. Themost commonly recognisedcontributionsofDGinthisrespectare:(i) significant roleofDGasamore secure PhD Student: GerganaMiladinova Pepermans publications (suchas supply weresetasa‘highpriority’ontheag Since the oil crises ofthenineteen-seventies, in theUSAalone)(WADE 2002). technologies andisestimated toleadasign 2002; WADE 2002).Thisproblem isassociated by voltagefluctuationsprovidingback DG canproducehigh-qualitypow competition between suppliers (EC2003a). also increasetheoptionsforconsumers to electricity prices” inthe liberalised EU elect in addition,according to theEC(2003a),canse higher (IEA2002).Inthisway,theycannotonlybringfinancialbenefitstotheirowners,and easily beswitchedonandoff, PHD THESIS-DISTRIBUTEDELECTR etal. 1.3.3. 1.3.2. 2003;Reisinger Social Opportunities Security ofSupply EC 2003a;IEA2002;Jorssetal. etal. introducing more energysources, 2002;Koeppel2003;Ofgem 2002).Powergenerationon er andreducethecostsof so canoperate atpeak hours wh etal. ty ofelectricitysystems toterrorist attacksandtofaults in ICITY GENERATIONINBULGARIA 2002;Uyterlindeetal. -up power(EC2003a;IEA2002;Reisinger s bysimultaneously producingheatandpower regional development. Forexample inastudyby ricity markets. Underthese conditions DGcan and (v)offertheoptionofhavingone’sown ificant losses(forexample $119billionin2000 and reliablemeans ofenergygenerationis endas ofmany governments. Inanumberof choosetheirsupplier,andcanstimulate the useofrenewableenergy requires0.1-0.9 provide electricitytore the issues related tothe security of energy rve as“aphysical ‘hedge’ against volatile tuation of theinternational prices of fossil with theincreasedcomplexityofmodern 2002;Koeppel2003;Ofgem 2002; unpredicted shut-downscaused en the price of electricity is (ii) decreasefuelsimports 2002;WADE 2002)the mote areaswhereitis etal. 2004; etal. 5

CEU eTD Collection for variousprocesses orspace heating (CHP). services related tothe improveme better electricity quality (Datta management, (iii)reactivesupport,(iv)avoi improved engineeringflexibility, need forupgrades.DG provideshighquality By feedingelectricityintothedistribution clean technologies. can alsobedecreasedbyusingmore environmentally friendlyfuels,andmore efficientand networks, areductioninhabitat destruction andharm wildlifecan resource depletioncanbereduced(EC 2003a).By reduction oftransmission anddistributionlosses PhD Student: GerganaMiladinova minimized, andthusfuelfired factors thanotherfossilfuels.Itsuseinco-gen and UNFC considered carbonneutral(UNEP burning processescanbeconsideredtohaveb The onlyexception is biomass, but Most energyproducedfrom renewablesour The reductionofCO of electricity tothegrid, oratleast at theirhomes,consumerscanalsobenefitfrom otherwise extremely costlytoconnect tothe PHD THESIS-DISTRIBUTEDELECTR 1.3.5. 1.3.4. 2 emissions isoneofthemostsi Technical Considerations Environmental ProtectionBenefits etal. more efficiently with lessCO nt ofgirdandelectricityqua nt including: (i)lowergridcosts from reductionintheirelectricitybills. 2004;Reisinger because the same amount ofCO ICITY GENERATIONINBULGARIA or supplygrid,DGcanenhanceitandreducethe ces isnot associated withdirectCO distribution system. ByinstallingDGequipment dance ofdistributiongr eration means thatheatwaste intheprocess is een captured fortheplan additional income from exported the volumes CC 2002).Naturalgashasloweremission , andincrease share ofrenewablesources, the electricity andback-up power.Itcanoffer constructinglesshigh etal. gnificant benefitsofDGtechnologies. 2002).Apartfrom theauxiliary lity, DGcanalsoprovide heat 2 emitted. Inaddition, bythe alsobeachieved.Pollution and losses,(ii)betterfault id congestion,and(v) -voltage transmission 2 ts’ growth, itisalso emitted during the 2 emissions. 6

CEU eTD Collection centralised fashion, butalsothat For variousreasons,including that DG. The secondobjectiveistorevealand studyth described inSection under thethirdobjective.Thean PhD Student: GerganaMiladinova capacity andcooperationbrieflyst main actorsandinstitutions (including state, soci implementation ofDGpoliciesandthewaythey implementation areidentified and studied.Furthermore, thepolicy instruments for the To achievetheobjective, first, themainpolicies related toDGandthemechanisms fortheir deployment andtoevaluatewhatpartof arereviewedin potentials forDGinBulgaria the time ofwritingon thestate of DGinte penetration ofDGtechnologiesin background information andinsightsonth characteristics oftheBulgarianenergysectorar used as abasisforthe analysis relatedto The information collectedonthepenetrationof sources, notallofwhich be determined thisis the first overview of related to the integration andstate policyfor the promotion of DGinBulgaria. Asfarascan The researchunderthefirs their potential,andtoidentify existing public policies for the promotionofDG inBulgaria. The firstobjective isto describethe presen generation inBulgariaandtoprovidea The ultimate goalofthe researchisto cont policy approachestoovercome the later. Bulgaria, toidentifythebarriers toitswider penetration, andtoproposealternative The aimofthisresearchistoassessexisting PHD THESIS-DISTRIBUTEDELECTR 1.4. AIMS AND OBJECTIVES AIMS ANDOBJECTIVES 1.5, below. are easilyavailable tointerestedparties. t objectiveis some DGtechnologiesarenot udied inordertoprovideast the country.Inaddition,most alytical approachastohow theelectricity systems havehitherto beenplanned ina basis forfurtherresearchinthearea. carried outinorder the availablepotentialisleftunexplored. ICITY GENERATIONINBULGARIA its kindandsynthesises t state of DG technologies inBulgaria,assess t stateofDGtechnologies e opportunitiesfor,andlimitations onwider order toexploretheopportunitiesforwiderDG ribute tothepromotion ofsustainableenergy theotherpartsofth publicpolicysupportingDGpenetrationin e barriersthat preventhigherpenetration of gration havebeengathered.Studiesonthe e alsostudied withth DG technologiesandontheenergysectoris functionareexamined. Alongwiththis,the al, andinternational) are identified andtheir to revealthepres yet market competitive, there arting pointfortheresearch these issuesarestudiedis recentstatisticaldataat information from many e purposeofproviding e research.The main ent stateofplay 7

CEU eTD Collection PhD Student: GerganaMiladinova result, anumberofrecommendati and theexperience of otherEUcountries tailored tothecurrent situation inBulgaria. Asa Measures toovercome barriersrevealedare the optimal, onDGdeploymentinBulgaria,depending ongovernmental priorities. framework andtosuggestdiff The thirdobjectiveistopr communications. upon, mainly atthebasisofexpertinforma remaining limitations suchasenvironmental, studied indet,ail,followingtheanalyt Bulgaria isgathered,onlythepolicy,regul Bulgarian caseisstudied.Althoughinformati are anumber ofbarriersthatpreventhighe PHD THESIS-DISTRIBUTEDELECTR approaches from variousfields(mainly Due tothe interdisciplinary character of the problems related to DG,theauthor borrows an introductiontoSectionswhenapplicable. questions ispresented.Moredeta In thefollowingtext,ageneraloverviewofth 3. 2. 1. They are: To achievetheabove-describedobjectivesan the benefitsofallscenariosat author’s 'optimal' scenariothattakesaccount achievement described,includingthesocial,en depending ongovernmental priorities, areou Bulgarian Government wantstoachieveincreasingcontributionofDG.Severalscenarios, framework, andwhatarethepossible scenariosforDGdevelopment inBulgaria? What recommendationscanbemade for What arethebarriersthatpreventhigher pene What istheexistingpolicyframework fors 1.5. ANALYTICAL FRAMEWORK FRAMEWORK ANALYTICAL opose recommendationsforimprovem acceptable costs isalsooutlined. erent scenarios, including onethattheauthorconsiders iled explanations of thetheoretical approachareprovided as ons areproposed thatareessent ical framework suggestedinSection ICITY GENERATIONINBULGARIA policy analysis,economics andenvironmental of thepresentintegra atory, administrative andeconomic onesare upport to distributed generation in Bulgaria? upport todistributedgenerationinBulgaria? social andtechnicalones,arebrieflytouched r DGpenetration.Theirimplication forthe e analyticalframework forapproaching these on allpossiblelimitations thatoccurin suggested, basedontheresearchinBulgaria, vironmental andtechnicalimplications. The tlined, and thenecessary policy fortheir tion providedininterviewsandpersonal swers aresoughttothre tration of distributed generation in Bulgaria? tration ofdistributedgenerationinBulgaria? improvement of theexisting DGpolicy ial tobeimplemented if the ent ofthe existing policy tion of DG and combines tion ofDGandcombines e researchquestions. 1.5, below.The 8

CEU eTD Collection PhD Student: GerganaMiladinova developed byHowlettandRa Uyterlinde etal. REBUS projectwhichwasfundedundertheEU’sALTENERprogram(Skytte Administrative barriersarealsostudied fo qualitative terms tocharacterisethemarket barriers thatlimit penetrationofDGtechnologies. economic limitations. From thefieldofeconomics depth studyiscarriedoutonlyofthoserela the countryarealsorevealed.Al DG areidentified,andthentheirpresence inBu review andresultsofseveral projects onDG.Theanalysisisqualitative, protection) aswellframeworks forrese PHD THESIS-DISTRIBUTEDELECTR the Directorate-General for En 2005 arealsoincluded,as wellas a major factor,andthustheprovisions onre environment, economy, regionaldevelopment, a programmes, andactionplans.AsDGisrelevant are studied based onareview First, thegoals, targets,andobjectives that actors toachieve”. Therefore,three a specifiedsituationwherethosedecisionsshoul actor orgroupofactorsconcer used, whichstatesthatpublicpol years. Inthis research,thedefinition ofJenkins(1978,citedinHowlettandRamesh 2003)is studied. Therearedifferentdefinitionsofpub To answerthisquestion,thegovernmental orpublicpolicypromoti 4. and futurescenariosonpossibledevelopments isproposed. order torevealhowtheproblems areovercome, acomprehensive and listofrecommendations these elements combine. Finally,comparison is approach ofHood(1986) guides the research and from economic, research,that ofGoloveandEto(1996)areused.Inaddition,the distributed generationinBulgaria? Research question1: Whatis theexis 2003).From policyanalysis,thedefinitionsandpartsofapproaches mesh (2003), Salamon(2002),Mc EU projects,thebarriersandinstruments forthepromotion of ning theselectionofgoalsand ergy andTransportofthe EuropeanCommission, andexperts variouselements from informal though barriersfrom different of variouspublicpolicydocum icy is “asetofinterrelated elements arestudied consequently. ICITY GENERATIONINBULGARIA llowing theframeworkprovidedinADMIRE are setupbytheGovernme arch developedforseve meso-level and inductive. Basedonliterature newables andCHPinthe AccessionTreaty of lic policywhichhaveb ted topolicy,regulatory,administrative, and on institutions, actors, instruments, andhow nd employment areanalysed.EUaccessionis made withtheexperien d, inprinciple,bewithinthepowerofthose ting policyframework forsupport to lgaria analysed.Otherproblems typicalfor todifferentareas,documents from energy, , atheoryofmarket means of achievingthem within decisionstakenbyapolitical Laughlin andJordan(1999), discussionswith fields areidentified,anin- ents suchasstrategies, ral EU-fundedresearch een developedoverthe ng DGinBulgariais nt arerevealed.These ce ofEUcountriesin failures isappliedin etal. officialsof 2003; 9

CEU eTD Collection PhD Student: GerganaMiladinova facilitates research,andcanpo provides agoodsynthesisofthepossibleinstru Hood proposesasimple classifi instruments byHood(1986)isusedtostudythe action isstructuredtoaddressapublicpr instrument of publicactionisconsideredas are identified andanalysed, base Secondly, oncethegovernmental objectivesarest of renewablesarecarriedout. in Bulgaria,onhowtheBulgarianGovernmenta PHD THESIS-DISTRIBUTEDELECTR 2003; Reisinger existing studiesofDGpenetration in Europe(forexample: Jorss There areanumber ofbarriersthat limit th distributed generationinBulgaria? Research question2:Whatarethebarriers main groups:state,social,andinternational. structures’ (Howlett and Ramesh 2003).Theactors andinstitutions are classified inthree why bothareresearched.Theinstitutionisde (or actors) are asimportant astheinstitutional setting within whichtheyoperate,andis Howlett andRamesh (2003)isused.Theysuggestthatindividualsor institutions iscarriedoutto the aim oftheresearch isnot detailedin implementation inBulgaria are identified, and Thirdly, themain actorsandinstitutionswhic mechanisms fornon-compliance(Salamon 2002,McLaughlinandJordan1999) achievement; studyofthedesign,activities, elements: identification of thegoals of theinstrument andtheresources orinputs for its described byMcLaughlinandJo the main assumptions suggestedbySalamon Once theinstruments determined, abriefoverv abbreviated NATO)accordingtotheresourcesg of instruments arenodality(information), etal. 2002;Skytte supportpolicyandbarriersanalysis.Theanalysisframework of ssibly preventomission ofsome d ondocument reviewandinterviewswithstakeholders.The cation ofthepossibleinstrume rdan (1999). The analysis is guided byreviewofseveral rdan (1999).Theanalysisis etal. ICITY GENERATIONINBULGARIA 2003;Strabac ‘anidentifiablemethod throughwhichcollective oblem” (Salamon 2002).Theclassificationof e penetrationofDGwo stitutional analysis. Study of theactors and authority, treasury,andorganisation(orif their main characteristicsdescribed. However, ments forrealisation ofgovernment policies, fined bythenarrowmeaningof‘actual iew ofhowtheyfunctionisgivenfollowing overnment uses toimplement itspolicies. deliverysystem andoutcomes, andthe (2002) andsome suggestionsforanalysis instruments appliedinDGfieldBulgaria. h participate inthepolicyformation and udied, theinstruments fortheirachievement dopted itstargetsreleva thatpreventhigherpenetrationof etal. 2002;Uyterlindeetal. 2002; key elements. Thefourtypes etal. nts intoonlyfourgroups.It 2002;Pepermans rldwide. Based onthe rldwide. groups ofindividuals nt tothepromotion etal. 10

CEU eTD Collection considerable barrierforsma development. Theimperfect competitionin the rewardscheme (i.e.thefeed-in tariffs),andlimited statefundingforresearch and approached throughareviewoftheissues,such from conventionalsources,andthefailureof The problem ofexternalities is researched byan information. Thesearestudiedinqualitativete failures, namely: failuretointernaliseexte market assuggestedbyGolove The economic limitations arestudied asbarriers problem issignificant,itnotinvestigated were alsoidentifiedandrese secondary legislation,lack Based oninterviews,severalproblems typicalfor Bulgaria, suchascontradictingprimary and Engineering Ltd.1997;Strabac Datta procedures; powerfullobbiessupportingfo of inclusionDGconsiderationintheplanni tradition; lackoflong-termandconsistentDGpoliciesthatincreases theinvestment risk;lack detail are:policy targeted at are identified,basedon Furthermore, ananalysisofthepolicyandregulat investors forwhichaquestionnairewas dawnup(seeSection carried outthroughreviewoflegislativeacts,re 2003). Analysisoftheinvestment process,ad REBUSproject(Skytte framework suggestedintheADMIRE PhD Student: GerganaMiladinova (including planning,impleme The problems relatedtoinvestments in but forcompletenessbriefinformation onthem isprovided. country. Duetotime constraints, these barriersalsoexist inBulgariaandsear technical; environmental; andsoci Uyterlinde etal. PHD THESIS-DISTRIBUTEDELECTR et al. et 2004;EC2003a;ENIRDGnet2003;ESD 2003)alistofbarriers a literature reviewof internationa ll electricityproducers(Jorss of implementation, inexistent large-scalegenerationbasedon arched. Althoughpowerfullobbies etal.2002;Urge-Vorsatz andEto(1996).Releva ntation andproductionphases thetechnicalandsoci al) havebeenprepared.The re ICITY GENERATIONINBULGARIA (regulatory, policy,and hereindetaildue ssil fuelsandnuclea DG throughout the whole investment process DG throughoutthewholeinvestment process ches for limitations whichappear typical for the rnalities, imperfect comp ng process; long and complicated administrativeng process;longandcomplicated rms basedondocument reviewandinterviews. the Government torewardDG.Thelatteris gulations andprocedures,interviewswith aslimited investment the energy sector is recognised to be a the energysectorisrecognised tobea ministrative procedures,andleadtimes is ory barriers iscarriedout. Themain barriers alysis ofthecost of related tothe existence of animperfect al limitations arenot nt toDGinBulgariaarethreemarket etal. etal.2002).Torevealtheproblems, etal. l experience. Thoseresearchedin microgeneration supportpolicy, to time constraints. 1.7.3, page15). 2001b;ESDandEcotherm - 2003;Uyterlinde etal. a long-andwell-established r industries(Cole ) areanalysedusingthe search investigateswhether existinBulgaria,andthe administrative; economic; 2003;Uyterlinde support, problems with etition, andimperfect electricity generation studiedindetail, etal.2002). etal. 1995; etal. 11

CEU eTD Collection priorities, andtheirrepercussionsanalysed.Th are developedthatdescribepossiblepolicyalternatives,dependingontheGovernment period attheEnvironmental Chan on international experience, especially inthe recommendations fortheimprovement ofDGpo comparison withtheexperienceofothe Based onthe analysis of theexisting DGpolicyfr Bulgaria? DG policyframework, andwhat aretheposs Research question3:Whatrecommendations ca its impact on theBulgarian energy system, of themost important ones,e.g.theplansfor sectors orissues. Itisnot bepossible tost DG policiesdonotstandaloneandareinfluen is included. limitations are alsonotstudied indetail,buttheinformation mentioned bysome interviewees windandhydropowerdevelopmentNGOs about ar Thus onlyproblems relatedtotheEIA procedur limits of thisresearch. Therefore itisvery Bulgaria havenotbeenidentifi PhD Student: GerganaMiladinova penetration ofDG.Studiesonpossibleenvi lead toenvironmental degradation, i.e.therearealso environmental barriersforthe DG isconsideredmore environmentally benignth revealed throughreview ofavailableinformation sourcesandinterviews. limited abilityoftheactorstouseoractuponthisinformation (GoloveandEto1996).Itis forms suchas:lackofinformation, highcost Sambeek andScheepers2004).Theproblem ofim access tothe networksandtothemarketsforDGproducersisstudied(Jorss the roleofdistribution-a PHD THESIS-DISTRIBUTEDELECTR nd transmission- system operators ed, anditisnotpo ge Institute (ECI) atOxford University. Different scenarios ICITY GENERATIONINBULGARIA udy allrelevant limiting fact and theproblems ofcorruption,isincluded. difficult todrawconclusionsonpossibleimpacts. of information, lowaccuracy ofinformation, and UK, wascollectedduringanine-month research ronmental degradation e scenarios have been r EUcountries,acomprehensivelistof construction ofanewnuc ced bydecisionsanddevelopments inother e andtheconcerns of amework inBulgaria,of thebarriers,andon an traditional energysources butitcanalso licies inBulgaria is ssible tocarryoutsuch astudywithinthe ible scenarios forDG developments in n bemadeforimprovement ofexisting perfect information emerges indifferent e summarized inthetext.Thetechnical (DSOandTSO)inproviding developed attheECI. caused byDGunitsin ors butabrief overview proposed.Information various environmental lear powerplantand etal. 2002;van 12

CEU eTD Collection PhD Student: GerganaMiladinova growing importance atEUandnati The most significant challenge during theresear PHD THESIS-DISTRIBUTEDELECTR that the research drawsaverycomprehensiv Although some issuescouldnotbediscussed in have beendulypresented. omitted. However,theauthorbelieves thatmo permits andauthorizations,butas For thesectiononadministrative procedures,th detail. Theseissuesrequiresepa interviews withinvestors. Fift However, information onthepossibilities for obta of thereadinessbankingsectortoprovidecreditsforDGprojectswasnotperformed. date whichcanbeanalysedwithinthelimited time-frame of theresearch. Fourthly,analysis structures forthese funds, andthereforethere as Bulgariaaceededonly in Thirdly, theopportunitiesunder applications. Secondly,onlythe there isnolegislationtopromote them) andth applications ofDGwereleftout Due tolimitations oftimeandresourcesseveral combination ofdifferentapproacheswasused. In addition, thesubject israth theories thathavebeendevelopedinwell-e communist onetodemocratic andmarket ba significant transition betweentwocompletely explains thesituationinBulgaria.Thisisdue From theoreticalpointofviewithasbeenve included inthetextwhen sections refers toevenearlier dates. Anindi May 2007.However,thePhDcoursestartdate changing. The authordidherbesttokeepthe 1.6. RESEARCH LIMITATIONS considerednecessary. January 2007,therewereproblems hly, theenvironmentalandtechni er newandrequiredinterdisciplinaryapproach.Thatiswhya rate comprehensive research. state policyisstudiedandnot ofthestudyastheypresentratherdifferentproblems (i.e. they areaconsiderable number onal level,andthuspolicyfo EU Structural,Cohesionand ICITY GENERATIONINBULGARIA stablished ‘Western’ democracies, verydifficult. cation ofwhentheinformation wascollectedis to thefactthatcountryhadundergoneavery sed one,whichmakes theapplicationof e pictureofthestate play,problems and ry challenging to choose one framework that ry challengingtochooseoneframework is notsufficient experience or information to aspects arenotstudied.First, theheating-only information asupdatedpossibleofthe st requiredstepsandauthorizations needed isOctober2003,andinformation insome detail,orwereomitted theauthor believes ch hasbeenthatDGisanewfieldwith e potentialismainly for verysmall-scale ining bankcreditshas different systems, i.e.centrallyplanned e authorhastriedtoreviewallrelevant those ofvariousorganizations. with settinguptheoperational cal aspectsarenot studied in other Funds arenotexplored r itspromotion , itis possible that some are been collected from been collectedfrom is constantly 13

CEU eTD Collection PhD Student: GerganaMiladinova data wasgatheredtosupportthearguments. interviews wasused.The research ismainly qu between descriptiveandexpl the research (ortheanalysesofexisting is whydocument reviewwasthemain research study calledfordifferentapproachestotheiranal in The researchwasconductedinthreephasesandaninitialorpreparatoryone,assummarised approached, forwhichtheaut much understandingandsupportfrom thevariousexpertsandstakeholderswhowere exceptions, thisdidnot cooperation, andreluctancebystak At thebeginningofresearchitwasperceivedthataserious opportunities forDGinBulgaria. PHD THESIS-DISTRIBUTEDELECTR Figure 1.Phasesofthe research Figure 1 1.7. - framework for the research the for - framework improve instruments help- overcome barriersand instruments - identify possible barriers and experience: international on research Initial 1.7.1. - institutions and actors and institutions - instruments - goals- . Thediverse natureoftheproblems discussedandanalysed ineachpartofthe Phase 1: METHODOLOGY

- other barriersand opportunities - how successful the policies are Bulgaria: DG in of state present the on research Initial

DG Policies Phases ofthe Research transpire; indeedonthecontrary

hor remainsmost grateful. anatory study and acombination ofdocument reviewand

eholders togiveinterviews ICITY GENERATIONINBULGARIA policy andstudyofbarri alitative innature, although some quantitative technique. Thefirstandthesecondphasesof ysis. Theinitialphasewasdescriptive,which - technical (in brief) environmental- social and (in brief) - economic - policy, regulatory,administrative 2: Phase - throughouttheres Barriers and scenarios 4: Phase . However,withsome minor limitation might belack of 3 : Recommendations ers) areontheborder earch therewas

CEU eTD Collection PhD Student: GerganaMiladinova Miles (1994). details important forthe research wasmade fo To systematise and summarise theinformation inthesedocuments, asummary ofthemain policy documents, studiesandreports,positionpapers,publications)fromvariousDGareas. The studyreliesonextensiverevi Document review process ofdatacollection. this sectionanoverview isgivenofthestrategi interviews, andfieldnotesisoneofthekeyelem into electronic form. Careful management of in more detail,interviewswereused.Simultane documents wasanintegral partofeachphase Two techniquesofdatacollectionwere used: selection wasused. barriers toDGinBulgariaand addition to thesesampling techniques forthe advantage oftheopportunitiesthatemerge unexpectedlyorbyfollowingnewleads.In the averageornormalopportunistic sampling, caseisstudied.In theresearchertakes good overviewofthewholefieldisachieved.When further referencestootherdocuments andpers The snowballtechniquereliesonthefactthatth (1994) intheresearch From therangeofpossiblegeneralsampling each ofthebarriersthat which havebeenchosenfortheirimplementa policy goals,actorsandinstitutions research. Inthefirst, the pol The unitsof research (or thecasestobestudie PHD THESIS-DISTRIBUTEDELECTR 1.7.2. 1.7.3. Data Collection Research Techniques snowball orchain,aty prevent DGpenetration. icy related to DGwas the unit studied through identification of other Europeancountries,thet thatparticipate intheir ac ew ofdocuments (forexampl ICITY GENERATIONINBULGARIA document reviewandinterviews.Thestudyof techniques describedby es usedtogather,systematise andfacilitatethe pical case,andopportunisticoneswere used. r eachofthem, followingtheprescriptions of research ontheusageofinstruments andthe theinformation collectedfrom documents, e expertsordocuments intheareacansuggest tion. Theotherunitsofanalysisrepresented ons therefore thankstothechainreaction a theresearch.Inordertorevealproblems ously todatacollectiontheywereconverted d) were different in th in different were d) ents ofmanagement oftheresearchdata.In thetypicalcasetec hievement, and theinstruments echnique ofcomparable case e variouslegislativeacts, e various parts of the e variouspartsofthe Miles andHuberman hnique isused,then 15

CEU eTD Collection and verifyingconclusions tobeused. were usedintheanalysis andinclude:orga data wereobtained.Singletona In ordertoavoidaccumulation which thediscussiontook place. interviewee belongs(i.e.investor identities arenotdisclosed.Thereisrefere For confidentiality reasons whendatawere collected ininterviews withstakeholders, thier the fileswere keptforfurtherreference. and September 30,2006.Theyweredigitallyr interviews thatrequiredco and continueduntilthecompletion ofthe The firsttypeofinterviewsstartedfrom thepl people directly,onlytwoofthosec were askedtoprovidedataforthequestionnai were sentbye-mail afterpriorcommunication authorizations. Mostinvestors investment opportunitiesandba questionnaire (includedinA The secondtypeofinterviewswaswith the opportunityinformally to University, andtheEuropeanCommission. During Region), CEEBankwatch(internationalNGO),the Regional EnergyCentre(intergovernmental orga and toworkonDG-relatedprojectswithvari stakeholders. Theresearcherhadtheopportunitytoparticipateinanu PhD Student: GerganaMiladinova type of interviews werecarried out mainly in protocols, andinterviews forwhichaquesti Two interviewing strategies were applied: semi-structured interviews withrevolving Interviews PHD THESIS-DISTRIBUTEDELECTR 1.7.4. Data Analysis mpletion ofthequestionnairewe discussissuesonDG deployment, policyandfutures. nnex III).Theaim wastocollectcomparable informationon were interviewedinpersonbutsome ofthequestionnaires nd Straits(1999)suggestthreest of considerableamount ofdata , projectdeveloper,expert,o ontacted didnotprovideinformation. rriers andproblems during ICITY GENERATIONINBULGARIA nising information, developingideas, anddrawing onnaire wasdeveloped(Mintrom 2003).Thefirst nce onlytotheposition,orwhichgroup the form ofinformal di first draft(August2007) investors whowererequestedtoanswera anning phaseoftheresearch,i.e.autumn2003 with therespondents.Se ecorded unlesstherespondents objectedand ous organizations,suchastheBlackSea res. Thankstotheapproachofcontacting nization ofthecountriesBlackSea these valuableexperien Environmental ChangeInstituteatOxford re carriedbetweenAugust1,2006 , itsanalysisstartedoncethe fficial, etc.)andtheyearin ages indataanalysiswhich the obtainingofvarious scussion withexpertsand venteen organizations mber ofconferences, . Mostsecondtype ces, theauthorhad 16

CEU eTD Collection PhD Student: GerganaMiladinova using differentsourcesofdata from differentperspectives(i.e were used,assuggestedbySingl To checkthevalidityof theinformation gather holistic picture,andwithholdingjudgements aslongpossible. opposites, talkingwithandlisten meaning changingdiagrams,constantlycomparing; and better, thinkingofextremes verifying conclusions.They are:rephrasingthe Lofland and(1995)suggestseveralus another strategythatwasusedfor “visual representationofrelationshipsbetw emergent ideasthathelpmake senseoftherealityone (1995) describe memos asa“small piecesof anal research. organising them incategories ‘meaningful andanalysableway’(Singleton andStraits1999).Thiswasachievedby In ordertoanalysetheextensiveamount ofre PHD THESIS-DISTRIBUTEDELECTR analysis includesnotonly descrip governmental documents, andtheindividualmeas for thepromotionofDG isstudied,includin technologies forthecountryasawholeand integration ispresented. Thisisfollowed byan summary of themain characteristics of the Bulgarian energysystem relevant toDG analysis currentstateofDG,opportunities,an After thisbrief introduction tothe research approach, inthefollowing chapters a detailed identified, the reasons other stakeholders’ accounts. When inconsistenc tried tochecktheinformation providedbytheintervieweesagainstobservations,data,and stakeholders witheconomic interestswereinte interviewed (MarshallandRossman1989).Thiswasparticularlyimportantasvarious When written accounts oftheevents orissues di 1.8. Memoing STRUCTURE OF THE DISSERTATION OFTHEDISSERTATION STRUCTURE wasusedtocapturevariousideasdur were alsoexplored. collectionsuchaspublicdocu . “data triangulation”), which in and subcategoriesthatcorres eton andStraits(1999).Oneofthemwastolookatthedata ing tofellowanalysts,drawing tion ofthemain characteristicsoftheinstruments, but also, the analysisofdatagathered. ICITY GENERATIONINBULGARIA een concepts”(Strauss rviewed. Thatwaswhytheauthorhadalways overviewofpotentialforrenewableandCHP ed andoftheconclusions,severalapproaches the differentregions.InChapter3,policy g thegoalsandobjectives setindifferent d challengesispresented.InChapter2,a ysis, usually a paragrap search datatheywerefirstorganisedina ies intheaccountofdi eful hintsthatfacilitateddrawingupand d notexist, then various stakeholders were researcher’s writingsin ordertocatch the ures appliedinorderto meet them. The is encountering”. ing theanalysis.Lofland andLofland pond totheobjectivesof ments, studiesandinterviews. theresearchwasachieved by back inasearchformore andCorbin1990)was h ortwo,that capture Diagramming orthe fferent actorswere 17

CEU eTD Collection PhD Student: GerganaMiladinova recommendations featuresinChapters6and7. communications withstakeholders, whilethe with the description of themain findings revealed during the literature review and 5 aremore descriptiveintheir alternatives forDGdevelopment underthefive final Chapter7,whererecommendations forimprovement ofthepolicyandvarious best examples from internationalexperience, areabasisfortheconclusions presented inthe social andtechnicallimitations areincluded. related to gaps inthepolicy and legislative framework, economic constraints, environmental, are revealed. Theconstraintsareanalyzed in procedures, andauthorizationstobeobtained during theDGinvestmentproce affected bythepublicDGpolicyisincludedin the role and capacityof thevarious actors and discussion oftheproblems associatedwiththei PHD THESIS-DISTRIBUTEDELECTR essence, althoughelements of ss aredescribedinChapter5 along withtheadministrative ICITY GENERATIONINBULGARIA Chapter 6where the more overarching barriers r functioning.Abriefoverviewandanalysisof The identifiedopportunitiesandbarriers, during thisprocess andthe related limitations scenarios chosen arediscussed. Chapters 1to institutions whichshape,implement, andare summary ofresearchresults,analysis,and Chapter4.Thestepsandthelimitations discussion areincludedtogether 18

CEU eTD Collection PhD Student: GerganaMiladinova in facttwotimes higher,ifmeasured as The energyintensityof the Bu electricity generationwas about10 by hydroenergy(mainly bythelargehydropower fuel andelectricitypricesisstartingtobe % in2005(ECandEurostat2007),represented ma The shareofrenewablesingrossinlandcons natural gas-fuelledCHPintheindustrialsector. firms whichcanafford toinstall new plants,as wellasfor introduction of more efficient Eurostat 2007).Nowadays,licencesfornaturalgasdistributionhavebeengiventoseveral in 2005)andrelativelylowsharethefi gas reserveshasleftthecountry The heavyemphasisondevelopment ofnuclear means forachievingindependenceof content (E.V.A.2004).However,furtherincreasein consumed Bulgariaislignitewithavery in space heating,andinindustria widely usedforelectricitygeneration(about40% Coal representsasignificantshareofthefuel imports, whichrepresentabout60to Appendix I).ThecountryisalsohighlydependentontheRussianFederationforenergy energy, whichaccountforabout80%ofthefuelmix more (for information see For itsprimary energyneeds,thecountryis potential forvariousdistributedtechnologi technologies aretobedevel the availablepotential.Toprovidebackground on thepossibilitiesforexistingenergysyst The development ofadecentrali PHD THESIS-DISTRIBUTEDELECTR 2. AND POTENTIAL FOR DISTRIBUTED GENERATION GENERATION DISTRIBUTED FOR AND POTENTIAL 2.1. CURRENTSHARE SECTOR, OFTHEBULGARIANENERGY OVERVIEW BASIC CHARACTERISTICS OF BASIC CHARACTERISTICS oped, anoverviewoftheenergysectorinBulgariaand lgarian economy isstilllaggin zed electricitygenerationsystem isdependent,among others, with alowshareofnaturalgas l processes (EC andEurostat2007). About90%ofcoal % in2005(ECandEurostat2007). 70%ofitsneeds(MEER 2004a). the countryfrom fuelimports. ICITY GENERATIONINBULGARIA widely usedforheatingandcookingpurposes) es arepresentedinthisChapter. nal energyconsumption(10.8%in2005)(ECand TPES atpurchasingpower paritiesin2002(IEA umption (orprimary energyneeds)wasonly5.6 mix (about35%inprimary energyneeds)andis low calorific valuea heavily dependentonfossilfuelsandnuclear em toaccommodatesuch technologies, andon information on theenvironment inwhichDG SUPPLY AND CONSUMPTION ANDCONSUMPTION SUPPLY and coal power generation, and small natural and coalpowergeneration,small oftotalelectricitygenerationin2005),for inly bybiomass (whichaftertheincreases theshareofcoalis plants).Theshareofrenewablesin g behindEU-15 averages,being in electricitygeneration(5.2% nd highashandsulphur seen as one of the seenasoneofthe Table 14 19 ,

CEU eTD Collection Total electricitygeneration in2006was42TW Section hitherto isverylimited. Forthisreason,theissu to some extentwhy,althoughthereispotentialfo plant revealstrongsupportforlarg Bulgaria. Thetensionsandpoli atKozloduyNPP of 1GWeach electricity shortagesisthec economy. However,theoptioncurrentlyconsider Therefore, increasing DGsharealong withend-use reduction canbevery beneficialforthe might beproblems inthemedium- andlong-term. needs withoutimports, butwiththeplannedclosure ofseveralthermalpowerplantsthere have significantlydecreased.Atpresentthecoun Albania. However,withthe 15% ofelectricitygenerated Bulgaria usedtobethebiggestnetexporterof improvements, transmission anddistri and theshareofthermalhydropowerhasthusincreased.Althoughtherearesome 2006 duetotheclosureoffourVVER440 PhD Student: GerganaMiladinova presented in development ofelectricityge Electricity generationisdominat the problems related toen dependence anenergyimports,widerintroduction the highshareofnuclear(andlackperm change-inducing emissions, andthe needfor the recultivation of mines after coal extraction), In thelight of thehigh shareofcoal(and inefficient fuel firing,and 2004a, b).Some ofthefactorsbehindthisphe PHD THESIS-DISTRIBUTEDELECTR 2.2. 6.5, page132. OVERVIEW OF ELECTRICITY GENERATIONSECTOR OFELECTRICITY OVERVIEW Table 15 , AppendixI.Theshareof nuclear ergy generationinBulgaria. high transmission losses. onstruction ofasecondNPPatBelene.Theremaining twounits closure oftheotherunitsatKozloduyNPP,exportopportunities in thecountrytoGreece,Serbia&Montenegro, FYROM,and neration, anddemand bysector tical debateregardingthecons contribute toasignificantshar e-scale electricitygeneratorsin ed bynuclearandcoal(see bution lossesarestillveryhigh. ICITY GENERATIONINBULGARIA electricityintheBalk especially the associated harmful andclimate anent storage fornuclearwaste),andthe strong h. Thefuelmixispresented below. nomenon are inefficientend-useconsumption, units atKozloduynuclearpowerplant(NPP), es onBeleneNPParedi try hasenoughcapacitytomeet itsdomestic ed bytheGovernmentforsolvingpossible r distributedgenerationinBulgaria,itsuse of DG should bethesolutiontomanyof DGshould of powerhasdecreasedsince2002and truction ofanewnuclearpower and export/import balanceis e ofelectricitygenerationin Bulgaria.Thisalsoexplains an region,exportingupto Figure 2 scussed inaseparate , below).The 20

CEU eTD Collection Source: MEER 2005 Figure 3.Structureand participatingentitiesintheelectricitymarket inBulgaria Section and distributionwereunbundled,butthereares PhD Student: GerganaMiladinova responsible forseveralpermits which hasasignificantroleinDGdevelopmen independent regulatortheStateEnergyand Water RegulatoryComm the electricitymarkets achieve the directsubsidiesdistorting 2003/55/EC ontheliberalizationof negotiations wasthetranspositionandim Among theobligations incumbant PHD THESIS-DISTRIBUTEDELECTR NEK Export PSHPP HPP & HPP 45% Companies 2.3. Distribution 6.2.2). Thestructure oftheener Import TPP Total electricity generation electricity Total THE ELECTRICITY ANDNA THE ELECTRICITY NPP Wholesale Providers Supplier Public Public Public HPP Regulated prices Independent Producers Condense type TPP and other RESother Customers (asdiscussedinSection the energy markets were phased out,andtheliberalizationof End 0% d overseveralstagesandcompleted byJuly1,2007.An NPP 44% HV on theBulgarianovernment intheprocess ofEUaccession Consumers electricityandgasmarkets. 11% Transmission Grid gy market ispresentedin Transmission Transmission ICITY GENERATIONINBULGARIA

Operator System TURAL GAS MARKETS GASMARKETS TURAL Source: Papazian2007 power plantinBulgaria2006 Figure 2.Totalelectricitygenerationby plementation ofDirectives2003/54/ECand till difficultiesforsma t, asitissettingupenergypricesand Market withMarket freely negotiatedprices Power transactionsPower in the stage of initial 4.1and Eligible Customers Autoproducers, CHP liberalization of the market rdcr HPP, – Producers Independent 5.2). Generation,transmission, Followingtherequirements, Figure 3 ll energyproducers(see . ission was created, ission was Traders of energy 21

CEU eTD Collection PhD Student: GerganaMiladinova privatized inyearsto exception ofKozloduyNPPandthebiggestTPP - have beenprivatized,including34HPP,orundergoingtheproce Privatization inthe energy sector is advanci PHD THESIS-DISTRIBUTEDELECTR should beprepared. construction oftwobiomass-fuelled units).That significant suddenincreaseoftheprice locations, which might leadtohighfuelcost has notbeenstudied.Forinstance,thereisari Section serious constraint.Biomassisrelativelycheap can beusedwithoutpayment offeesorconcessi details see EUR 5lv/Gcalwhilebriquettesandpelletsfr DG inBulgaria.For example, lignite wholesale products, andthelowcostofdomestic fuels(s On theotherhandhighpricesofsome fu to carryoutmajor investments inmodernization. which powerplantsselltheir figures inmanycasesdonotincludetheexternal only veryfewexceptions,between2.5and4€cents/kWh 2006(Expert2006).Butthese in The generationcostsatwhichBulgarianpowerpl provided impetusforimprovements inenergyeffi already beenprivatisedthroughauctionsandp Privatisation ofthedistricthe AG (MEER2004a). three packages and67% oftheirsharessold 2.4. 2.5. 2.7.1.1, below,buttheeffectofconstruction of severalbiomass-fuelled powerplants Table 16 PRIVATIZATION IN THE BULGARIAN ENERGY SECTOR SECTOR ENERGY INTHEBULGARIAN PRIVATIZATION SOURCES INBULGARIA SOURCES FUEL GENERATIONFROMDIFFERENT COST OFELECTRICITY , AnnexI).From renewableenergy come. The eight electric electricity arekeptlowbythe ating companies (DHCs)isalso ICITY GENERATIONINBULGARIA in 2004toCEZa.s.,E.ONEnergieAG,andEVN ng. On the generation side, most power plants ng. Onthegenerationside,most power ity distributioncompanies havebeengroupedin els forDG,e.g.naturalgasandsome biomass om woodareaboutEUR21/Gcal(forfurther s duetoscarcityonthemarket, andthusa biomass (ashappenedinHungaryupon sk ofrapidexhaustionbiomass fromclose uch aslignite)areasignificantlimitation for and thereis significant ublic tenders.Thischan ons. Thereisafeeforwaterusebutitnot for energygenerationhas is whyanevaluationofthelikelyscenarios ciency, incl.introduc ities ofelectricitygeneration.Thecostsat ants generate their electricity varied, with Maritza East2TPP.Thelatermight be sources, onlysola Regulator notallowingforthem underway.Mostofthem have ss ofprivatizationwiththe tion ofnewCHPunits. potential asshownin ge toprivateowners r andwindenergy a specific priceof 22

CEU eTD Collection systems installed. was about1MW installedcapacityof wind (MEER 2005).Small hydropowerplants belo installed capacityofal large-scale hydropowerplantsarethemain renewableelectricitysourceinBulgaria.The share inelectricitygeneration isvery low(see Although thecountryhassignific connected tothegridbutused There wereabout22gasturbinesin2003wi environmental performance theref (MEER 2005).However,consideringthatthey amount to880MW andinlargeindustrialente Large-scale CHPunitshavebeeninstalled forso large-scale CHPunits,some capacity of1kW upto400MW areincluded,then WADEBulgaria isnegligible. Ifthe (2004)defi The shareof renewablesunitsbelow10MW andsmall-scale CHPinelectricity generation in significantly restricted. or certificates for electricity generated, future development of naturalgas-fuelled CHP willbe fuelled CHPunits.Thisiswhy only heatfrom itratherthantouse theheatpr PhD Student: GerganaMiladinova In addition, becauseofthelow increases. This situationcanobviouslybeve in 2007therewereregulardemands byBulgargas–thenaturalgasimporter –forprice new long-termonesignedshortlybeforeBulgar used tobepaidbyfuelsupplies. However, the agreement wassubsequently cancelled,anda due tothefactthataccordingalong-term The Bulgarianeconomy hadbenefitedfrom lower The biggestchallengeforincreaseofnaturalga PHD THESIS-DISTRIBUTEDELECTR 2.6. BULGARIA IN GENERATION OFDISTRIBUTED PENETRATION CURRENT l HPPin2005wasabout2GW, andof of which arecoal-fuelled. of which toprovide electricityforco price ofdomestically mined coal without governmental supportinforms ofpreferentialtariffs ore questionable,theyarenot ant potentialforrenewables, ICITY GENERATIONINBULGARIA ry negativeforCHP development inBulgaria. agreement withGazprom oduced byrelectricitygenerationinnaturalgas- turbines. Therewereonly 33kW photovoltaic Figure 4 w 10MW totaled0.2GWin2004,and there rprises for993MW intotalinstalledcapacity s-fuelled CHPisthehigh th apowerof6MW to10MW, werenot nition ofDGisfollowed,i.e.CHPunitswith ia’s EUaccession.Itsclausesaresecret,but me ofthedistrictheatingcompanies, which areinmany casesobsolete,andtheir than theEU-averag the shareofDGincreasesthanksto , andTable17 mpressors (ENIRDGnet2003). pumped units-0.9GW storage itismuch cheaperto produce as alreadymentioned their included inthisresearch. inAnnexI).Presently, transit thoughBulgaria price ofnaturalgas. e naturalgasprices 23

CEU eTD Collection PhD Student: GerganaMiladinova Additionally, takingin countries withhighest identifiedin energy resourcesdevelopment opportunities ac for thedifferent renewable technologies type to thetotalinstalledelectricitygeneration Although thisistechnica (excluding solar)canbe8GWe by2020ifthewhol theoretical potentialfor renewablesinBulgar EBRD study(Black&Veatch the accessible potentialis used.Thiswillco Mtoe which accordingtothem in2015willbeonl total accessiblepotentialforen generation fromrenewablesislessoptimistic. Theauthorsoftheprogram foundoutthatthe Energy Sources(2005-2015) Table 2 There areseveralstudiesonrene Note: nodatacouldbeidentifiedontheshareofCHPafter2002 electricity generation- Sources ofdata:Forrenewables-calcula Figure 4.ShareofDGinelectricitygenerationBulgaria PHD THESIS-DISTRIBUTEDELECTR

Electricity Generation [GWh] 10 15 20 25 30 35 40 45 2.7. 0 5 ). However,inthe 9019 9920 0120 0320 2005 2004 2003 2002 2001 2000 1999 1995 1990 2.7.1. POTENTIAL FOR DISTRIBUTED FORDISTRIBUTED POTENTIAL Potential for Renewable EnergySources to accountthat90%ofth IEA 2004candMEER2005 l potentialandnoteconomic ormarket National Long-term ProgramforthePromotionofRenewable (EEA2006)theevaluation ofth etal. ergy generationofallrenewabl wables potential which showthat 2003)presentsmuch moreoptimistic estimations onthe the studywindpotentials (3.4GWe 2020). in ICITY GENERATIONINBULGARIA capacities in 2002 which were around 12 GWe. As capacities in2002whichwerearound12GWe. As me mainlyfrom hydroenergyandbiomass. tions ofBSREC;forCHP-IEA2004c; e countriesterritoryis ia. Itshowsthatrenewable energycapacity s, “Bulgariahasverypromising renewable ross alltechnologies”, GENERATION INBULGARIA y 38%ofthetotalfinal consumption, ifall e mid-term technicalpotentialisutilized. e accessiblepotentialforenergy itisstillsi CHP Fossil/nuclear (>10MW)HPP (<10MW)HPP es inthecountryisabout6 itisconsiderable (see arable (35%forestsand beingoneofthe gnificant compared

CEU eTD Collection PhD Student: GerganaMiladinova deserted arableareas(which areabout8.5%of agriculturalland)orthosethat are poorly use ofbiomasswastefrom differe conservation objectives.Atpresen However thispotential islimited by thepossibil of 547ktoefirewoodforenergyneeds significant potentialforwooduse-datashows that pulp andpaperindustry.With 35%ofBulgar insignificant limited onlytoseveralCHPinstalla firewood, andrepresentedabout4% electricity generationinBulgaria(EEA2006). Biomass isconsideredtobethesourcewithhighest potential fromrenewablesforheatand but also,thedifferencesofoutcome Note: This tableisonly withillustrative purpos 1 in Bulgariavariousstudies Table 2.Comparisonof theestimated potential inMtoe also included withaclearreference thatdatare in some studies thereisnoseparate evaluation for ‘electricity’ butonly for‘energy’ theyare In thefollowingtextmoredetaileddataofpot scale hydropotentialarguingthat (including largehydropowerplants)althoughotherexpertsare GWe. TheEBRD studyevaluatedthatthemi 45% agriculturallands),thepotentialforbiom PHD THESIS-DISTRIBUTEDELECTR Accessible potential potential Accessible potential Reserve Accessible Total (1993) potential Theoretical available (1993) resource Total Indicator citedin(Novem andEneffect2000) p otential otential p otential otential 2.7.1.1.Biomass Energy [Mtoe] Solar 14 703 703 14 000 13 8 169 18.4 0.0 0.4 0.283 [Mtoe] Wind 10 748 748 10 75 (?) 5 357 1.8-2 75

ithasalreadybeenexploited. nt sectorsandtheplantingof t themost sustainableuseofbiomass cancome from the [Mtoe] Biomass oftheTPES.Itsapplications 5-5.3 1159 1159 2.70 0.4 3.6 - s insome oftheavailablestudies. ICITY GENERATIONINBULGARIA [Mtoe] ssHPP (ESD andEcotherm -EngineeringLtd.1997). 1.8 0.1 1 entials forrenewableelectricityareprovided.If - fers toenergy(i.e.both es anddemonstrates th d-term potentialofhydropoweris1GWe 371 ass isconsideredasverypromising or3,4 2.3 ity ofconcurrentuses [Mtoe] lsHPP ian territorycoveredbyforeststhereis It islargelyusedforheating,mainly as tions thatutilizewasteby-productsinthe thereisatheoretical N N N/A 2.0 /A /A [Mtoe] Geothermal for renewable energygeneration 336 0.3 0.0 0.4 - - woodenergycropstousethe forelectricitygenerationare more scepticalaboutlarge- heatandelectricity). [Mtoe] 13 526 526 13 458 25 14 941 941 14 e significant potential, Total Total oftimber andnature 81 22 potentialfortheuse 6

(Simeonova et al. Engineering Ltd. (EEA 2006) Ecotherm - (ESD and Source 1996) 1997) 1997) 1

CEU eTD Collection different typesofbiomass is notevenlydistributed(See biomass powerplantsshouldbesituated closeto The transport of biomass is amajor limiting fact Biomass potentialbyregions direction canbeasuitablemechanis support. TheEUstructuraland lands canbeusedfortheplantationofenergy small sizeof some parcelssome oftheland is their ancestors.Duetothesech after thefall of thesystemitwasreturnedto not inuse.Duringthecommunist eratheagri About 50%ofBulgarianterritoryisforagriculturalpurposesand outoftheseabout8%are climatic, geomorphologic, andecolo Engineering Ltd.1997).Further evaluated thatthey further development inthesector. is notutilizedwhichonitsownprovidesgoodopportunitiesfor waste, withtheexcept PhD Student: GerganaMiladinova the potentialfortheseenergy data onsuchspeciesbeingusedforelectricity switchgrass, miscanthus, cardoon, grown onshortrotationcoppice(will growing species.Some ofthespeciessuitable Another possibilityforhigherbiomass useis Energy crops plants’ waste (see highest potential isfor forestry residues and for agricultural Mtoe whichforcomparison was13%ofTPESin2005.The According toEEA(2006)biomass Biomass fromwasteproducts distribution oftheirpotential. managed. That iswhythesetwouseswillbe PHD THESIS-DISTRIBUTEDELECTR altogethercantheoretica Table 18 ion offorestresidues , AnnexI).It isinteresting that most crops. Regardingthewoodand anges andthelackoffinancia cohesion fundsandagricultural Spanish thistleartichoke(C research onthemost suitable m for theuseof thispotential. waste cancontributewith2.7 gical conditionsisneeded. ow, poplaretc)ordifferentgr ICITY GENERATIONINBULGARIA lly contributewith843kt and industrialwaste, cultural landwas stateownedandmanaged but itsownersfrom beforetheWorld War IIand generation andtherearenodetailedstudieson leftuncultivatedoris through thecreationofpl crops ifthereisproperpolicyandfinancial for electricitygenerationpurposesaretrees the source. In Bulgaria the potential for the thesource.InBulgaria the potentialfor discussed indetailalong withthe spatial or toits widerpenetration and that is why Table 19 RES report2003).Thereareno l resources,knowledge,orthe liquid biofuels,ithasbeen speciesfortheBulgarian , AnnexI)withthehighest Biomass pellets, Photo: Erato subsidies targetedatthis asses, suchasgiantreed, oe (ESDandEcotherm - poorlymanaged. These antations withfast 26

CEU eTD Collection PhD Student: GerganaMiladinova the totalinstalledcapacitywa (including large,small andpumped storage)wa still inoperation.Datafor2005showthat small HPPconstructed at thefirst decade of the20 extent inBulgaria.Thecountryhasalongtr Hydro energyistheonlyrenewablesourcethat (REC 2004).Ontheopposite-withsmallest in theNorth-East region. Therethepotential for PHD THESIS-DISTRIBUTEDELECTR protection objectives. Bulgaria whichinevitably willin some inst approval. Theycovervi Regional Environmental Inspectoratesfor hundreds investment proposalswerefilledatthe 2006). Somesourcesreportthatby2007several with cumulative capacity of 23 MW (EEA 2001-2003 26newsmall HPPwereconstructed the preferential feed-in construction ofsmall hydropowerplantsdueto In therecent yearsthere isagrowinginterest in 2004. only with1.6%ofthetotalgene considerable most ofitcome period thesharewasbetween6.7%and7.2% There arevariationsoftheannualelectricout the rehabilitationofsmall-scale units. size unitsarerenovate increase theirload factorasthere arenotsu large NPPandTPPswhichareusedtocoverbase were designedandconstructedtocovermainly load factorformost HPPisverylowwhich 2.7.1.2.Hydro Energy d orareintheprocessof rtually all rivers in tariffs. Overtheperiod s fromlargeHPP(above10MW). s 23%oftheinstalledcapac rated electricityor22%ofthehydrogenerationin ICITY GENERATIONINBULGARIA fficient water quantities. Mostlarge andmedium potential isintheNorthWestregion. adition of hydro power generation with the first adition ofhydropowergenerationwiththefirst theoutputofabout125hydropowerplants put duetoclimaticreasonsandover1997-2005 s 7.2%ofthetotalelectricitygenerationwhile modernizationbutstill ances lead toconflict peak loadsand inthiswaytocomplement the becausethe units,especially thelargeones, urban andbiologicalwastesisalsothelargest (EEA 2006).Althoughthiscontributionis has beenalready utilizedtoaconsiderable (photo: G.Miladinova) Typical high mountainous river, West Rhodopi th loads.Inthiscase itisnotpossible to centuryandsome unitsfrom the1930s ity (MEER2005).Thereforethe Thesmall HPPcontributed

s withenvironmental there ispossibilityfor 27

CEU eTD Collection PhD Student: GerganaMiladinova (NEK 2004b).However,theenvironmental impact is low heads,and(iii)about100attractivesitesfo head, (ii)atleast 35units can areas wherethewaterflowismore limited butthereareopportunitiesforhigherhydraulic these unitsareidentified tobe:(i)700sitesfo there arepossibilitiesforcons (EEA 2006).InapublicationoftheNationalElec Cascade by2020).Regardingthesmall HPPtheir planned (completionofTzankovKamak HPPby2009andconstructi much criticizedbyNGOsbecauseofthepossi HPP isconsidered tobe almost fully exploitedandonlytwoprojects,bo limited duetoseasonalvariationsandenvironm potential and15TWh -technica The totalpotentialforhydroenergyinBulgariaisestimated tobe26.5TWh -theoretical PHD THESIS-DISTRIBUTEDELECTR Montana, SofiaandPlovdiv(Energoproekt1994,citedinEEA2006)(see distributionofthepotential As fortheregional installed capacityof18 In thestudyintotal34possiblesitesforinst done atverylowcostasthere irrigation anddrinkingwatersupply existing pipelinesorfacilitiesthathaveotherfunctionsthanpowergeneration(suchas potential fortheinstallationofsupplemental mi In anunpublishedstudyfortheMinistryofRegionalDevelopment andPublicWorksthe if takenintoaccountmight leadtoadecr MW andannualelectricityoutputof82GWh. be installedonlowlandareaswith is noneedofaddi truction ofmorethan800small HPP.Thepossiblesitesfor l potential(EEA 2006).Howeve ) is studied. Theinstallation ease ofthenumber ofpossiblesites. ICITY GENERATIONINBULGARIA cro hydropowerunits,i.e. cro r run-of-riverunitsonriversinmountainous for small-scale HPPitliesintheregions of allation of microHPP are identifiedwithtotal allation ofmicroHPP are r theconstructionofunitsonexistingdams ental considerations. Thepotentialfor large tional watercollectionorderivationsystem. tric Company (2004b)itwasconcludedthat bility ofrareecosystems destruction,are potential isev notwellintegrated of suchunitscanusuallybe aluated tobe0.8GWh/year higherwater r, itsuseismuch more in theevaluationand th ofwhicharevery turbines installedon Table 20 on ofGornaArda flow butwith , AnnexI). 28

CEU eTD Collection number ofongoingprojects. interest inindividualwindtu (ESDandEcotherminstallation of0.5GWe -Engineerin the PHAREstudyfrom1997accordingtowhichth be between2.2and3.4GWe instal (Black &Veatch EBRD Bulgariaisconsideredtobe“oneof the studies questionable. Mapsofthewindspeedarepresented on which thewindspeedismeasured at10m abovethesurface.This makes the conclusions of based onwindspeedmeasurements atturbine hu There areseveralstudiesonwindpowerpotentia many limitations theprogress wasmuchmore limitted. installed capacity ofwind turbines inthisre of Varna(thatincludestheNorthernpartth PhD Student: GerganaMiladinova electricity generationfrom wind thatin2006the Zagora DistributionEAD.Itwaspredicted these eightoperatingwind turbin between 15and25%,dependingon 3.7 MW. Thecoefficientfortheirworkingloadwas sites throughoutthecountrywith GWh weregenerated byeighttu (EEA 2006).Forthefirstnine MWh weregeneratedbythefewoperationalwind turbines Bulgaria isverylimited butincreasing.In2003only63 The contributionofwindenergy PHD THESIS-DISTRIBUTEDELECTR 2.7.1.3.Wind energy etal. 2003,p.7)andthemid-term technical rbines andwindfarms development acrossthecountryanda months of2005already2.3 power plantsintheregion totalinstalledcapacityof es areconnectedtoStara rbines situated atvarious to electricity fuelmix of led capacity.Muchlessoptimistic aretheconclusionsof theirsitting.Sevenof ICITY GENERATIONINBULGARIA the top countries for wind energy development” thetopcountriesforwindenergy gion wasexpectedtoreach 300MW butdueto e BlackSeaCost)istoincrease tenfold. The b’s heightbutonWind AtlasofBulgariafor l in Bulgaria. However, none of them is l inBulgaria.However,noneofthem is eoretically thereis g Ltd.1997).Thereissignificant potentialby2020isevaluatedto Photo: G. Miladinova in Bulgaria turbine firstwind The Figure 5 a possibilityforthe . Inastudyforthe

CEU eTD Collection PhD Student: GerganaMiladinova Bulgaria isfavourablylocatedbetween the41 with highpotential. landscape impactsofwindturbines a seriouslimitation asinmany casesthereisno 21, AnnexI).Thefactthatpartofthepotential coast, theCentral mountain range,and The most promising regionsfor theinstallation Note: Thewindspeedismeasures at10 Figure 5.Mapsofwind energydensity,zones, andpotential inBulgaria PHD THESIS-DISTRIBUTEDELECTR PHARE study(ESDand Ecotherm - Engineering The energyfrom sunthatisfalling onBulgar Solar potentialbyregions energy wasprovidedforBulgarianv m high).Inaddition,tothisin needs andoneformeteorological stationsituated institutions, twoonresidentialandsocialcarebuildings,oneused connected and11.5kWoff-grid,incl.seven instal In 2006therewereonlyfewPVsystems inst southern partsandfor170–180daysintherest Athens, Greece.APVsystem couldefficien show asunshinedurationof2200–500hours belt” oftheplanet.DatasuppliedbyNational InstituteforMe Energy densityofthewind 2.7.1.4. SolarPhotovoltaicEnergy a charityprojectofDenimaLt illage that wasstilloff-grid. still havetobeinvestigatedandassessedfortheareas m abovetheearthsurface,Source:EEA2006 the RhodopiMountainsinSouthwest(see ICITY GENERATIONINBULGARIA liesinmountainous areas tly functionforover200daysayearinthe st oftheterritoryBu ian territoryisabout13Gtoeannually.Ina andthe43 of windturbinesaretheNorthernBlackSea proper infrastructure.Fu alled withtotalcapacityof21.5kWgird Ltd. 1997)thecountrywas dividedinthree close tothehi led atsitesofuniver Wi year andthatisakintothevaluesfor nd speedzones andpotential rd parallelintheso-called“sunny d. streetlightningbasedonsolar ghest peakin teorology andHydrology lgaria (Scientist2006). fortelecommunication can beconsideredas rther, thenature and sities orresearch Bulgaria (2300 Table 30

CEU eTD Collection 730 MW. Becauseofthepreferential tariffsat (data arefor2000-2002). CHPunitsareinstalled most commonlyusedfuel(about81%)followed sector. In2007therewere21districtheatingco More information isavailable on thesmall-scale natural gas potentialin in buildings of Bulgarian Telecommunicat Vratza; 150kWe unitinBankjaPalaceHotelsituatedcloseto Sofia; 150kWe and100kWe different industrialsectors,including515kWe un examples ofsuccessful projectsand severalna difficult tomake asdetailedstudyfor estimations There arenostudiesonthepot co-generation. tourist andrecreational possibilities fortheinstallationofCHPunitsatgreenhousehouses The potentialforCHPliesmainly inindustrial Source: EEA 2006 Figure 6.Mapoftheoretical sola PhD Student: GerganaMiladinova MWh/m2/year), zoneII52%-1.55MWh/m2/year zones basedontheoreticalsolarenergypotentia PHD THESIS-DISTRIBUTEDELECTR 2.7.2. 2.7.2.2.Potential for Small-scale NaturalGas-fuelledCo-generation 2.7.2.1.General Overview

Potential for Small-scale CombinedHeatandPower sector. There isapotential bothfornaturalgasandbiomass-fuelled ential inthedifferentbranches r energy potentialinBulgaria ICITY GENERATIONINBULGARIA ion CompanyinthecityofBlagoevgrad. mpanies (DHC)inBulgaria.Naturalgasisthe tural gas-fuelled CHPun which theco-generated electricity below50 by coal(14%)andheavyfueloil(5.3%) and districtheatingse , andzoneIII:7%-1.65MWh/m2/year. it inVratitsatextilefactorythetownof each sector isneeded.Still,therearesome l i.e.zoneI:41%solarradiation(1.45 in 9ofthem withto ofBulgarianeconomy anditis , hotelsorothe ctors. Therearealso tal capacityofabout its wereinstalled in the district heating

r sitesofthe 31

CEU eTD Collection PhD Student: GerganaMiladinova 1 still considerable barriers. Thereisno information onthespatialdistributionofthispotential. some indication thatbiomass-fuelled CHPcanbe account thatnoneofthishasbeenrealized installed capacity areimpressive:1GW electricand 2 GW thermal -especiallytakinginto (CRES Network (BIOCOGEN) biomass co-generation wasevaluated in a At present thereisno information ofexistin in nineDHCwhichwillresult330MWe newinstalledcapacities. there isnoneedforspacehea option. Still, themain limiting factoristhehe MWh isbought,theinstallationofCHPunitsb PHD THESIS-DISTRIBUTEDELECTR and financialsettings,arecr technologies andpoints tothefact there geographicsituationinEuropeisless example, solarenergyismuchbetterdevelope of renewablesources.However,inpracticetheu The maps showthatthecountryhashigherpot Austria. situated ontheAtlantic Oceanbutiscomparab insufficient butstillitshowsth area tocountry surfacecoefficient.Dataonwindpotentialarefrom pointsmeasurements and is among thecountrieswithhighhydroandsolarenergypotent compared totheotherEuropeancountrieswhichisshowninmaps (see below Bulgaria hasfavourablegeographicsituationandisrelativelyrichinrenewablesourcesif posses a question on the correc on a posses question and that the power to heat ratio is 1:2. The heat demand is not taken into account as alimiting factor which the plants that assuming and resources are utilized fully

Data are obtained based on estimations of the possibility ofthe estimations on based Data areobtained 2.8. POTENTIALS POTENTIALS BULGARIA ONTHEEUROPE 2.7.2.2.1. tness of these evaluations. tness of ucial forDGdevelopment. Potential for Biomass-fuelledCo-generation ting. Thereiseconomic analysis etal. at itismuch lowerinBulgar thatother limiting factors,such aspolicy,administrative 2003)(seeTable22 ICITY GENERATIONINBULGARIA 1 . Althoughthisisatheore g biomass-fuelled CHPplants.Thepotentialfor AN MAP–COMPARISONOF d inGermany, Austria,andDenmark although at demand during the period of the year when at demand duringtheperiodofyear FP5 project,entitledBiomass Cogeneration

are operating 6000 hours per per hours 6000 operating are ential thansome Europeanonesforanumber ecomes an economically viableandprofitable favourable. Thesame istruefortheother for co-generation assuming that the available biomass available the that assuming co-generation for tilization of thepotentialismuch lower.For le withcountries from CentralEurope, i.e. anoptionforBulgaria andthatthere are , AnnexI)Thefiguresforpossible for introductionofCHPunits ia compared tothecountries ial andhighproductiveforest tical potentialitgives year, with 75% efficiency 75% year, with Figure 7 ). It 32

CEU eTD Collection Gross TheoreticalHydraulicEnergyPotential Wind Energy Potential-mean windspeedsat PhD Student: GerganaMiladinova Figure 7.Potential forrenewable energysourcesinEurope PHD THESIS-DISTRIBUTEDELECTR Photovoltaic SolarElectricity Potential 80m for2000 ICITY GENERATIONINBULGARIA

WEC 2004) WEC 2004) For allother:GENI2007(basedondatafrom For photovoltaicpotential:EC,DGJRC2006 Sources ofthemaps: Productive ForestAreainRelationtothe Fuel woodProduction Country Area

CEU eTD Collection market shares. heat pricesforprivateconsumers itisnotvery high priceofnaturalgasandits of theheavyoil-fuelledheating- units invariousindustries, Small-scale naturalgas-fuelledCHP: commercial pointofviewpolycrystallineor investment supportbuildi other monitoring unitssituatedfarfrom thegrid for remote andunconnectedtothegridsites, Photovoltaic elements: development itisexpected thatthere willbe growing. Althoughthereisno PhD Student: GerganaMiladinova Wind turbines: as thepriceofcoalistoo low. the fuelswitchfrom coaltobiomass isnot existing naturalgas orheavy oil-fuelled units by biomass ones.Underthepresent conditions biomass-fuelled powerplants.Alsoeconomically waste, energycrops,andtimber byintroduction used mainly forheatingproposesthereisa Biomass for electricitygeneration and/or forco-generation: can beconstructedinverydifferentareasva on existingdams andsupplemental toirrigation are stillpossibilities Hydro-power plants: technologies inBulgariaisasfollows: At thisstageofdevelopmen PHD THESIS-DISTRIBUTEDELECTR 2.9. FOR BULGARIA FOR BULGARIA RECOMMENDED DISTRIBUTED GENERATION TECHNOLOGIES TECHNOLOGIES GENERATION RECOMMENDED DISTRIBUTED Thenumberofwindturbinesconstructe for newsmall-hydro powerplantsin The potential for hydro power hasbeen Becauseofthehighinvestment cost ng integratedphotovoltaicsfornewbu residential andtourist t thelikelihoodofpenetra only boilersindist expected increase in thefuture andthe artificially keptlow proper evaluationofthepoten Thereareopportunitiesfor ICITY GENERATIONINBULGARIA a cost-effective,althoughmore sustainable,option amorphous siliconelements arerecommended. rious typesofturbinescanbeinstalled. arapid increase intheinstalled capacity. such asmountain huts,telecommunication, or significant possibilityfortheuseofbiomass . Duetothehighinvestment costsandlackof likelythatthesetec anddrinkingwaterspi of CHP units onbiomassof CHPunits orconstructionof viableoptioncanbethereplacement of sectors, and for the replacement of some sectors, andforthereplacement ofsome rict heatingsector. mountainous, andinlowlandareas, d inBulgariaisstillvery lowbut s atpresent theyareviable only traditionally exploited but there Althoughatpresentbiomass is tion ofdifferent type ofDG ild arestillnotpossible.For tial basedonthepresent hnologies willgainhigh the installationofsuch However, duetothe pelines. Astheunits 34

CEU eTD Collection on throughin-depthanalysis ofthegovernmental In thefollowingtext main governmental obj means orinstruments forachievingofthegoalsarechoseninprocesspolicyformation. process. Third,variousactorsandgroupsofactor limited byresourceavailabil that iswhygovernmental deci (Howlett andRamesh 2003).First,thegovernment istheagentofpublicpolicy-making and 2003). Thereareseveral characteristics ofpublic within thepowerofthoseactorstoachieve’ achieving them withina specified situation wher taken byapoliticalactororgroupofactorsco chooses todoornotdo’(Dye1972)andmore There aredifferentdefinitions 2007 willbepresented. In thissectionananalysisofpublicpolicyrela policy andmeasures forthepromotion ofrene impact sectoroverenvironment ofenergy Bulg To meet EUaccession requirements, todiversity fuelmix, andtodecrease thenegative some ofthemwere,andstillare,ve of theSoviettechnology.Anotherreasonis opportunities fortheworkingclass,andhigh-t preference of large-scale coal-firedpower plan economy andwasplanneddevelopedinhi development ofenergysectorinBulgaria PhD Student: GerganaMiladinova many reasons behindthisphenomenon. Partiall significant potentialforawide Bulgaria wasrevealedalongwith their potential.The In Section2thecurrentpenetrationofdistri PHD THESIS-DISTRIBUTEDELECTR 3. BULGARIA PUBLIC POLICIES SUPPORTING DISTRIBUTED GENERATION IN GENERATION DISTRIBUTED SUPPORTING POLICIES PUBLIC ity; andnondecisioncanalsobetheoutcome policy ofthe of publicpolicy.Ingeneralte sions arestudied.Second,public r DGintroductiontheirpresentsh ry expensivemeans ofenergygeneration. ICITY GENERATIONINBULGARIA which has beenthebackboneofcommunist the DGtechnologieswerenotwell-knownand wables andco-generati ech NPPwhichwereshowingtheachievements ted toDGinBulgaria ts whichwereproviding (Jenkins 1978,citedinHowlettandRamesh ncerning theselectionofgoalsandmeans of buted electricitygenera arian government startedslowlytointroduce ectives andinstruments arepresented based programs, sectoralstrategies,programs and s participateintheprocess.Fourth,specific ghly centralizedands specifically ‘a set of interrelated decisions specifically‘asetofinterrelateddecisions y, itcanbeexplaine e thosedecisions shoul policy thatemerge from thesedefinitions analysis showedthatalthoughthereis rms itis ‘anything agovernment are isnegligible.There policyisgoal- that wasadoptedbyMay on from thelate90s. cheapelectricity,job tion technologiesin ubsidized waywith d bythehistorical d, inprinciple,be oriented; is 35

CEU eTD Collection PhD Student: GerganaMiladinova oftheenergypolicyinBulg The fundamentals Energy strategyof2002 the main documents and DGtargetsarepresented. policy documents suchasstrategi The goalsthatgovernmentstoachievew aim of themain actorsand institutions related toDG action plans,andonanalysisoflegaldocuments andinterviewswithexperts.Briefoverview PHD THESIS-DISTRIBUTEDELECTR authors isduetothehigher costofinitiali economic potential’ hydropower plants,geothermalenergy,etc.) Security ofSupplySectionwhereitis need fortheincreaseofsharerene mentioned explicitly in thislistthey arein Although thepromotion ofrenewableenergy a dispatchingandmarket centreintheregion. reliable countryfortheprovision energy efficiencypolicy,(v)efficientsocialpr implementation ofnewlarge-scaleinvestment regulatory framework, (iii)creation of alegal,regulatory andmarket environment priortothe and freecontracting,(ii)activero set tobe:(i)introduction The main principles tobe followed bythe Government intheoverarchingenergypolicyare consumption andgeneration. and introductionofenergymarkets andcompetition areseenasthesolution consumption ofenergyresourcesischaracterize sector toamarket basedoneinaccordancewiththeEUre Energy Sectoruntil2010 Strategy 3.1. (MEER 2002).Itcame toreplacethe 3.1.1. OBJECTIVES ANDGOALS they are Strategic Documents of market relationsinenergysect (SCEER1998)andtoguidethetransitionofBulgarianenergy ‘usedirregularlyand insufficiently’ es, actionplans,andprogrammes.Inthissectionareviewof of future transit of oil, natural gas and electric power andas le ofthestateinth pointed thatalthough ICITY GENERATIONINBULGARIA nvestments. Asameasure wables inenergybalanceisacknowledgedunder cluded underdifferent sections. Forexample, the otection, and(vi)positio aria intherecent years aresetbythe ith theirDGpolicyare policy ispresented inthe chapter tofollow. have asignificantresource,technicaland d asirrational andas“energyextravagance” and privatizationproj National Strategyfo technologies andco-generationarenot e creationofaclear and stablelegal or, basedoncost-r ‘much oftheRES (biomass,small quirements. IntheStrategy, overcome thebarriersto which according tothe r Developmentofthe ning ofBulgariaasa ects, (iv) pro-active included invarious

for thewasteful eflective tariffs eflective tariffs Energy 36

CEU eTD Collection option forthedecrease ofCO Climate Change(MOEW2005b)electricity generationfromwindisnoteven mentioned asan energy, shouldbepromoted inBulgaria.Forinstance,theSecond National Program on actions. Thereisnoevidentcoherentapproachon whichrenewablesources,apartfrom hydro these strategicdocuments theydonotseem verywellcoordinated interms tobe of proposed Although renewablesand/orco-gen documents: PhD Student: GerganaMiladinova The needforthepromotion ofrenewablesandCH Other sectoralstrategies, DG promotions buthasbeenabolishedinlaterdrafts. technology asitisatpresent to bechanged toonepreferential tariffinstead Economy demanding andEnergywere thatitisrecommendedthesupportforrenewables Regional EnergyCentre.Accordingtowellinformed supported bytheWorld Bankandisprepared At themoment ofwriting(spring2007),anew Energy Strategy(forthcoming) the overallenergybalanceofcountryth at thetopof thelistof relevant measures isthe Bulgaria tomeet itsKy Section on The widerintroductionofRES,CHPandnatural for improving energyefficiency. 2006. Regardingco-generation–theneedofits renewables itissuggestedthatanActionPl PHD THESIS-DISTRIBUTEDELECTR - - - -

(revised) (AEAF2003) (MOEW 2000) Second NationalProgramonClim National RegionalDevelopment Strategyfortheperiod2005-2015 (MRDPW 2005). National PlanforEconomic Development ofBulgariafortheperiod2000-2006 National Strategy forEnvironmental Prot Environment oto obligations in the area of electricity andheatge oto obligationsintheareaofelectricity fromtheEnergyStrategy.Thereit programs, andactionplans (Expert 2007). This would have been ahugestep (Expert 2007).Thiswouldhavebeen 2 emissions. IntheNationalPlan forEconomic Development of

eration arementioned invari ICITY GENERATIONINBULGARIA ate Change2005-2008(MOEW 2005b) rough constructionofnewnuclearcapacities’. an shouldbedevelopedwhichwasdoneonlyin ection andNationalActionPlan2005–2014 ‘preservation ofthenuclearenergysharein byanexpertteam ledbytheBlackSea ofdifferentiatedaccordingtothetype promotion ismentioned asoneoftheways Energy Strategy is under preparation. It is Energy Strategyisunderpreparation.It P isalsoincludedin gas ingenerationisalsomentioned inthe expertrepresentativesoftheMinistry is seenasoneofthemeans for ous contextsandpurposesin several otherstrategic neration. However, backwardsin 37

CEU eTD Collection new document was preparedbytheEEA andadoptedbytheMi the execution ofthesetwoprogramswereevalua introduction ofrenewableenergytechnologiesin small-scale CHPinmunicipal buildings,increasi biomass energyfor inpelletsformandofsolar evaluation of investment needs.Themeasures there weremeasures bothforEEandRES.Th In thefirstEEProgramandActionPlanthatwe to thelowimportanceofEEattributedbyth policy onEEwithfrequentchangesandtheabol PhD Student: GerganaMiladinova how energyintensityofthedi lead totheimplementation oftheProgram but isonlymentioned.Therearenotargets oranyotherconcrete of CHP EEA 2005),doesnotincludeanymeasures relate which wereadoptedisincludedin the lackoffinancing.Asummarymain ta adoptedandeventhos only afewofthem were Several Programs andActionPlan on renewables. included inthevariousprograms There isnoProgram orActionPl Programs andActionPlansforEnergyEfficiency andRenewables reporting oftheresultsachievedisnotalwa poor andthefundingrequiredisonlypartia mentioned. Theotherproblem withthesedocuments increased shareofco-generation.Inthe diversification offuelmix,but sector orenvironmental protecti Bulgaria (AEAF2003)renewablesarenotmenti PHD THESIS-DISTRIBUTEDELECTR - National Long-term Program fferent sectorswillevolve. the promotion ofnaturalgasis on eveninthe partthatdeal an targeted directly at the and actionplansforenergy efficiency andin theprograms s onenergyefficiencywere prepared inthelast decade but Table 3 ICITY GENERATIONINBULGARIA ys performed orisnotpubliclyavailable. e Government andthelackoffinancing. other twodocuments RESandCHPareonly . Ascanbeseenthere lly provided.Themonitoring, evaluationand relatedtoDGwereforthepromotion waste for EnergyEfficiencyuntil 2015 justgeneralsuggestionsandon rgets and financial resources needed for those rgets andfinancialresourcesneededforthose e whichwereadoptedabolisheddueto industry.However, theinvestment needsfor d toRESandtheneedforwiderintroduction ishment ofstrategicdocuments possiblydue nister ofEnergyandResources.The heating inservicessector,thepromotionof ng theshareofCHPin ted as‘toohigh’a ey includedconcretegoals,measures, and re officiallyadoptedbutabolished recently oned atallamong prioritiesintheenergy isthatingeneral their implementation is promotion of DG, however DGis promotion of DG,however s withmeasures regardingthe included andalsotheneedfor nd anewProgramonEE has notbeenconsistent mechanisms thatwill mechanisms district heating,and (MEER and (MEER and 38

CEU eTD Collection PhD Student: GerganaMiladinova electricity by2015isthe devel concludes thatthemain sourcethat cancontri the 11%indicative RES-electricitytargetse measures onthereduction ofconsumptionaresuggested asthemain mechanisms forreaching only reach8%ofthegrosselectric measures. Itisconcluded thattheshare ofRE renewables forheatandelectricitygeneration. 2015) In the (EEA 2006)wasadoptedinOctober2006 the fulfilment of the EU requirementsfor 11 They didnotincludetargetsorfinancialeval Project/Programme onRenewableEnergySources for theDevelopmentofRenewabl promotion ofrenewablessuchwhichwerenotadopted.ThesetheStrategyandPolicy There werealsoseveral unsuccessful attempts topreparePrograms orStrategies forthe Sources: (EEA2003a,b,2006;IEA1998b;SEEA programs andactionplans Table 3.Expectedresults andinvestment requiredforthevarious energyefficiency PHD THESIS-DISTRIBUTEDELECTR Efficiency until 2015 2015 Efficiency until Program for Energy Long-term National 2007) (2004- Saving Energy PlanFor Action National Three-Year 2014 until Saving Energy for Program National 2001) (prepared Saving Action Plan Energy National 2010) (until Saving Energy for Program National 2010?) (until Efficiency Plan Energy National Name (EEA2006)thereisanextensivereviewofthedifferentstudiesonpotentialfor National Long-termProgramfortheProm No quantitativeNo targets available 1.3 Mtonnes 0.4 Mtoe € 0.1B (0.2 B leva) annual savings 10% reduction of Bulgarian energy intensity 5.6 Mtonnes 1.6 Mtoe €0.6 B(1.1 leva)annualenergysavings 30% reduction of Bulgarian energy intensity 3 Mtonnes € 0.2B (365M leva) annual savings 10% reduction of Bulgarian energy intensity (M) million 6 tonnes 1.7 Mtoe € 0.6B (1.1 B leva) annual savings 30-40% reduction of Bulgarian energy intensity 4 Mtoe billion $1.2 (B) emissions Expected outcomes annual energy savings annual reduction of final consumption annual reduction of final consumption annual reduction of final consumption annual reduction ofCO opment ofbiomass-fuelled units annual reduction of CO of reduction annual CO of reduction annual annual savings savings annual ity generationby2010,and9%2015. e EnergySourcesinBulgaria ICITY GENERATIONINBULGARIA . annual reduction CO of reduction annual t intheEUaccessionnegotiations.TheProgram % RESelectricityby2010andanewProgram uation. Theirimplementation couldnotleadto S inelectricityconsumption inthecountrycan However, therearenoclearlysettargetsor bute significantly tothe increase of RES- etal.2001a,b) otion ofRenewableEnergySources(2005- intheRepublic ofBulgaria 2004–2014 2 emissions 2 2 emissions emissions . Regardingtheheatdemand 2 needs I nvestment (0.9 Bleva) ~€0.5 B available calculations No $2.4 B (5.8 Bleva) ~€2.9 B (0.8 Bleva) ~€0.4 B (4.8 Bleva) ~€2.4 B and theNational

Status

implementation under Adopted and Not adopted Not started implementation started implementation abolished but Adopted abolished but Adopted N N That is why That iswhy ot adopted but ot adopted but

CEU eTD Collection disseminate information policyinstruments onthevarious areincluded. purposes. Inthecategory ofnodal policy implementation orcreate conditions for the establishment of markets for these using organizationbasedinstruments government (Howlett andRamesh 2003,p.108)andaredepe governments orfromotherindividuals,fi include all of theirpolicythroughvariouscommand andcont Authority basedinstruments arethoseused government usesforpolicyimplementation. fiscal), and Organisation-orif allabbreviated NATO-according to the resources policies. Thefourtypesofinstruments areNo PhD Student: GerganaMiladinova provide agoodsynthesisofthe Hood (1986)isused.proposesfourcategor above mentioned goalsandtargets.Fortheirid Bulgarian Government hasadoptedanumber of renewables. There arenotargetsforelectricityandheat this targetcanbemet. by 2010.Although,thereisasignificantpotentialfo As aresultthetargets wereset at11% of electricity from renewables inthefinal consumption obliged toset such as part oftheEU accession adopted in2003suchtargetshadnotbeeno electricity consumption inthecountry(Art next tenyearswhichshouldrepres Minister ofEnergyandResourcesshouldproposeanationa According totheLawonEnergy(LE)(Na energy generatedinthecountry. with EEmeasures. The estimation is thatby2015 according to theprogramallneedsofcountrycanbemetbyrenewablesincombination PHD THESIS-DISTRIBUTEDELECTR 3.2. 3.1.2. PUBLIC POLICY INSTRUMENTS INSTRUMENTS POLICY PUBLIC “forms offinancialtransferstoindividuals, firms, andorganisationsfrom National Indicative Targets possible instruments forthere ity basedinstruments allmeas ent theshareofrenewables(i ICITY GENERATIONINBULGARIA by thegovernments toimpose theimplementation . 157from theLE).EventhoughLawwas rms, andorganisationsundergovernments” tional Assembly 2003,lastamend. 2006),the dality (orinformation), Authority,Treasury (or producedinCHPmodeorforheatfrom obligations, i.e.in fficially adopteduntiltheGovernment was entification andanalysis ies forgroupingofpolicyinstruments which the share ofREScanreach40% of theheat ndent ontheavailablepublicfunds.When s relyonexistingformalorganisationsfor policyinstruments inordertoreachthe rol measures. Treasury-basedinstruments r renewablesitisratherarguablewhether alisation ofthegovernmental n percent)in ures thatgovernments useto the EUAccessionTreaty. l indicativetargetforthe theclassificationof the totalannual 40

CEU eTD Collection PhD Student: GerganaMiladinova though advisorycommittees andquangos (Howlett andRamesh 2003). controlre different forms suchascommand and In many governments cases usetheirauthority generation, asofMay2007 Table 4.Publicpolicyinstrume applied arepresentedinthefollowingtext. the classification ofinstruments andhoweachof renewable energytechnologies The main instruments includedintheBulgarian PHD THESIS-DISTRIBUTEDELECTR instruments information based Nodality or instruments Organisation based instruments Treasury based instruments Authority based 3.2.1.

Authority BasedInstruments 15. Creation oforganizations 14. Creation ofmarkets 13. 12. 11. 10. 9. 7. 6. 5. 4. 3. 2. 17. 16. 8. 1.

Energy EfficiencyAgency Green electricityobligation andcertificates(planned) RTD support National Trust Eco-Fund Protection Enterprise for theCoordinationof Energy EfficiencyFund(publicprivatepartnership) EBRD creditlines(notgovernmental instrument) Kozloduy InternationalDecomm Environmental Impact Assessment Preferential treatment fo natural gasnetwork Preferential connectiontothetransmissionthandistribution Tax incentives forlarge-scale projects tariffs Feed-in Obligatory PurchasingofElectricityfrom DG Obligatory connectionof DGunitstothegrid Conferences andworkshops Brochures oninvestment pr technologies and CHPunitsareincludedin nts usedinBulgaria topr

ICITY GENERATIONINBULGARIA gulation; delegatedorself-regulation; and to impose certainpolicy.Thiscanbein theinstruments identified inBulgariais r biginvestment projects legislation tofacilitate theintegration of ocess invariousrenewable issioning SupportFund(KIDSF) theActivities for Environmental

omote distributed electricity Table 4 . Moreexplanationon 41

CEU eTD Collection PhD Student: GerganaMiladinova installed capacity of upto power plantsgenerating electricityfrom rene system anddistributionsystem operators(TSO 162 ofBulgarianLawonEnergy(NationalAssembly2003,lastame The obligatoryaccesstotransmission ordistributiongridofDGunitsissetbyArt.160and Obligatory gridconne which arenotyetdevelopedinBulgaria. codes, standardsand/orguide Requirements fortheconstructionofDGunitscanalso beincluded inthenational building consumers. Suchinstrument inBulgaria not usefiscalresourcesandpriceriseinmany casesispaid quantities fortheelectricityproducedfrom d Market interventions can alsobe inthefo environmental impact forsome projects. connection rules,purchasingofgreenelec controlregulationinst In Bulgariacommandand are alreadyadopted. every undesired activity andeven their wideremployment isthatthegovernment suited forallpossible cases,and canlead to inhibit innovationbycreatingsecu demand for quickanddefiniteaction.Thereareal the government thanthefiscalinstruments, a are more predictablethan theotherinstrument regulated asiswiththevoluntaryinstruments. They allowbetter co-ordination because they from theseinstruments: thereisnoneedofex There areanumber ofbenefitsmentioned inmostdesignated agencies(Reagan1987).Theincompliance casesisfollowedbyapenalty. entities whichareimposed throughsome administ requirements orbyprescribingce andcontrolinstrumeWhen usingthecommand PHD THESIS-DISTRIBUTEDELECTR ction ofDGunits 10 MW,andfrom highlyefficien lines andinthedesignorar rtain activitiesorbehaviouron maynothave thecapacity toenforcetheregulations which rity inthemarkets; areinflexibleand aredifficulttobe arethepreferentialfeed-intariffs. ICITY GENERATIONINBULGARIA by HowlettandRamesh (2003)forgovernments wable energysources,including HPPwithtotal ecentralised units.Inthiswayecentralised governmentsdo economic inefficiencies. Other constrainsfrom rm offavourableprices s usuallydonothavetheresourcestoregulate /DSO) areobligedtoconnect withpriority nd canbeplausibleto s, might requirelessfinancialresourcesfrom tensive consultations withthesubjects tobe tricity, and obligatio ruments forDGpromotion arerelatedtogrid nts governments regulatebysettingcertain so anumber of limitations such as thatthey rative processby,ingeneral, specifically chitecture guidelines (IEA 1997) chitecture guidelines(IEA 1997) by theproducerswhopassitto t combinedheatandpower individuals, privateorpublic nd. 2006)Transmission n forevaluationof the publicifthereis and/orquarantined

42 all

CEU eTD Collection should be at least 5% (Additional Remarks, 5 from the Law on Energy). fuelsavings the lessthancapacity 1 are installed MW sources and/or with energy renewable that utilize such heat andelectricityproduced separate of same the quantity comparisonto savingsin fuel atleast10% to lead Energy, Lawon the of adoption after the PhD Student: GerganaMiladinova 2 plants PHD THESIS-DISTRIBUTEDELECTR plants, if they are registered witha certificat including hydroelectricplants purchase theentirevolume ofelectricitygene According toArt.159and162oftheLEpublicproviderand/orprovidersmust Obligatory Purchasingof solvable technicalproblems forthenetwork. this electricityandtheyhavetoexportitthemedium voltage opportunities bymaximizingtheirelect Another problematic issue for TSO/DSOisth details seeSection 9.06.2004, (MEER2004c)).Theseclausesareusedto of thepopulationandpropertythirdparty the qualityof electricitysuppliestoconsumers; comply withtechnicalrequirements; might reduce There isapossibility forTSO/DSOtodenyacce 25. para1to3,Regulationontheregulationof reconstruction theyaretobeincludedintheco implementing secondarylegislatio new powerplantaretobepaidbytheTSOandrespectively theDSO. However,inthe reconstruction oftransmission a site oftheproduceraretobepaidbyprodu prices forfinalconsumers donotincreasesigni Water Regulatory Commission keepsthemarginal return rate verylow, sothatthe electricity distribution company tobuyelectricityatpr has with whichtheproducerparticipatesin which theproducerhasenteredintocontractswith High-efficiency co-generation ofheat 2 whichholdcertificate 6.2.2, page124). Electricity fromDG

of origin.Theconnectio of upto10MW, from and high-e ly. In case the plants are constructed before the adoption theLaworof the adoption before are constructed plants ly. Incasethe and electricity fromthermal power plants arethose, which, if constructed nd/or distributionnetworksi n itisstatedthatifther ricity output.Still,insome ICITY GENERATIONINBULGARIA e oforigin. Theexcepti rated byunitsusingrenewableenergysources, cer whileallother,includingtheexpansionand electricity prices(CouncilofMinisters2004a) might havenegativeim nnection feeandin practice this happens (Art. ficantly, thedistribution balancing market.Duetothefactthat eferential priceandthattheStateEnergy at DGproducersaim atfullyutilizingthe (Art. 3,para1and2ofRegulation#6from ss totheirnetwork if the unitseither: donot in whichthe pricesarefreelynegotiated or the securityofsystems orthesecurityand n coststhatare within preventordelayc

e arecostsforexpansionand nvolved intheconnectingofa fficiency co-generation power areasthereisnoneedof on is for the volumes for on isforthevolumes for networkwhichcauses pact onhealthandlife companies aretrying onnection (formore thebordersof 43

CEU eTD Collection Council of Ministers 2004a) but was changed to changed was but Ministers 2004a) of Council PhD Student: GerganaMiladinova 3 Biomass below 5MW (dep Photovoltaicsabove 5kW Photovoltaics below 5kW year per hours 2250 than more operation in generators power Wind year per hours lessthan 2250 operation Wind power generators in exploitatio Wind power generators below 10 MW aday hours two th head HPP withhigh HPP below 10 MW utili Producers producers DG Table 5.Feed-intariffs inBulgaria forelectricityproducers at negotiatedpricesand/orpric of suchtariffs.TheelectricityproducedinCH biogas andgeothermal as accordingtotheRegulator tariffs forphotovoltaics plants under 10MW andforco-generation units (see Until recently, therewerefeed-intariffs onlyfo operation beforetheendof2010. CHP for7yearsafterthe startof on Energyfrom 2006thefeed-intariffsforrene feed-in tariffswerenotguaranteed over aperi individually foreachinstallation onthebasisof price (Art.33(2)oftheLE).Forco-generat electricity forhouseholdstheprevious renewables theyaredetermined bytheRegul sources, includinghydroofupto10MW, The differentiated feed-in tariffs are setinBulgaria for electricity produced from renewable Feed-in Tariffs where thebarriers related toimperfect competition arestudied. to preventthenewentrants(Expe PHD THESIS-DISTRIBUTEDELECTR

Until, September 2006 this percentage Prices this the percentage on of Electricity was (Art. 6,Regulation 2006 80% September and 19, Until, para 4,5 zing RES: zing at canrun ending on the source) were set by the Regulator but still there are no such for biomass,were setbytheRegulatorbutstilltherearenosuchfor continuously for more than for continuously

operationoftheunit.Theseare n after 01.01.2006 in es setatthebalancingmarket. rt 2006).Thisproblem isanalyz 70% with the amendments in the Law on Energy Lawon the amendments in withthe 70% ICITY GENERATIONINBULGARIA year -theyshouldbenolessthan70% od of time butwith the amendments intheLaw P modeabovethelimit of and CHP with output below 50 MWh. For outputbelow50MWh.For and CHPwith r electricity from HPP,andfrom windpower costplus model.BeforeJanuary1, 2007the ator onthebasisofaverageprice ion thepreferential tariffs aredetermined wables areguaranteedfor 12yearsandfor there isno requestby investorforsetting October 26, 2005* 2005* 26, October tariffs Preferential (VATexcluded) N/A 89 40.8 €/MWh N/A 80.0 35.8 €/MWh N/A N/A 61.1 €/MWh N/A Table 5 ). From January1,2007feed-in valid for unitsthat enterinto ed indetailSection5.3 50 MWh can besold 50MWh can 40.9 € 8* 8* 200 29, June 43.6

367.6 400.4 94.2 – .6 101.1 /MWh

3 of this 44

CEU eTD Collection PhD Student: GerganaMiladinova the factthat back oftheLawonEnergyregardingrene these HPPisthatinthis waytheyarecompensated foroperatingatpeak load.Anotherset large-scale HPPsothatdistribut which istheoppositeofeffo for hydropowerplantsaremore beneficialfor have almost certainlybeenrepaid their constructiontheunitswereprobablysupp which means that theremight beanaccumulati Most unitsthatbenefitfro Source: (SEWRC nodate) *Interbank exchangeratesasofthedate forbalan not and Price for other power plants (only for electricity generation Vidahim BrikelAD,TPPSviloza AD, Deven A DHCs units: co-generation with Companies Geothermal N/A gas Landfill producers DG PHD THESIS-DISTRIBUTEDELECTR preferential feed-intariffs. units producedoutsideEU. Therearenosubsidiesorotherincentivemechanisms apartfrom came intoeffectbutmight be on wavingofimport taxesforrenewableener andEnergyEfficiency (National Law onEnergy There arenoothertaxexemptions forDGequi does notsupportsmall localinvestments (Investor2006). bigger than BGL10million (EUR5million). This The levyonthevalueaddedta Taxes incentivesanddisincentives are coming from thewayfeed-intariffsaresetseeSection does notleadtousemainly ofthegeothermal AD cing capacity) capacity) cing thermal energy,producedfrom renewables m thefeed-inta a goodapproachforthepromoti x ont ,Zhrizvd D 40.5€/MWh ZaharniD, zavodi AD ed renewablesarefostered. Th . Anothersetback isthat as setinthiswaythefeed-in tariffs rts ofenvironmental organizat he equipment suppliedis indicated,So ICITY GENERATIONINBULGARIA riffs in2006wereconstructedalongtime ago and biomass potential.Formore limitations that wable energygeneration on ofwindfallprofitsbecauseatthe time of units withhighheadsandstoragereservoirs gy technologies,whichunfortunatelynever pment or orted bythestateand Assembly 1999)therewerealsoprovisions ishelpful for large-scale DGprojectsbut

urce: http://www.oan 7.6 to 24.7 €/M 2005* 26, October tariffs Preferential (VATexcluded) 45.3 €/MWh 40.5t N/A projectsalth o 61.1 €/MWh o 76.3 o 61.1o €/MWh isnottreatedpr 6.2.1.2. given toinvest on ofDG,especiallyforthe e reason forsuchtariffs ions andexpertstoexclude Wh Wh ough intheabrogated the investment costs and co-generationis da.com 51.2t 61.8 to 34.3 6.5 to 29.9 €/ 2008* 29, June N/A N/A eferentially which ors for projects ors forprojects MWh 45

CEU eTD Collection of relevantpermits (Projectdeveloper 2006).A from theMunicipalitywhereth decided thatthereisno signifi obtaining ofafirstclassinvestorcertificateme certificates. However,oneoftheinvestorsinterviewed for thisresearch thatiseligiblefor Some investorsinDGt information (IBA2006c). BGN 10Mto40MorEUR5M20M)are class two(with investment fr administrative leadtimecanbereducedtoab expenses. They arealso treated preferential wh real estate "titling"issues; andmore importantly if benefit areentitledto:individual informationa PhD Student: GerganaMiladinova 2006c). Firstclassis certificate forfirst,secondor According totheLawonEncouragement Preferential treatmentforbiginvestment projects transmission networkoperator. consumers andiftheyownthenetwork the networkissituatedandwhoow the installationofCHPunitand high consumptionofnaturalgasfor itsproces and output(Art. 2(3)1of Rulesonconnection(S entities thathavecombined heatandpowergenerationunits,irrespecti from 2004connection directlytotransmission a decisionof theChairman oftheBulgaria to thetransmission networkmeans EAD (nowBulgartransgazEAD)andbydistribu The natural gasnetwork inBulgaria isopera Preferential connectiontotransmission relevant EUdirectives. There aredisincentive taxes onpo PHD THESIS-DISTRIBUTEDELECTR issued tothosethatinvestsove echnologies, especiallyinlarge om BGN 40M to 70M or EUR 20M to35M)andthree(from 70MorEUR20M BGN 40Mto om thirdclassdependingonthesi cant benefitsforapplying forth e project is situated andther changing its supplier. However, this also depends on where changing itssupplier.However,thisalsodependsonwhere that thequantitiessupplied willbeatacheaperprice. With llution withanumber ofsubstancesasisrequiredbythe ns it.Itisnotbeneficialfo ICITY GENERATIONINBULGARIA than distributionnaturalgasnetwork n StateEnergyandWater RegulatoryCommission ted bytransmission system operator–Bulgargaz out onethirdofthelegallysetone.Investors ses itcansignificantlyreduceitsbillthrough l andadministrative services;assistance with ntioned thatafterconsiderationshiscompany en differentauthorizatio nother investorwhohas firstclasstoldthat networkisgrantedamongothersalsoto supported mainly throughtheprovisionof tion network operators. EWRC 2004)). Inthiswayif anentityhasa might try toobstruct theswitchingto aninfrastructure istobebuildit onstate of Investments theinvestorsareissued r BGN70M(orEUR35M)andasa wind farms, haveobtainedsuch efore noproblems withtheissue r distribution companies tolose e certificateif ze oftheirinvestment (IBA vely of their capacity ns areissued andthe Connection directly there issupport 46

CEU eTD Collection PhD Student: GerganaMiladinova installations of50MW projects fortheconstructionofhydroandwi amend. 2006) theneedofEnvironmental Impact According totheLawonEnvironmental Protection(LEP)(NationalAssembly 2002,last Environmental ImpactAssessment usually doandpayforheinfrastr has toconstructtheinfrastructure itwilltake they didnotuseanypreferentialtreatment altho PHD THESIS-DISTRIBUTEDELECTR environmental therenewablesandparticularlyhydro andwindshould NGOsregarding on realdangerorsome otherinterests, protection organizationBi was alsoanegativepositionrega Some projectsareheavilycriticizedbysome ofthe environmental NGOsinBulgaria.There of onethetwomajor birdmigratory routes Sea coast becauseofpossible negative impact relate Another areaofconcernaretheprojectsforwi granted authorization. construction atsites located at approval attheRegionalEnvironm installation costsnowthere proposals forhydropowerplants.Forinstance,du At present, inBulgariatherearegrowingc (Art. 96.2,LEP). supposed topayfortheproceduremightimpose cer taken bytheRegionalInspectorateofEnvironm make theprocessrather subjective.Mostdeci no quantitative orevenqualitativesystem for th of potentialimpacts, andpublicinterestinth the area where itistobe constructed, thepossibi criteria anEIAmight beundertaken.Mostconditi conditions forscreening accordingtowhich,if that might havesignificantenvironmental impa

and more, and forNPP;andth rdLife International. Itcan be are severalhundred projectproposalsfor HPPsubmitted for protected areasor ucture themselves (Investor2006). rding theprojectsbywell- ental Protection Inspectorates. Some oftheprojects are for ICITY GENERATIONINBULGARIA but thegrowingnegative opinionamongthe oncerns abouttherapidl nd power plants, for TPP and othercombustion nd powerplants,forTPPand e project (Art. 93 5.4., LEP). However, thereis e project(Art.935.4.,LEP).However, sions ontheneedforEIADGprojectsare passingthroughBulgaria toomuch time andasaresult the investors nd farm development, especiallyattheBlack ct (Art.811.2.,LEP). lity ofecosystems toad e evaluationof theneedfor EIAandthiscan ugh theyown suchcertificateandifthestate the projectsfallwithinabove-mentioned Assessment (EIA)shallbeconsideredfor e totheexistingpreferentialtariffsandlow ent andWaters(RIEW). is Theinvestor ons arerelatedtoproject’scharacteristics, tain constraintsonthe d tothe factthatsomeofthesites arepart with vulnerableecosystems butthey are questionable whether thesearebased e proposals for plans and programs e proposalsforplansandprograms known internationalnature y increasingnumber of There areanumber of apt, thecharacteristics , calledViaPontica. experts preparingit 47

CEU eTD Collection this instrument canbeusedforthe stimulation ofthepenetrationDGtechnologiesand keeping thepriceof electricity lowsoitwas and indirect)thatwereacting against thepr One ofthemajor problems forBulgarianenergy EU internalmarket a remove theopposition of thebeneficiaries.Forth, all interestedparties.Third, subsidiesmight work indirectlyandsotheireffectmay notbe 2003). First,thecostsofestab resources, andthereareotherimplications that larger groupofsociety(Wilson 1974).Onth although thesubsidyisgivento search forthem (HowlettandRamesh 2003).Th to whatextend tobenefit from them;andcanbe are easytoestablish;encourage to promote certainpoliciesandcanbetheprefe Using differenttypesofsubsidies(suchasgrants,taxincentives,andloans)isonetheways policy development andimplementation. through taxesorfees.Government disincentives whenitpenalises certain activity 2003). Theseinstruments canprovideincentives have attheirdisposalandonabilityto The treasurybasedinstruments energy sourcesisincluded inSection An analysisoftheconflictenvironmenta developed first. PhD Student: GerganaMiladinova possibilities forwoodwasteusefrom industrial treated carefully so that itdoesnotleadtode Although biomass electricitygenerationinBulgaria stakeholders intheprocess. indicate thatthereisaneed ofamore tran PHD THESIS-DISTRIBUTEDELECTR 3.2.2. nd notgrantedpermission. Treasury BasedInstruments lishing theexactamount might ofsubsidy behigh.Second,they are dependentonthefinancia a limited number ofbeneficiariesithasanimpact overmuch innovation; areflexibleasth s canalsofundinterestsgroups 4.3. ICITY GENERATIONINBULGARIA sparent EIAprocedureandearlyinvolvement of omotion ofDGandenvironmental protectionby raiseanddisbursefunds(HowlettRamesh be redundantanditmight beverydifficultto prevent their application (Howlett and Ramesh apparentquicklyenoughtobeappreciatedby not cost-effective toconstructDGunits. Still, l organizationsandtheinvestorsinrenewable byincreasing costs to thosewhoexercise it forestation insome regions.Thatiswhythe ey arealsolessopposed rred option due to the fact that such schemes rred optionduetothefactthatsuchschemes processes andagricultu easilyenforcedas thosewhoareinterested sector was thatthereweresubsidies (direct e otherhand,subsidiesrequirefinancial they might beconsidered as impediment to whengovernments givesubsidiesorbe isnotdevelopedyet e individualparticipantschoose l resources which governments l resourceswhichgovernments thatmight fa ral residuesshouldbe by differentactorsas it shouldalsobe cilitate the 48

CEU eTD Collection generation projects.The conditionsvarybybankand byprojects’specifications butingeneral projects areintheform of7.5%granta this €10million areusedtoprov Decommissioning SupportFund six Bulgarianbanks.Thefacilityis thousand to€1.5million eachinindustry andre In 2004theEBRDopenedacredit line of €50million for energy efficiency projects from €20 sources ofpreferential creditsforsuch projectsandthusareincl Although EBRDcreditlinesarenotagovernment EBRD creditlines the anticipatedriskforDG projectsandconsequently theinterestratesremainhigh. other financialinstitutions thatthose that investors of thesepossibilities. Inmany casesit There isstilllimited experienceofBulgaria countries thereisnoscheme in environmental funds,butatpr to usethefunds.Renewableenergygenerationprojectscanalsobe from theEUstructuralandcohesionfunds, technical assistanceanddemonstration projects,andinthecoming yearstherewillbesupport In addition,beforetheEU accession therewa PhD Student: GerganaMiladinova financing DGprojectsare provides financing toenergyefficiency proj and Development(EBRD)in2004,oftheEnergyEfficiencyFund(EEF)2006,which genera andrenewableenergy efficiency projects Thefirstwastheestablishmentand RESprojects. ofacreditlineforfinancingenergy years severalimportant initiativesstartedthat projects whichwasoneofthemain forth reasons Until recentlytherewasnoproperlyfunctioningsupportscheme instruments; taxexemptions; outputcredit reasons. Theycanbeinforms ofgrantsor nowadays there isawide rangeofeconomic andfi PHD THESIS-DISTRIBUTEDELECTR through saleofcarboncreditsin Bulgariatosupporthousehol ide financialincentiveswhichin esent thissupport (KIDSF)whichprovided€10m establishedwithsupportofthe ICITY GENERATIONINBULGARIA forrenewableelectricity(IEA 1998a). work withtheabove-mentioned donorsbecauseof nd 20%grantinthecase ofrenewableenergy n banksandfundsenoughknowledgeinthe depending oncountry’sad createdsome CHP opportunitiesforfinancing ects, includingCHP. Ot s supportfromtheEUpre-accessionfunds for tion bytheEuropeanBankforReconstruction is difficulttoobtainco e pooruseoftheexistingpotential.Inlast newable energy sourcesincooperationwith subsidies involvingdirecttransfers;credit scal incentivesthat can beappliedfor these is verylimited. Unlikemany European instrument, theyareoneofthemain Joint Implementation (JI)projects. ds toinstallDGtechnologies. uded intheanalysis. thecaseofen illion (EBRD2004).Partof

for the investments inDG investments for the Kozloduy International mmercial credits from ministrative readiness her opportunitiesfor financed bythetwo ergy efficiency 49

CEU eTD Collection PhD Student: GerganaMiladinova finance transactionsuptoabout50 component The financialresourcesvotedfortheFundare support forthepreparationofFund(WB2005). other internationaldonors.A to come fromco-financingleveraged th from GEF,USD1.8million from theBulgar The Fundstarted operationatthe beginning of2006.Ithas received USD10million grant resources shall bespent forle for energyefficiencyprojects.TheFundisnot establishment andthefunctionsofEnergyEffi The LawonEnergyandEfficiency(National Assembly1999)setstherulesfor Energy EfficiencyFund source). and anextension of EUR 50million was provided (ECinternal document –to find other Europe &EnCon Services2007).The scheme has For threeyearsuntilJune2007about40DGproject training ofpersonalatthebanks the interestratesarebetween PHD THESIS-DISTRIBUTEDELECTR no CHP projects fundedandthetotalapplicati no CHPprojects efficiency improvements andfortheinstallati establishment theFundwasenvisaged topr interest rate2.5%to5%compared with municipalities inBulgariabecause ofthepref improvements inbuildingsorotherinfrastr performance. However,mostprojectsbynow Due tothefactthatFundisoperationalfor a veryshorttime itisdifficulttomeasure its administration. component includes and theprincipalpayments intotheFundwill commercial basisforprojectsbetweenUSD second component Partial Credit Guarantees Investment Financing technical assistance 9%and12.5%(ME2005).EBRDalsofindsthroughthelinesa dditionally, in2003theWorld BankgrantedUSD300000as nding andguaranteeingactivitiesforenergy efficiencyprojects. responsiblefortheevaluatio % oftheoutstandingloanprincipal willprovide sharingof creditriskfor energyefficiency ICITY GENERATIONINBULGARIA will serveasanrevolving fundprovidingloans ona forcapacitybuildingmeasures andfortheFund ian government, USD31.96million areexpected 5 to9%forSMEs)(Expert2006).With its on ofCHPunits.BySeptember 2006therewere 100 000andUSD2each.Theinterest e privatesectorandaboutUSD6million from erential loansprovided tomunicipalities(with ciency Fundwhichprovi ovide fundingforprojects onlyforenergy were mainly forsupport ucture andservicesprovidedbydifferent part oftheconsolidat ons werebelowexpected. Thisledtothe beusedforadditio structured inthreecomponents. Thefirst s werefundedfrom thecreditlines(DAI been evaluatedasaverysuccessfulone n oftheinvestment risk. ed statebudgetandits nal loans.Thethird des preferential loans to energyefficiency

(WB 2005).The 50

CEU eTD Collection PhD Student: GerganaMiladinova 2006) forwhich therearedata.The majority of for ofthe totalfundingofEUR15.6M EUR 0.6M funded bytheNational Innovation F these sourcesprovideverylimited supportforR& the research institutes andprivate donors. Unfo SMEs) forthedevelopment oftechnologiesthat and theNationalInnovativeFund,whichsupports ma sources offundingaretheNationalScienceFun opportunities forthecreationofcheapDGtec At present,thereisverylimited R&DsupporttoDGinBulgariawhichlimits the Research andDevelopment(R&D) support have beenfinancedbytheFund. government ofSwitzerlandandBulgaria)but agreement underthescheme forenvi “Debt environmental protectionfund,calledtheNati to greenhousegasemission reductionsare (MOEW 2005a).Theloanshallbe project costsandshouldnotexceed€750,000fo projects. Theprovidedfunding isintheform of Protection (oldname NationalEnvironmenta protection funds. TheEnterprisefor theCoor Renewable energygenerationproj Environmental protectionfunds DG projectsapproveddirectlyundertheFund. might includecons which of energyefficiency described aboveandforlarge-scaleprojects( lines twocredit providesgrantsforthe Itismanaged EBRDand bythe improvement. improvement of theKozloduyNPPandtos FundestablishedbytheEUto KIDSF isa Kozloduy InternationalDecommi for renewablesprojects(Expert2005). reconsideration of theeligibility criteriaa PHD THESIS-DISTRIBUTEDELECTR ssioning SupportFund(KIDSF ects can also befinanced from thetwoenvironmental returned after5years.The fi und projectsarerelated toDG, ICITY GENERATIONINBULGARIA nd possibly theFund willstart providingfinancing over EUR 4-5 million each) fortheimprovementover EUR 4-5million each) truction ofCHPunits.Ho l ProtectionFund)fundssmall-scale hydro dination oftheActivitiesforEnvironmental no projectsforrenewableenergygeneration the fundedprojectsarefor biogas(4 projects) upport projectsaimed atenergyefficiency onal TrustEco-Fund(e ronmental protection”signedbetweenthe assist thedecommissi rtunately, DGresearchisnotapriority and d, whichprovidessupporttobasicresearch, hnologies inthecountry.Possiblenational interest freeloansforupto70%ofthetotal r eachproject and€1,750 perinstalled kW also among thepriori are closetomarket uptake,ownsourcesof D activities.Forexampl the threerounds(2 in2005and1 inly projectsofprivat nancing ofprojectsthatlead )

orthisisonly3.7% oning andthesafety wever, thereareno stablished byswap e, only9outof218 ties oftheother e sector(especially 51

CEU eTD Collection this case governments intervene inmarkets by Creating markets canbeanotherway forusinggovernments’ capacitytoimplement policy.In Creation ofmarkets See Section InvestBulgaria Agency See Section Energy EfficiencyAgency adoption ofnotcost-inefficient solutions. issues notrelevant tothewholesociety; this agenciesorofficialswhichmight beusedforgainingofelectionadvantagebypromoting are: theusual lack of flexibility of thebureaucracy; the political control overthe functions of functioning andtoreducevarioustransactioncost also possibletoavoidthenegotiationswith knowledge andexperienceonspecificissueswithin the organisationscreate for theirestablishmen and Ramesh 2003).Thepositive effectsofsuchunde services (i.e.whengovernments The creationofagenciesiscons Creation ofOrganizations of markets. creation ofagenciesorunits Governments canimplement their policiesalso which thatarenot100%financedby Framework Programmes, Intelligent Energy -Europe by localsources aretheEUsustainable ener PhD Student: GerganaMiladinova The main offundingin source 2007a). followed byphotovoltaics(2projects)hydro,wi PHD THESIS-DISTRIBUTEDELECTR 3.2.3. 4.1, page56onwards. 4.1, page56onwards. Organization BasedInstruments t isminimal and thereareopport dealing withtheimplementation this areathatsignificantly use theirownresourcestoimple idered asaninstrument of theEU,isfindingco-financing. ICITY GENERATIONINBULGARIA the lackof competitionwhich might drivethe gy programmes (suchastheRTDandEnergy creating scarcityofsome goodbysetting fixed through organizationalreforms leadingtothe actors outsideofthegovernment fortheir nd andbiomass (each1project)(BSMEPA s. Theproblems relatedtothisinstrument rtakings isthattheinformation required ). Still,themain problem for those of outnumbers theamounts provided unities fortheaccumulation of of policies,throughthecreation direct provisionsofgoodsand ment theirpolicy)(Howlett d. Inthiswayitis 52

CEU eTD Collection have proventoberelatively easytodevel unwillingness ofgovernments toactoncertain pr instruments thatdonotprovideimmediate out by tryingtochangecertainbehaviours.Th information availabletotheinterested partiesor Ramesh 2003).Information candedisseminate of datacollectionor is submitted tothem duetothecentral role they play(Howlettand Government canrelyonsignificantamount of distributed genera term prospects creates additional investment risk whichdoes notstimulate theinvestments in obligation. Althoughitcanbeargued is notclear whetherthe preferential tariffs sy communication withrepresentatives from theMi PhD Student: GerganaMiladinova when aRegulation waspreparedbut neverad 2011. Therewereattempts forintroductionofgr include CHP)electricity certificates andcertifi based mechanism fortheirfurtherpromotion. Itw through feed-intariffstheMini changes oftheEnergyLawfromSeptember 2006itisenvisagedthataftertheinitialsupport Renewable obligationandcertific Renewable/green electricitycertifi constructed orundergoesrenovation.Such provisions oninclusionofdistributedelectricitytechnologies Markets canbecreatedalso some ofthe actorsmight beabletomanipulate mechanism isthatif there is tobeauctioned.Oneoftheshortcomingsthat itallowschangesoftheamount this because themarkets aretheonewhichdetermine it approach allowsthem tocontroltheamount of amount ofpropertyrightstobesoldonauct PHD THESIS-DISTRIBUTEDELECTR case the enforcement might become tooexpensive. 3.2.4. tion technologies. Nodality BasedInstruments through publicprocurement sche very limited amount oftradable ster ofEnergyandRes ates might beintroducedin cates andcertificatesoforigin which systemisbetter,thelackofclearvisionandlong- ICITY GENERATIONINBULGARIA op andnotrequiringsi practicesdonotexistinBulgaria. stem willbeabolished andchangedtorenewable comes andsometimes mightonlydisguise the d bythegovernments pa information whichtheyobtainthroughsysteminformation opted. Basedonthisex ions andbysupportingtheexchanges.This e information-based instruments areweak moreactively (calledsuasion orexhortation) goods tobeconsumed atrelativelylowcost, cates oforiginandshouldbeenactedfrom the system fortheirow nistry ofEconomy andEnergyResourcesit een certificatessince ill beinthe (orgreento form ofrenewable oblems. Apartfrom theselimitations they s price. The instrument mes when governments include credits of participating actors ources shouldproposemarket gnificant resources. whenitsbuildingstockis Bulgaria after2011.Inthe the beginningof2005 perience and personal ssively bymaking the n benefitandinthis is flexible interms 53

CEU eTD Collection promotion ofCHPandmicrogeneration mentioning thatthis isnot possible.Thereis target toreach11%share of Renewable EnergySources(2005-2015) strategy foritspromotion. Theproposed DG ismentionedinanumber with theinstruments usedisprovidedinChapters6and7. conditions increasingtheinvestment riskpe (i.e. theplansforchangeoffeed-intariffsto There isalso lackofclarity with thefunctioningoftheseinstruments andso real actions toimplement theseinstruments. Th exist. However,there isabigdifference betw certain capacitytothegrid,purchasingofwhol The main legal prerequisites, suchas indica several yearsbutmuch moreneeds There has been significant progress inthe polic governmental organizationwerenotidentifiedbutareverymuchneeded. At thisstageofresearchotherinformation sources whichareanimportant PhD Student: GerganaMiladinova The EEAalsoorganizesannualconferenceson recent legislative changes. Theyarenot contain anumberofmistakes. potential foreachsource.However,thesebrochu administrative procedures atthedifferentstag includeinformation onthelegalrequirementsprepared in2003and2005.They and geothermal (EEA2005c),biomass andbioga brochures, whichincludeinformation on opportunities forinvestment invariousrenewa The BulgarianEnergy Efficiency Agency PHD THESIS-DISTRIBUTEDELECTR 3.3. SUMMARY and continuityofthe networking eventforexperts. of strategicdocuments butunt renewables in the totaldomestic electricity consumption to bedoneinorderhave noticeable increaseofitsshare. and oftheheatfromrenewables. (EEA2006)departsfrom ICITY GENERATIONINBULGARIA National Long-termProgramforthePromotion of small hydro(EEA 2005d),wind(EEA2005e), updated regularlyanddonotincludemany ofthe dissemination materials that weredevelopedby tive targets, obligatory connection of DGwith een targetsandobjectives no strategicdocument ortargetsthataim atthe rception. Detaileddiscussionontheproblems s (EEA2005b),andsolar2005a)were haspublishedseveralbrochuresonthe ble energy technologies.Twoeditions ofthese es ofinvestment andbriefinformation onthe e volume ofelectricity,a greencertifi ere arealsoanumber y relatedtothepromotion ofDGinthelast res donotinclude allthe proceduresandalso me ofthemneedtobefurtherdeveloped. energyefficiency approach usedregard cates) thatcrea il nowthereisnoconstant the EUrelatedindicative of problems associated and renewableenergy and politicalwilland ing these instruments nd preferentialtariffs tes unfavourable 54

CEU eTD Collection PhD Student: GerganaMiladinova region andonthevariousprocedurestobe There isnosufficientinformation toguideth for small HPP. CHP isalsoverylimited. The established itdoesnotdealwi consequently theinterestratesremainshigh.AlthoughafundonEnergy Efficiencywas with theabove-mentioned donorsbecauseth difficult toobtaincommercial creditsfrom other projects andinformation provided addition, thereisnotenoughexpe make thehuge changethatisneededfortheGove projects. However,thesupportwithintheseso renewables, theEnergyEfficiencyFund, with theestablishment oftheEBRDcreditlinesforenergy efficiencyinindustry and Until 2004therewereno dedicatedsourcesof PHD THESIS-DISTRIBUTEDELECTR th renewableenergyprojectsat two environmental protectionfundsprovidefinancingmainly rience withthebanksonth to the investors on the financ ICITY GENERATIONINBULGARIA undertaken duringtheinvestment process. the KozloduyDecommissioning Fundsupported funding forDGprojects. Thesituationchanged e investorsintheirchoiceoftechnologyand urces isverylimited, exhaustibleandcannot e anticipatedriskforDGprojectsand rnment targets andobject financial institutions thatthose thatwork themoment anditssupportfor e risksassociatedwithDG ing possibilities. It is still ives tobemet. In 55

CEU eTD Collection PhD Student: GerganaMiladinova research withintheactualsett analysis as suchdeserves aseparate doctorate its goals and objectives. Theaim of thisresearch isnot to make acomprehensive institutional who areengagedinpolicyformulation, adoption, An essential element ofDGpublicpolicydevelopment arethe variousactors andinstitutions PHD THESIS-DISTRIBUTEDELECTR Table 6.Stateactorsandinstitutions identified intheresearch ispresented in and theirimplementation, andduetotime limitations. Thelistof stateactors andinstitutions more relevant to the objectives and appointedofficials.Hereonl stateact According toHowlettandRamesh (2003), main groups:state,social,andinternational. Ramesh 2003,p.53). Toeasetheanalysis the actor structures ororganisationofthestate,soci system called‘policyuniverse’.Institutions ar that boththeinstitutionsandact institutional contextinwhic collective actors play intheprocess of Although therearedifferentapproachesonth concludes with observationsontheinteractions Bulgaria intheresearch isprovided. This is brief overview of themain institutions and acto Ministry of Regional Development and Public Works Ministry of Agriculture and Forestry Waters (RIEW),Basin Directorates(BD)) Ministry ofEnvironment and Waters (and subordinate institutions: Regional Inspectorate ofEnvironment and Ministry of Economy andEnergy Ministries 4. DISTRIBUTED GENERATIONINBULGARIA DISTRIBUTED ACTORS, INSTITUTIONS AND STRUCTURES RELATED TO RELATED ANDSTRUCTURES ACTORS, INSTITUTIONS 4.1. STATE ACTORS AND INSTITUTIONS ACTORSANDINSTITUTIONS STATE h theyoperate,HowlettandRa ings andtoprovidebackgroundc of the research, i.e. ors haveasignificantinfluence y theroleofappointedofficial relevant toDGpromotioninBulgaria Table 6 ICITY GENERATIONINBULGARIA policy developmentandtheimportance ofthe ety, andtheinternationalsystem” (Howlettand carriedout inthefollo e lookedatbytheirnarrowdefinitionas“actual onitsown.However,in ordertoposition the betweenthemain groupsofstakeholders. below. rs identified asimportant toDGpolicyin e importance of theroleindividualand andimprovement andintherealizationof ors aredividedintotwocategories:elected making ofasnapshot s and institutions areclassified inthree mesh (2003)adopttheposition onditions itisim nd thattheyareanintegrated s isstudiedastheirwork wing text. The chapter of thecurrentpolicy portant thata 56

CEU eTD Collection PhD Student: GerganaMiladinova other sectorrelatedstrategies,fortheissuingof isrespon The MinisterofEconomyandEnergy efficiency andenvironmental protection. and withinthisa separate Directorate wasde Energy Resources(MEER). Attheendof2005 Agency ofEnergyandResources.Then status of thisbody.Foralongtimeitwas a Economy and Energy (MEE).Inthe lastdecade therewereconstantchanges inthe name and The main institution responsiblefor thedevelo Ministry ofEconomyandEnergy(MEE) Source: ownresearch PHD THESIS-DISTRIBUTEDELECTR prepared bytheEnergy Efficiency Agenc example, thestrategies andaction plansonrenewablesandenergyefficiency areusually documents andoftentheMinisteroutsourcers them The MinistryofEconomyandEnergydoes not December 2007. evaluate theprogressmade.Th the Minister istoprepareananalysis ofthe national potentialforhigh-efficiency CHPandto effective only from 2007andonly becauseEU reports ontheirattainment. Thesewereadop indicative targetsforthepromotion ofrenewabl as discussedinSection energy efficiencyin2003butabolishedandnew adoptedin2006,andforrenewables2006 promotion notofficiallyadopteduntilrecently(for ofrenewableenergy.However,thesewere the LawonEnergyfrom2002istopreparenationallong-andshort-te communautaire. Among themain functionsoftheMinisterrelated toDG aslistedinArt.4of and forpreparing reports tothe Eur Municipalities, City and Regional Councils Councils Regional Cityand Municipalities, Authorities Local State Energyand RegulatoryCommissionWater bodies Regulatory Bulgarian Small andMedium Enterprises Promotion Agency InvestBulgaria Agency Executive Environment Agency Energy Efficiency Agency State Agencies 3.1.1, page36).TheMinister isalsosupposed toset national is reportnotavailable ICITY GENERATIONINBULGARIA y. ThenewEnergyStrategy isunderdevelopment opean Commission as ted withsignificantdela statutoryinstruments of accession requirements. Anotherfunction of e electricitygenerationandtoprepareannual it wasmerged withtheMinistryofEconomy signated todealwiththeissues of energy separate Committee on Energyand aState sible forthedevelopmentofenergyand in 2001itbecame aMinistryofEnergy and pment ofenergypolicyistheMinistry of tootherinstitutionsororganizations. For have the capacity to develop strategic have thecapacitytodevelopstrategic to theEuropeanCommissionby required inthe rm programmes forthe y in2006andbecame secondarylegislation, acquis 57

CEU eTD Collection PhD Student: GerganaMiladinova transmission, (ii)setting upof thepricesof important functions relatedtoDG,i.e.:(i) SEWRC (alsocommonlyreferredastheRegulator), The functionsofanindependentregulator State EnergyandWaterRegulatoryCommission (SEWRC) Section Works areresponsiblelandandforestrydesign ation andspatialdevelopment issues(see The MinistryofAgricultureandForestry page administrative proceduresandtheroleof basins andfor theissuingofwaterpermits. Theenvironmental protec issuing ofComplex Permit. BasinDirectorates areresponsible are theregionalrepresentativesofMOEW and implementation ofstatepolicy.RegionalInspec responsible fordetermining emission standards, final approval oftheresults.TheExecutive Complex Permit (seeChapter 5),and ifneeded the procedure forscreeningoftheneedfo DG unitsareinstalledandoperateinanenvi Works. TheMinistryofEnvironm of Agriculture andForestry (MAF),andthe Other relevantministries are: Other Ministries DG inBulgarianenergyagenda. regulation on greencertificates, The delayin theimplementation of thelegislatio amended atanumber ofstakeholdersmeetings. provide adraftofthenewlaw by expertsfrom outsideoftheMinistry.Forexample,twobranch organizationswereaskedto and isfundedbytheWorldBank.Thedevelopment oflegislationisalsostronglysupported by ateamleadtheBlackSeaRegionalEnergy Centre(intergovernm PHD THESIS-DISTRIBUTEDELECTR 94 andSection 0, page89). 5.2.1.4, page96. the MinistryofEnvironment andWaters (MOEW), the Ministry on thepromotion ofrenewables and ofthecertificatesorig ent andWaters hasveryimporta ICITY GENERATIONINBULGARIA state authoritiesarediscussed inSection energy andwatermarkets arecarriedoutbythe r Environmental Impact Assessment (EIA)or ronmentally friendlyway.Thisisdonethrough electricity, heatandnatu issuing oflicencesfor energy generationand Ministry ofRegionalDe Ministry ofRegionalDevelopment andPublic Environment Agency(EEnA)toMOEW is for guidingandmonitori includingfor CHPandthemonitoring ofthe torates ofEnvironment andWaters (RIEWs) n ortheadoptionofregulations(suchas are responsibleforth thatwasestablishedin1999.Ithasvery in) showthelowimportanceof which wasthen discussed and for themanagement ofriver nt functionstoensurethat ral gasbasedon‘cost e EIAproceduresand velopment andPublic tion andresourceuse ng oftheprocessand ental organization) 5.2.1.3, 58

CEU eTD Collection than severalyearswhichcreate about EUR250permonth) andmany oftheexpert young expertsthestartingwagein2006wasabout depends onfundingcoming undervariousEUpr a veryseriouslimitation totheworkof strengthening andimproved coordi administration) (CouncilofMini hasbeengraduallyimprThe EEAcapacity information onenergyefficiency andrene preparing suchforthepromotion ofRES. and inthepreparationofseveralenergyeffici renewable energygenerationtoo.The Agencyhaspa responsibilities totheEx PhD Student: GerganaMiladinova responsibilities areinthefield wascreatedbackin1992andhasbeenaseparatebodysince1999.Its mainMEER which Executive Agency totheMinisterofEconomy and aseparatelegalentityonbudgetary The EEAis Energy EfficiencyAgency(EEA) particular. problems arediscussedonseveralpl delays their increaseto answerpoliticaln Regulator. There arecommonly accusations thatth the Regulator.Therearealsoproblems associated challenge its decisions of electricity prices and of SWERCresources.Thereisasignificant funding. Theexpertshavetoansweranumber of As most regulators inCentral andEastern Eu 2004, lastamend. 2005). transmission networks,and(iv) plus’ model, (iii)developingtherulesforconn PHD THESIS-DISTRIBUTEDELECTR ecutive DirectoroftheEEA, he/she of energyefficiency.However,if s asignificantproblem withworkcontinuity(Expert2006). issuinggreenandcertificatesoforigin(CouncilMinisters sters 2005,lastamend. 2006)butth nation withstakeholders.Thel aces in thetext and inSection ICITY GENERATIONINBULGARIA wable energygenerationinthecountry. eeds ofthegoverningparties.Theseandother oved, employing about50people(includingthe Agency. Apartfrom thestatefundingitmainly ency programs andactionplansiscurrently rope, SWERC hasaproble number of lawsuitsagainstSWERC which Another responsibilityisthecollectionof feed-in tariffs setting whichare often lost by ection toelectricityand gasdistribution and requests andclaims thattakealargeamount financingandservesthefunctionsofan EUR150grosspermonthandforsenior- e Regulatorkeepsenergypricestoo lowor s donotremain withtheAgencyformore with the setting of feed-in tariffs bythe ogrammes. Thewagesareverylow(for Energy. Itisthesucces rticipated inseveral canperformfunctionsrelatedto theMinisterdelegateshis/her ack offinancia ere isaneedofitsfurther 6.2.1.2, page m withcapacity and EU fundedprojects sor ofaunitwithin l resourcesis 122 in 59

CEU eTD Collection temporary committees orafteradecisionof Architect. Theyactbased onthe conclusions mainThe actorsaretheMajor,Regiona non-existent atall. funding opportunities,theirroleasinitiatorsandinvestorsin DG projectsisverylimited or constrained orthereisnotenoughknowledgeandexperience in thesetechnologiesorthe sustainable energytechnologies administrative ones,hospitals,andschools)that process isveryimportant. ownanumber Municipalitiesalso ofbuildings(suchas construction works(for moredetails see Section of landdesignation,detailedspatialplans, process. Forexample,DG investment theyareone Local authoritieshaveresponsibil Local Authorities no indicationofactivesupporttoDG bythisCentre. industry byexecutingenergyaudits Japanese InternationalCooperationAgency.It works intheareaofenergyefficiency The centrewasestablishedin Energy EfficiencyCenterinIndustry 3.2.2). Innovation Fundwhichprovidesli information, consultancyadviceandtraining(B the legislationandopportunities certificates isquestioned by the administrative andinfrastructure aspects of functions inthepast.The Investme PhD Student: GerganaMiladinova were establishedwith decisionsfrom2004butwe The twoAgencieshavemainly indirectfunctions Agency (BSMEPA) InvestBulgaria Agency andBulgarianSmallMedium Enterprises Promotion PHD THESIS-DISTRIBUTEDELECTR some investors (seeSection 1995 afteragreement oftheBu to investinBulgaria.BSMEPAsupportsSMEbyproviding . However,asthelocalau ities formost authorizationsre nt Agencyissuescertificates , providingconsultations,andor mited supportforDGprojects ICITY GENERATIONINBULGARIA the MunicipalCouncils. Theyareindependent SMEPA 2007b).ItalsomanagestheNational l Governor,ChiefM theirprojectsbuttheusefulnessofthese 5.2). Therefore their role inDGinvestment canserveasabestpracticeexamplesof re successors ofbodies tothepromotionof DGinBulgaria.Both for approvalofinve from theworkofvariouspermanent or oftheinstitutionsresponsibleforchanges 3.2.1). Italsopreparesoverviewson thorities areusuallybudget- lgarian Governmentandthe to big investors tofacilitate quired intheduecourseof ganizing events.Thereis (as discussedinSection unicipal or Regional unicipal orRegional stment proposaland with similar to them 60

CEU eTD Collection Table 7.Socialactorsandinstitut The main socialactors andinstitut included. be studied.Inthediscussionnationalandinte general public,politicalparties,andthemassa areinvolvedmainly medi (2003) arethink-tanks,researchorganisationsandinterestgr PhD Student: GerganaMiladinova 4 research. Within thelattergroupmain actorsan engagement of thelabour organisations in investors, consultants,equipment suppliers actors and structures comprising theformer gro economic structuresandactors,(ii)pol Howlett andRamesh (2003)describetwocategorie successful implementation theinputandsupportof The stateactors arevery important in polic fees fortheprocessingofapplicationsvariouspermits. from thestate authorities intheir decisions PHD THESIS-DISTRIBUTEDELECTR That is why the word ‘research’ was added. research units are not always actively involved in policy formulation but are essential for market transformation.

Consulting Firms Consulting Bulgargaz National Electric Company (NEK) company distribution gas natural Electricity and Transmi and Distribution Project development organizations and associations District heatingcompanies (DHC) activities business main their among companies with DG foreign and well-established developers/investors Bulgarian between companies Joint Investors that have other main business A number of companies that can be classified in several groups: Project Developersand Investors intechnologies DG Howlett and Ramesh (2003) name this category as‘Politi category (2003) name and Ramesh this Howlett 4.2. 4.2.1. SOCIAL STRUCTURES ANDACTORS SOCIAL STRUCTURES ssion System Operators Economic Structuresand actors SOCIAL ACTORS ANDINSTITUTIONS (1) ECONOMIC ACTORS AND INSTITUTIONS

ions identified arepresentedin ions relevant toDGinBulgaria

ICITY GENERATIONINBULGARIA Bulgarian DGsector they areomitted from the regarding DG.Theyalsodetermine and collect , andlabourorganisations.Duetothelow itical andresearchstructuresactors y development andimplementation butforits d structuresaccording up arebusinesses, such cal structures actors’. cal structures and However, in the Bulgaria rnational social struct social rnational s socialstructuresandactors:(i)political theotherinterested oups, whileothersuchasthe Table 7

to HowlettandRamesh as projectdevelopers, indirectly andarenot . ures andactors are parties iscrucial. 4 . The 61

CEU eTD Collection PhD Student: GerganaMiladinova There arevariousDGprojectdevelopersan Project developersand investors Source: ownresearch PHD THESIS-DISTRIBUTEDELECTR (project ofBulgarian-Spanish ventureEolica). in cooperationwithMitsubish Corporation) (AES2006), 33MW Kaliakra wind German development renewable firmandis development are120MWKavarnawindfarm (i projects whichrequiresignificant financing. Exam firms becameinterestedindoingprojectsBulg With theprospectsofEUaccession andgood mislead byconsultantswhowanttomaximize theirprofits. enough assetstoprovidecreditsecuritiesbut funding. Thethirdgroupdoesnothaveproblems CHP inDistrictHeatingVarnaandsome HP few yearsagoJIwasnotwellknowninBulgaria additional financingunderinternational schemes, suchasjointimplementation. Forexample factories inJapan.Foreigninvestorsareal one ofthewindparksinKaliakraregion willbeproducedbytheMitsubishi HeavyIndustries bank credits, andinsomecases,easiesthepurchasing ofequipment. Forinstance, turbines for from localsources.Forthesecondgrouphavingin cases isapreconditionforsmooth obtaining resources to investinDG. Theclosetiesthatthefirst group haswith stateactors inmany third groupofBulgarianinvestorswhohave representatives offoreigncompanies orwerepur NEK). Thesecondgroupconsistsoffirms occupying highlevelsinthehier groups. Thefirstgroupcomprises of observations theprojectdevelopersandinvestor Foreign: GE, ABB, Tedom, etc. Bulgarian: Energoremont, Nicola Vaptzarov, Vipon - Vidin suppliers Equipment Branch –Bulgarian Ecofys ESD Bulgaria Ltd Energoproekt i HeavyIndustries),and 64 archy positionsinthegovernment firms ledbyexpertsthatinmany caseshaveeitherbeen ICITY GENERATIONINBULGARIA are notexpertsinDGtechnologiesandmight be of permits orgoodknowledgefundingoptions so more awareabouttheopportunitiesfor P didnotuseitasasourceofsupplemental d investorsinBulgar other main businessandsufficientfinancial economic growthanumber ofinternational chased byforeigncompanies. Thereisalso a tobeimplemented withtheUSAES andsome projects,suchasintroductionof nitiated byGeoPowerLtd.-aBulgarian- aria. Thisismainlyfarm thecaseforwind s inBulgariacanbe categorized inthree farm (developedbytheBulgarianINOS-1 ples ofsuchprojectswhicharestillunder ternational partnersfacilitates obtainingof with obtainingbankcreditsastheyhave that eitherhaveforeignpartners,are MW windfarm inSuvorovo orrelatedin ia. Basedonpersonal stitutions (i.e. 62

CEU eTD Collection the CzechRepublic, and Poland(Investor 2006). realization ontheBulgarianmarket thefactorie the productionofPVmodulesinBulgariabut with BulgarianexpertworkingforitinGermany) which evenwantedtobuildafactoryfor to thelackof preferentialtari The interestindevelopingandinvestingphotovoltaicsprojectsisra have sufficientfinancialresources. projects’ ideasforbiogaspowergenerationat company –SofiaWater ADandevenattheKo pharmaceuticals). There areplans fortheinsta demand processes(suchasBi for Several CHPunitshavebeeninstalledatindu 2005). owns largeportionofprivati ofHristoKovachki–abusinessman largeDHCbythefirms who the privatizationoffour rather often thecase for DHCinBulgaria). can beusedascredit securities,exceptintheca companies (DHC).Itiseasier forDHCtoobtain The investmentsinCHPunitsweredonemainly af rivers. already plans formost suitable locations andther relatively small andtherefore H PhD Student: GerganaMiladinova mentioned that thepay-backtime isverysh laundering forthecriminal structuresinBu Kovatchev warnedthatinvestinginHPPa sources offunding.EventheformerMinist 1990s. Manyquestionswereraisedonthelegalityandtransparencyofsome deals number ofHPPwereownedbyNE For hydropowerplantsmain initiatorsandi other main business andseethis Investors inindividualsecond-ha PHD THESIS-DISTRIBUTEDELECTR ffs forelectricity.Therewasan zed energygenerationplantsandsome coalmines (Netinfo PP areveryattractive option. This asanewbusinessopportunity. nd windturbinesareusuallyfi ovet JSC-manufacturer ofan K butmost of them werepriv ICITY GENERATIONINBULGARIA The installationofCHPhasbeenspeededupby ort (insome casesabout nd small energyprojectsisawayofmoney er ofEnergyandEnergyResources–Milko stries thathavehigh s arenowplacedintheformer EastGermany, several animal farms buttheirownersdonot nvestors areBulgarianfirms. Initiallylarge ses inwhichtheyhavehugedepths(whichis lgaria (Novinar 2005). Still, itshouldbe lgaria (Novinar2005).Still, zloduy NuclearPowerPlant.Therearealso llation ofunitsattheSofiawatersupply bank loansastheyhaveotherpropertythat e isrealdangerof‘ ter theprivatizationof due tothelackofpossibilityfortheir interest from German firm (also (also firm German from interest rms orindividualsthathave alsoexplains whythereare atized mainly endof by the tibiotic feedadditives and energy demand andsteam ther limited mainly due 3years),investments overbuilding’ ofsome thedistrictheating 63

CEU eTD Collection PhD Student: GerganaMiladinova grouped inthreepackagesand67 operate indifferentregionsofBulgaria.They usedtobestate-ownedbutin2004were Distribution system operators (DSO)are eight preferential prices. connection andelectricitypurchas (above 5MW) toelectricitygrid,forupdateof is responsibleforthepreparationofastudy demand inBulgaria,usually called LeastCost is responsible forthe preparation of forecas Kozloduy NPPandisresponsiblefo plants andpumped-storage hydr owns asignificantpartof electricity generation is separate from the and wascentraldispatchingunit.With th monopoly organizationthatwasresponsibleforel The NationalElectricCompany EAD(NEK Distribution andTransmissionSy municipalities inthedevelopment ofDGprojects. For variousreasons,mainlyfinancialandlackof projects butwithoutthesupportofinvestors. There arealsomany andexperts associations if thereisan adequatefiscal polic Bansko, havebeenestablishedbylocaldevelopers heating projectsonbiomass, such (as discussed inSection 3.2,page40andSection that forseveralyearsweresetuponly development butnothinghasbeenrealizeddueto the lackof statesupport, i.e.feed-in tariffs There isasimilar situation withbiomass el PHD THESIS-DISTRIBUTEDELECTR (EDC PlovdivandEDC Stara Zagora)(MEER2004a). AG (South-EasternBulgaria: EDCGornaOr Bulgaria andconsistsofEDCStolichno, large-scale hydropowerdevelopm y therewillbemoresuchprojects. o powerplantsoftotalcap ing contract,andpurchasingofDGgeneratedelectricityat % oftheirsharesweresold asdistrictheatingprojects stem Operators (DSOand TSO) r thepreparationof ICITY GENERATIONINBULGARIA hydro andwindnotbiomass andphotovoltaics e EUaccession ithadtobe unbundled andnow transmission system operator(TSO).NEKEAD EnergyPlan.Thetransmissionsystemoperator ts forthedevelopment ofenergysupply and with boldandinnovative on theconditionsforconnectionofDGunits iahovitza and EDC Varna), andtoEVNAG iahovitza andEDCVarna), ectricity generation -there areideasforits thegrid,ifneeded,forproposingandsigning Sofia Oblast,EDCPleven),toE.ONEnergie electricity distribution companies (EDC) that EAD) wasestablishedin1992anda ectricity transmission, experts,thereislimited participation of and investorswhichpoin 6.2.1.2, page122).Still,several local thetendersforth ents, including34hydropower acity 2.6GW. Italsoowns inthecities of Ardinoand to CEZa.s.(coversWestern ideasforvariousDG e secondNPP.NEK generation, trading, ts tothefactthat 64

CEU eTD Collection low price by firms closetothosein powe took ma in Bulgaria companies established producers,suchasVestas,Ener Netherlands), andseveralothers. by GEEnergy,Wartsila (Swedish),Tedom Ho PhD Student: GerganaMiladinova 5 or new(formoredi Apart from theabove-mentioned,most DGequipm in Bulgaria(Mavela.s.2007). Bulgarian HPP market. Forexample,Marvel hasprovidedtheequipment theCzech for7HPP licence agreement withforeigncompanies. So and Vipon-Vidin(inthetownofVidin).Howe (which issituated inthetownof Plovidv),Ni CHP units.Atpresent,HPPunitsareproduced experience intheproductionofturbinesforH few manufacturing firmsthat Unlike, thesignificant number of Equipment suppliers Bulgaria, Ecofys–Bulgaria. themselves inBulgarianmarket, such as – TACLtd,Delectra HydroLtd.Inrecentye such asEnergyInstitute,andCompany forEn Energoproekt –HydropowerLtd,orestablished owned companieswhoseassetsweregraduallyprivatized recently, most ofthese firms wereeitherthe There areanumber of Consulting firms discussed inSection of newcapacitiestothegrid,which atpres DSO andTSOplayanimportant role toDGdeployment astheyare to allowthe connection PHD THESIS-DISTRIBUTEDELECTR

The process of privatization of the large well-established during the Communism energy consultancy scussion seeSection 6.2.2, page124.

consulting firms areengagedintheprojectdevelopment process.Until ny years and in many casesthey were bankrupted so that can be purchased at very

produce DGunitsinBulgaria.Therehasbeensignificant differentorganizati For thesupply of newwindturbines negotiations withwell r orsimply becauseof bad management. ICITY GENERATIONINBULGARIA 5.1.2, page Energy forSustainableDevelopment (ESD)– con, Gamesa, Ecotechnia,Dewind,Mitsubishi remainder ofwell-established communist state- ergy SavingsJSCo(CESAD),Hydroekoenergo cola Vaptzarov factory(i by three companies inBulgaria: Energoremont PP andsomeintheproductionofboilersfor ver, most oftheirproductsareproducedunder ent israther prohibitive thansupportive as me foreigncompanies arestarting toenter and runbyBulgarianexpertsconsultancies, ars foreigncompanies aretryingtoestablish lding (Czech),Lek/HaboGroepB.V.(the ent isimported andiseithersecond-hand 79). NewCHPunitsaresuppliedmainly ons andconsultingfi 5 , suchasEnergoproektLtd,

n thetownofPleven), rms, there are only only are rms, there 65

CEU eTD Collection PhD Student: GerganaMiladinova universities (aslistedin centres totheBulgarian Acad The main actorsandstructures Research institutes and universities Source: ownresearch The main political andresearchstructures andactorsarepresented in Bulgaria Ltd (forwind). consulting orprojectdeveloping Heavy Industriesarecarriedout.Secondhandunits PHD THESIS-DISTRIBUTEDELECTR Table 8.Politicalandresearchstructures Centre for Environmental Information and Education For the Earth Green Balkans Society Balkani WildLife Bulgaria) in (BirdLife partner the SocietyBirds Protection of for Bulgarian NGOs Centre Energy Sofia EnEffect Sofena – Agency Energy Sofia SOFENA – Agency Energy Sofia Black SeaRegional Energy Centre Other organizations Society Solar Energy International of the Section Bulgarian BulgarianEnergy Association Wind Bulgarian Energy Sector Chamber National Associationtheof Independent EnergyProducers ‘Ecoenergy’ BulgarianAssociation ofthe EnergyAgencies Cogen Bulgaria Alterna for Association Branch Organizations - Technical - South-West University, - Technical University, Gabrovo TechnicalUniversity,Sofia - Agrarian University, Blagoevgrad - University, Varna Universities: Plovdiv Forestry (biomass) Institute Research Forest Agricultura and Reclamation Land on Research Institute (hydro) Problems Water of Institute - some hydro) and (mainly energy Hydrology wind and ofMeteorology Institute National - Central Laboratory of Solar- and New Energy Sources (mainly photovoltaics) - theResearch centres institutesto Bulgarian and Academy Sciences: of Universities and Research institutions 4.2.2. tive Sources ofEnergy Political and researchstructures and actors SOCIAL/RESEARCH ACTORS AND INSTITUTIONS Table 8 SOCIAL ACTORS ANDINSTITUTIONS (2) – that conductDGresearchinBulg emy ofSciences(BAS)andva ). Inaddition,limited research firms, suchasDr.EnergySy ICITY GENERATIONINBULGARIA and actorsrelevanttoDGinBulgaria l Mechanisation of the Ministry of Agriculture and Agriculture of Ministry ofthe l Mechanisation areimported by small, mainly Bulgarian, stems Ltd(forCHP)andATM is carriedoutbyprivate firms aria areseveralinstitutesand rious units within different Table 8

. 66

CEU eTD Collection the countriesofBlack SeaRegion),EnEff group aretheBlackSea Regional EnergyCentre(w such asSynergy,Thermie, SAVE, andfrom th of them wereestablished withinternational research, consultancyandadvicefortheGovern In the lastdecade anumber oforganizations Other organizations Bulgarian Energy Agencies EU. Representativeoftheenergy agencies an There arealsoanumber ofenergy agencies, other havemuchmore limited role. of them wereinvitedtodraf Chamber. Some oftheassociationshavesigni investors in energysectoringeneral arere the Independent Energy Producers ‘Ecoenergy’, andCogen Bulgaria.Theinterests of PhD Student: GerganaMiladinova active onesaretheAssoci Several organizationsrepresent Branch Organizations same limitations ofresourcesasfortheBAS. state budget,studentfees(whichareverylo are alsonosufficientcourseson courses aremainly theoreticalasthere areno to-date coursesonDGtechnologies traditional large-scaletechnologies Many oftheuniversitiesarewell-establishedan properstaffBAS tooffer remuneration andtopurchasetheneededequipment. usually limited andif nointern predecessor organizationfrom 1869.Itisaut BAS isaninstitution with longtraditioninresearch formally established in1911basedon under theNational InnovationFund. or associationsmainly fundedunderEUres PHD THESIS-DISTRIBUTEDELECTR ation forAlternativeSourcesof t theLawonRenewableswhichis ational (mainly EU)sourcesare DG projects’investorsand pr policyandeconomics ofDG. . However itis difficultformostuniversitiestoprovide up- as thisisstillanewareafo ICITY GENERATIONINBULGARIA support coming mainly undertheEUprograms, earch framework programmes recently orsince onomous andonastate

w), andinternationaldonorstherearethe have been created thatarecarrying out policy established underSAVEIIprogrammeofthe financial means topurchaseequipment. There ficant impact onpolicyformulation, i.e.some ect, SofiaEnergyAgency d of municipalities isthe Association of the e USAID.Somee ofthemost activefrom this presented by theBulgarian Energy Sector ment, investorsandotherstakeholders.Most d providegoodtraining hich anintergovernmental organization of Energy, theNationalAssociationof Universities arefundedbythe ensured itisoftendifficultfor r Bulgariaandtherefore most stillunderdiscussion,while ojects developers.The most budget. Thefundingis –SofenaandSofia for engineersinthe 67

CEU eTD Collection PhD Student: GerganaMiladinova 6 sustainability oftheinvestments ofthe of them beenpartofCEEBankwatch have consistently from theircreationonthepromoti For theEarthandCentreforEnvironmental In limited numberofNGOsthathaveenergyasone only whenpossibleconflictswi While most NGOsareinterestedinnatureco proposing suitablelocationsand consider damaging theenvironment for butso Green Balkansarecommonlyopposingprojects Birds (BSPB)-BirdLifeInternational partner Several NGOs haveinterestinDGBulgaria. TheBulgarian Society for theProtection of However, mostoftheirimpactonDGpolicyislimited. are activelytryingtoengageinpolicyforma society werecreated,es last decade withthesupport offoreigndonorsanumber oforganizations thatrepresentcivil established practiceofpublicc Civil societyorganizationsdid Environmental Non-governmentalOrganizations (NGOs) their impact limited. limited. Also not allofthereportsarepublishe usually nocontinuationaftertheprojectsarefi part oftheprojectsanumbermeetingsareorganizedandbr were usedintheresearch,especiallyfor partofpotentialsbutotheraretoogeneral EU supportforDGseveralprojectswereinitiated. Some ofthereportswereveryusefuland consortia. Stillfinding of co-financing,ifneed are verysuccessfulinbeingawardedEUs Energy Centre.Theyhavecontinuedtooperate PHD THESIS-DISTRIBUTEDELECTR out under DIGENAS project whichis funded underthe EU’sSixth Frameworkprogramme.

As wasmentioned earlier the present research (esp. Chapters 1.8, 3 and parts of 5) has been partially carried pecially inthearea

not existduringthecommunist er onsultation orinclusionofNGOsindecisionmaking. Inthe the preparationofEIA. th environmental protection objectives occur,there area International Financ ICITY GENERATIONINBULGARIA of nature conservation and minority rights. NGOs of natureconservationandminority rights.NGOs network –aof tion andthemonitoringofitsimplementation. nservation andbecome inDGissues involved on ofenergyefficiencyandrenewables.Both upport aspartorcoordinatorsofEU-wide ed, canbeveryproblematic. With increasing formation andEducationhavebeenworking d onlineorareeasilyavailablewhichmake in Bulgaria, BalkaniWildLife Society,and after theirinitialfundingwasexhaustedand nished theirimpact, insome cases, isvery me ofthem cooperatewithinvestorsby theirmain areasof for windandhydropr ing Institutions. ochures printedbutasthereis a and therefore therewas no NGOswhomonitorthe interest. Forexample,

ojects thatthey 6 . As . As 68

CEU eTD Collection PhD Student: GerganaMiladinova European Commission (EC)Bulgaria adoptedindicativetargetof11% renewablesoffinal field. Bulgaria had to align itslegislation with The EuropeanUnionaccession was themain dr Source: ownresearch Table 9.InternationalactorsandinstitutionsrelevanttoDGinBulgaria system thatisactiveonlocallevel. discussed underthecategorySocialStructur developers, investors,consultingfirms, equipment buttheirrolewas suppliers,NGOs governments (see Development, theEuropeanInvestment Agency), donororganizations(suchasth institutions (suchastheinstit imposing theadoptionofspecificlegisla the promotion ofDGthroughprovisiontechnicalandfinancialassistance,lobbyingforor International actorsandinstitutions playimporta policy formulationanditsmonitoring. better paid ormore secure. Thisissignificant limitation to NGOs’abilitytoengage inDG rarer tomeet highlyqualifiedexpe background. Itisraretomeet peoplewitheducation orexperienceinenergymatters andeven development. Mainlytheexpertsworking forth Most NGOsemploy peoplewithoutexperien young PHD THESIS-DISTRIBUTEDELECTR Developers, investors, consulting firms, equipment suppliers, NGOs Structures Social International National governments USAID and other development agencies Fund Monetary International Group Bank The World European Investment Bank European Bank for Reconstruction and Development Agencies Development and Institutions Financing International Agency Energy International Institutions: Union European institutions Union and European institutions International Council of Ministers, European Parliament DG Enlargement) DG Environment, European Commission (in particular 4.3. INTERNATIONAL ACTORS AND INSTITUTIONS INTERNATIONAL ACTORSANDINSTITUTIONS Table 9 INTERNATIONAL ACTORS INSTITUTIONS AND ACTORS INTERNATIONAL and Actors (discussed in Section Section in Actors(discussed and below).Anothergroupofinternationalactorsareproject utions andbodiesof Directorate General (DG) Energy an rts inDGmatters as consultanc ICITY GENERATIONINBULGARIA Bank, theWorld Bank tion. One group comprises ofinternational tion. Onegroupcomprises es andActors e European Bank for Reconstructionand e EuropeanBankfor iving factorbehindthe developments inDG theEU’sones. With theinsistence of the nt roleinpolicydevelopment andinfluence em arewithnatureconservation or related the EuropeanUnion,InternationalEnergy ce whothesupportintheirprofessional 4.2 above) as they are integral part of the d Transport, DG Internal Market, Market, Internal DG d Transport, y orpublicsectorjobsare

Group), andnational 69

CEU eTD Collection PhD Student: GerganaMiladinova implementation scheme forselling ofemission reduction unitswhichare supportedwith in 2004.Additional investment supportfrom nationalgovernments isprovidedunder joint has participatedintheorgani development studies,i.e. the AustrianGovernment thr National governments havealsosupportedthedevelopment ofDGinBulgaria.Forexample, diminishing itsfundingforBulgaria. establishment andfundedenergyeffi ofEnEffect supports sustainableenergyproject Environment Facilityandotherinternationa Communities andtencountries.The EnergyEffi The totalcommitments totheKIDSFare decommissioningand supplysideenergyprojects(EBRDn.d.). oftheNPPunitsanddemand Decommissioning SupportFund closure ofunits1to4 International donorsalsoprovidefinancialsupport toDGprojects.Asacompensation forthe sustainable energyprojects. and otherEUfundedprogrammes.Mostagen Bourgas RegionalAgencyforEnergyManageme SOFENA (est.2001)andsevenre 1998), werefoundedunderOPETinitiative;sixlo example, theBlackSeaRegionalEnergy Centre Several organizationswereesta well forgotten. follow-up of these initiatives. Many of theprojects that werecarried outwere archived and best practicesandhelpingthenetworkingofe programmes wereorganizedtosupportexchan organizations. Anumbercarried out,andseminars ofstudieswere fundedunderEU popularize sustainableenergyan Apart fromdirectinsistenceonlegalandpolic undertaken inlinewithCHPDirective(2004/8/EC). and strengthenedthecapacityof domestic electricity consumption by2010underth PHD THESIS-DISTRIBUTEDELECTR National energysavingprogramofBulgaria zation of conferences,i.e.the ough theAustrianEnergyAgency(E.V.A.)hasfinancedpolicy Kozloduy NPPaspecialfund,calledInternational blished withEUfundingasmen theEEA.Measuresonpromotion alsobe ofCHPshould gional ones,suchasPlovdivEnergyAgency(est.2000)and d toenhancethecapacityof s and capacity building is the USAID. It assisted in the s andcapacitybuildingistheUSAID.Itassisted inthe (KIDSF), wasestablishedin2001tosupportthe ICITY GENERATIONINBULGARIA EUR 170million coming from European the xperts. However,inmany casestherewasno ge ofexperienceand l donors.Another internationaldonorthat y changesEUsupportedvariousactivitiesto ciency projectsinmunicipalities butarenow (est.1995)andSofiaEnergyCentre nt (est.2005)werecreatedunderSAVEII cies areoperational ciency Fund wassupported by theGlobal e RES-electricityDirective(2001/77/EC) cal agencies,i.e.SofiaEnergyAgency - Austrian EnergyDaysin Bulgaria tioned inthetextabove.For Bulgarianinstitutionsand knowledge, forshowing (SEEA and carryoutlocal etal. 2001b); 70

CEU eTD Collection countries havetoensure transpositionandcompliance iftheywanttojoin theUnion.This meeting Inthisway thepolicy ofrequirements. its development, butthereisapossibility to which wasalreadyadoptedandcateredtotheneed acceding totheEUtherearenopossibilitiesfor including thetranspositionofEU Union. Duringtheyearstoaccession thecountry January 2000formal negotiations The BulgarianGovernmentsubmitted applicat European Commission–BulgarianGovernment certain DGprojectsthat theyconsider many casesofconfrontationbetweenthe The impact of NGOsandresearch institutions on DGpolicy cycle is very limited. There are initiate legal procedures groups. Forexample, manyinvestorsargueagains organizations whensettinguppreferentialtariffs discussed inthetextabove.Th that represent them. Thiswasthecasewhen draftLawonRenewableswaspreparedas PhD Student: GerganaMiladinova and information thatcanbepr actors andpublicstructuresactors.Public stakeholders inpolicycycle.However,thereis There arenowelldevelopedpr Governmental institutions –stakeholders interactions betweenstakeholders various participantsisnotanobjectiveofthis Revealing theorganizationofdecisionmaking Austria, Denmark, Netherlands,andSwitzerlandandtheWorld Bank. memorandums ofunderstandingbetweentheBulgarian Government andthegovernments of PHD THESIS-DISTRIBUTEDELECTR 4.4. INSTITUTIONS AND STRUCTURES ANDSTRUCTURES INSTITUTIONS COOPERATION ANDDIALOGU againsttheRegulator. ovided bytheinvest e Regulatoralsousesinforma areincluded inthissection. wereopened,andonJanuary ocedures regardingtheparticipationofvarious asdetrimental for theenvironment. acquis communautaire.Ingeneral,whenacountryis ICITY GENERATIONINBULGARIA Bulgarian Government andNGOsthatoppose research.However,some observationsontheir ion forEUmembership inDecember 1995,in authorities drawextens adialogue betweenthestateinstitutions and negotiatederogations, changes inanyoftheexistingEUlegislation E BETWEENTHEACTORS, . Therearealsoconfli transfer isratherone-way andtheapplicant had tomeet anumber system and the interactions between the s oftheMember States t thesettingupoffeed ors in DG technologies ororganizations ors inDGtechnologies tion frominvestorsorlobby 1, 2007Bulgariajoinedthe ively ontheexperience cts betweenthesetwo of challengingcriteria i.e. topostponethe -in tariffsandeven that participatedin 71

CEU eTD Collection PhD Student: GerganaMiladinova it shouldbehigher,i.e.11% renewable electricityinitiallytheMEER proposed including Bulgaria,andhadhighrequirements. Forexample,regardingthetargetfor renewables. However,the Commissionadopted ra DG thangreencertificates.Also the targetsar in orderpolicytobeimplemented, forexampl was alsothecaseforBulgaria.Member States PHD THESIS-DISTRIBUTEDELECTR leading environmental NGOs,such asBSPB, and evenimpossible(esp. oncelandisboughtandsome permits obtained).Some of the moreover theyarenotfacingproblems atlaterpr dialogue asthelikelihoodof developing andexecuting Other, thoughlimited number of,investorswo investors. Thereismistrust ofi costs. Some investorsaccuseNGOsforblackmailing andservingth had negative impacts on theaccounting balances bought tocourtsome oftheEIAdecisionsbutth as the Bulgarian Society for theProtection of Birds(BSPB)andBalkani Wildlife Society, (like cityofDragoman) andofconstruction wind farm developments onbirds’migrations EIA proceduresreceiveapermission tocontinue which they considercan causesignificant enviro severe oppositionfrom environmental ra NGOsat do notconsultthem whendevelopingtheirideas investment process.Mostinvestors,esp.the patterns ofcommunication: nodialogueatall, pr Regarding thedialoguebetweenNGOsand NGOs -investors institutional capacitytho As wasexplainedinthetextabove is non-compliance infringement procedures Commission continuestomonitor theadoptiona ught fundinganumber ofprojectsandorganizations. their projects.Theyacknowledgeth , andBulgarianGovernment ag nvestors towards NGOs and vice versa. nvestors towardsNGOsandvice their projectshavingnegativeimpacts isdecreasingand ICITY GENERATIONINBULGARIA are tobeinitiatedandfinesimposed. Commission supportedthepolicytransferand big ones,donotconsiderNGOsaspartnersand HPPonriverecosystem can usuallychoosewhatmechanisms toadopt or theopposite-dialoguefrom earlystageof e Bulgariachoose feed-intariffstopromote e to benegotiated, as nmental impact butduetoshortcoming inthe . Therewasaheateddebate ontheimpactof nd implementation of EU policy and if there nd implementation ofEUpolicyandifthere are alsoconsultinga oject stages whenchangesaremore difficult e former lostmany ofthem. Thisinevitably the BlackSeacoastandseveralotherplaces rk inclosecooperationwithNGOs when 9%targetbuttheCommission insistedthat ther hardstandon of theSociety asithad tocoveralllegal . Theseresults,insome cases,toavery ojects’ developerstherearetwodistinct ther latestagesofprojectdevelopment reed. Afterthe accession the at thereisaneedofsuch the accessioncountries, nd preparing EIA for nd preparingEIAfor those fortheshareof s. Some NGOs,such e purposesofother 72

CEU eTD Collection with thenewfor country technologies missing grouparetheinstallersand maintenance and cooperatewiththe stateorganizations increasing. Some ofthem formed associations They arebuildingtheircapacityandknowledge a gradually realized thepotential Nevertheless, many localandinternationalproj keep theirexperts. present, thesalariesinpublic Russian) was verylow andtheexpertswere the specificsofDG.Inpastlevel development opportunities.Inaddition,therewasa implementing thepolicydocuments andinstrume that wantedlargegenerationprojects.Asaresu considered asanewandexpens of thesystem,andplansforconstructi was alongtraditionofcoalandnuclearlarg On theotherhandforBulgarianinstitutions no followupandtheirresultswereleftunused. the impact oftheseeffortsbut, in some cases PhD Student: GerganaMiladinova funding ofstudies,thecreation possibility for‘real’negotia Agreement. The process wasratherone-sidetr objectives onthepromotionof the negotiationswithBulgarianGovernme the EUlegislation,withEu The main driver behind theDGpolicyformation wasthe EU accession andthe needtoadopt construction of64MW windfarm Association forAlternativeSour projects attheBlackSeacoast.Thereareal PHD THESIS-DISTRIBUTEDELECTR 4.5. SUMMARY tions. Thetransposition fromEUsidewassupportedthough ropean Commission beingthemain of DGandstartedtotakeadvant ces ofEnergy.Outcomesuch collaborationisaprojectfor of ive technologyandwasagainst renewablesandCHPwerese sectorarelowanditisdifficu nearthecityofSuvorovo. organizations andtrainingcourses. ICITY GENERATIONINBULGARIA so veryclosecooperationbetweenBSPBandthe on of new conventional power plants. DG was on ofnewconventionalpowerplants.DGwas e-scale energygenerati in shapingBulgarianDG policy.Stillalarge , afterthecompletionof projects, therewas to representtheirinte knowledgeofforeignlanguages(apartfrom such aswindandphotovoltaics. Equipment DG wasnotanissueofmain concernasthere ansfer of EUrequirements withonly limited trained intraditionalenergygeneration.At lt theinstitutions wereslowinadoptingand nts andtakingfulladvantageofthecapacity technicians. Theproble nt. Ambitious butachievabletargetsand nd thenumber ofDGproj ect developers,consultants,andinvestors nd stillislackofexpertsthatunderstand lt forthepublicin age ofthisnewmarket niche. t outaspartofAccession the interestoflobbygroups institutionresponsiblefor rests whichactivelylobby on, existingovercapacity Itisdifficulttoevaluate m isespeciallyacute ects isconstantly stitutions to 73

CEU eTD Collection PhD Student: GerganaMiladinova There isalackoftraditionfo even iftheydoitisverydifficultto for theirstaffitisdifficulttoattracthighly institutes anduniversities.Astheseorganizations arenotabletoprovideproperremuneration problem stateinstitutions,especiallyinlo for technologies orthelevelofknowledgeforeig Until recently there were nograduate courses on sustainable energypolicy, economics, or Finding welltrained experts issignificant problem them. become wellestablished itwillbe very difficult for Bulgarian manufacturers to compete with lost asforeignsuppliercompanies arequic producers, isvirtuallymissing. Thiscanbeim manufacturers arealsoimportantgroupthat PHD THESIS-DISTRIBUTEDELECTR based onthepoliticalpriorities preparation oflegislatio Government andtheRegulator drawontheexpe limited andmainly relatedtoconflictsituatio to engageintheprocess.Thedialoguebetw especially trueforthe environmental NGOsbutthereisalso n andthesettingof andinternationalpressure. r inclusionofstakeholdersin keepthem withtheorganization. ICITY GENERATIONINBULGARIA , apartfrom some hydro andCHPcomponents ns whenNGOsopposecertainprojects. Stillthe qualified expertsortotrainyoungand kly enteringBulgarianmarket andoncethey portant businessopportunitywhichwillsoonbe een theGovernment andNGOsectorisvery cal andregionallevel,fortheresearch feed-in tariffs. However, thefinaldecisionis feed-in tariffs.However, n languagesisnothigh.Thparticularlya for all actors andinstitutions inBulgaria. rience of investors’ associations forthe lackofcapacity thepolicyformation. Thisis withintheNGOs 74

CEU eTD Collection PhD Student: GerganaMiladinova environmental concerns,many investorsfailto investment niche withpossiblegoodreturnsan institutions engagedinthepromotion of In theprevious chapters analysisofthepotential, preferential po PHD THESIS-DISTRIBUTEDELECTR installations inDHC,andapr association ofwindenergy developers),most CH projects and theDirectorofAssociat interview sample coversmost windpowerdevelopments (three investors in large scale IV. Duetothelimited number ofDGprojectsimplemented orintheplanningphase However, alistof interviewed e names arequotedasthismight ofexperts be information collected is summarized investors inDGprojectsandotherstakeh The analysis is based on aliterature review, mainlyof legal texts, and oninterviews with the barriers toDGinBulgariaispresented inthefollowing Section presented. Based onthisanalys overview of theinvestment costsandpay-back from thepointofviewprocedures,time re transactions, thoserelevant toDGdevelopments inBulgaria arestudied indetail, especially fact thatthe administrative procedures are Uyterlinde etal. following text,wherefirstthei that might delayorevenstopprojects’realiza from theinitial projectideas DG capacityisananalysisofthestepsthatin Therefore, animportant element ofunderstandi land andresourcesuse,environmental protect of information for resourcesavailability andinobtaining various authorizations (such asfor economic areas, butinaddition,has distinctive f implementation ofDGprojectsinmostits phasesissimilar tothoseformanyother 5. INVESTMENT COSTS INBULGARIA COSTS INVESTMENT NISTRATIVE PROCEDURES AND ADMINISTRATIVEPROCEDURES PROCESS, INVESTMENT (2003),isdescribedandthemainlimitations outlined.Second,duetothe to the project completion and toidentify the possible difficulties oject developerforsmall scaleCHP units)andsome inHPP nvestment process,dividedinseveralphasesassuggestedby xpert andtheorganiza is andthepreviouschapters andnodataonindividualproj ICITY GENERATIONINBULGARIA DG waspresented. While DGoffersaspecific ion of Producers of Ecological Energy – the ion ofProducersEcologicalEnergy–the ion, construction,andtechnicalmatters). an important reasonfordelaysandadditional quired andauthoritiesi olders. Due toconfidentiality reasons the d growing importance duetogeopoliticaland d growingimportance ng theneedsand vestors orprojectdevelopershavetofollow eatures, forexample, relatedtothecollection tion. Suchananalysisiscarriedoutinthe realize theirprojects P installations(allbut times of some DGprojects inBulgaria is harmful totheirprojects’development. tion they represent is onsupportpolicyasummaryof barriers thatpreventhigher 6. ects ispresented.Alsono nvolved. Finally,abrief . Thedevelopmentand licies, andactors oneinvestorsinCHP included in Annex includedinAnnex 75

CEU eTD Collection PhD Student: GerganaMiladinova Source: Uyterlindeetal. Figure 8.Projectphases et al. different phasesandrelatedrequirements were In ordertoanalysepossibleba one developerperresourcewasinterviewed. there is an interest andprojectsinthepipe the development ofotherHPP) (three investorsandprojectdeveloperseachof PHD THESIS-DISTRIBUTEDELECTR administrative obligations arest division providesgoodbackgr Figure 8 development, administrative procedures),(ii) subphases: (i)planning(with threesubphases:search/p phase of planning Beginning

2003)divisionof investment processinto - administrative procedures - negotiation/development 5.1. - search/pre-feasibility - search/pre-feasibility below).Althoughinsome cases,phasesove Planning phase: Leadtime costs dueto Transaction INVESTMENT PROCESS PROCESS INVESTMENT procedures planning

2003 . TherearenoprojectsforotherDGsourcesinBulgariayetbut ound forsystematicanalysis. udied inaseparatesubsection. rriers thatmight occurduringtheinvestment process,first Opportunity Implementation costs phase lifetime Production

ICITY GENERATIONINBULGARIA line. Forphotovoltaics, la studied. Thiswascarried them owns several HPPsandhasworkedfor them owns several implementation, and(iii)production(See Transaction costsdue

to productionand Production phase market activities three main projectphaseswithseveral rlap or are executed simultaneously, this

Due tothehighimportance of

re-feasibility, negotiation/ ndfill gas,and biomass outusing(Uyterlinde End of End of time

CEU eTD Collection conservation networkNatura 2000 orpossiblene to consider possibleconflicts withnature conser asiteandevaluatingresource availabilityWhen choosing itisalsoimportant fordevelopers credits. be usedbyinvestorsinindividualunitswith There aresome Bulgarianfirmsoffercheaperbut notlicensedmeasurements which thatcan Hassan andPartnersLtd–aninternationalco fees thantheBulgarianfirms. Bynowforseve such licensed companies inBulgariaandinternational companies arehired whichhavehigher their resultsareaccepte wind developments theseevaluationshaveto measurements foratleastoneyearandaboutha When sites arechosen,adetailedevaluatio possibly therearelocationswith the vicinity.Althoughnotsufficient,theseda hub heightwhichisusuallyover50 Hydrology. Therefore,resourcesaremeasured at10m heightandthenextrapolatedtoneeded observations made formeteor sufficiently reliableinformation onwindpotential inBulgaria asdataare based on Wind powerevaluations arethe mosttime andcap evaluation differs. DG technologiesutilizeverydifferentenergys Evaluation ofEnergyResourcesAvailability resource; ensuringofproject In Bulgariaimportant issues tobeconsidered feasibility studies. PhD Student: GerganaMiladinova budget (Uyterlinde choice ofdesiredtechnology,measurement of position and optimal strategy;searchforasuitab This subphaseincludesfindinginterestedpartners tothetransaction;identifyingone’sown PHD THESIS-DISTRIBUTEDELECTR 5.1.1. etal. Planning Phase–Search/Pre-feasibilitySubphase d bythebanks whendevelopers apply forbank credits. Thereareno 2003).Itusuallyconcludeswithacc funding; andacquiringofland. ology purposesbytheNational reasonablygoodwindspeeds. m. Anothersourceofdataareai ICITY GENERATIONINBULGARIA theirowncapitalandtheydonotneedbank ral ofthebigwindfarms be carriedoutbyalicensed company sothat are:evaluationoftheavailability of energy vation objectives,suchas theEuropeannature n ofpotentialisrequiredwhichincludes nsultancy withheadquartersinBristol,UK. ources andthereforetheapproachfortheir lf ayearofdataprocessing.Forlarge-scale resource; roughdetermination ofavailable ta sources provide information onwhere ta sourcesprovideinformation le site and enquiries about itsavailability; gative impact onbirds’migration. Natura ital intensive. Atpresent,there isno omplishment ofoneormorepre- Institute onMeteorologyand rports, iftherearesuchin the services ofGarrad 77

CEU eTD Collection DH Vratzaaprefeasability study and fundingapp due tointrusion intothe processof some politicalparties (Investor 2006). Forexample, for include thelackoffunding, lack reasons, therewas notsignificant advancemen 1999-2001; from DanskaEnergyManagement a prepared undervariousprojects(suchas Studies on thefeasibilityofinst water. cases ofDHCtheunitsareusuallyplannedto scenarios onthefuturedemand, pricesof onthe demand. dataonheatdemand Usually, forabout The evaluationofpotentialforintroduction CHPinDHCorindustriesdependsonheat mounted. orientation ofphotovoltaicpanelsis important butitdepends onthesitewheretheywillbe organizations institutes,andon-sitemeasuremen from theNationalInstitute onMeteorology andHydrology,studies ofresearchand The determination ofsolarresourcescanalsoea available against afeeto thoseinterested. data arecollectedbytheNati site andtechnology.Thatiswhythe changes) arerequired.Some investorsusedataforatleast40yearsinordertochooseproper (which depend,amongcatchment others,onthewholewater basin,andontheterrainits location to place theirHPP. Oncethisisdecide on variousriversiswell-knownandthusitnotdifficultforinvestorstodecidewhich PhD Student: GerganaMiladinova Hydro engineeringisahistoric shortcomings arediscussedinSection Birds) butwonandproceedwith hugedela GEOpower wereboughttocourtbyNGOs(i.e. of theAssociationProducer have problems withenvironmental NGOs,likeSuvorovowindfarm andsome project others Those whohaveadoptedpositionof firstenqui Black Seacoast)facestrongoppos 2000 sitesarenotclearlydetermined yetandsome PHD THESIS-DISTRIBUTEDELECTR ally well developed sectorin s ofEcologicalEnergy.Theothe onal InstituteonMeteorolo allation of CHPatdistrict heating companies inBulgaria were ofwillingness andcommitment ition totheirprojects availability ofreliabledatais 6.4, page130. ICITY GENERATIONINBULGARIA World Bank1992-93;unde covertheminimum summer demand forhot d more detailed evaluatio ring aboutpossible problems bynowdidnot sily bedonebasedontheavailabledataagain energy resourcesandonin nd EKF2002-2003).Howeve ys. TheEIAprocedureandsomeofits t with these projects untilrecently. These ts. Inordertogethigherenergyyieldsthe the BulgarianSocietyfor theProtectionof 5-7previousyearsareneededaswell lication fortheDanish ExportCreditFund investors(especiallywithprojectsonthe from nature conservation NGOs. from natureconservationNGOs. gy andHydrologytheyare Bulgaria. The potentialforHPP rs, particularlyINOS-1 and of theowner–state, or essential.InBulgariasuch r ECOLINKS–USA- n ofwaterquantities flation rates.Inthe r, duetomany 78

CEU eTD Collection of theapplicant,opportunities usual creditconditionsdependonmanyfactors, such cooperation withsixBulg appreciation arethecredit lines forenergyefficiencyandrenewablesestablished byEBRDin has goodcreditworthiness.Important factor large-scale developments banksarereadytoprovidecreditsfo PhD Student: GerganaMiladinova securities. Still, the Bulgarianbanking sector is with obtainingcreditshavesmall investorsthat DG technologiesinBulgarianeed bank credits to Many projectsarenotrealizedbecauseofthela Project Finance financing; acquiringland;a to haveimpeding impact overprojectdevelopmen economic andtechnicalfeas negotiations regardingloans project site; hiring lawyerstodraft contracts; This subphaseincludesnegotiati as theiroriginalauthorswerenotrenumerated. and technicalstudieswereusedbythenewowne similar situationhappenedwithseveralot realized whentheDHCwasboughtbyaprivate 2001 thefinancingunderthisscheme forBu strong interestinprovidingtheneededsupportbu by theKostovGovernment (1997-2001).Kobur European Investment duetopoliticalreasonstheprojectwasnotsupported Bank.However, ensured andabankguaranteefrom theBulgarian consultants. The25%grantandinvestment (EKF) werepreparedbyDanskaEnergyManage PHD THESIS-DISTRIBUTEDELECTR 5.1.2. Planning Phase - Negotiation and Development Subphase Planning Phase-NegotiationandDevelopmentSubphase arian banks(seeSection nd purchasingofequipment. ibility studies(Uyterlinde for providingcred and ensuringoffinancing; ng theterms ofthecontractbetweenpartners,visitsto ICITY GENERATIONINBULGARIA her DHC.Theprefeasabil lgaria wasstopped.Finally,theproject veryactiveandaccordi bytheDanishCHPequipment providerwere evaluationofdifferent donothaveenoughassetstoprovidecredit it securities. ment (Danish EnergyAgency)andBulgarian ck offinancing.Majoritytheinvestorsin proceedwith their ideas.Usually,problems rs andthusthecostsforthem wereminimal t afterthechangesof in theimprovingofDGprojectsrisks gotski Government (2001-2005)expressed t inBulgaria are mainly: ensuring of project government wasneededforaloanfrom the 3.2.2, page48formoreinformation). The investor withoutfore astypeandsizeof etal. 2003).Issuesthatwereidentified acquiring land;finalizingthe r DGprojectsiftheinvestor ity andothereconomic Danish Government in ng totheinvestors in financingschemes; project, creditrating ign participation.A 79

CEU eTD Collection PhD Student: GerganaMiladinova Varna, photo:Miladinova G. Exhaust tower - District Heating Company first HPPasaguarantee. and operatingwithoutproblems theinvestorco increases the riskperception among theprospe mortgage propertythatwasfourtime higher credit security.Insomeinstances investors for theprojectasasecurity interest. Forlarg wishing toinstallwindturbinesobtain businesses asmain sourceofprofits.Thisisb sufficient securityinterest.Forexample, most For theless-established technologies andsmall-s Credit securities protection funds. Formoredetailson EBRD supportedcreditlines,Bu 1 to1.5yearsgraceperiod.Therearelimitedopportunities forpreferentialcreditsunder Credits areusuallyprovidedfornomorethan interest rates varyalot a The conditionsoftheindividual Credit conditions PHD THESIS-DISTRIBUTEDELECTR smaller than if itwasfor thewholeproject. sale ofthermal energy,wasstil was topurchasetheequipment onaleasecontract these companies couldfindsolutionandinthe of projectdevelopment) andbecau company -Bulgargas(for example DHC-Varna nd basedontheinvestorsinterv l neededtocoverth credits arecommercially lgarian EnergyEfficiencyf se ofthisitisdifficultforth

thesesourcesrefertoSection3.2.2. debts tothenatural gassy equipment forDHCisthatsome ofthem huge have significant problemfor project development andimplementation. Another funding foralltheother securing. Whenthisisdoneonestillneeds to find For CHPunits,banks acceptequipment credit for ICITY GENERATIONINBULGARIA bank creditsonlybyprovidingequipment bought e-scale windprojectsthe 5 yearsthoughthereare investors insmall windin case oftheabove-mentioned DHCthesolution in small-scale HPPswereaskedtoputon ctive investors. Oncethe firstHPPwasbuilt uld obtaincreditsforthenextonesbyusing ecause itisstilldifficultforsmall investors had aboutEUR0.5million depth atthetime cale projectsitcan be than thecredit requested. Thisinevitably . Inthiscaseacredit,securedthroughthe e initialleasepayment butitwas much confidential,butin iewed arebetween8%and12%. und andthetwoenvironmental em toobtain bankcredits. Still, stem operatorandsupply activities requiredduring the purchasingofDG exceptions andthereis equipment isputasa stallations haveother very difficulttofind general,typical 80

CEU eTD Collection PhD Student: GerganaMiladinova Preparation ofapplication increased to8.5%. interest rate butafter itwasconfirmed bythebankregisteredinBulgaria interestrate very good.Thisincreasestheinterestrates.ForoneprojectUS guarantee from alocalbankisalsorequiredbecaus In some cases,suchasforCHPproject, wh firms thecreditisprovidedmore easily. development consortiumisveryimportant.When For successful application forsuchcreditsthecreditworthiness of thecompanies in the project credits formorethan15years. years from theclosest monitori Certified andindependentwindcharacteristics on project’sprofitabilitybase lending syndicateswithotherba potential’ (Investor2006).Therefore especially whenthereis nomortgage ofequi developments, i.e.ofmorethanEUR50million, according tosome investors: ‘ As forlarge-scale wind farm projectsthereare PHD THESIS-DISTRIBUTEDELECTR credits often saidthatthey arenoteasily funds) investorsresponded intwooppositeways. When askedaboutthepreferenti Preferential credits scheme orotherinternationalsourceisdeveloped. External consultants areusuallyused whenan large-scale – minimum 2years. 4-5months;for small-scale forsm HPP–about application andobtainingofba application isdifferentand investors areresponsibleforthepreparationof credit applicationbutexpertsfrom ba the Usually noexternal consultants are usedin

depends ontechnology.Basedth d onbusinessplansandinformation onresourceavailability. nk credits areasfollows:forCH Bulgarian banksdonothavesuffic ng pointisrequired.Inthes nks tosharetherisk.Auditfi al credits(i.e.EBRDcredit they usuallyworkwithforeignbankswhichform ICITY GENERATIONINBULGARIA obtainable anddonotprovidevery goodconditions nks, andlawyerseconomistsemployed bythe the preparationofdocumentationrequiredfor relevantdocuments. time The forpreparingthe application foradditionalfinancingundertheJI en credits areobtaine pment orpropertybutonlydataonthewind all-scale windprojects–about6-7months,for data for1–1.5yearsandabout10 Some not usepreferential ofthemwhodid e thecreditimage ofBulgarianfirms isnot banks interestedtopr partners are wellestablished international and areverysuspicioustogivecredits, e casesthebankscanprovide lines, EEF,twoenvironmental rms tothebanks consult them bankprovidedcreditwith5% P atDH–from 2to5months; e interviewsthetime for ient experienceforlarge d from foreignbanksa ovide credits.Still, 81

CEU eTD Collection Another limitationtoforeigninvestors in genera investment interestforconstructionofwindturbines. expensive. Thepricesarealsodriven upinso massive development oftouristresortsandth The priceoflandisvery highatsomeplacesasthereareconflicting uses. Atpresent, thereis have beenmucheasierforthem toobtainrightsuseit. owned bylocalauthorities.Itis very complicated andslow.Anothersignificantlimitation isthattherenotenoughland and many ofthem arenotlivinginthearea. early 50s.In many cases this means thatther Now ithas beenreturned totheheirs of those whoowneditbeforeits‘n need forlandpurchasing.Formany yearsdurin CHP unitsthatareoften constructed withinthe siteofDHCorfactoryandthusthereisno anotherlimitingThe acquiringoflandis factor Acquiring Land that workswiththeEBRD hasalsobeen and strictprocedures,withmany auditsandno terms ofconditions. Accordingto The investorswhohavebeengrantedfundingare be takenasservicetaxes. time andmoney inthepreparation of documents have enoughfundingonlytoobtainthegrantbutthis PhD Student: GerganaMiladinova and thusthiswasnotasignificant probl derogation periodapplies). However,legalentiti introduced in2005andlandcanbepurchased Bulgaria. However,duetocountry’saccessi to theBulgarianConstitutionnoforeignnationals if nocreditistaken.Some investor the development ofbankingsectorinBulgaria Another more seriousconcernrega (i.e. thegrant isasmuch asth PHD THESIS-DISTRIBUTEDELECTR e taxesforthecreditandinterest perceivedbytheinvestorsthatifthiswascase itwould rding the EBRD credit lines is that as they are designed for rding the EBRDcreditlinesisthatastheyaredesignedfor the latter, processis very s hintedthat itis stillpossibl em investors(IBA 2006a). toforeign praised foritscooperationandsupport. ICITY GENERATIONINBULGARIA me areaswithhighwind e aremany peoplewhoown verysmall parcels This makes forpurchasingofland negotiations there isnopossibilityforobtainingofthegrant g thecommunisteralandwasstate-owned. possibility forcorrupti on toEUchangesinthebasiclawwere l inBulgariawasthat e landatthe BlackSeacoastcan bevery for most DGprojects,withtheexceptionof es registeredinBulgaria canown property and varioustransactions the futurebyEUcitizensandfirms (7-year orforeignlegalentitiescouldownlandin very satisfiedwiththeproceduresand means thattheyhave tospendadditional rateshigherthannormalones). transparent withelaborated e to take credit even if they untilrecently according on. Theconsultingfirm speeds bytheincreased ationalization’ in the andsome of itwill 82

CEU eTD Collection The windturbines supplied for small developm American AES.Thesefirms facilita firms aretheJapanese Mitsubishi HeavyIndu example, inthethreelargestdevelopments at carried outbyprojectconsortiums thatinclude well-established, largeforeign companies. For not haveenoughexperienceandca 2006). Thismakes purchasingofwindturbinespr production ofturbinesandusuallyabout25% outstrips supplyandtherecanbeabout1.5to Purchasing ofnewwindturb Wind turbines Depending onfinancialconstraints,investors for waterturbines andsome CHPcomponents. investments inDGstep.Thepr Choosing andpurchasingDGequipment isim Purchasing andSupplyofEquipment the related administrative proced according to some investorsis asavery challenging andbureaucraticprocess. More details on for industrialuses,orchangeoftheregional development plansmight berequiredwhich Once thelandisacquireditsstatusmight needto are much higher thaniftheywere turbine. Thisisaverygoodwayfortheownersto are havingtechnicalproblems andthus financiallo turbines arefunctioning without provided withwarranty,factoryservice,technical specifications,orsoftware. Some ofthese exploitation life.Theproblem when theinvestors have topayonly thetransportation costs for units attheend of their lower pricethanthenewones.Thecosttobuy PhD Student: GerganaMiladinova to berenteddependsonprojectparameters sign long-term rentingcontracts.Thisoften For some installations, whenthepurchasingof PHD THESIS-DISTRIBUTEDELECTR ines canbeasignificant pr oduction ofDGequipment inBulgariaisverylimited, except with second-handunitsisthat ures areprovidedinSection significant problems butitis alsocommonthattheinvestors producinggrainorothercorns. te thesupplyofequipment. pital. ThelargewindfarmdevelopmentsinBulgariaare ICITY GENERATIONINBULGARIA butcanbeasmuch as2decares(2,000m happens forwindfarms developments. Thearea either purchasesecond-handornewunits. the BlackSeacoastpartnerstoBulgarian 3 yearsdelaybetweenthepurchasingand landisnotpossible, such unitvaries alot.Thereareevencases Becauseof thismost unitsareimported. stries (MHI),theSpanish Eolika andthe ents areusually seco portant, andinsome cases,impeding to oblematic especiallyby the totalcostdeposit sses that,insome cases,canbesignificant. be changedifitisno earnprofirfortheirland.Inthiscasethey 0 page89. oblem asgloballythedemand inmany casestheyarenot project developerscan nd-hand andatmuch t designatedasaland is required(Investors small firmsthatdo 2 ) per 83

CEU eTD Collection and providebettertechnical supportinBulgaria(Projectdeveloper 2006). by onecompany whichnegotiated PhD Student: GerganaMiladinova significant share insupplied CHPunitstoDHCin At present,bothsecond-handandnewunits (below 100kW) andlarge(above1.5MW) capacity. future shortages.Itisalsodifficulttofindonthesecond-hand replacement withnewer oncebut the growing present, themarkets havestabilizedandth second-hand CHPunitsofferedatveryreas energy markets intheEUconditionsforCHPworsenedandtherewaslargeamount of Initially, most CHPunitsinstalledinBulgaria There isnoproductionofcomplete CHPsyst CHP units (shown inthe insert at the lowleft corner). construction tohostthe turbine andaccumulator photo whichconsistsofderivationpipe,small There arealsoverybasicsolutionsastheoneon are purchasedfromproducer. aforeign very riskyand theother turbines they areinstalling are noproblems buttheinvestorsconsideredthis foreign company.TheHPPisinoperationandthere three times lowerthan if itwaspurchased from a generate electricity. In thiswaythe turbine cost was bought fromBulgarianfirm, whichwasmodified to one HPPprojecttheinve Bulgarian investorsareal reliable. Thepurchasingdecisionalsodepe some investors prefertoimport them as they agreements. Other equipment isimported.Bulgarian productionisin production ofturbinesandpumps butnowmostofthem areproducedunderlicence In Bulgariathereisatrad HPP PHD THESIS-DISTRIBUTEDELECTR so very ‘innovative’. For so very‘innovative’.For stors installedapump, ition inhydropowergeneration with theproducertoestab ICITY GENERATIONINBULGARIA nds alotontheoper ere arefewermachines thatcome from the weresecond-hand.With theliberalizationof onable prices(Projectdeveloper2006).At demand from the Asian markets might cause cause might markets Asian the from demand considerthattheimported onesaremore are purchased.SwedishWartsila holdsthe ems inBulgariabutonlyofwaterboilers. Bulgaria. Mostof it Photo: G. Miladinova Micro HPP in Rila mountain, lish awarehouseforspare parts ational conditions. market unitswithverysmall and thereforethereislocal generalcheaper but s unitsarepurchased 84

CEU eTD Collection PhD Student: GerganaMiladinova There isnosignificanttradingof Other DGunits in providingbadadvice. evaluation of theneeds and astheyare interested insellinglarger unitsthey might betempted association, expert2006). larger capacity thantheirneedswhichturnedth CHP issuesweremisguided byfirms thats working loadatthegivenheatdemand. Some For CHPprojectsitiscrucia about 5-6months whileseveralyearsagoitwasonly3months (Projectdeveloper2006). is stillshorter thanfor windturbines. Forinstance, for small-scale unitsthisperiod isnow Due tothehighdemand thelagbetween purchasing PHD THESIS-DISTRIBUTEDELECTR responsible forconstruction worksdecidedtore example, afterthecompletion of HPPconstr Poor qualityofconstructionworksorunprofessi difficult orimpossibletoplan. conditions; andprotestsofstake distribution/transmission networkduetoadministrative procedur equipment; difficultiesofmeeting various this phasemightbecausedamong by:su others it areopportunitycostsandthusan selling ofelectricity.Apartfrom thecostsof This phasecovers the time from theobtaining of construction permits untiltheactual start of subsection Due totheimportanceofthiss be imported. there isnoproductionofsuchunitsinBulgaria. 5.2, page88. 5.1.4. 5.1.3. Project Implementation Phase Planning Phase-AdministrativeProceduresSubphase Thisispossiblebecausethefirm l tochooseunitsthatwillha holders. Themajority ofthese ubphase itwillbediscussedin otherthanwind,CHPandhydro y delayscanbetranslatedinto ICITY GENERATIONINBULGARIA construction works,other upply theequipment andpurchasedunitswith small investorswithnosufficientknowledgeof pply, technicalorcons Therefore, allothertype e projectsintobigfi onal decisionscanbeaseriousproblem. For duce itscostsandinstea d oflayingsuitable uction worksitturned standards; delays inconnectionto and supplyofunitsis s thatofferequipment alsodothe ve themaximum possible annual are unpredictableandtherefore a greaterdetail financiallosses.Delaysin units inBulgariaandalso es; bad meteorological es; bad nancial loss(Producers’ truction problems with costs that incur during s ofDGunitshaveto outthat thefirm alsoincreasingbut in aseparate 85

CEU eTD Collection PhD Student: GerganaMiladinova 7 changed atahighcostborne pipes installedsome thatdidnotanswertechni PHD THESIS-DISTRIBUTEDELECTR are satisfiedtakingtheriskoffi other casesinvestorsstartorcontinueconstruc Some communicateactivelywiththe authorities fr distribution/transmission companies. Investors Project developersreportvari Slow administrative procedur delays inidentifyingandreplac after renovations.Astherewere consumers andthereason wasthatthepipelines used districtheatingpipelines.However,itturned outthatthewaterdoesnotreachfinal in thecity of Bansko Similar problems occurredduring construction firm. the unitscanalsobealimitation inthispha Problems withthelack of trained technicians and expertsthat canensure detail alongwiththedescriptionofth their willingness todobusiness inBulgaria. Detailsonthe possibledelays arediscussed in bribes) with the authorities, inve requirements ortoarrangethespeedingupof authorities knowthatthereare delays. Thisispossibleastherenostringent units andeventomend some othersecond-hand Once theseengineersweretrained theycould engineers tohelpthedisman are nodetaileddesigndocumentation. Some invest limitation forwindprojectsisthat,insome wind powergeneration projects being themost problematiconce. Anadditional serious Bulgaria and thusthisproblem iswithdiffe mentioned on several occasions as there are many

The projectBansko ofDH is not for generationelectricity of of heatbut from biomass.However, itis 7 . Projectdeveloperswereplanning tling andrepairingoftheseco

es cancausesignificantdelays ous problems withalmost all of ing thediscontinuedsections. nes, butalso,decreasingthelosse norecords,theprojectdevel by theinvestorwhohadtota some problems.When itisnot stors waitandthisincreases the startofoperationtestsfor e administrative procedures-Section ICITY GENERATIONINBULGARIA similarities withbiomass-fuelled CHP projects. cases, whensecond-handunitsareimported, there rent significancedependingontheproject,with se. Some technologies try toovercome theseproblems inmany ways. tion worksevenifnotallproceduresforthis help theinstallation and themaintenance of the processbypersiste cal requirements. resulttheyhadtobe Asa were discontinued atsome places inthecity unitsofthesame producer(whichwasnot control or itisnotexcersized even if the ors inlarge-scaleCHPunitshavesenttheir om earlystagesofpr to utilizeexisting butnotrecently nd-hand unitstheywerebuying. opers hadseriousproblems and the project costs and decreases ofprojectimplementation. ke legal actions against the the firstdistrictheatingplant theinvolvedauthoritiesor possibletodisregardsome s thatthey might are betterunderstoodin nt contacts(andeven oject development. In properinstillationof 5.2, page88.

beardueto 86

CEU eTD Collection PhD Student: GerganaMiladinova environmental organizationsagai negotiation withpublicauthoriti example, inordertochangetheownership of Legal proceedingscanalsodelayprojectde technologies delaysarepossible ifsome can beveryexpensiveforsmall DGinvestors. very wellappreciatedbytheproducerbutwasmu PHD THESIS-DISTRIBUTEDELECTR problems occur(Producers’ association,expert example, theCzechTedom issendingitsexpe CHP unitsandwaterturbines whichalsohave Maintenance from theproducersofequipment isprovidedbysome supplycompanies, esp.of CHP units. second-hand units(Projectdeveloper2006).Such service company. Thelaterprovidesadditionalsecu operational hours,allthecoststhatmight occu owners are‘subscribed’andagainstcertain experts forongoingmaintenance investors orprojectdevelopershavetheneeded usually possiblefortechnologieswell-knownin Some of theDGprojects development companie can beasignificantproblem forthemaintenance oftheunits. supply company,andcapacityofprojectdevelopm these arecarriedoutdepend,among other,onthe technology,thesizeofdevelopment, maintenance andoccasionalrepairs arerequired.Thearrangements onbywhomandhow During theoperationofmost DGunits,with regimes might alsobeasignificantproblem natural disasters, technical failures) occur. costs forcomplyingwithvarious maintenance andoperationcosts,costsformonito Once theunits areinstalled projects tobe situated attheBlackSeacoast 5.1.5. Production Phase es andlegalappealsthathe and normal operationstartsva nst theEIAarealsovery comm requirements), andunexpectedco and foreignexpertswhenseri parts ofequipment needtobereplaced. ICITY GENERATIONINBULGARIA Additional factorsasqui andfinancialburdenduringthisphase. or forHPPinavulnerableuniqueecosystems. velopment, implementation andoperation.For r formaintenance andrepairsarebornbythe water permit aninvestorwater permit spentthreeyears of rts from theCzechRepublicwhen technical 2006).Forwindturbines constant fee, thatusuallydependsonthe technicalexperience.Otherfirms hirelocal Duetolackoftechnicalsupportforsome Bulgaria, such as hydro and CHP, and when Bulgaria, suchashydroandCHP, establishedtheiroffices in Bulgaria. For ch cheaperfortheinvestors).However,this ring andverifyingofdifferenttransaction, ent firms. Thelackoftrainedlocalexperts servicesareusuallyusedforsmall-scale s ensure their own maintenance. Thisis the exceptionofphotovoltaics,regular rity fortheinvestment won.Courtappealsbroughtby ous problems occur.Some DG on especiallyforwind farm rious expected(suchas sts (suchaslossesdueto ckly changingregulatory therearestillno s especiallyinthe 87

CEU eTD Collection PhD Student: GerganaMiladinova different issuesandfortheneedsofpres operation of DGunitsinBulgariaispresented. Theseauthorizations or procedures relate to detailed accountandanalysisofthevarious and whatproblems canbeanticipatedbythein important toknowwhatpermits arerequired,to (EC 2003a;ENIRDGnet2003; Long administrative procedures constitute asi needed replacement, thecostsarebornbyinsuringcompany. the unitsareusuallyinsuredandwhentherewere of settlements andinfrastructure. Some of the disasters. Intherecentyear Another reasonfortechnicalproblems orstopping condition andthelackofproperma sudden bigvoltagechangescoming from the Technical problems happenalsoduetofailure economically viablefortheproducersto are eithersecond-handoronlyseveralar producers thathaveestablishedtheirbranchesin PHD THESIS-DISTRIBUTEDELECTR the process. engaged intheprocess, and anal summary oftheestimated administrative leadti This subsectionincludesanove been missed out. comprehensive stillasthere might bespecificpr interviews withinvestorsandexperts.While The analysisisbasedonextensivereviewof generation relatedprocedures, and (vi)otherprocedures. protection relatedprocedures, and planningrelatedprocedures,(ii)procedures 5.2. ADMINISTRATIVE PROCEDURES PROCEDURES ADMINISTRATIVE s therewere veryseriousdamages causedbyfloodingonanumber IEA2002;Uyterlinde rview of allauthorizations identified which isfollowed bya ysis of theidentified problema (iv) resourceuserelatedproc intenance ofelectricitygrid. invest inrepresentationBulgaria. ICITY GENERATIONINBULGARIA ent studyaredividedin e purchasedforoneproduceranditisnot existinglegislation(asofMay2007)andon gnificant limitation toDGprojectsworldwide HPP werealsoaffectedverybadly.However, me, information onthenumber ofauthorities understand theprocedures ocedures forsome projectssome mighthave authorizations requiredbeforethestartof Bulgariaas for nowmostturbines supplied relatedtoconstruction, (iii)environmental vestors. Thatiswhy,inthefollowingtext, damages, including suchthatsome turbines thelistofadministrative procedureis of onsiteequipment, andalso,becauseof grid whicharepossi of operation,especially of HPP,arenatural etal. 2002).Thatiswhyitvery tic points(or‘bottlenecks’) in edures, (v)electricity/heat five groups:(i)landuse ble duetothepoor fortheirobtaining, 88

CEU eTD Collection PhD Student: GerganaMiladinova demonstrated in The complex natureoftheauthorizationproces PHD THESIS-DISTRIBUTEDELECTR subject ofmoredetailedex administrative procedures areaserious constrai each ofthis requires anumber ofstepsforitsob average formostDGtechnologies experience withthis and asthe 5 MW, andtheminimum is3forphotovoltaics The maximum number ofauthorizationspert not all authorizations are required for allDGtechnologies (as presented in Figure 9 below.Thetotalnumber ofpossibl amination inthis research. legislation isnotclearmore might thenumber ofaut ICITY GENERATIONINBULGARIA echnology is15–forhydropowerplantsabove s whichinvestorsinDGhavetoovercome is taining. This points tothe conclusion thatthe nt toDGprojects and thatiswhytheyare horizations variesbetween11and13 installed onbuildings(butthereisno e authorizationsis20.However, berequired in practice). On Table 10 , below). 89

CEU eTD Collection many permits atearlystageaspossible. for obtainingthepermits andisnotstrictlyfo the previous onehasbeengrantedisneeded. PhD Student: GerganaMiladinova The arrowsin Source: ownresearch Figure 9.Summaryofthemainauthorizations PHD THESIS-DISTRIBUTEDELECTR Figure 9 represent that in orde ICITY GENERATIONINBULGARIA r for oneauthorization to This interrelation additionally prolongsthetime llowed byinvestorswhichtrytoapplyforas requiredforDGprojectsinBulgaria beobtainedproofthat 90

for EIA/complex permi Coord. -firesafety auth. P Complex permi E A Setting offeed-in tariffs Test for grid connection g L E E E Concessions P P Construction permi i Coord. andapproval of P D development plan Change of detailed Change oflandstatus A TYPE OF contract (TSO) contract (TSO) (DSO) contract operation nvestment project eneration ermit for resource use startof for ermit rovisional consultation ublic procuremen IA 5 energy icence for gridcontrac lectricity l grid study/ preliminary l grid study/ preliminary OTHER ENVIRONMENTAL PROTECTION ELECTRICITY/HEAT RESOURCE USE CONSTRUCTION PLANNING LAND USEAND ssessment ofthe need esign visa UTHORIZATION Table 10Administrativeproceduresandthei Source: own research PHD THESIS-DISTRIBUTEDELECTR PhD Student: Gergana Miladinova

t 11 t t

1 week t

1 month1 months 0.5-1.5 6-8 months 1.5 months? 2 months ve time Administrati 6 months 3.5months -4 3-6 months 1-3 months 1-4 weeks months months 1-1.5 2 weeks 1 week 3.5-5 2-2.5months ? 1 month1 months months

CEU eTD Collection Hydro ( Very likely Not likely ≤5MW) Likely Yes Yes Yes Yes Yes Yes No No No No No Yes In limited cases

(>5MW) (>5MW) Hydro Very likely Very likely Likely Yes Yes Yes Yes No No No No Yes No Yes ICITY GENERATIONINBULGARIA (individual) Wind Very likely Very likely Only in limited cases Yes Yes Yes No No No No No r relevanceforvariousDGtechnologies

(parks) (parks) Wind Very Very likely Yes Yes Yes No likely

( Biomass Very likely ≤5MW) Possibly No Yes Yes Yes Yes Yes No No Yes No No Yes No No Not likely No Yes (>5MW) (>5MW) Biomass Very likely In lim. cases In lim. Possibly No Yes No No? No No? No

Landfill gas No tariffs Likely Yes Yes No No No No

(individual) Solar Yes ifgrid connected No butno Possibly practice Yes? Yes? Yes? Yes? yet? yet? No No Yes No Yes No No No No No

(>5MW) (>5MW) Solar Po Possibly No Yes? ssibly No Yes Yes Yes No Not No No No Yes

gas, CHP ≤ Yes Yes No Yes 5MW) likely Not likel (natural If If state-owned Only iftotalload

Possible in some cases Possible insome cases

≤ CHP 5MW) Yes Yes Yes No Yes No Yes No No (biomass, Yes In limited cases In limited

≥ y Not likely 50MW 91 (all, >5MW) (all, >5MW) CHP th Yes Yes

No No No

CEU eTD Collection PhD Student: GerganaMiladinova account ofthesteps,actors,admi In thissubsectionoverviewof much longer. various stepsoftheauthorizati shorter time. Still, itisalso additional prolongingbutdoesnotmean thatth additional documents arerequiredandallth or othersupportingdocumentation. Thelowerof documents, andconsultationsdonotinclude legislation. Theyrepresent Table 10 request bytherelevantauthorities.Ther The Bulgarianlegislationprovide PHD THESIS-DISTRIBUTEDELECTR initiation oftheprocess an EI Annex II)andofforestry toindustrialrequires 4 steps(see Altering thedesignation ofagricultural Change indesignationofagricult in thelocalplanningdocuments. obligation for settingupofareasdesignatedfor development planforwhichalengthyprocedure In addition,thelandon designated asindustrialbutagriculturala buildings, mostoflandthatisacquired within existingindustrialsites,andofphotovoltaics, whichinmost areinstalledon cases industrial purposes.With theex The constructionofDGunitscanbedoneonlandthathasadesignationforbeing Annex II. showadministrative timesetoutthe 5.2.1. Land Use and PlanningProcedures 5.2.1.1.Land Useand Authorizations Required which theunitistobeconstructe only thetime thatisrequire possible, andithappensoften, A scopingisrequiredand ifne on process, soin thiscase the administrative leadtime canbe thevariousauthori ception ofCHPunits,whichareinmost casesconstructed ural landsandofforestry nistrative time, andthelegalbase s withmaximum time for thecons ICITY GENERATIONINBULGARIA efore in thevalues intheboxes on lands toindustrialrequires 3steps(see for wind,hydroandbioma nd forestsanditsdesigna the development ofrenewableenergyprojects e proceduresarecarr any ofthetime forprep e proceduresmay notbecarriedoutfora should befollowed.Atpresent,thereisno maximum permissible intheBulgarian twovaluesisforthecaseswhenno zations requiredispresented.Detailed d shouldbeinclude Table 24 d fordecision,completion of eded acomplete Environmental that there aredelays withthe

isincludedinthetables ideration ofapplicationor tion shouldbechanged. , AnnexII).Priortothe ss onnewsitesisnot ied outwithoutany aration ofapplication Figure 9 d inadetailed Table 23 andin 92 ,

CEU eTD Collection operation DG units.Theseare:(i) Several types of authorizati PhD Student: GerganaMiladinova for thestart of operation phases: provisionalprojec (National Assembly 2001,lastamend.2006),theinvestment projectsconsistofseveral According toBulgarian legislation, inparticular theLawon Spatial Development (LSpD) developments. for thisismorecomplexandwillnotbediscussedasitonlyre one municipality changesoftheGeneralDevelo to 4months, excludingthedevelopment ofthedraftPUP.Whenprojectcovers morethan Annex II).Theminimum administrative time, if makes theprocesscomplex –includesa time consuming steps.Theprocess isthe same The modification ofPUPisrated which electricitycablesarepassingthrough. where theelectricitysubstation w DG project,i.e.forthesiteon to projects’realization.Several Development Plans(knowasPUPinBulgaria)wh Detailed Territory Development Plans. With direct relevance toDGarethe Detailed Territory The spatialorganization of territory inBulgaria isestablished inRegional, General and Change ofdetailedregionaldevelopment plans take about2.5months andfortheexclusionfrom theStateForestryFund-about2months. legally prescribedtime fortheprocedureach Assembly 1996,last amend. 2003). Once theinvest Impact Assessment (EIA)(LawforthePreser PHD THESIS-DISTRIBUTEDELECTR 26, AnnexII.Themaximum administrative time there arerequestsforadditional documentation, should be undertaken aspresented in (iii) coordination andapprovalofinvestment project 5.2.1.2. Procedures RelatedtotheConstruction . Toobtainthesefiveauthorizations t proposal,technicalproject ons areneededwhile plannin procedures forthechangeof which the installations are to ill bebuilt(forlargecapacity projects), forthetrackthrough by investorsinterviewedasone design visa bout 8steps-andistime-consuming (see ICITY GENERATIONINBULGARIA vation ofAgriculturalLands(LPAL),National , (ii)

forallofthemisabout4.5 months. pment Planmight berequired.Theprocedure ange ofthestatus asifentirenewPUPisdevelopedwhich the legally settimeframe isobserved,3.5 ich inmost casesshouldbemodified prior or haspositive decision regarding EIAthe provisional projectproposalconsultation, , (iv) , andworkingproject. construction permit, g, developingandbringinginto ninestepsintotal,excludingif PUP might berequiredforone be constructed,fortheplace ofthemost elaboratedand agricultural landsshould levant forlarge-scale and(v) Table 25 permit Table 93 ,

CEU eTD Collection Environmental Impact Assessment (EIA), Assessment oftheneedEnvironmental Imp installed capacity of more for CHPunitspartofbiggerdi certain typeofinstallationsthatarecausi The complex (orIntegrated PollutionPreventi have adverseenvironmental impact thenacomplete EIAisrequired. aim changeofthestatuslanduse.Ifafterth (ii) hydropowerplants,(iii)windturbines,and(i industrial installationsforthe 2006). However,most tounder ofthem need according to theEnvironmental Protection Law(LEP),(NationalAsse The majoritydonotfallinto ofDGproposals Three typesofenvironmentalauthori PhD Student: GerganaMiladinova according to some investorsarea‘small EIA’. permit about0.5month. Thedocuments requiredfo time forobtainingdecisionontheneedofEI 2006). Theprocedureconsistsoffivesteps(see at stagepre-investment studies(Regulati The investor isobliged toinform of itsproject permit (or scoping)fortheneed of thepublicauthoritiesora were completed whichwaspossiblebecauseof was evenacasewhenthe permit forthestart of Some investors interviewedreportfordelayswi PHD THESIS-DISTRIBUTEDELECTR

5.2.1.3. EnvironmentalProtectionProcedures than50MW(LEP). of Environmental ImpactAssessment orComplex Permit ‘flexible approach’ofnot‘ generation ofelectricity,stea strict heatingcompaniesori zations are related toDG, i.e.:(i) ICITY GENERATIONINBULGARIA on EIA,CouncilofMinisters2003,lastamend. and(iii) ng pollution.ForDGsuchapermit isneededonly the relevant public aut constructionworkswas on andControl(IPPC))permit isissuedfor A isabout1.5months andforthecomplex go screeningforEIA.Thelistincludes:(i) the lackofcontrol andenforcement capacity th the issuing of construction permits. There act Assessment and/orofacomplex (EIA) is assessment itisconsideredthat theywill the categorythatrequirescompulsory EIA Table 27 v) primary forestationordeforestationwith Complex Permit r theEIAscreeningar noticing’ the incompliance. , AnnexII)and theadministrative m andhotwaterbelow50MW, ndustries andhavetotalthermal . horities andstakeholders mbly 2002,lastamend. preliminary assessment issued aftertheworks e veryelaborateand , (ii) 94

CEU eTD Collection impacts andthewaystheyaremitigated research of theareaand investorsarguethat essential partoftheEIA,butinsome cases,the collected and includedintheEIA A seriouscriticism frominvestor the delays. with theNGOsthathadinitiated NGOs. Attheendmost ofthem wonbyth were projects. Intherecent years so some investorsaccuseenvironmental NGOsforblackmailing andunreasonablystoppingtheir them from participating orfor notintegrating when investorsareconcernedthat theremight alsoarguethatth Some NGOs field studieswhileothers between thedepthofdifferent confirms thisandnoEIAreporthadanegativ hire expertsthatmight come toanegativeEI question the credibility of itsconclusions. Also itis probable thatinvestors wouldnot like to The factthatEIAreportispa II . months. Moreinformation onthealleight prepared theadministrative time carryingou for conditions andthusthetime for elaboration oftheassessment dependsonthetypeofdistributedgenerationsource,local a team ofcertifiedexperts who arehiredan its environmental impacts, anEIAreportshould Once thereisadecisionthattheinvestment PhD Student: GerganaMiladinova Environmental Impact Assessment (EIA) PHD THESIS-DISTRIBUTEDELECTR conductingmainly reviewofexistingresearch. id bytheinvestorsmakes some e publicconsulta EIA reportswithsome teams of me ofthepositive EIAreportswerecontested atcourts by the appeals,butalso,financial s’ pointofviewisthatalot ‘irrelevant’ information is its preparationiscasedepende on thecharacteristics of environment. Thisisindeed an than toreadlongscientificreports. ICITY GENERATIONINBULGARIA

steps oftheprocessisprovidedin proposal shouldundergodetailedassessment of their concernsintheminutes. Ontheotherhand A conclusionandstopthe tions arenotannouncedproperlyaccusingthat beanopposition, theyaretrying toprevent they willbegladtolearn more onpossible expert teams prepareaverydetailedscientific d paidbytheinvestor.Thelengthfor bedeveloped.TheEIA e conclusion.Thereis t allproceduresforitsapprovalisabout5 e investors.Thiscausedfinancialproblems environmental protectionNGOs expertscarryi losses fortheinvestorsdueto nt. Oncethefinalreportis also bigdiscrepancy report ispreparedby project. The practice project. Thepractice Table 28 ng outdetailed , Annex 95

CEU eTD Collection PhD Student: GerganaMiladinova concurrent requestsfortheextraction of place andthere areanumberofcaseswhensuch From theLawonWaters itisnot report ofthelackenforcement oftheseobligations. stream flowintorivers,andonmonitoring re among others,provisionsondistributionofpe requirements forwaterandbodyusagear that havetobefollowedarepresentedin about 3.5monthsandthemaximum about5months not necessary.Ifallthedeadlines areobserved For theapplication astandard se single oneisissued. ofupto20kWisinstalle maximum capacity diverted from theriver,exceptif waterisnot water useandforbodyarerequir According totheLawonWaters (National A Permits forwaterand bodyuse required. Depending onthecase,permits forwaterus Of allDGtechnologies,onlyhydroresourcesrequi met. Serious delayswiththis approximately 11months, administrative procedures,withouttheprepar consuming (see The process ofobtaining thepermit isverycomplicated -includes13 steps-andtime- Complex permit (Integrated Pollution PreventionandControl(IPPC)permit) PHD THESIS-DISTRIBUTEDELECTR 5.2.1.4. ResourceUseProcedures Table 29

if noadditionaldocuments arerequestedand allthe deadlines are , AnnexII).Themaximum time forpassingthrough allthe permit werereportedbyinvestors. t ofdocuments isrequired,includi clear whathappensiftherear

gravel andfortheplacement ofHPP. ICITY GENERATIONINBULGARIA ssembly 1999,lastamend. 2006)thepermits for ed inallcaseswhenmore than10m quirements. However,representativesofNGOs d. Inthecasesbothpermits arerequiredthena diverted from thewater rmitted volumes, ontheminimum permissible e andforwaterbodyuseorconcessionare ation oftheassessments needed,shouldbe the minimum time for issuingof thepermit is Table 30 problems occur.Sometimes therearealso e specifiedinthepermits. Theseinclude, . Detailsonthesevenstepsofprocess re theissuingofpermit forresourceuse. , AnnexII.Onceissuedspecific e severalapplicationsforone ng EIAordecisionthatitis course andaturbineof

3 /day are 96

CEU eTD Collection preliminary contractwith PhD Student: GerganaMiladinova predetermined bytheoperator. to bepreparedbytheDSOorTSOand MW (Regulation6from9.06.2004,(MEER2004c)). The applicantshould regionalsub-unitof th equal to5MW orbythe A studymust bepreparedbythenearesttositeDSOif contract Request forastudyofconditionsand thewayof analysed astheyarecarriedoutsimultane technical testsforthestartofoperation licence forelectricitygenerationun of electricitytothegridare:(i) The electricitygenerationproceduresthats should besignedwithin3months. (depending onthetypeoftender) Assembly 2006)foradecision once tender documents aresubmitted is3or 2 months However, themaximum administrative time many casessome ofthedecisions areconteste involves many publicauthorities.Itisdifficultto The issueofconcessioncontractisalong 1997, lastamend. 2003)). (National Assembly 1999,last equipment, and(iii)theuseofstateorm that arepublicproperty,(ii)construction required are:(i)theuseofwa not bediscussedindetail.Thecasesreleva It isnotverycommon forDGprojectstorequir Concessions PHD THESIS-DISTRIBUTEDELECTR

5.2.1.5. Electricity/HeatGenerationProcedures the distribution/transmission system operator(DSO/TSO) ter sitesandconnectedtothem watersystems andequipment amend. 2006)andLawonForestry andiftherearenoappealpro ICITY GENERATIONINBULGARIA ously tothoseforelectricitygeneration. its with capacityof more than5MW . The heatgenerationrelatedproceduresarenot . The of newhydrotechnical,hydroenergysystems and unicipally ownedforests(LawonWaters (LW), hould befollowedbeforethecommercialfeeding process withcompulsory tenderprocedureand nt toDGprojectsforwhichconcessionis study forconnectionto set intheLawonConcessions(National connecting toelectricity provideexactfiguresonthetimeframe asin e concessions andthereforetheprocess will e TSOfor installed capacity of more than5 d atcourtswhichprol fee forthestudyshouldbestandardand cedures initiatedthe contract installed capacityislessor (LF),(NationalAssembly electricitygrid gridandpreliminary ongs theprocedure. request thestudy , and (iii) , and , (ii) and 97

CEU eTD Collection PhD Student: GerganaMiladinova whole procedures.Thedetailedaccountofth practice numerous additional documents orcl submission ofadditional information (14days foreach request). Based onthe existing there might berequestsforcompletion ofthe time astheapplicationmight beredirectedto connection istodistributionor The minimum time forthewholeprocedur connection. construction costsaretobedeductedfrom the constructed bytheprojectpropo can alsotake theresponsibility for this.Inth the connectioncosts(MEER2004c).Theyshoul The preliminary contractforconnectioninclud applications totheTSO.Thisadditiona and whentotransmission networkitisvery clearly formulatedintheEnergyLawwhen to dothisis torefertechnicalproblems thatpreventconnection. Inaddition, although itis DSO/TSO oftenusetheirmonopoly totryandprev connection datebutanalternativetimeline rejection oftherequestispossiblebasedon the LawonEnergy(LE)(NationalAssembly The DSO/TSOareobligedtoconnect distributed ge PHD THESIS-DISTRIBUTEDELECTR out andapermit forthecommencement ofexerci and oncetheunitisconstructed Regulator (LE).Adecision whetheralicenceis are requiredfor plantswithtotal installed capac Licences forelectricitygenerationandheat Licences forelectricitygeneration and competition practicesof theDSO/ Shortcomings ofthewayconnectioncosts connection tothegridcontractisprovidedin transmission grid. Itisdifficult todetermine themaximum a secondreviewofthedocuments TSO isincluded inSection nent shouldbetransferre for electricitya lly slowsandcomplicates theprocess. ICITY GENERATIONINBULGARIA should beproposed(MEER2004c).Nevertheless, Table 31 dossier (maximumdossier delay1.5months)andforthe e latter case the ownership of theinfrastructure 2003, lastamend. 2006).However,temporary e is30or90daysdependingwhetherthe es, among others,agreement onthesharingof distributioncompany (d and electricitygenerati e relevant–ninest ity of upto 5WM which arifications arerequired whichprolongs the common that the DSO are trying to direct common thattheDSOaretrying todirect connection feeasagreedinthecontract for d bebornbytheDSO/TSObutapplicant units shouldbeconnectedtothedistribution technicalinability sing oflicensedactivity are determined andissues relatedtounfair to begivenshallmade bytheRegulator ent thenewentrantsandoneofways neration unitsto the gridas stipulated in , Annex II. , Annex nd heatgeneration 6.2.1.2, page122. d to the DSO/TSOwhilethe andconstructioniscarried on, inthecaseof CHP, to meet theproposed eps for obtaining of a eps forobtainingofa

elay of1month),or is issuedbytheState is issued.Thewhole 98

CEU eTD Collection PhD Student: GerganaMiladinova Certificate for compliance withfire safety rules accounts theprocedurelastabout6-8months. initiated by municipalities or for theremaining state-ownedDHC procurement proceduresmight causeadditionalhi this procedure itwillnot bediscussed indeta privatization iswelladvanced butis fitted to thespecificneedsofDGprojects the bankcredit,andforpurchasingofequipment. installation ofCHPwasrealized.They hadto amend. 2006).Forexample,DHC-Varnawass the procedureslaiddown intheLawonPub For state-ownedcompanies publicprocurement pr Public procurement procedures with possible‘doubleuse’,i.e.formilitary orotheruses. had toapplyforadditionalauthorizationassome certificates might alsoberequired.For instance, relevant institutions, such asthefiresafe rules forthestateownedenterprisesandcertificates forcoordinationorapprovalfromother Procedures thatdonotfallw performed by theexpertsofDSO/TSO. plant for72hours,and(iii)parallelconnec of theconnectionequipment for72hours,(ii)testingofelectricale The connectionofnewpowerplant Procedure for connectiontoelectricitygrid Annex II). procedure includesfivestep PHD THESIS-DISTRIBUTEDELECTR relevant documentation thesiteshould beex Upon writtenrequest and submission ofconstr 5.2.1.6. OtherProcedures s andtheadministrative tim now andthusitisno ithin theabovementionedcate

to electricity gridiscarried out inthree phases:(i) testing ICITY GENERATIONINBULGARIA

tion tothegrid(MEER2004c).Thetestsare lic Procurement (NationalAssembly 2004,last announcetwo procedures: ty andpublichealthauthorities. Additional amined bytheNationalDirectorate Fireand

uction, technical and technological and other for theimport ofsome equipment aninvestor il. Still,itshould bementionedthat public essentialtool forcorruption prevention. As ndrances anddelays,esp The procedureisslowandnotverywell ofitselements categorizedassuch were t verycommonforDGprojectstoundergo till state-owned when a project for the till state-ownedwhenaprojectforthe ocedures aretobefollowedaccording e isabout2.5months (see gories arepublicprocurement quipment ofthe power . Basedoninvestors for theobtainingof ecially forprojects Table 32 99 ,

CEU eTD Collection PhD Student: GerganaMiladinova to itsrealization (i.e. when electricity issold toelectricity grid) (Skytte Lead time is thetime that is required tocomplete relevant torenewableelectrici about 2months foritsissuingwhichaccordingto is requiredfortheapprovalofinvestment pr A certificatethattherearenothre Accident Safety(IBA2006d).Within 1month a PHD THESIS-DISTRIBUTEDELECTR maximum case includes almostmaximum case allpossible pr likely’ and‘likely’,that wereusedin legislation. Itisbasedon The minimum caseincludes the shortest admi the proceduresandforinvestorstocomplete and decideonapplication,thetime forwhichst Table 11 economic evaluationsandisusuallywell-knownbytheinvestors. issues, such assite selection, availability previous experience.Bycontrast,thetechno- more difficult for them topredict its duration capacity. Ingeneral thistime is depends mainly onthecountry’slegislation,th et al. two typesofleadtime: techno-economic andadministrative, describedin Coordination withtheRegional Inspector and aneasysolutionofthecomplications. functioning oftheunits.Some i requirements thatarenotnecessaryforthesafe experts arenotwellacquainte According tothem notonlythattheadministrati Investors report that there are significant problems withtheobtaining of thecertificate. Accident Safety. which isvalid for 3yearsisissued bytheDi 2003).Inthepresentresearch belowshowstheadministrative time requiredbytherelevantauthoritiestorespond 5.2.2. Administrative LeadTime Table 10 ty generationproject–windturb nvestors alsomention corruption also lessdependentontheprojec d withthespecifics of CHPinstallations and impose ats topublichealthassociated , page onlytheadministrative lead ICITY GENERATIONINBULGARIA Table 10 ates ontheProtectio 91. Theproceduresmarked aspossibly ‘no’,‘not of theresource, selection of equipmentand ocedures andthemaximum administrative time economic leadtime involvesmainly technical oposal. Aninvestorreportedthatittookhim and hindrancesiftheydonothavesignificant ty, andinsomecases,evenprevent the normal akeholders havetoprov ve times arenotrespectedbutthefiresafety rector of theNationalDirectorate Fireand theirapplicationsif information ismissing. e typeofDGtechnologyandtheinstalled nistrative deadlines includedinBulgarian alltransactionsfromtheinitialproject idea areexcluded intheminimum case. The him is too long for a certificatethatitnot himistoolongfora certificate oftheapp n ofPublicHealth ines inthecasementioned. withtheprojectdevelopment t developersanditmight be as aprobable reason behind time isstudiedbecauseit etal. ide theircomments on theliterature(Skytte lication certificate, 2003).Thereare

100

CEU eTD Collection be prohibitoryhigh.Theonlyfacilitationisth means thatforvery small-scale projectstheadmi significant intheadministrative leadtimes be PhD Student: GerganaMiladinova 8 Another conclusionthatcanbedrawn upfrom this useof landfills which stallsthe development of suchprojects. electricity generated from landfillgas andnow case thetransactioncostsmight betoohigh. lead times (0.8to1.4years),butalso,onlysma technologies. Projectsforlandfillgasusearealso among thosewithshortestadministrative permit theadminist isnotrequiredforCHPunits farms developments willundoubtedlyrequiremoretime thanhydrounit.When thecomplex the time fortheevaluation ofre 2.8 years)mainly becauseofthewaterand scale winddevelopments requirelesstime (2to2.4years)thanthela individual buildingwhennopermits relatedto The shortestadministrative leadtime of4to Source: ownresearch of variousapplicationsforDGdevelopments Table 11.Minimumandmaximum administrative one afteranotherand timesCHP unitsisnotincluded.Thedifferent ar required forthemajority ofDGprojects.Als procurement proceduresarenotincluded inthe ci as includedinthelegislation.Forbothcases PHD THESIS-DISTRIBUTEDELECTR required andthatforhydroprojects they havetobeconnecteddistribution MW.

MAX That is why Table 10and Table 11the units aredifferentiated in two groups – with capacity MIN

≤5MW Hydro 1.4 2.0 >5MW Hydro 2.1 2.8 there isnooverlap. Wind (ind.) (ind.) 1.3 1.6

(parks) (parks) Wind 2.0 1.1 2.4 1.4 source and forthepreparation below 20kW nowaterpermit isrequired. Biomass ≤5MW ICITY GENERATIONINBULGARIA network andnolicenseforenergygenerationis o, thetime fordecisionsonfeed-intariffs 5months isforphotovoltaicinstallationsat at whenthe units are less orequalto 5MW construction arerequired.Surprisingly,large- Biomass tween small- andlarge-scaleprojects. This illingness from thelocal >5MW Table 11 Inaddition, there is e calculatedasiftheproceduresareexecuted concessions,complex permits andpublic ll unitscanbeinstalledonthem andinthis nistrative leadtime a 1.4 0.8 1.8 1.4 site usepermits tobeobtained.However,if ted figuresastheyarenotverylikelytobe rative lead time isshorterthantheother time-lags(inyears)forconsideration Landfill is thatthere is gas (ind) Solar of EIAisincludedthewind 0.3 0.4 nd associated costscan rge-scale hydro(2.1to no feed-in tariff for tariff nofeed-in >5MW Solar 1.1 1.5 authorities topermit a differencebutnot all ≤ 0.7 1.3 CHP ≤5MW 5 MW and<5 all >5MW all>5MW CHP 1.0 1.7 101 8

CEU eTD Collection PhD Student: GerganaMiladinova activity thefeeisbe fees arecollectedinthecaseof locally bytherespectiveMunicipalCouncil investors. One ofthe‘cheapest’procedures is The administrative feesvarybut in general are relatively low a variations of thecosts. country butsome oftheone-offfeesaresetup fees, andlicences.Some ofthe when anapplicationforauthorization isfilled obtaining variousadministrative Different administrative feesarecollectedby uncommon thatitisissuedaftertheunitstartsitsoperation. usually between1and2yearsbut permit. Inthe meantime thevalidityof some of if theyfollow thelegally set sequence and carried outsimultaneously. Some in years. Forlarge-scalewinddeve and forobtainingallpermits variesalot.For In practicebasedontheinterviews theadministrative lead time for application’s preparation PHD THESIS-DISTRIBUTEDELECTR project andarenotquan documents andforthefollowingofprocedures number ofadditionalcostsforthepreparation ofthevarious Although the levelofadministrative chargesisacceptable,apartfrom them, therearea 2004d));. (about EUR1100plus0.055%oftheannualinco about EUR500),(ii)initialfeeforlicence fee forreviewofapplicationor feeforthem of licencesfor electricityandheatgeneration.Fo 5.2.3. tween EUR250–5,000(CouncilofMinist Administrative Fees tified intheresearch. application for the issuing of fees aredetermined atnational level andsame for thewhole lopments itis about2yearsbut authorizations. Thereareone-off often there aredelays with the complex permit and itnot vestors suggestedthatitcanta ICITY GENERATIONINBULGARIA and isaboutEUR 10(IBA2006b).Thehighest issued (about EUR 7500), and (iii) annual fee issued (aboutEUR7500),and(iii)annualfee do notpursueactivelyth the publicadministrationduringprocessof but thereare annualcosts, suchasresource use the issuingofdesignvisa example, forsmall-scale HPPitcanbe2or3 the permits the might expire.ForCHPthetime is odification ofalreadyi atlocallevelandth r thelater,thereareth . However,thesearevery specificforeach me ofthecompany) (CouncilofMinisters acomplex permit -dependingon nd notseenasabarrierbythe ers 2004b),andfortheissuing onlyiftheproceduresare ke asmuch5to6years fees thatareto bepaid application supporting ssued licence(eachis us thereareregional whichisdetermined e issuingofvarious ree typesoffees:(i) 102

CEU eTD Collection PhD Student: GerganaMiladinova institutions Main Provisional project proposal consultation Decision Design visa TOTHE CONSTRUCTION RELATED PROCEDURES Decision Consultation institutions Main Change ofdetailedregional development plan Decision institutions Main Changein designation offorestrylands Additional Cadastre institutions Main Changein designation ofagriculturallands Agency PROCEDURES RELATED PLANNING AND USE LAND (4) projects isprovidedin and actorsthatparticipateinsome wayindeci is authorization ofDGprojects The largenumber ofauthorit PHD THESIS-DISTRIBUTEDELECTR DG projects Table 12.Maininstitutionsandactorsinvolved which additionallycomplicates andprolongstheprocess. public sector.However,onehastobearinmind businesses, havenotbeencountedastheaim of other stakeholders,suchasgeneralpublic,NGOs,variousexpertsandconsultants, The numbers providedabovedonotincludemainly publicauthoritie some regionsconstructionpermits arealso to connectionthegrid.Astherearenomany practical examplesitmight buildings atresidentialandtertiarysectorbut construction permits. Theminimum number is1 The highestnumber committees, ofauthorities, and individualstateactors arerequired forthe average thereabout19authoritiesareinvolvedin one technologyisabout22whichthecasefor required byindividualDGtec 35, including thevarious committees, engagedintheauthorizations butnotallofthem are 5.2.4.

Council of Ministers (proposal of the Minister of Agriculture and Forestry) (6, 7) or or the (6, 7) Forestry) and of Agriculture the Minister of (proposal Ministers of Council the Farm Lands (2), Mayor of the Municipality (3) Commissions to the regional directorates Agriculture and Forests (1) or Commission for Public Works (15) (15) Works Public Commission to the Fore tothe National Commission Chief Municipal Architect Municipal Architect Chief 13) (12, Committee Municipal Mayor (10), Chief Municipal Architect (11), Municipal (or National) Expert Minister of Agriculture and Forests (propos Chief Municipal Architect Other interested institutions, general public institutions, Other interested Municipal Mayor, or Regional Governor (14), or Minister of Regional Development and Authorities Involved Table 12 hnology. Themaximum numberofauthoritiesandactorsper . Thenumber of institutions, actorslisted inthetableisabout anotherseriousburden.Asumm ies involvedintheadministra

ICITY GENERATIONINBULGARIA required whichmight increasethenumber to13. stry Directorate (NDF)(5) thisfigureincludesonlyauthorizationsrelated sions regardingdifferent large hydropowerplan the researchistoinvestigateroleof theprocesswhichmakes itrathercomplex. that there isalarge numberofstakeholders inadministrativeprocedures relatedto for individualphotovolta

al ofthe Director of the NDF) (8, 9)

tive proceduresrelatedto ary of the main authorities

s (and the DSO/TSO) s (andtheDSO/TSO) authorizationsofDG ts (above5MW). On bethecasethatin ic installationsat 103

CEU eTD Collection PhD Student: GerganaMiladinova Source: ownresearch institutions Main Certificate for compliance with health safety rules institutions Main Certificate for compliance institutions Main Public procurement OTHER PROCEDURES Main actors Procedure for connection to electricitygrid institutions Main Licences forelectricity generation and Main actors Contract forconnection toelectricity grid Main actors Request forastudyconditions of a ELECTRICITY/HEAT GENERATI institutions Main Concessions Decision Consultation Interested institutions Main Permits for water andwater bodyuse parties RESOURCE USERELATEDPROCEDURES Decision Consultation Interested institutions Main Complex permit (Integrated Pollution Pr stakeholders Decision Consultation Interested institutions Main Environmental Impact Assessment (EIA) stakeholders Decision Assessment ofthe needofEnvironmental Impact ENVIRONMENTAL PROTECTION Decision Director Additional institutions Main for startofoperationPermit of Decision Construction permit Decision DNCS Consultation institutions Main Coordination andapproval investment of project Decision Consultation PHD THESIS-DISTRIBUTEDELECTR

Municipal or National ExpertCommittee (16, 17) Distribution ortransmission system operators (34) Commission Regulatory and Water State Energy Distribution ortransmission system operators Distribution ortransmission system operators Directorate (33) RegionalGovernor, Municipal Mayor andMunicipal Council, National Forestry Energy (32), Minister of Agriculture and Forestry, Regional Water Basins Directorates, Council ofMinisters, Ministry ofEnvironment and Waters, Ministry ofEconomy and Basin Directorates (30), MOEW, Municipal Mayor, Specially appointed Commission (31) MOEW, Municipality EEnA RIEW, (29), authorities RIEW, MOEW, regional Minister of Environmental Protection and Waters (28) Superv Construction Directorate forNational independent licensed firm Chief Municipal Architect, Expert committee ofthe approving administration (18) or Regional Inspectorate on the Protection and Control of Public Health Health Public of and Control the Protection on Inspectorate Regional National Directorate Fire and Accident Safety Ministry of Economy andEnergy, Public Procurement Agency (35) Basin Directorate Director or the Mi (22) theRegion Architect of Chief and (21) Council orMunicipal Architect, Municipal Chief and Public Works institutions relevant other (20), Health Development and Public Works Director of the RIEWDirector of Director oftheRegiona Chief Municipal Architect, orRegional Governor, or the Minister ofRegional Minister of Environmental Protection and Waters Cadastre Agency,DSO/TSO (25,26) spectorate on the Protection and Control of Public ofPublic and Control the Protection on RegionalInspectorate (19), Fire SafetyAuthority Chief Municipal Architect, or Regional governor, or the Minister of Regional Development withfire safety rules nd way of connecting to

ON RELATED PROCEDURES RELATEDPROCEDURES for electricityandheat generation or the Minister of Environmental Protection and Waters evention and Control (IPPC) permit) l Inspectorate of Environment and Waters (RIEW) (27) or the

ICITY GENERATIONINBULGARIA Assessmentcomplex (EIA)and/orofa permit

nister ofEnvironment Protectionand Waters

electricity gridandpreliminary contract

ision (DNCS) (23), (DNCS)(23), ision

Special committee (24) 104

CEU eTD Collection PhD Student: GerganaMiladinova Note: thefiguresinbracketsareusedforcoun PHD THESIS-DISTRIBUTEDELECTR for theiractions. Nevertheless this isnot true for allprojects. Attracting investments, are corrupt.Alsothatas there is investors claim thattherelevant local authorit problems’ arethoserelatedtolanduseandcha Another setofproceduresthat there aremany delaysintheissuing of complex permit andaccusationsofbribesaswell. people tounderstand theproblem andwillingness engines anditisverydifficultforthenorms tobe permissible pollutionnorms aredetermined forna targets. Several investors in Problem withthecomplex permit forCHPunits the processtobespeededup. problems whichaccording toinvestors, arebecause on theEIAisdelayeduntil maximum time setinthelegislation,evenifthereareno civil servantsothatnoproblems withtheEIAareencountered.Insome cases,finaldecision problems. Twoinvestorsevenclaimed thatthey Regarding theEIAslowconsiderationofre authorizations, i.e.obtainingofEIAor Most ‘complaints’ frominve time forregular ‘reminding’ oftherequests. that theeaseofobtaining some authorization provide guidanceregardingthevariousprocedures for itssupport.Accordingtoinve institutions butwhilesome me interviews withinvestorsrevealedthattheyhaveencounter procedures andthusactorsorinstitutions It isdifficult toevaluatewhetherthereare are countedseparately). They indicatethatitisthefirst time authorit 5.2.5. Administrative ‘Bottlenecks’ cogeneration usinggaspistone ntioned oneinstitutionasthemo stors interviewed wererelated toenvironmental protection nodirectstatecontrolit isdifficult tomake them accountable werepointedoutbythei stors interviewedsome institutions werehelpfulandreadyto ICITY GENERATIONINBULGARIA complex permit from theMOEW andRIEW. y ismentioned (commissions andspecialactors represent a‘bottleneck’ toDGprojects.The depended oninvestors’ne ies donotobserveanylegally setdeadlinesand levant documents wassaidtobemost common ting oftheauthoritiesen such andifsowhichoftheadministrative nge ofthedetaileddevelopment plans.Some were askedforbribesbyaveryhighranked met buttherelevant authorities lack trained to providesupport.Apartform thisproblem tural gas-fuelledturbinesandnotforpiston . However,inmany casesinvestorsstated they donotwanttopaybribesinorderfor isthatcannotmeet ed problems virtually with all ed problems virtuallywithall nvestors ascausing‘horrible ngines mentioned thatasthe st obstructive ot tworks ordevotionof gaged intheprocess. existingemissions hers praisedit 105

CEU eTD Collection PhD Student: GerganaMiladinova two sources.Moreanalysisontheroleof of January2007(pv)andJuly was alsothecaseforphotovoltaicsandbiomass for renewable technologiesforwhichtherewerenof model andtheinvestorsconsider especially trueforCHPprojectswhichthe also commonlypointedasaseriousconstrai which arediscussedindetailSection many cases, tryingtopreventtheirentryandhe Investors alsopointedtothefactthatdi some investors hadsignificantproblems ar Another permits thatinvolveenvironmental prot assistance their projects woul acknowledged thattheregionalandlocalauthoritieswereveryhelpfulwithouttheir especially oflargeones,ishighlydesired PHD THESIS-DISTRIBUTEDELECTR technology isincluded in AnnexIV).Atthe during AugustandSeptember 2006 isprovided In the following textsummary of theinformation collected from field research in Bulgaria prices. pay-back time Anotherfactoristhepossiblechangesinnaturalgas havefeed-intariffs. credits arelessfavourable increasing pay-backtimes. Inaddition,significant impacts onthe framework increasestheinvestment riskperc which insome cases,issignificantlycheaper experts. Second,financiallimitations made ma development andimplementation areloweras to theinternational ones. Still,there aresevera licenses of international firms theinvestment co Due tothefactthatalmostallDGequipment is page 122. 5.3. INVESTMENT COSTS AN COSTS INVESTMENT d nothavebeenrealized. 2007 (biomass). Thisdelaystalle that theirreturnsarekeptve 6.2.1.2, page ICITY GENERATIONINBULGARIA D PAY-BACK TIMES D PAY-BACKTIMES e thewaterandsiteusepermits. the Regulator isincludedalsoinSection thannewone.Third,theunstableDGsupport stribution and transmission companies are,in ny investors purchase second-hand equipment, ny investorspurchasesecond-handequipment, time oftheresearchtherearenoprojects for eitherimported orproducedinBulgariaunder l major differences. First, thecostsfor project nce createthemalotofbureaucratic problems feed-in tariffs aredetermined onthe cost plus by many local authorities.Some investors sts forDGprojectsmight beconsideredclose eived andthereforetheconditionsofbank in many casestheyarecarriedoutbylocal ection andlocalauthorit n toDGpenetration inBulgaria. Thisis eed-in tariffsforalongperiodoftime. This which preferentialtariffswereadoptedas 122. TheEnergyandWater Regulatoris (the listofinvest ry low(about4to8%)andfor d anydevelopments forthese ies forwhichissuing ors interviewedper 6.2.1.2, 106

CEU eTD Collection PhD Student: GerganaMiladinova equipment canbepurchasedinBu The overallcostsfortheconstr 70-80 000totransportaunitat500km. only thetransportationcostswhichdepe EUR/kWe. Accordingtosome investorsforso as inmost thereisland,infrastructure, case costs areincluded).Itshouldbe areaboutEUR580-600perin DHC inBulgaria Information from interviews showsthattheav Investment Costs costs forBulgariancanbeprovided. biomass orsolarelectricityge PHD THESIS-DISTRIBUTEDELECTR very easilyastheexperts wereonsiteandnew project’s implementation andoperation oftheunitsor if there were problems theywerefixed acquainted withthespec end itwaspreparedforEUR4000byexperts unit atone oftheDHCafore typical issuesforBulgaria.Forexample, economic andtechnicalstudiesbecauseitisch interviewed mentioned thatthey used Bulgaria is tohire local experts. Apartfrom thelarg According totheinvestorsinterviewedoneofwaysfor morepurchasing oldunitsismuch they consideritmore reliable.Noinform cases the costs arecloser tothelowerlimit but hand unitsasitvariesalotbutfor some EUR 1100-1400EUR/kWe. Itisdifficulttoprovide For large-scale winddevelopments whennewequipment ispurchased thecosts areabout EUR/kWe. can beaslowEUR230-240oriftheconn adjustments and costs.For some second-handun When steamorhotwaterisused forsome i ific conditionsandtherefore ther ign consulting firm askedas neration andthereforenoinforma uction ofnewHPParebetween noted thatitis cheaper toin limited thanforwindorCHP. lgaria asitis pr ICITY GENERATIONINBULGARIA e investments alloftheinvestors inwindfarms ation onsecond-handunitswascollectedbut ndustrial processes thismight require additional projects inBulgaria th and processes(waterpre- the technicalstudyforth nd ondistancebutcanbeaboutEUR erage investment needsfornewCHPunitsat n expertsin thepreparationofprefeasability, some investorsprefertoimport equipment as me second-handunitsinvestorshavetopay stalled kWe (all development andequipment its atDHCtheinvestments perkWe installed ection costsareincluded-uptoEUR 340 the projectfromitsstart (Projectdeveloper eaper andlocalexpertsaremore awareof oduced under international licence. Inthese from theDHC.Theseexpertswere better reliablefigureson e werealmost noproblems during much asEUR400000andatthe stall unitsatexisting DHC sites 500 to750EUR/kWe.Partof reduction ofinvestmentcosts tion ontheactualinvestment e costswereabout400 processing) available. e installationofCHP thecostofsecond- 107

CEU eTD Collection PhD Student: GerganaMiladinova back time isusuallytwice the hotseasons) or1year(ifthey operate on a small-scale cogenerationunitscanbe repaidfo about 1year.Accordingtosome suppliers, as theproductionofvegetablesingreenhous Very shortpay-backtimes arealsocommon fo investment wasrepaidfor 2months. hand CHPunitthatrunsasaback-uppowerge (EUR 500to15000),dependingontheproduction processes about2to 3times aweek.For factory fordiaryproducts, cutsin theelectricitysupply werecausingbreaksoff inthe very commonforBulgarianelectricitysystem is usedasback-uppowerforindustrialprocesse some exceptionalcasesthiscanbeasshort The pay-backtime forsmall-scale CHPinstallati and hotwaterarelow. tomakeconsidered asoneoftheveryfewways gas to Bulgargaz andreplaytheircreditfor them asmuch as20years.Inthis casesome Regulator gave them verylowtariff for electricity purchasing theythink thatitmight take initially thecalculations werethatthepay- is designed, preferential feed Bulgaria isabout5-7yearsbut According totheinvestors interviewed theaver Pay-back Times as thereisnotenoughexperience hand equipment investorsusuallyuseforeigncons preparation ofJointImplementation (JI)financingapplicationandthepurchasingof second- Not allpartsofprojectpreparationareperfor only EUR50000andwasdoneinaverys another DHC wereaskedtopayEUR120000butby 2006). Fordismantling andshippingfrom theUK PHD THESIS-DISTRIBUTEDELECTR these ofsecond-handones. -in tariffsandnaturalgaspri this isverymuch dependenton with Bulgarianownedfirms. ICITY GENERATIONINBULGARIA hort periodoftime –about20days. each thelosseswerefrom BGL1000to30000 depending ontheoperation of theinvestorsdelayth back time willbeabout4yearsbutafterthe a coupleofmonths.ThisisthecasewhenCHP r 2heatingseasons(ifthey donotworkduring es wheresecond-handunitcanberepaidfor age pay-backtime forCH s forwhicheachpowershortages,thatarestill r industriesthathavehighheatdemand,such constant annualload).For newunitsthepay- med bylocal experts. Insome casesasthe , cancausehugelosses. some profitsfrom thepricesofheat some DHCas the CHPunit.Still, investment inCHPis ons variesalot,depe nerator therewerenointerruptionandthe of second-handCHPunitsthe investors in ultancies withrepresentations inBulgaria phase. With theinstallationofasecond- sending fiveoftheir ce. Forexample,foroneDHC heatdemand forwhichtheunit eir payments fornatural nding ontheiruse.In al hourssecond-hand P projectsinDHC Forinstance,ina experts itcostthem 108

CEU eTD Collection PhD Student: GerganaMiladinova contribution totheprojectwill to obtainlong-term bank credits. In these case The longestpay-backtimes areforlarge-scale which thereturnofinvestment average itisabout4to6yearsfornewproject The pay-backtime forHPPalsovaries alot. PHD THESIS-DISTRIBUTEDELECTR technologies, suchaswind, some CHP andphot A thirdsignificant problem andlimitation is th known foreignoneswitgoodcreditrating. developments long-termcredits DHC orindustrieswhichassetscanbeused limitation to investments. Inmost of thecases business asamain sourceofincome that are high and because of thisprojects arema projects and thereforeitismore difficulttoobt The second specificcharacteristic certified firmshouldcarry prepared bylocalexperts,exceptforthe wind, hydroandbiomass asdiscussedinSection might turnintosignificant financial loss.In Bulgaria there are general data on potential (for collected overlongperiod.Ifth potential andchoosingthebesttechnologyfor problems. First,animportant di and negotiatingwithpartners,purchasingland investments inanyothersector,suchasdeve The investment processinDGtechnologies developments. January 1,2007.Nodatawereobtainedonth adoption ofveryfavourablefeed-intariffs about 15yearsforthebanks.Suchshortowncapitalpay-backtimes arepossibleafterthe and 80%creditsfrom banksthe 5.4. SUMMARY outthemeasurements. can beasshort3years. be returned.Forexample, for fference is related to e siteortechnologyisnotchos are possibletobeobtainedas pay-back canbeabout3.5-4yearsfortheowncapitaland of DGproject isthat they ar ICITY GENERATIONINBULGARIA for windgenerationwhichcame inforcefrom can beputonmortgage whichpossesahuge wind developmentsforwhichinternationally lopment ofpre-andfeasibilitystudies,finding wind developments. Thatiswhyitimportant Most investorsintervie inly carriedoutbyinve for nowCHPunitsareco s but there are also examples for projects for s buttherearealsoexamplesforprojects s investors are interest are s investors e lackofqualifiedexperts especiallyinnew ain bankcredits.Secur ovoltaics orthelackof enough information as creditsecurities.Forlarge-scalewind circumstances asthesedependondatatobe in Bulgariahasmany similarities with equipment, andhasdistinctivefeatures 2.7, page findingpropersite,determining resource e rateofreturnforsmall-scale wind 24) anddetailedevaluationsare a projectwith 20%owncapital the developingfirms arewell- en properlythewholeproject e stillperceivedashighrisk wed mentioned thaton ed forhowlongtheir stors whohave other ities thatarerequired nstructed atexisting 109

CEU eTD Collection PhD Student: GerganaMiladinova photovoltaics andbiomass untilrecentlymakes the and thefactthat investment costsarehigh administrative procedurescanbeonethirdshorter intime (seeSection Encouragement ofInvestments (National the contrary thereispreferen is tobedistributionnetworkandforH DG projectsapartthatforbelow5MW about 2.8years(forHPPofmorethan5MW). Thereisalmostnopreferentialtreatment for individual photovoltaics)andthemaximum is The minimum number ofauthorizationsis3with different authorizationsarere The last difference and constraint istheobta authorities. some time forthem tobefixed.Anotherproblem technical supportwhichmeans thatiftherear Bulgaria therearealsonotenoughinternationalfi carry outmaintenanceandretrofittingofunits.Duetothe Bulgaria butasthetechnologiesarerather newtherearestillnotenoughpeoplewhocan the maintenance andoperationofunits.Althou on thetechnical characterises ofsecond-hand units PHD THESIS-DISTRIBUTEDELECTR about 19onaverageper DGtechnology)involvedintheprocesswhichisanother hindrance There is alargenumber ofaut bureaucratic requirements asa‘stateterrorism’. One projectdeveloperwhohadrealizedanumbe from aninterview withinvestor: As forhoweasyistoobtain difficult andvirtuallyimpossible. needed.’ (Investor) the fastestwayandtoc different waystogetthemanditisuptheinvestorpursueitsin unified systemorwaythroughwhichtheva ‘To obtainthevariouspermitsdependsonho onvince theofficer.That iswhy the variousauthorizationvery quired andtheadministrative leadtime isonaverage 2years. horities (asmany as35relatedin tial treatment forlarge-scale ICITY GENERATIONINBULGARIA PP below20kW –nowaterusepermit required.On Assembly. 1997,lastamend. 2007)forwhich ining ofvariouspermits e problems equipment with itmight takequite 15whichmeansadmini –nolicencerequiredandthegridconnection andtherehavenotbeenfeed-intariffsfor rious permitsareobtained.Theremany gh thereareverywelltrainedengineersin the administrative lead time of0.3years (for r ofDGprojectswent rms that have their representations and offer rms thathavetheirrepresentationsandoffer w muchonepushesforit.Thereisno . Thiscanbeasignificanthindranceduring is thelack of trainedexpertsinthe public realization of indicative is the following quote indicative isthefollowing quote projects undertheLawon one Lawthatregulatedthisis small size of DGmarketin some aspecttoDGandwith projects utiliz . Onaverage11to13 terest andtopressfor further anddescribed ). This 3.2.1, page41).This strative leadtime of ing them very 110

CEU eTD Collection discussed makes highlydistributedelectricitygenerationsystems verylimited inBulgaria. specially targeted at verysmall-scale unitsandallother limitations thatwere already long as20yearsforla investment canbeasshorta new unitssecond–handwindandCHPturbinesar produced underlicence,andsome PhD Student: GerganaMiladinova close tointernationalonceas The investment costsarealsodifferent,depe with DGprojects.Insome cases slow intheirresponses,notcomplying withthe to theinvestments. Moreover,whilesome of PHD THESIS-DISTRIBUTEDELECTR rge-scale winddevelopments. Thela thereisnolocalproductionap couple ofmonths forCHPunitsusedinsome industriesoras corruptionisalsoaproblem. partsofCHPunits.Duetothehighinvestment costsfor ICITY GENERATIONINBULGARIA nding onthetypeofDGtechnology,butare the institutions areverysupportive othersare legally setdeadlines,and e quitecommoninBulgaria.Thereturnof ck ofinvestment supportscheme art from some hydro,which are lack capacitytodeal 111

CEU eTD Collection Bulgaria are summarized inthetextbelow. Uyterlinde etal. difficult to bemet byintermittent s such aslongandexpensivepermitting procedur 2003a). In addition, anumber ofconcreteregul powerful lobbiessupportingthefossil support whichleadstovariousgapsandinconsis not suitedfor small-scale solutions. There that energysystems andpolicyweredevelopedwiththeviewoflarge-scalegeneration DG (ESD DG technologiesaremadeandthereforeproblems Stable, long-term andclearpolic the international experience andidentification whether similar problems existinBulgaria. The analysisisbasedonreviewofdocuments, interviewswithexperts,butalso,onreview towards constructionofasecondNPPisalsoprovided. and thusmight impede installationofnew the the renaissanceofnuclearpowermight havene In addition,abriefoverviewofenvironmental a framework andsufficientfinancialstimulifor investing inDG. important and limiting toDGinBulgaria asit prevent thewiderpenetrationofDGinBulgaria of themain barriers, i.e. (i)policy, regulator generation isminimal becauseofanumber ofbarriersthatstill ex PhD Student: GerganaMiladinova preferential tariffsasdescribed in Section the grid,mandatory purchasingofwholevolume electricity consumption by2010,obligationforthe For example, thereisanindicativetargetof The main legal andpolicyprerequisitesforthe PHD THESIS-DISTRIBUTEDELECTR 6. 6.1. BARRIERS TO DISTRIBUTED GENERATION INBULGARIA GENERATION BARRIERS TODISTRIBUTED etal. POLICY, REGULATORYANDAD 2001b;Strabac 2002).Themain policy,re etal. 2002).Ageneralproblem forDGinmany countriesis y framework isessentialwhendecisionsoninvestment in ources (EC2003a;ENIR ICITY GENERATIONINBULGARIA fuel andnuclearindustries(Cole 3 , page is a lackof tradition andwillingness for DG gulatory andadministrative barriers toDGin DG unitsasummaryofthemain developments 11%contributionofrenewablesindomestic y andadministrative, and (ii)economic, that atory barriershamper thedevelopment ofDG, gative impact overtheneed formore capacity is essentialtohavebothenablingregulatory tencies inthelegaldocuments. Therearealso nd technicalconstraints promotion alreadyexist. ofDGinBulgaria es, andrequirements andstandardsthatare ispresented.Bothareconsideredequally . However, theshare 35. However, MINISTRATIVE BARRIERS MINISTRATIVE BARRIERS of decentralizedgeneratedelectricity,and with itcanbeoneofthemajor barriersto connection ofDGwith ist. Inthis chapteranalysis DGnet 2003; IEA 2002; DGnet 2003;IEA2002; is alsoincluded.As of DG inelectricity certain capacityto et al. et 1995;EC 112

CEU eTD Collection PhD Student: GerganaMiladinova was heavyindustryandthecoun COMECON theparticipatingcountrieshadtospeci communist states,calledCouncilforMutual Economic Assistance(COMECON).In centralization after the World War IIwhen Bulgar started atthebeginningoftwentiethcentu The Bulgarianenergysystem wasplannedin PHD THESIS-DISTRIBUTEDELECTR of Ministers.Indicative target 2003 (Art.157)wastopropose targetsforrene functions oftheMinisterEnergyandResourcesas Until recently, there werenotargetsforthe pr included, thoughinconsistently,inthestrategicpapers. opinion. Atpresent,theyarestillnottreatedwith statements such as For many yearstheDGoption,apartformhydr wholesale market asthecaseofmost la i.e. reduce thepriceofelectricityfor thefi the countryandnewDGunitswillberedundant,ex units (ofabout700-800MW). Ifthesecapacitiesar example ofthisaretheplansforasecondnuc there isstillanemphasis and measures toincrease the shareofrenewables liberalization andprivatization After thechanges in1989 there generations ofengineerswere mining became ofcoal themain sourceofinco several locations.Theenergysectorwasth and tofeedthemwithelectricitylarge-scale co economy toaheavyindustrialone.Largeplants for steelandoreprocessingwereestablished 6.1.1. 6.1.2. Low PriorityfortheAlternatives ‘wind energyistoowindy’ Long Tradition ofConventionalCentralizedLong Tradition EnergySystemand Lack ofStrategicApproachandPolicyImplementation trainedinBulgariaorRussiatomanage thissystem. forelectricityfrom renewabl tendency towardstherealization were advancingslowly.With th were nomajor changesintheen try hadtomake aleapfrom rge-scale winddevelopments atpresent. ICITY GENERATIONINBULGARIA nal consumers directlyandarenotsoldonthe e backboneoftheBulgarianeconomy andthe ry buthadsignificantadvancements towards andco-generationwereintroduced.However, (Expert2004)beingillust al andnuclearpowerplan a highlycentralizedmanner. Itsdevelopment lear powerplant(of2GW) andfornewcoal wables thatshouldbeadopted bytheCouncil omotion ofrenewablesalthough one ofthe me forpartof theru prioritybutbecauseoftheEUpressureare ia hadto jointheeco e installedtherewill be anovercapacityin cept, iftheycompet alize indifferentsect o, wasnotconsideredseriouslywith laid intheLawonEnergyfrom es wasadopted only afterthe e aspirations forEUaccession ergy sector.Theprocessesof of large-scalesolutions.An anagriculturedominated ral population. Several nomic organizationof e ontheretailmarket, ts wereconstructedat rative ofthegeneral ors. For Bulgaria it ors. ForBulgariait 113

CEU eTD Collection PhD Student: GerganaMiladinova electricity isensuredfor 12yearsforthein changed toamarket basedoneat the e of theLawonEnergyfrom September 2006aprovisionwasaddedthatthe system should be green certificatesbut therewasnoindication of Energy from2004theexistingdifferentiatedfeed Another veryseriousinconsistencyisrelatedtothesupportsy renewables. 36. Thisis indicative of thelowpriority in years butusuallysoonaftertheiradoption related toDG.Forexample,se The lackofastrategic approachisalsoconn requirements enteredintoforce. photovoltaics, suchwereenforcedonlyin2 was mentioned onseveraloccasionsinthete adopted onlyin2002andthefirsttariffsfo Efficiency from 22(2)),butaseco 1999(Art. first provisionsonfeed-intariffswereincl An example ofaslowimplementation oflegislationisthein efficiency thathavebeenabolished promotion ofCHP.Measurestopromotewere acknowledges thatmeeting thetargetisnot 11% targetofrenewablesin Action Planforitsimplementation isunderdeve the PromotionofRenewableEnergySources(2005-2015) was mentioned before,itwas was todevelopshort-andlong-term plansfor Another functionoftheMinist The strategic documents related toDGinBulgariawere discussedinSection targets forco-generationandthereisnodiscussionsuchtobeset. insistence oftheEuropeanCommission andente PHD THESIS-DISTRIBUTEDELECTR 6.1.3. Mechanisms Inconsistency inPolicyandLack thetotaldomestic electricity only inSeptember 2006when veral programmes onenergyefficien er ofMEERfromtheLawonEnergy2003(Art.4(9)) but therearenosuchinthelastone. ICITY GENERATIONINBULGARIA were abolishedaswasshowninSection r hydroandCHPwerein uded intheabrogatedLawonEnergyand stallations constructed nd of2010butpreferen thepolicyagendaofenergyefficiencyand included insome oftheprogrammes onenergy ected withthelackofconsistencyinpolicy whenthisshouldhappen.Intheamendments feasible.Thereisnoprogramme forthe the promotion ofrenewables.However,asit ndary legislationforitsimplementation was 007 oralmost eighty red intoforceinJanuary2007.Thereareno lopment. Still,theprogramme from departs -in tariffsshouldbe xt forsome sources,i.e.biomass and of Security in the Support ofSecurityintheSupport consumption by2010andeven National Long-termProgramfor wasadoptedandashort-term troduction offeed-intariffs.The stem. AccordingtotheLawon before December 31,2010. troduced onlyin2002.As cy wereadoptedinrecent tial purchasingofDG replaced bytradable ears afterthelegal 3.1.1, page36. , page 3.1.1, page 114

CEU eTD Collection differentiated according tothe differentiation onthelowerlimitforvarious Therefore, thereisnoguaranteethatthetari year) thereisnoobligationthattheyshouldbe higher thantheonefrompreviousperiod. they shouldbehigherthan80%oftheelectric Another limitation withth increase theinvestment risk. will be introduced soitisnotclear whenthis shall bedetermined separateordinance(§ bya PhD Student: GerganaMiladinova 9 in theLawonEnergythatprice offeed no guarantee thattheywillbesufficiently highfor a legalactasisthecaseforexample inGerm Still, asthefeed-intariffsaresetbyRegulator onanannualbasis,theyarenotincludedin PHD THESIS-DISTRIBUTEDELECTR technologies intothesystem atthetime of implications onDGarenotfully considered. Thisisdue tothelow integration of these The secondary legislation isbetter suitedto large-scale projectsasdescribedinSection There areno taxreductionsforsmall-scale DG were abrogatedjustbeforethedate(January waiving oftheimport taxesforrenewableener abrogated LawonEnergyandEfficiency Some neverimplemented. legaltextsonthesupporttoDGwere Forexample, inthe discussed undertheSectiononEconomic Limitations There arealsootherproblems relatedtothe discussions intheMEEforintroductionof creates additional uncertainties and increases th a decreaseofthelowerlimit -from80%to Alternative Energy Sources and Biofuels. In the Inthe following Biofuels. and Energy Sources Alternative The complete name of the law is Law on the Promotion of the Utilization of Renewable Energy Sources, Energy ofRenewable Utilization ofthe Promotion isLawonthe law the name complete of The 6.1.4. Additional Complications Legal ProvisionsNotSuitedforSm e feed-intariffsisthatalthoughth

resource. Moreover, inthe proposed draftLawonRenewables ICITY GENERATIONINBULGARIA 3.2, page41. -in tariffs,disaggrega any and the Czech Republic. Therefore, there is any andtheCzechRepublic.Therefore,thereis problem willbesolved. Allthese uncertainties onetariffforallrenewableenergysources. 2001) theyweresupposedtocomeeffect. into theneedsoflargescalegenerationandits gy technologies.Unfort 127. (3))butthereisnodeadlineastowhenit ity priceforfinalconsumers fortheprevious 70% -wasproposedbutlaterrejected.This text only Law text Law willbe only Renewables on on used. and onthecontraryaVATlevyisofferedto ffs willnotdecrease. Further,there isno writing ofthelegislation andthelackof setting upofthefeed-intariffswhichare e investment risk.Fu the investment tobe repaid.There isatext from 1999therewereprovisionsonthe technologiesalth 6.2. all-Scale GenerationorCreating all-Scale ere isalower limit forthem(i.e. ted byDecember 31,2022, unately, theprovisions ough thetariffsare rthermore, thereare 115

CEU eTD Collection PhD Student: GerganaMiladinova renewable systems expertswhoarede ofthe that thesoftwarewillrunon validated forthespecificlocation(Art.1363d). investors shall prove that theyhave software to operatethe system andthatthissoftware is Another articlesaysthatfortheprovisiona National Institute forMeteorology and Hydrology. data for most windprojects if theyarenot lo (Art. 136.1aofRegulation14,(MRDPW andMEER speed asafunctionoftime anddirectionfor project proposalforwindpowerplantstheinve Some requirements areredundantandimpossible to investments asdiscussedinSection5.4,page109. However, insteadofthem enjoyingpreferentialtreatment suchisavailable forlarge-scale administrative procedures arevery complicated knowledge onthepossibleimplications that PHD THESIS-DISTRIBUTEDELECTR regulation itisstated that if there are costs conclude thatthe‘shallow’ model isused be paidbythetransmission anddistribution company respectively. Ba the costsforexpansionandrec generation unitsupto10MW uptothepropert example, theLawonEnergystipulates thatthecostsforconnectionof renewableand co- In some cases the secondary legislation includes unnecessary increasesthe investment costs. that the investors in such might alsobere mentioning oftherequirementsphot forindividual one ofthegridaninverteranddieselgenerato ensure thatthesupplyisnotin system ofphotovoltaicgenerator,invert consists According tothedefinitioninRegulati comes withtheinverterorisdownloadable software isnotessentialtor 6.1.5. Secondary Legislation thatC un systembutonlytomonitor elect this location.Thisrequirem onstruction oftransmission and/or terrupted andthatthephotovoltaic ICITY GENERATIONINBULGARIA on 14 (MRDPW and MEER2006)aphotovoltaic on 14(MRDPWand and isnotsitespec quired aback-upgenerato l investment proposalforphotovoltaicsystems for expansionandreconstr the particularlocationfornolessthan10years r are alsorequired(Art.145 (2)).Thereareno cated veryclosetoamonitoring pointofthe in Bulgaria.However, in theimplementing tobefulfilledbysmall-scale DGproducers. er, andalso,ofaccumulator (Art.145 (1)).To stors areobligedtoprovidedataonthewind y border are to be paid by the producer while y borderaretobepaidbytheproducerwhile some texts might cause. Inaddition,the There isnoclarificationhowonecanprove provisions thatcontradictthemain law.For veloping therelevant ovoltaic installationsanditisverypossible ontradicts Primary Legislation bemet. For example, intheprovisional 2006)).Itisimpossible topresentsuch ent showsthelowknowledge of ific (Installer2007). ricity generation.Ittypically distributionne system isinlinewiththe r andbatterieswhich uction they are to be sed onthisonecan legislation. Usually tworks areto 116

CEU eTD Collection with thelegalbase,i.e.Art. 141(1)of wind powergeneratorson privatehomes orinur However, evenifthere was asupportformi developed. development ofDGindustries,andpublicawareness low andthemunicipalitiesarebudget-constrained. microgeneration technologies willbe purchased other publicbuildings.Without stronginve There isnopolicytargetedatthe installation programme. unnecessaryupgradestothesystemTSO/DSO require thatshouldbe initial investor might indirectly support thepr to connectthereisnomethodology fortheshari Apart fromthehighcosts,anothershortcoming of connection –theinvestors legislation andthatTSO/DSO haveotherprio should bedoneaccordingtothelegislationby included foruseofthispartthegrid.This maintain it. Theinvestors willhavetopaytransmission fee inwhichth have totransfertheownershipofconne farm development) and5km HPP).Aftertheinvestorsconstruct theconnectionthey (fora 250. Forotherprojectstheinvestor costs wereabout10%of totalprojectcostsa (110/20 kV)attheirsiteandforupgradingof the grid(12km distancefrom thegrid)a For example, theinvestorsinwindfarm proj constructed. the substationistoberehabilitatedoraconn PhD Student: GerganaMiladinova are paidbyinvestors,whichin is used bythe TSO/DSOto included intheconnectionfee(Art.25.para1 PHD THESIS-DISTRIBUTEDELECTR 6.1.6. Inexistent Policiesfor Microgeneration finally doitthemselves. requirethatalltheexpensesre some cases, canbesignificant s hadtoconstruct7km connec Regulation 14(MRDPW andMEER2006)mentioned ICITY GENERATIONINBULGARIA nd EUR 3.5M for constructinganewsubstation nd EUR3.5Mfor nd increasedthepricepe ect hadtopayEUR1.5Mfortheconnection is aseriousfinancialbur ction toTSO/DSO inorderforTSO/DSO to crogeneration itwillnot be of DGunitsatprivatehomes ormunicipal an oldsubstation(110/20kV)ofNEK.These to 3,CouncilofMinisters2004a).Thisarticle oject ofthenextones.Also,insome cases, theTSO/DSO.However,duetoconflicting ban areas.This isbecause ofanotherproblem ection cable of severalkilometres istobe rities andpostponethe as theincomes ofthegeneralpublicaretoo stment supportitisveryunlikelythat ng of the connection costs. In this way the ng oftheconnectioncosts.Inthisway thismodel isthat whennewentrants want Therefore, ifincrease e that this niche is is soughitdesirablethatthisniche lated tothe connection of DGunits amount ofmoney,especiallyif tion tothegrid(forawind partoftheirinvestment r installedkW byEUR den fortheprojectand e investment costsare of theshareDG, construction ofthe possible toinstall 117

CEU eTD Collection PhD Student: GerganaMiladinova above stipulatesthatwindgenera PHD THESIS-DISTRIBUTEDELECTR information abouttheinternationa new technologiesfor some pr long delaysfortheirissuing ar are prerequisites forthesuccessfulcompletion ofprocedures.Moreover,forsome permits, documents required.Personalcontacts,insistence no singlewell-known andpre-determined sequen possible asthemonitoring ofcomplianceisnotst continuing withprojectexecutionifsome au can beverylong.Thereforeth According toinvestors,ifthesequencefor within the authorities. that playsasabottleneck.Fourth,thereis possible withalmost allinstitutionsandotherac authorities toDGintotal)whichtranslates in time andthusexpenses. Third,delaysare might beinvolvedintheprocesscanasmany as22forDGtechnology(outof35relevant documentation andfulfillingthevariousobligati detailed knowledgeofBulgarianprimary ands environmental protection,andenergygenerati average 11to13authorizationsrelated these constituteaseriousburde carried out inSections A detailedanalysis oftheadmi potential ishighandthereareno development plans.Alsothereisnozoning many cases thereisaneedforchangeof decided. Thiscreatesproblems landuseperm when regional andmunicipal levelis Another serious limitation for theuseof DGpotential isthe fact that whenspatial planning at of theclosestpopulatedarea. 6.1.8. 6.1.7. Long andComplicatedAdministrativeProcedures Lack ofInclusionDG intoRe 5.2, page e possible,andinsome cases, performed areasdesignatedforDGdevelopments arenot n toinvestments inDGproject nistrative proceduresandtheadministrative leadtime was ey startwithseveralproce ojects investorseven provided technical assistance and 88 and5.2.2,page tors shallbesituatedatleas l experiencesothatdecisions ICITY GENERATIONINBULGARIA negative environmental consequences. land designation,regionalplanning,resourceuse, lack ofadministrativ ofthecountryshowingregionswhere DG the landusedesignationandofdetailed econdary legislationandtime forpreparingof on aretobeobtained.Thisrequiresavery issuing ofallpermits isfollowedtheprocess tors anditisdifficulttopointasingleone thorizations arenotacquired. Thelater is ons. Second,thenumber ofauthoritiesthat , andregularreminders ringent orhardlyexists.Therefore,thereis ce butmany differentwaystoobtainthe its aretobeissued forDGprojectsasin 100 whereithasbeendemonstrated that gional andLocalPlanning Process dures simultaneously andeven t 500m from away theterritory bribes arerequired.AsDG are by therelevantauthorities are s inseveralways.First,on e capacityandknowledge of thoseresponsible 118

CEU eTD Collection PhD Student: GerganaMiladinova complicated thatitisraresu Such cases werediscussedinthe caseforcomplex permits whentheprocedure isso there isincompliance but after discussions they relevant authority tonoticetheworks waslimited. In some casestheauthorities areawarethat permit butthiswaspossibleastheconstruction Some investors reportedthattheystarted entirely divertedthroughHPPswhichcomp ensuring minimal negative environmental impact with theprescriptions of theEIA orwateruseandsite usepermits isimportant for implementation effectively. Thisis particularly trueandproblematic whenthecompliance The lack ofcapacitythestateinstitutions al not havestartediftheyknewthat authorities andpatience.Severa taken. Allthesemake processdifficulttopred the PHD THESIS-DISTRIBUTEDELECTR limitation –corruptionisadded information (GoloveandEto1996).Inaddition,ba namely: failure tointernaliz Three market failures relevant toDGsectorare studiedquantitatively indetailthis section, that allthebenefitsor costs general arecausedbythefactthatin thereal number of‘market failures’areobserved(Fis economics, market allocationisefficient,how failures aremorefundamental a innovation anditsmarket uptakeitispossibl failures. While withtheadvancement oft DG unitsarehigherthanthoseoftheconventi The economiclimitations come from 6.2. 6.1.9. ECONOMIC LIMITATIONS Insufficient StateCapacitytoMonitorCompliance of certainproductsor e the externalities; imperfect competition; and imperfect to the list of l investorsandprojectdevelope ch isissuedintime (seeSection nd difficulttosolve.Accordingthetheoryofwelfare therewillbesomany problems. thefactthat costs fo ICITY GENERATIONINBULGARIA echnologies andproperpol letely destructthelocalecosystems. economic ones. construction workswithouthavingtheneeded her andRothkopf1989).Th life therearesub-optimal marketstructures and so makes itdifficult for them tomonitor policy e toovercome theformer limitation, market onal ones,andfrom theexistenceofmarket verballyagreenottocheck forcompliance. ever thisisnotthecaseinpracticeanda was within theirsite and thepossibility for s. NGOsreportthatsome small riversare ict, requiring alotof time, workwith the sed onthefieldworkinBulgariaanother services arenot included in their price. r installing andoperatingsome rs mentioned thattheywould 5.2.2, page icy mix toencourage e market failuresin 100). 119

CEU eTD Collection photovoltaics) maximum 22Eurocents/kWh forsolid bi were onaveragebetweenminimum 2.5Eurocents/k (2005) calculatethatth between 2.5and4Eurocents/kWh (withonlyveryfewexceptions).Forcomparison, Resch report that thegeneration costsatwhichBulgaria comply withthe environmental regulations. information. Therearenostudiesontheexternal There isno detailedinformation available on thegeneration costsas thisiscommercial generation, areinsufficientor for R&D,usedtocompensate forthismarket failure andtopromote sustainable electricity Second, themechanisms, suchasinitialinvest construction andalsobecause environmental c electricity generationcostsfrom conventionalsourcesarelowdue In Bulgaria thelackof internalization of ex competitive. environmental, social,andeconomic benefits and toover-inefficientconsumption. Inth electricity producedfrom technol include allcostsofenergygene externalities representthefailureof themark ‘spillover’ or ‘third-party’ costs orbenefits” PhD Student: GerganaMiladinova 10 consequencies ofgeneration arenotsufficiently initial investments weresupportedbythestate First, the majority of the installations were The generationcostsfrom conventionalsourcesin society butnotbytheproducersorconsume Externalities aredefined as PHD THESIS-DISTRIBUTEDELECTR

These costs represent long-run marginal 6.2.1. 10 6.2.1.1.Cost ofElectricityGeneration . Theothertechnologies Failure toInternalize the Externalities e electricitygenerationcostsfrom “costs orbenefitsofproduction notworkingproperly.

ration into the energyprice. Th ogies thathavenegativeenvironmental andsocialimpacts costs for 2004, pay-back time 15years vary within thisrange. ICITY GENERATIONINBULGARIA constructedduringthe However, experts from theMEEinterviewed ternalities ismanifested intwoways.First, (Sloman 2004,p.291).Intheenergysector or arenowrepaid.Second,theenvironmental ment support,preferentialtariffsandsupport ets andinmany casesoftheregulators, to arenotvalued appropriately and arenot is wayDGtechnologies thatofferadditional onsiderations arenot included in the costs. n powerplantsgeneratetheirelectricityvary omass 160Eurocents/kWh(for and included intheprice.There areregulations rs themselves.Sometimes ities andtheexpensesofpowerplantsto Bulgariaarelowduetoseveralreasons. Wh biogasandbiowaste)toup (for andFuelCostsinBulgaria renewables intheEU-152004 renewables or consumptionexperiencedby is leads toun

tostatesupportattheir communist eraandthe referredtoas derpricing of 120

CEU eTD Collection delivery network.InBulgaria the natural gasprices were lower thantheinternational ones fears that the priceof natural gas willincrease development of naturalgas-fuelled CHPwillbe in naturalgas-fuelledCHPunits.Thatiswhy withoutgovernmental cheaper to produce only heatfrom coalthanto increasing priceofnaturalgas.B The biggest challengefortheincrease ofthena evaluation oftheopportunitiesshouldbeprepared. (as happenedinHungaryupontheconstruction of twobiomass-fuelledunits).Thatiswhyan creation ofscarcityin material especially fromcloselocationswhic plants isnotstudied.Forinstance, thereare possible use.Theeffectontheresource ofthe there aresignificant problems withillegallo of biomass fortheneedsofenergygeneration, potential, aswasdemonstrated inSection investors, orinrarecasesac biomass. Forhydroresourcesawaterusefee,is For themost renewables thefuelprice iszero, i. mining andcarbonemissions intothecoalpri This isdue tothe fact thatth I showsthatthespecific priceofcoal islessth Another reasonforthelowelectricityge generationcompanies. by some energy the costs formodernizations allowed to be pa the Regulator is trying to keepenergy prices lo potential problem. isdoneduetothelack This enough investments inrefurbishment arecarriedoutwhichlimits theco this would notlead to internal than most renewables.Bulgariaisalsopartic of electricitygeneration costsfrom coalitwi Plants Directive(2000/80/EC)is PhD Student: GerganaMiladinova restricting theSO PHD THESIS-DISTRIBUTEDELECTR 2 emissions frompointsources,and emissions the market andsignificantsudde oncession fee.Biomass isrelatively ere isnoproperinterna ization of allexternalities related to fossil fuels. Fourth, not mandatory after2014.Although,this ecause ofthelow priceofdomes neration costs arethe low fuelcosts. ICITY GENERATIONINBULGARIA 2.7.1.1, page ce, andduetothelowlabourcosts. possibilities foraquickexhaustionofbiomass ipating inthe EUemi ssed onto the final c ll mostprobablystillremain acheaperoption w duetosocial andpolit gging ordeforestationwhichmight limit its construction ofseveral utilize the heat waste for electricity generation generation electricity for heatwaste the utilize tural-gas fuelledco-gen i.e. therearenoenergycropsplantations,and h might leadtohighfu offinancingopportunitie e. windandsolar,orverylow,i.e.hydro an theone forbiomass, tobepaidasignifi andthe costs for the construction of heat significantly restricted. Tothisadds upthe compliance withthe LargeCombustion lization of allassoci 25. Thereisnocommercialproduction n increaseofthepricebiomass cheapandthereissignificant tically mined coalitis much onsumers low asreported ssion tradingscheme but cant burdenaccordingto will leadto anincrease biomass-fuelled power eration isthehighand ical reasonsandkeeps sts butcanbeahuge supportthefuture natural gas,andoil. el costsandtothe s, butalso,because ated costs ofcoal Table 15 , Annex 121

CEU eTD Collection PhD Student: GerganaMiladinova investment needsisessential.However,in As theupfrontcostsforsome DGprojectsca Limited InvestmentSupport market failuresandsupportformarket uptak due toproblems intheirdesignandfunctioning cycle inBulgariaarethefeed-i in thesector,creatinga‘virt improvement of productiontechnolo demand which istostimulatehigherproduction worldwide hasdevelopeddifferentpolicyinstrume To compensate forthemarket failuresandtosupportthedevelopment ofDGGovernment therefore itisnotclearhow conditions oftheagreement werenotmade av transit contractwithGazpro but afterapressureBulgarianGovernment si because ofalong-term agreement withGazprom. Theagreement was dueto expirein2010 PHD THESIS-DISTRIBUTEDELECTR protection funds butthereisnoinforma list ofeligibleprojects.Some were noCHPprojectsfunded untilSeptember 2006 (DAI Europe&EnConServices2007).Under 21.6 MW, totalprojectcosts-EUR15M,B BEERECL loans–EUR15M,grants3M), a hydro powerprojects(totalin 16.6 MW, projectcosts-EUR13M,BEER total project costs)wereprovidedfor17windpowerge Credit Line orBEERECL).From 2004untilJu (EBRD) supportedcreditsline (namelyBulgar 48. Themajor stakecomes fromtheEuropean Information onthesourcesforfinancing 6.2.1.2. FailuretoReward DG much betheincreased. will uous cycle’(IEA2003).Themain mechanisms aims todrivethis m attheend of 2006-weeksbeforetheEUaccession.The HPPwerefundedwiththeassi stalled capacity–36.7MW, tota n tariffsandtosome extentth gies. Thisonitsowncans tion ontheirnumber andinstalledcapacity. ICITY GENERATIONINBULGARIA of DGprojectswasprovidedinSection Bulgariasuchsupport e. Thesearestudied inthefollowingtext. EERECL loans–EUR5M,grants 0.4M) gned anotherlong-term naturalgassupplyand n beprohibitivelyhigh,supportfortheinitial ian EnergyEfficiencyand RenewableEnergy they donotoffertheneededcompensation to BankforReconstructionandDevelopment ne 2007loansandgrants volumes andlower thecostsperunitand the BulgarianEnergyEfficiencyFundthere ECL loans–EUR11M,grants2M),16 nd 4CHPprojects(total ailable totheinterestedstakeholdersand neration projects (total installed capacity - nts. Theiraim istocreateanincreased and renewableswere stance ofthetwoenvironmental e investment support.However, timulate furtherdevelopments l projectcosts-EUR 22M, is ratherlimited. installed capacity – (forupto20%of not includedinthe 3.2.2, page 122

CEU eTD Collection CHP, make theinstallationof can belowerthanwhatwasexpectedbytheinve toolate.As there and thereforethetariffcomes is no wellestablishedmethodologythefigures feed-in tariffsaredetermined oncethe business plan 4% in2006whileforcomparisontherateof costson which rate ofreturnowncapital Feed-in tariffs forCHPareformed atthecost-plus model and no guaranteethattheywillincrea methodology and,apartthattheysh is mainly becausetheyaredetermined on The feed-intariffsdonotprovide shortcoming duetoinconsistencyinpo Nevertheless, there are stillanumberofproblems withth of 2007preferentialtari in some well-advanced Europ photovoltaics. Afterlongwaitingfeed-intariffsintroduced in January2007 areclosetothose very favourableconditionsforwinddevelopments inBulgaria.Thesame istruefor the othertechnologiesforwhich argue thatthishasbeendone BGL/MWh, dependingontheannu increase ofthefeed-intariffsfor example, thepossibilities forconflictswithnatureconservation are lower. Dueto thesharp the development ofprojectsforlocationswherewindconditionsarenotsofavourablebut, differentiated according totheannualhoursofope tariffs forwindandphotovoltaics.SinceJune2006 tariffsforelectricitywindhavebeen page high enoughwasoneofthemain hindrancesto PhD Student: GerganaMiladinova The lack ofpreferentialtariffs Problems with theRewardingScheme limited andprovidedfrominternationalsour The dataaboveshowsthatalt PHD THESIS-DISTRIBUTEDELECTR 52). In2006and2007therewereverypositive developments regardingthe feed-in ffs werefinallyadopted ean countries (seeSection underlobbyingpressureanddoes CHP unitsatDHCunprofitable. hough thereissome supportforin set forthevarioustechnologiesor se enoughtomeet thecosts. there wasnoincrease.Nonethele the neededsecurityininvestme nvestors in other technologies al operationalhours)some investorsinothertechnologies ould be80%offinalconsumer wind power(from 120BGL/MWh to156and175 licy whichwereexplainedinSection ICITY GENERATIONINBULGARIA ces andnotbytheBulgarianGovernment. the tariffsweresetbyRegulatorwas about return for DSO was 16% (Investors 2006). The (Investors2006). The return forDSOwas16% investments inDGprojects(seeSection alsoforbiomass. irregular periods onthe basisofunclear stors. Allthese,according totheinvestors in ration oftheinstallati isready, i.e. the project iswell advanced, 3.2.3, page e rewarding scheme. Thereare vary for the different DHC. The vary forthedifferentDHC.The nts inDG technologies.This not implyfairtreatment for thefact that theywerenot ss, thesetariffsarecreating itial investment 52). Alsoatthebeginning electricity prices,thereis ons. Thisfacilitates 6.1.3, page itisrather 3.2.3, 114. 123

CEU eTD Collection connection inmany waysusingsome gapsor costs may notbepossible.Asaresult theDSO possible sothatthepricesof end bythefinalconsumer buttheRegulator istrying to squeezethe profits as much as and constructionworks.Itshouldbementioned thatmost ofassociated the unitsatpreferentialtariffs.Inaddition,th they might havetobearpartof from economic perspective,evenonthecontra the DSOorTSO.However,connectionof al. producers, includingbychargingthem very Many wayscanbeusedtobythenetworkoperators to preventthe connection ofDG et al. PhD Student: GerganaMiladinova create anumberofproblems forthegridc the TSO,whichinmany countriesarecontinui monopolies (Goloveand Eto1996).DGproducerscan be associatedwiththeproblems ofdiscrimi One ofmost commonmarketfailuresisimpe insufficiently funded. programmes toshowthebenefitsofDGandexplorepossiblelimitations arealso which thatarenot100%financedbytheEU Framework Programmes, Intelligent Energy -Europe by nationalonesistheEUsu distributed technologies.Anothersourcethat priority andthesesourcesprovideverylim donors (formoredetailsseeSection recently established Innovative Fund, own sources and uptakeofDGtechnologies.Possiblenationa The limited fundingforR&Dactivitiesrelatedto Projects Limited StateFundingforResearcha PHD THESIS-DISTRIBUTEDELECTR 2002). In Bulgaria the decision on the conditions andthefeesforconnectionistakenby 2002).InBulgariathedecisiononconditions 2002). 6.2.2. Imperfect Competition electricity donotincreasesignifican theconnectioncostsandhaveto stainable energyprogrammes (s 3.2.2, page48).Unfortunately,DG researchisnota ICITY GENERATIONINBULGARIA onnection andthepurchasin nd Development(R&D)andDemonstration nation of DG producers from the existing power nation ofDGproducersfromtheexistingpower high andnontransparent uncleartextsinBu ited supportforR&Dactivitiesintheareaof ere aretransactioncosts rfect competition, whichin thecase ofDGcan significantly outnumbers theamounts provided ry itcausesadditional ng tobenaturalmonopolies, andtheymight DG unitsisnotbeneficialtoTSOandDSO and TSOaretryingtore isfindingofco-financing.Demonstration l sourcesaretheNationalScienceFund, the DG inBulgariaalsolimits thedevelopment ofthe researchinstitutes and private ). Still,themain problem for those of be seenascompetitors bytheDSOor uch astheRTDandEnergy lgarian legislation. purchasetheelectricityfrom tly andfull recovery of these connection fees(Jorsset expenses andlossesas g ofDGenergy(Jorss related tonegotiations fuse orpostponethe costs arepaidatthe 124

CEU eTD Collection PhD Student: GerganaMiladinova Third, itismoreofapracticethan exception to substation or closetoitthevoltage willhave tobe transformed backto20 kVandto11kV. be transformed to110kVandif distribution network.Iftheunitistobeconnect works at11kVitcaneasilyfeedelectricity lower if itis tobesupplied totheclose-by fact thatthevoltagewillhave way theconnection costs canbecome prohibitory even if there is distribution netw transmission network(Art.50,Regulation the secondarylegislationifa Second, theDSOmight refusetoconnectDGunits Art. 3,para1and2,Regulat using the‘nonexistent’ is nogridintheareabutatsame time they refused connectionofanewCHPunitinstalledattheDHC–Burgason instance, accordingtoexpertsfrom DHC First, some DSOclaim thatitisnottechnically PHD THESIS-DISTRIBUTEDELECTR indefinite longperiodsbefore theycanstartse should bebuilt. Theyarenotapriority for network orsubstationsis requiredasinthe Even more problematic arethecaseswhenconstr of 3months asincludedinthelegislation. months beforeobtainingthepreliminary contract Still, there aredelays withbothTSO andDS in some casesiftheDSOrefusestoconnectTSOmight proposeacontractassolution. Regulator intervenes. Thereismo with aproject whenthere aresome issuesthat the privatization of theDSOthereisnocontro investors nobodyrespectsthedeadlines.Accord described inSection in thelegislation withinwhichdecisions on theconditions,andsigningofpreliminary 5.2, page88.However,therearenopenaltiesandaccordingtothe network. Possibilityforarefusalon ion 6from9.06.2004(MEER2004c). to betransformed tohigher,i.e.400kVor unit isofthiscapacitythen ork much closertoth re control of theTSO(NEK),whichisstillstate-owned and it istobesuppliedbackthedistributionnetwork atthe ICITY GENERATIONINBULGARIA distribution network.Forex 6 from 9.06.2004,MEER2004c).Thishappens legislation thereisnotimeframe onwhenthese - Burgas,StaraZagoraDistribution Company should bemade andannounced,whichwere the DSO/TSOandinvestors might wait for O. Forexample,DHC–Burgaswaitedfor9 are notwelcomed bytheDSO.Inthis casethe lling theirelectricity. Mo weresellingelectricitytotheDHCobviously havedelayswiththe into10kVoraftertransformation 20kV ing tosome oftheinvestorsinterviewedupon feasible fortheconnection toberealized.For ed totransmission network thevoltage hasto l onthem anditisve forconnectiontotheel uction, reconstructionor and finalcontracts.Therearefixedperiods high. Therewillalso ofmore becauseaccordingto than5MW e unitthanthetransmission grid.Inthis technicalgroundsisincludedin itshouldbeconnectedtothe development ofastudy ry difficulttoadvance the groundsthatthere reover, inthecaseof ample, ifagenerator 220kV,andbackto ectricity gridinstead be losses dueto the rehabilitation of the rehabilitation ofthe 125

CEU eTD Collection information (GoloveandEto1996). InBulgaria accuracy oftheinformation; andlimited abili different forms suchas:(i)lackofinformati whole economy andisrelatedto The problem ofimperfect information istypical not only for theDG developed thereisalmost nocompetition whic precondition fordrivingofthepricesdownbu number ofDGsuppliersandinstallerssoth Another veryimportant areainrespectofimpe deep charges model is secondary legislationisdubiousa connection costsareaccordingtotheshallowm grid ofrenewables(includinghydroupto Finally, asdiscussedinSection operator) issupposedtodoitbuttheyrefuse to connectnaturalgasnetworkalthoughBulg build automatic natural gasdispatching station It isnotonlytheDSO/TSOthatabusetheir are included intheconnection feethese PhD Student: GerganaMiladinova control they might include whateverthey want commission thestudyonconditionsforth maintenance programmeoftheTSO/DSO. that arenotneededfortheparticularc rehabilitation ofthenetworkandsubstations,in Forth, theTSOandDSOmay requireunjus pay forit. themselves and,asthecostsforitareincludedin some investors about8months). Therefor public procurement procedure which willcause a the TSO(NEK) asastate-ownedcompany,evenif PHD THESIS-DISTRIBUTEDELECTR 6.2.3. Imperfect Information de facto appliedwhichisase thetheoryofboundedrationali 3.2.1, page42inBulgariatheconnectiontoelectricity nd providesthatallthecostsaretobebornbyinvestors,i.e. ones willalsobebornbytheinvestor. ICITY GENERATIONINBULGARIA onnection orshouldbedonewithinthenormal dominant positions.Forexample,oneDHChadto d. Thetotalinvestment wasaboutEUR200000. 10MW) andcogenerationiscompulsory. The on, (ii) high cost of information, and(iii) lowon, (ii)highcostofinformation, h isessentialfortheirproper functioning. e, usuallytheinvestorsdoconnection . Becauseoftheexistin and highpressurenatura stallation ofexpensiveopticalcablesandother However, the TSO/DSO aretheonethat However, theTSO/DSO e connectionandasthereisnoindependent odel butasdiscussedinthesame sectionthe theconnectionfee,they at thereis arealcompetition.Thisis argaz (thenaturalgastransmission network ty of the actors touseoractuponthis ty oftheactors dditional delays totheproject (according to rfect competition isthe lackofsufficient t asatpresentthemarketsarenotwell there isinsufficientdata onthepotential, they decidetobuildithavefollow rious barrierotDG. tified demands forreconstructionsor ty. Thisproblem emerges in g model whenallcosts l gaspipelineinorder arealsosupposedto projects butforthe 126

CEU eTD Collection PhD Student: GerganaMiladinova 14 13 12 11 similar studies.Mostofthesest organizations arekeepingthereportsascommerci contacts and becausetheyareto beused reports thatwereusedforthewritingofSection obtain thereportsonpotenti reasonable pricefromorganizatio While information ontheavailabilityofwind,h in thetext. investment process, and theavailability of financing asdiscussed onseveraloccasions earlier PHD THESIS-DISTRIBUTEDELECTR or theresponsibleinstitutions process asitcausesdelaysandrequiresadditional resourceseitherfortheprojectdevelopers relevant authoritieson how todeal withthem. Thiscanbeaserioushu technologies arerelativelynewan the institutionsonhowtodealwithspecific Another aspectoftheproblem RIEW andsomeofthem websites evendonothaveinternetpresence. Veliko Tarnovo Information ontheEIA isalsoprovidedonsome municipalities, suchas the construction orregionalplanningpermits isincludedonthewebsitesof several websites. Forexample, detailed explanation on some oftheprocedurestobe and theInvestBulgariaAgency information isprovidedintheinvestments guide There isalso limited information ontheinve observations, andmay notalwaysbe purposes, for example wind speed is measured at free. Anotherproblem withtheda funding, i.e.arepaidbytheEUorBulgarianta http://www.riosv-vt.hit.bg/p1.html http://www.riosv-vt.hit.bg/p1.html http://www.dobrich.org/index.php?s=sc&id=73 http://www.pernik.bg/services_3.html http://www.blgmun.com/?lang=bg&t=2&id=94 14 , Pleven 15 , andRusse carried outatlocal levelisso

Municipalities of Blagoevgrad with theimperfect information bothtosolvetheproblems. udies were carried outwith th (for more detailsseeSection3.2.3,page al preparedundervariousstudies.Thiswastrueformost ta onresourceavailabilityisth n responsibleforitscollection, d thereisnopropertraining adequateenoughforDGneeds. ICITY GENERATIONINBULGARIA 16 ). However,thisisnottrueforallmunicipal or forresearch purposes. Inmany casesthe x payers,andthereforeshouldbeavailablefor for DGtechnologies issues asmost ofthese ydro andsolarresourcescanbepurchasedata the proceduresandfees s preparedby theEnergy EfficiencyAgency 10m heightas partof 2.7. Theywereobtainedbasedonpersonal ofthewebsitesRIEW (suchasRIEW stment process.Insufficient oroutdated al productsortrying metimes providedonthemunicipal e EUorBulgarian Government 11 is thelackof at theyarecollectedforother , Pernik of thoseresponsibleatthe itisnotalwayseasyto regularmeteorological rdle toDGinvestment forobtainingvarious to usethem forother 52). Information on 12 , andDobrich knowledgewith 127 13 .

CEU eTD Collection PhD Student: GerganaMiladinova 16 15 have towaitmore. Still, investors declared thatitispossible to environmental protection,firesafety, those thathavetogivethei investors arethoseresponsibleforissuingenvi the delaycaused significant financial losses. Usuallythe institutions mentioned bythe contested thedecisionofauthorityincourt. or projectmodifications werere administrative proceduresweredelayed,andalo and 400,000.Otherinvestorsmenti for bribes.For example, for apositive EIAtw Investors andprojectdevelopersre briefly tosummarizetheinformation onsuch impeding factor.Thepurposeis on many occasions intheinterviews withinvest ors andproject developers asan important Initially, corruption was notintended tobe includ are important andshouldbesupported. carbongenerationandlackofsigna for loworzero the impacts ofconventionalelectricitygenerati There isalsoinsufficientknowledgeandintere PHD THESIS-DISTRIBUTEDELECTR http://www.riosv.ruse.bg/ http://www.riosv.ruse.bg/ http://riewpleven.hit.bg/proceduri/usl/index.html 6.2.4. Corruption Practices r opiniononinvestment proposal quested. Inonecasethedelaywa not toproduceevidencesor port that,insome cases,theywerehintedordirectlyasked and localauthoritiesevenNGOs). oned thatastheydidnot ICITY GENERATIONINBULGARIA proceed without providing bribesbutoften they practices collectedduringthefieldwork. o investors claim that Thedecisionwaspositivefortheinvestorbut on environment. Thisleadstolowdemand ronmental protectionorresourceusepermits, st ingeneralpublicregardingDGissuesand t ofadditionalandnotrelevantinformation ed intheresearchbutasitwasmentioned ls tothedecisionmakers thattheseissues or startofoperation(suchas blame some institutions but s three years as the investor s threeyearsastheinvestor wereaskedEUR250,000 want togivebribesthe 128

CEU eTD Collection Modernization IncentivesinPr identified and dealsto some extendwithth effective integrationofDGinBulgariais Detailed analysis ofthe technicalproblems rules forthesmooth integrationofDG. by legislators,regulators,gridoperators,andgr protection, andcontrol. extensions/enforcements isneeded.Itwill PhD Student: GerganaMiladinova 17 true forwindandhydropowersources(Ignat of gridcapacitytouptakethe One ofthemostcommonlyacknowledgedproblems Energy Centrebutatthetime ofwritinghasnotbeencompleted. under theSixthFramework Programme oftheEU order tomaintain ahighlevel the design,constructionandoperationofmedium middle tolowvoltage)powerflowsthatimpose the medium andlowvoltagegridcreatereverse frequency controlproblems. Theelectricityinjectionsto concentration inremoteareasis potentialsourceof predictability ofwindpow problems might beexpected. For example, thelimited intermittence of some DGsources anumber of technical With thecentrally planned electricity system andthe existing problems isprovidedinthetextbelow. primary Therefore,abriefoverviewofthe importance. mana to gridconnectionand the growingnumber ofDGinst primary objective of the presentresearch. However,with A detailedstudyofthetech PHD THESIS-DISTRIBUTEDELECTR

EU Sixth Framework Programme project, Ref: FP6-2002-INCO-WBC/SSA-3, start date: February 1, 2007 6.3. TECHNICAL LIMITATIONS In addition,anumber ofactionsand

er andthegeographical electricity producedbydistributed generation.This is mainly nical limitations isnota allations, theissues related of securitysupply,more pla e-accession Countries(DINEMO) gement will become of gement willbecome of ICITY GENERATIONINBULGARIA notavailable.Theonl concernparticularlytheautomation, relay and themeans forreliableandeconomically e problem isentitledDistributionNetworks id users,aiming ates ovski 2006).Forinstance,most projectsfor to thenormaldirection(whichisfromhigh significant changeofth andcoordinatedbyth andlowvoltageelectricitynetworks.In revealed during the fieldwork isthe lack mountainousarea, Photo: G. Miladinova a transmission in line Medium voltage investigations needtobetaken nning securityforfuturegrid 17 . Theprojectisfinanced tablishing ofharmonised y studythathasbeen e standardsregulating e BlackSeaRegional 129

CEU eTD Collection deterioration ofenvironmental quality. the precautionaryprincipleshoul Environmental Impact Assessment (EIA)should such ashabitats destruction,increased birdsmo more environmentally benign thanthetraditiona PhD Student: GerganaMiladinova content. However,itshouldalsobementione the high shareofcoalinBulgarian electric The problem withgridisnotso areas because of lowgridcapacity. realized there willbeasignificant problem withtransmitting theelectricity generatedtoother rehabilitation ofthenetworkwhennewunits problems associatedwiththissituationisthattherearehigh costsfortheexpansion and and isnotwithgoodspatialcoverage wind farmsare forsitessituatedattheNorthern PHD THESIS-DISTRIBUTEDELECTR resource depletion,pollutionandCO or lesspollutingconventionalonessuchasna that isless harmful toenvironment andtohum One ofthemainDGisthatitprovidesanopportunityfo benefits needed. studies ontheimplications andneedsrelatedto dispatch andcontrol,(iii)specialinterfaces,a be on:(i)newsystems ofprotectionandauto power accumulationcapabilities” electric power networksisrequired,mainlyin technical problems fortheintegrationofDGandthat Preliminary conclusionsfrom proj DINEMO with biomass projectsasitwill small tohave any impact onthenetwrok.Itis heating orindustrialsiteswherethereisalr 6.4. ENVIRONMENTAL ANDSOCI ENVIRONMENTAL depend wheretheyareconstructed. acute withCHPunits because they d beadoptedinallcaseswhen (BSREC2007,p.24).Itissuggestedthatemphasis should 2 emissions. Thisisespecially true taking into account ICITY GENERATIONINBULGARIA ity generationmix andits eady gridconnection.PVdevelopments aretoo d thatalthoughDGtechnol termsofmanagementandimprovementthe an healthbyutilizing lo AL CONSIDERATIONS AL CONSIDERATIONS difficulttosaywheretherewillbeproblems nd (iv)storages. Nevertheless,more detailed BlackSeacoast.Therethenetworkis110kV are connected.Inaddition,ifallprojects mation, (ii)remote monitoring, decentralized wider DGintegration totheelectricitygrid is ect acknowledge that l ones,there arestillenvironmental impacts, be conductedfortheproblematic casesand rtality rates, deforestation.Thatiswhyan tural gas, whichleads tothe decrease of insufficienttransfercapacity.One ofthe “radically new developmentofthe theremight beirreversible areusuallybuildindistrict r electricitygeneration cal, renewablesources highsulphurandash there are numerous numerous are there ogies areconsidered 130

CEU eTD Collection a river, it hosts abundant in species rare habitats and is important biological corridor (Save Kresna Gorge 2007). on the border of continental andMed PhD Student: GerganaMiladinova 18 interest ofthegeneralpo against theinstallationofDGunits.However,th barriersatpresent, there arenoseriouspr As forthesocial residues shouldbeexploitedfirst. opportunities fortheutilization treated carefully sothatitdoesnotleadtode Although biomass electricitygenerationinBulgaria procedures andearlyinvolvement of indicate thatthereisaneedofmore environmental therenewablesandparticularlyhydrowindshould NGOsregarding organizations, suchasBirdLifeinternat negative positionregardingthe projects arealreadyheavilycriticizedbyenvi two major birdmigratory routespassingthroug their possiblenegativeimpactonmi The otherareaofconcernareforwindfarms de that are with connections tothecurrent au good returns, thebancame todiscourage thecu However, some investors years ontheconstructionofHPPinarea.Thismove waswelcomed bytheNGOs. protests ofenvironmental Ministerof NGOthe There wasaheatedpublicdebateontheprotectionofKresnagorge authorization. located atprotected areasorwithvulnerable Environmental Protection Inspectorates. Some now thereareseveral hundredproject proposal wind parks.Forinstance,dueto proposals forhydropowerplantsandsome of At present, inBulgariatherearegrowingc PHD THESIS-DISTRIBUTEDELECTR

The Kresna Gorge is situated in the Southeast part Bu part of the Southeast in issituated The Kresna Gorge pulation inDGtechnologies. suggest thatasitbecame apparent

iterranean climatic zones, andrelief, i.e.between two mountains andalong the existing preferential tari projects bythewell-knowninte of woodwastefromindustrialprocesses andagriculture stakeholdersintheprocess. gratory birds.Sme ofthesite ICITY GENERATIONINBULGARIA thorities willbeabletobuildtheir HPP. ional. Thegrowingnegativeopinionamongthe transparent Environmental Impact Assessment oncerns abouttherapidl ronmental NGOsinBulgaria.Therewasalsoa ecosystems butstillsome ofthem aregranted rrent investors andwhenitwillbelifted firms forestation insome regions.Thatiswhythe Environment andWaters putabanfortwo h Bulgaria,calledViaPontica. Some ofthe of theprojectsarefor velopment atthe BlackSeacoast becauseof lgaria. Due to the specific climatic conditions, i.e.itis climatic conditions, to thespecific lgaria. Due e main constraint isthelowawareness and s submitted forapproval attheRegional the projectsrelatedto isnotdevelopedyet otests from thelocalpopulation that thisisabus ffs andsmall installation costs rnational natureprotection s arepartofononethe y increasingnumber of 18 andafternumerous construction atsites theconstructionof it shouldalsobe iness withvery 131

CEU eTD Collection about EUR3billion(Kirkova 2005 design, andforfuelsupply andnuclearwastemanagement. Theforeseenprojectfinancing is design, constructionandcommissioning ofthetwounits,whichwillbeRussianVVER In 2006theRussianAtomstroyexport JSCwona Bulgarian Academy ofSciences. were concernsregarding seismic safetyofthesitewhichwereraised byresearchers atthe PhD Student: GerganaMiladinova population, andthelackoffinanc the local community andenvir was putonholdin1992(ParsonsE&C–Europe was taken.The constructionoftheBeleneNPPwa project and,afterpre In December 2002theBulgarianCouncil ofMinistersdecidedtoreopen theBeleneNPP of energyhubtheBalkans. of nationalprideandthe EUdemands asanat for theconstructionofasecondNPP.Thenuclear energydevelopment waspresentedasissue European Unionwasskilfullyusedbythenucle four ofthesmall units(440MWat each) plant whichissituatedclosetothetown electricity generation–41%in2005.Atpresen inSection As wasdiscussed Bulgaria ispresented.Formore inform centralized projects.Inthisli decentralized electricity generationpathandal now advancingquickly. Thesedevelopments w population theplansforconstructionofasecondnuclearpower–BeleneNPP,planare energy mix wasreconsidered and withthesuppor and unlikelytohappen.However,bytheendof NPP andmanyexpertsconsideredthataconstruc was decreasingwiththeongoingplansforclosur When thepresentresearchwasinitiatedin2002 PHD THESIS-DISTRIBUTEDELECTR 6.5. GENERATION INBULGARIA? GENERATION TODISTRIBUTED NUCLEAR POWERASAMAJORBARRIER liminary studiesinApril2005,afina ght abriefintroductiontotheissu 2.2 nuclearenergyhasaconsiderable shareinBulgaria’s onmental organisations,thene ing. Anotherimportantfactorfo ) althoughsome expertsargue ation pleaserefertoMiladinova(2006). ICITY GENERATIONINBULGARIA of KozloduyontheDanubeRi Kozloduy NPPafterstronginstancefrom the tempt todeprivethecountry ifitskeyposition so revealsthe strongbiastowardslarge-scale ar lobbytogainlarge theimportance ofnuclearpowerinBulgaria 2006 theplaceofnuclearpowerinBulgarian ill inevitably haveanegative impact on the t Bulgariahasoneoperatingnuclearpower t of Bulgarian government, most partiesand s initiatedattheendof1981butproject Ltd. 2004).Thishappenedafterprotestsof tion ofnewunitsisveryexpensive,risky tender forthecontractorresponsible e offourthesix l decisiontobuildtwo1GW units es relatedtonuclearenergyin gative opinionofthegeneral r theshelvingofproject that itwillreachEUR5 support from population units attheKozloduy ver. Theclosureof 132

CEU eTD Collection Assessments withoutpublic tenderasislegally Europe Ltdwaschosen tocarryouttheEnvironmental ImpactandtheTechno -Economic Administrative Courtagainsta number of the project (TheAccess it. Second,thereisastrongre information for theproject andthelack of inclus ignored. First,thisisthenegativeattitude oftheGovernment regarding theprovisionof but, thereisoneotherveryimpor There isnospacetorehearse allthearguments starting market reforms andothersaremember and ofelectricitymarkets intheregion assome electricity market.Ingeneral, itisdifficult to project willensure the leading electricity exportingpositionofBulgariaontheregional about 2014-15(Kaschiev2005b).Therearealso consulting firm Totem Engineer also contradictstudiesbytheWorldBa experts (Brunwasser The justification of the need will becompetitive ontheregional export between5and7TWh annuallyandthatthepriceofelectricityge agreements towhichBulgaria isaparty. Onaregional level itisestimated that Bulgariacan order tomeet growingelectricitydemand andto of between1GW and2GW newnuclearcapac PhD Student: GerganaMiladinova 1.6 GW should beconstructedbythen.According the 2007-2010periodwillbecriticalforBulgar (2004-2020) (NEK2004a)preparedbytheNationa Balkans. Inanofficialstudy,calledBulgaria exports and thecountry willloseitskey position ofamajor electricityexporterinthe exports inshort tomedium-term. Thiswillle (NEK 2004a)existingcapacitywillnotbesuffi The main argument fortheconstructionofBele DG promotion thepositiveeffectmight beconsiderable. billion (Kaschiev2005b). PHD THESIS-DISTRIBUTEDELECTR etal. Initiative 2004).Thisresultedin If allthesemoney arespentonth 2004;Dimitrov 2005;Kaschiev2005a).TheNEK’scalculations for newcapacityonsuchascale sistance bythepublicauthorit ing accordingtowhichnewlargecapacity willbe needat tant characteristicofthew market inthe next10-15 years. ICITY GENERATIONINBULGARIA nk, RWERheinbraunandtheBulgarianenergy government institutions. Third,Parsons E&C predictthedevelopmen n Power Sector Least-Cost Development Plan n PowerSectorLeast-CostDevelopment Plan s oforjoiningtheEUanditsmarket. required.Moreover, itwas paidUS$8 million for andagainst theconstructionofBeleneNPP ian energysystem andnewcapacitiestotalling ad toadeclineorstoppingoftheelectricity ity duringthe2010-2015pe comply withtheinternational environmental cient tocover domestic electricityneedsand ion ofstakeholdersin ne NPPisthataccording tosome scenarios of thecountriesarestill intransition orare to allpossiblescenar l ElectricCompany, itwascalculatedthat arguments againstthereasoningthat e reductionofenergyintensityand hole processwhichshouldnotbe ies forprovidinginformationon several appeals totheSupreme is heavily criticised bymany t ofelectricitydemand the decisions related to ios thecommissioning nerated inBulgaria riod isessentialin 133

CEU eTD Collection PhD Student: GerganaMiladinova support inBulgaria isproposedinthenextconcludingchapter. comprehensive framework forimprovement of Bulgaria aspresentedinthe that DGwillnothavehighpene limited supporttoinitialinvest long administrative procedures;lackofclear support; difficultieswith texts thatprovideopportunitiesforDSO/TSO to preventDGconnection;complicated and inconsistencies inthepolicy framework toincrease the investment risk; contradicting legal electricity generation in Bulgaria.Until DGisw The listofbarrierstoDGinBulgariaisratherlongwhichexplainstheirlowcontribution increase ofDGsharemight betheEU requirements thatthecountryhasadopted. this happens theprospects of DGwillbe very limited and theonly driving force behind ensured therenaissanceofnuclear criticisms oftheproject andthedisbelief of ma size oftheprojectmight beharmful totheec agreementscost ofstateguaranteesorlong-termpurchasing whichtakingintoaccountthe However, theGovernment seems determined toc fuel. evaluation of thewholefuelcycleincluding th attacks, seismic activityandot according towhom it did notincluderesearchontheriskofseriousaccidents, terrorist Environmental Protectionalthoughitwasheavilycriticizedby issues (Kaschiev2005b).Fourth,theposi prepared bylocalexpertswhohavemuch lowe for thejobandexpertsclaim thattheamount couldbe70-80times lessiftheevaluationwas PHD THESIS-DISTRIBUTEDELECTR 6.6. SUMMARY ments andfundingofR&D;ma text aboveandoverviewofth her issues(TheA tration inBulgaria. Based on electricitygenerationwillbeco ICITY GENERATIONINBULGARIA onomic development ofthecountry.Despite tive EIA was approvedbytheMinisterof tive EIAwas ny international experts, if sufficient funding is e management ofradioactivewasteandspent thepolicyframework forDGtechnologies r hourratesandarebetterawareaboutthe ith lowpriority,thereare:uncertainties and ontinue withtheprojec ccess Initiative2004). the overviewofbarriersin environmentalists andexperts e international ny other,itcanbeexpected me arealityinBulgaria.If t possiblyevenatthe therewardsystem; There isalsono experience a 134

CEU eTD Collection PhD Student: GerganaMiladinova buildings andnewlarge- opportunities forintroduction of Denmark andGermany forphotovoltaics,Germany with much lowerpotentialandhighersharesof lagging behindinterms ofutilizationthispot for biomass, wind,solarandforsome hydro.Neve In Section Increased sharesofDGcandecreaseenergyimpor developed, therearesome hutsandremote hou 170V insteadofrequired220V±5%).AlthoughBu severe problems withpowerquality(withvolt low voltagenetworkswhich,duetoinsufficientinvestments ingridrehabilitation,sufferfrom DG canalsooffergridenhancement functionsas employment tothemost vulnerablesegment harmful emissions. Biomass DGdevelopments poor qualitycoalthatisused provide market nicheforBulgarianfirms. DG ways. With propersupportmechanisms DGe DG canbebeneficialto Bulgariansociety, eco Bulgarian Government aims atachieving withitsDGpolicy. the available policyoptions and their implicat concludes withthedescription opportunities andlimitation ofpossiblenegative order toprovideinvestorsa barriers waspresented.Inthisfinalchapterthe system, of thepublic policy that aim tofacilitate its uptake and itslimitations, and of the In thepreviouschapters adeta PHD THESIS-DISTRIBUTEDELECTR 7. PROMOTION OF DISTRIBUTED GE PROMOTION OFDISTRIBUTED 7.1. RECOMMENDATIONS CONCLUSION: 2.7.1 itwasshownthatthere issignificant potential for renewablesinBulgaria, i.e. BENEFITS AND POTENTIAL FOR DGINBULGARIA FOR ANDPOTENTIAL BENEFITS scale buildingdevelopmen for powergenerationinBulgaria of severalpossiblescenariosDGfuturesanddiscussion iled analysis of theintegration of DGintoBulgarian energy nd otherstakeholderswithenablingenvironment, equal CHP unitsindistrictheati ng companies, formunicipal ICITY GENERATIONINBULGARIA of population–ruralpopul ions dependingonpossibl can supporttheruraldevelopment andprovide theresourceintheir ses whereDGcanprovide off-girdelectricity. nomy, environment, andsovereigntyinmany quipment industriescanbecreatedand age variationsatsome placesbetween 160- basic requirements thatshouldbeadoptedin generation can alsobeanalternative tothe NERATION INBULGARIA DG electricityisusuallyfedintomedium or ential, i.e. thereare t dependencywhichat impacts ofDGaredescribed.Thechapter ts, andinindustries. AND SCENARIOS FORTHE ANDSCENARIOS rtheless, itisobviousthatthecountry for wind),Therearealsoconsiderable lgarian electricgridisratherwell and inthiswaydecreasethe energy mix (forexample a number ofcountries ation andminorities. present isveryhigh. e objectives thatthe 135

CEU eTD Collection with theStrategyon German Government signals toinvestors.Good examples ofsuch exist inBulgariatheyare oftenabolishedor or long-termprogrammes anddeta The waysthe targets aretobeachieved further policyinstruments adopted. achievement aredevelopedandenforced,thatthe including CHP.Itisimportant thatoncetarg even though indicative,andpossiblyadopta developments in DGarea itshould reconsider theimportance andthe role of these targets, commitment fortheiraccomplishment. IftheBulgarian Government wantsmore under EUaccessionpressure and, basedonthepresent research, thereisno strong increased DG shares.The existing indicative targ Ambitious butachievabletargetsareimportant policyareas thatlacksuffici existing supportingmechanisms shouldbest with astrong Government commitment. Tof stimulating investments inthe Therefore, thecreation ofalong-term,stable and clearframeworkisamain precondition for The perceivedriskofDGinvest one ofthemainlimitation bytheinvestors. should beplacedontheeliminati Recommendations totackle these issues areprovided inthe following text. Special emphasis strong commitment, measuresfortheiraccomp Bulgarian Government, ambitious butachievabl and PhD Student: GerganaMiladinova regulatory barriers (seeChapter Bulgaria and ageneralframework wasesta In therecentyearstherewere PHD THESIS-DISTRIBUTEDELECTR 6) thatneedtoberesolved.IftheincreaseofshareDGisapriorityfor 7.2. 7.2.1. RECOMMENDATIONS POLICY, REGULATORYA Long-lasting, BindingandClearPolicyLegalFramework ent support(suchasfinancia considerable advancements inth area. InthisrespectstrategicapproachtowardsDGcoupled 6) andproblems withthesupportmechanisms (seeChapters ments isclosely related totheexisting policyenvironment. on oftheadministrative barrier iled short-termactionplans.While suchdocuments already ICITY GENERATIONINBULGARIA ND ADMINISTRATIVE notimplemented atallwhichdoes notsendgood ets areadoptedaccompanying measures fortheir documents areavailablefrom allacross Europe dditional ones fortheindividualtechnologies, ontheUseofOff-shore Wind Energy (BMU blished buttherearestillmany policyand be laiddowningeneraloverarchingstrategies rengthened and new ones proposed for the rengthened andnewonesproposedforthe acilitate the uptakeofDGtechnologiesthe lishment improvedand newonesdeveloped. ets forrenewableelectricitygenerationcame e targets should beadopted combined with progress isregularlyfollowedandifneeded element ofaholistic approach towards l andfiscalinstruments). e publicpolicyrelatedtoDGin s astheywereidentified as 136 3

CEU eTD Collection PhD Student: GerganaMiladinova broad groupofstakeholders,suchasproject When changesinthelegislation aremade, incl sections ofthisChapter. occasions inthethesisandrecommendations involved; andlackofinclusionDGinthepl financial supportsystem; thehighnumber ofau the DSO/TSO.OtherseriousbarrierstoDGinBulgaria are related totheinsecurity of the and theremainingcosts arepassed tothefinal evaluation ofeconomic benefitsfortheDSO/TSOofauxiliary grid shouldbebornbytheDSO/TSOwh small generatorsandthereforemight beprefer should bedeveloped.The shallowmodelforconn procedures, deadlinesthatca prevent connection,chargehighconnectionfees, inconsistencies orunclearprovisionsinthe The limitations werediscussedin detailinSection electricity purchasing and preferential tariffs,ar Although thebasiclegalprerequi awareness (Boardman perscomm 2007). authorities wereengagedinthediscussionswhichturnedveryfruitfulasitraisedtheir Environmental andARUPEconomics &Planning2002).Theywere such wasinitiated inthe UKandregional rene The introductionofregionaltarg environmental protection,industr its promotion shouldbeanintegralpartofot progress. Inaddition,theincrease of suchdocuments areclearandmeasurable comprehensive andforward-lookingapproach.Ap 2002) andtheSpanishRenewabl PHD THESIS-DISTRIBUTEDELECTR which isastepinpositive direction. Howeve groups ofstakeholders, wastakenwhenthenewlawonrenewable during theinvestment process.Such approach,but NGOs,isessentialasthey arewe DSO/TSO, and nnot beendlesslyextended,a y development, andjobcreation. e EnergyPlan(2005-2010)(EC ets might alsobeconsideredinalong-term. Discussionon sites forsupportingDG,such of DGcanbebeneficialforot ICITY GENERATIONINBULGARIA her strategicdocuments related,forexample,to ile ensuringthatcl anning policy.Thesewerediscussedonseveral r, the opinions expressed at such consultations r, theopinionsexpressed atsuchconsultations consumers andarenotanadditionalburdento existing legislationthatallowDSO/TSOto toovercomethem areproposed infurther red aoption.Thecostsforconnectiontothe objectivesandregular e inplace,changes usion intheprocessandconsultationwitha wable energy assessment prepared (OXERA ll awareofthepossibleproblems orconflicts and delayconnection.Therefore clearrules, developers,investors, withmore limited participation of different art from targets another important element ection costsprovidesfairplayingfieldfor thorizations required 6.1, page112.Thereareseveral nd penaltiesfornon-compliance as obligatoryconnectionand her areasaswell.Therefore, 2005b) beingillustrationof ear methodologyprovides services providedbyDG notadopted several actsareneeded. energy wasprepared monitoringoftheir andofauthorities local authorities, but thelocal 137

CEU eTD Collection PhD Student: GerganaMiladinova An important element isthatthesecondarylegi the variousstakeholderstheyshouldbe should betakenintoaccountandifthereisa PHD THESIS-DISTRIBUTEDELECTR establishment ofone-stopauthorisation agency provide information, adviceand support on introducing penaltiesfordelays, procedures, (iv)decreasingtheadministrative time for issui levying theneedforcertainauthorizations for Government. Theseinclude:(i)bundlingof admi medium-term severalmeasures canbetakenataveryloworminimal costforthe Significant improvementsarepossi non-discriminatory. appropriate administrative level, the regulatoryandnon-regulatory shall evaluate theexisting legislative andregul obliged totranspose and implem Directive 77/2001/EConthepromotion ofrenewables whichtheBulgarianGovernment is streamlining isnecessary. Reductionofadministrativ This environment strongly di than 5MW (andthesefigures donotinclude from 4monthsforsmall-scale photovoltaicinst engaged insome wayinDGprocess).This ofabout22 DG) andtodealwithamaximum consuming. InvestorsinDGarerequ At present, administrative procedures related if necessary. planning orenvironmental protectio the implications andpossiblecontradictionswith that exist at the moment (as wasshown inSection This provides for better consiste after theframework oneandpossiblybythesame orsimilar committee orteam ofexperts. 7.2.2. Mechanisms toDecrease theAdministrativeBurden scourages thoseinterestedindevelopingDGandtherefore ncy andfewerconflictsbetween di ent. AccordingtoitMember States orcompetent authorities and (iii)ensure thattherules areobjective,transparent and and (v)establishingorusingof barriers, (ii)streamlining and ble andcanbe achieved inse n thatmight berelevantare ired toobtainup15author reconciledandwin-winmodels sought. ICITY GENERATIONINBULGARIA significant differencebetweenthestandingsof atory framework withtheviewof:(i)reducing to DGinBulgariaareencumbering andtime possible delaysbeyondle small generators,(iii)developing‘fasttrack’ terms ofadministrative leadtime might take that providesinformation anddeals with DG slation ispreparedsi public actorsandinstitu allations toabout3yearsforHPPofmore legal acts from otherareas, such aslocal the variouspermits. Inlong-term the 6.1.5, page nistrative authorizati e burden isalsorequired byArt.6(1)of ng oftheauthorizationsand also consideredandmodified, 116). Itisalso important that expediting proceduresatthe veral ways.Intheshortand izations (outof fferent piecesoflegislation theexistingstructuresto multaneously orshortly gally setdeadlines). tions (outof35are ons andsteps,(ii) 20relatedto 138

CEU eTD Collection connect tothenetworkwhen domestic microge reconsidered. Forexample, intheUKthereisnoneedforapriorconsent from the DSOto these installations isvery small. However,whentheirshare increases this approach might be come thiswillnot beaproblem for themanagement Small unitsinstalledbyconsumers shouldbeex objections regardingtheproject(BMU 2003). provide ananswerwithinthele Germany, wherethenotionof‘pre the process.Therefore,itmight authorities (seeSection interested authorities that are notsorelevant For severalproceduresitwasmentioned that study ontheconditionsforBulgaria be exempted fromsome permits. Thesizeofthe the size ofunits is also needed. However,to permit) andthereforeadecrease is implausible tohave as much as13 steps forone authorization (as is the case with Complex In Section in thefollowing text. 141). Theoptionsfortheimprovement ofEIA of planningprocedureswhichatpres There arealsosignificantopportunitiesforthere PhD Student: GerganaMiladinova bundled andthecontractcanbeproposedtogeth if itisrequested bythe invest present, the construction permit is issued along investment processwhichshouldincludepermi (where preliminary proposalontheprojectisal documents requiredcanbesplit,forexample, proposal, coordinationapproval considered. Forexample, instead of submitting application for design visa, provisional project Based ontheanalysisprovidedinSection factor relatedtoadministrative proc relevant procedures might beconsidered. Corruption exists andisclearly another limiting PHD THESIS-DISTRIBUTEDELECTR 5.2, page88theconcretestepsforissuingofindividualpermits weredescribed.It 5.2, page be usefultofollowtheexample gally setdeadline thenitisas oftheirnumber isurgently ors. Theproceduresforelectricityconnection canalsobe 88). Waiting for apositive answeradditionally slows down of theinvestment proposal, sumption ofconsent’isused, edures thatneedstobetackled. and astakeholdersconsultation. ent causesignificant delays(seeSection ICITY GENERATIONINBULGARIA 5.2, page88bundlingofseveralprocedurescanbe decrease theburden onsma and Complex permit proceduresarediscussed so submitted forconsultation) andapproval of with theapprovalofinvestment proposalonly neration unit is installed (Ofgem 2006). Once neration unitisinstalled (Ofgem 2006).Once to DG, such as health or fire and safety er withtheresultsfr ssion forthestartofconstructionworks. At there isaneedfor consultation withother betweentwoauthorizations–designvisa installations shouldbedecidedafterdetailed duction orevenabolishment, insome cases, empted fromauthoriza of thegrid asthenumber andthe size of needed. Differentiationbasedon sumed thatitdoesnothaveany of otherEU countries,suchas and constructionpermit the i.e. iftheau om theconnectionstudy. ll projects they might tion. Intheyearsto thority doesnot 7.2.3, page 139

CEU eTD Collection PhD Student: GerganaMiladinova is practicedinGermany andhasfacilitated th obliged toprovidepositiveanswertheperm requirements andthereisnooppositionfrom intere decreased and if theresultsof theinvestigations showthatthere is compliance withthe The administrative time for decisiononce al are required(E.V.A.andÖEKV2003). to 0.5MW, dependingontheLänder,shouldonly also applied inAustria where,forexample, sm the unitisputintooperation the installers shou PHD THESIS-DISTRIBUTEDELECTR support tooff-shore winddevelopment inGermany (EC2005b). Bundesamt fürSeeschifffahrt undHydrographie burden andprovideenablingclimate forinvestment environmental protection,might besought.This information andauthorizationsformost ofthe In long-term theestablishment of aone-st with DGprojects. (for more detailsseeSubsection InvestBulgaria Agency, ortheBulgarian Sma alternatively byoneoftheexistingagencies,i. documents required.These can be carried ou information ontheadministrative procedures investment processistheestablishment of an Another mechanism thatwillpromote DGt are met, shouldalsobeintroduced. therefore administrative sanctionstoprovideadditional guarantee that thelegal requirements At present,delaysfrom theseandotherlega taken, i.e.atleast5months fortheissueof it takesasubstaintail amountoftime forthefi permit should be decreased. Forexample,aftera positive study issubmitted totheauthorities, (BMU 2003).Alsooncealldocuments aresubmitted theadministrative time forobtaining of 3.2.3, page52).TheEEAisthemost experienced in dealing ICITY GENERATIONINBULGARIA Complex permit andatleast3months -forEIA. lly set deadlinesareaverycommon practiceand e investment processin ll andMediumEnterprisesPromotion Agency it request.Thisapproachof‘boundedconsent’ procedures, suchasthoseforresourceuseand and supportintheprepar ld onlynotifytheDSO.Thesame is approach all-scale CHPinstallation withcapacity of up agencywiththemain functionstoprovide e. theEnergy EfficiencyAgency(EEA),the op authorisation agency l thedocumentsare submitted should be nal decision oftherelevant authoritiy tobe echnologies inBulg t by a newly established organization or t byanewlyestablishedorganizationor willundoubtedlyease notify theconnectionandnoauthorizations sted stakeholdersthe inDG.Anexample ofsuchagency isthe which servesasaone-stopagencyfor renewabletechnologies aria andsupportthe authorities shouldbe ation ofthevarious that isto provide the administrative 140

CEU eTD Collection wind onshorearepresentedin environmentally friendly.Example ofsome cons concerns thatDGin Bulgariainitspresent development is more detailedevaluation oftheimpacts. required. Ifinvestorswant tode procedures canbeeased,i.e.noplanningan with data on the potential andelectricity grid historic andlandscapesite of theareasappropriateforDGdevelopments investment inDGazoningofthecountryshallbe To develop suchapproach andintegrateDGin in Germany. assessment might besufficientand DG projectswithintheurbanareasprocedur regional targets onthe shareof DGintheelectricity orenergy mix. Forthedevelopment of developments (EC2005b).Inalong-term, theGovernment might considersettingupof Sweden, areas,called ‘areasofnationalin procedure isnotneeded.Asimilar approachwa local authorities canalso designateareasforDGdevelopmentswherelengthyauthorization HPP, windfarms, biogasinstalla 2003). Thesocalled‘installations PhD Student: GerganaMiladinova be grantedconsentperse Germany. First,forareasoutsideofsettlement short-term measures, twopossibilitiescanbe considered bothofwhicharepracticedin Government aims atincreasingDGshare itshould At present,DGisnotincludedin PHD THESIS-DISTRIBUTEDELECTR 7.2.3. Planning Policy s of special value, airports, andsettlements. This shall be combined , i.e.withouttheneedofspa Table 13 tions andincertaincaseslarg velop projectsoutside the regional and local development plansin Bulgaria. If the privileged inouterar therefore no otherauthorizati , below. ICITY GENERATIONINBULGARIA Moreover, suchzoningcanaddressthegrowing capacity. Within these zones the authorization s andnatureprotectedareas,DGprojectsmight d environmental protectionpermits shallbe terest forwind’,aredesignatedwind es forconstructionpermitandenvironmental by excludingthenatureconservationareas, s alsodevelopedinSwedenandtheUK.In ideration forthepreparationofazoning considered.Thisincl the regionalplanningthusfacilitating consider itsintegration inthese plans. As theseareastheys eas’ thatfallunder tial planningauthorizations(BMU e biomass installations.Second, ons areneededasis thecase udes creatingofamap not sustainableand hould besubjectto thiscategoryare 141

CEU eTD Collection practice PhD Student: GerganaMiladinova power turbinesusedformountainhuts. mountain wherephotovoltaicsareusedforstreet connection, suchasmountainhuts,butalso pumps. Somesmall photovoltaicsinstallationsare At present,therearemostlyheatgeneration ap technologies, andconsiderab DG unitsattheirhomes andthelackofpublic reasons behindthisistheinabilityofBulgaria the BulgarianGovernment prioritiesandthere The promotion ofahighlydist X –means veryimportant criteria, Contributed policy advisor, by: ArendBosma,energy ProvinceZuid-Holland, The Netherlands Table 13. PHD THESIS-DISTRIBUTEDELECTR Local zoning aspects (distance form houses, airports, other wind turbines/parks) to electricity grid Connection Other scaleMW. developments, forlarge above10 wind energy possibilities - map ofareas/locations (large scalelandscape and/orla below/above 10 MW) - map ofareas to beexcluded from wind energy on landscape grounds (possibly with a distinction for units Landscape and infrastructure - amap of important birds' migration, foraging and brooding routes/areas. MW) 10 below/above for units distinction - amap ofnature and wildlife areasto be excluded Nature and wildlife available. when turbines wind by productions electricity of statistics - level m ground above 40-80 Bulgaria: map of speed wind - - local wind speed measurements by weather stations Wind speed Criteria forzoning\impo

7.2.4. Main criteriaforonshorewindzoning Policy forthePromotionofMicrogeneration rtance of thefactor rtance le budgetconstraints. ributed electricityge x –important, N/A-notrelevant. ICITY GENERATIONINBULGARIA and/or avoided for wind energy (possibly with some funds. Thereisalsolowawarenessabout these are nopolicymeasures forit.Oneofthemain , atonevillage–GornoOsenovoinPirin n householdstoco-financetheinstallationof plications, especially solarthermal andheat r industrial zones)rge scaleinfrastructureand/orwith industrial lightning.Thereare available atlocations neration athouseholdslevelisnotamong of acountry,basedonDutchplanning preferential preferential N/A x x x also small-scale hydro restrictive restrictive where theisnogird X x x x exclusion X x x - 142

CEU eTD Collection PhD Student: GerganaMiladinova 19 until more detailedevaluations Local Government, 2006,p.19)isin supply ofsubstantial newdevelopmentisgained on-site’ provision that thelocalauthoritiesareto ‘ Climate Change commitments intheproposed Policy Statement22(PPS22): RenewableEnergy The BritishGovernment followed theMert build. the shareofrenewableenergy,withmost pr February 2007 cities wheretheruleisappliedorunderconsiderationra 2006). Theideawastakenquicklyaboardbyot m Council decidedtoimpose anobligationonall newnon-residentialdevelopment above1,000 the UK.TheBoroughofMertonwasfirstto Obligation onthecontributionofmicrogeneration wasted. demand reduction standardsarese scheme is needed. Nevertheless,itisimportant thatfirst advancement is tobesought large developments (suchas share ofrenewablesorcoge planned intheUK.Atbeginning,anobligationon up requirements foritsincorporationintonewbuild,asis preferential loans,asinma can supportDGatconsumers levelbyprovidinggrantsor the BulgarianGovernment wantstoreversethistrend,it will possibly remain verylow if no measures are taken.If Apart formtheseapplicationstheshareofsmall-scale DG PHD THESIS-DISTRIBUTEDELECTR

For regularly updated list:http://themertonrule.org/list-of-boroughs updated regularly For 2 tohaveatleast 19 ). There aredifferentrequirements re (Department forCommunitiesandLocal

10% renewable energy of thepredicted energy requirements (Hewitt ny EU countries orbysettingny EUcountries in Merton,UK).Ifsignificant an initialinvestment support neration canbeappliedfor

Supplement toPlanningPolicySt are available.Anothersignific t sothatenergyisnot cluded. ‘Significantproportion’ ICITY GENERATIONINBULGARIA ensure that asignificant on example andincludedprovisions in ogressive requiring30%renewablesinallnew her Councilsandthenumberofboroughs (ODPM2004)andfurtherstrengthenedits leadtheexample in2003whenthelocal in anewbuildisadopted insomeparts garding thesizeofdevelopments and

Government 2006b).Inthelatter,a (Department forCommunitiesand Photo: G. Miladinova Bulgaria mountain, PV panel at Macedonia hut, Rila pidly growing(wasabout160in ant development istheproposed atement 1,PPS:Planningand is definedasatleast10% proportion of the energy energy the of proportion Planning 143

CEU eTD Collection PhD Student: GerganaMiladinova can bedonethroughthesupport:(i)ofproduct, ensures thattherearesufficient long-term andlegallybindingpolicyframework it impeding toDGpenetration.Therefore, factors In chapters carbon after2016(Departmen Government planfor“zerocarbonhousing”acco PHD THESIS-DISTRIBUTEDELECTR and 8-yearperiodforhigh- once aregulationinwhichtheexactamount ofta or clarityhow much thetariffswillbein considerably improved. Atpresent,themajor fixed overperiodof time. Graduallythe gaps werefilled outandthe system hasbeen generation untilJanuary2007while technologies. Notablytherewere design andimplementation ofthetariffswh in anumber ofEuropeancountries.InBulgaria Differentiated feed-intariffsisthemain fina discussed inthefollowingtext. (iii) fiscalmeasures targeted at differentphase and/or heatgeneratedorquotasfortheirsharein abolished in later drafts. Itisimportant that the confidence of the investorsishigh inthe all technologieswhenthe dr the LawonEnergy.Second,therewere alsoevendi ‘market-based system’ (possiblyakindofrene change ofthesupportscheme withtwoalterna dramatically. Onthisbackground the countryinspotlightsof investors thenumber of DGproj With therecentimprovements inthe scheme andBulgarian accession totheEUthat placed 7.3. 7.3.1. 5 and6itwas revealedthattheeconomic limita MECHANISMS MECHANISMS RECOMMENDATIONS FORFINAN Stable DGElectrici efficient CHPisadoptedas aft EnergyStrategyhas been t forCommunitiesandLocalGovernment 2006a). financial stimuli fortheinvestments inDGtechnologies.This nopreferentialtariffsfor it issurprisingthattheGove thoseforhydroweresetin ICITY GENERATIONINBULGARIA ty Reward Scheme ty RewardScheme ncial mechanism forDGsupportinBulgariaand remaining problem isthelackofmethodology years tofollow butthisshould alsobe solved s ofprojectcycle.Thes wable obligation)after2011asisrequiredby along withtheestablishment ofaconsistent, therewereconsiderableproblems withthe tives beingtabled.First,theadoptionofa the fuelmix, (ii)oftheinitialinvestment, or riffs overa12-yearpe ich weredeterringinvestorsincertain is essentialthattheBulgarianGovernment rding towhichallh scussions for a change to a single tariff for scussions forachangetosingletariff CIAL AND FISCAL SUPPORT CIAL ANDFISCAL i.e.preferentialta islegallyrequired. tions areoneofthemost important discussed in2007butthis was 2004,andthetariffswerenot biomass andsolarelectricity ects inapipelineincreased rnment isstillconsidering e threeapproachesare ouses shouldbezero riod forrenewables rrifs forelectricity

144

CEU eTD Collection PhD Student: GerganaMiladinova support system andthatitensures PHD THESIS-DISTRIBUTEDELECTR land photovoltaicinstallations; 5%forbuilding integrated photovoltaic incentives forcostreductions. Theannualdigr the tarifffornewlycommissioned plantsshould bereducedannuallyto provide stronger Renewables establishes thatinBulgariathe peri 20 years-forallothertechnologies(IEA to 150MW; 30years-for hydropowerplantssm In Germany itisasfollows:15years-forreno differentiated andbasedonactualgenerationco in ordertoprovideopportunity For asuccessfulfeed-inscheme a Obligation intheUK. system considertheshortcomings isadopted further improvements intheexistingpreferenti below). However,ifhighshareofDGisdesi conditions (seemore discussionon possiblesc Choosing whichsystemtobeusedisbased indefinite, long-term (Haas and newones,(iii)providesecurityininvestments bybeingsetforsufficiently,butnot already competitive,(ii) make distinction betw development, butatthesame time avoidingwi technologies supported,providi system should: (i)takeintoaccount forthediffe is essential butshouldalsobecombined with and continuousmonitoring, long-termstabilitya or policy”butwhatismoreimportant iscl seventeen Europeancountries,thereis“nouniversally applicable‘b Network onEnergyResearch (Haas quota system.However,accordingtotheconclu debate betweentheproponentsandopponentsoftwomain options:feed-intariffsand ofthedifferentsuppor As forthesuitability mechanism may notbeaproperapproach. development phase.Therefore,continuousdisc etal. fordifferenttechnologiesto 2004). ng sufficientsupportfortechnol number ofcomponentsareneeded. that theywillhavethereturn etal. ICITY GENERATIONINBULGARIA 2004),whicharebased ear governmental commitment, excellentdesign t systems thereisalongongoinginternational red theBulgarianGovernment shouldconsider amix ofpolicyinstruments. Inaddition, the ession factorsinGerm on thegovernmental prioritiesandthelocal of theexistingones,suchasRenewable od willbe12yearsforalltechnologies. Third, een existing units(that are fully depreciated) rences inthemarket uptakeofthevariousDG enarios according topriorities inSection vated hydropowerplants al tariffs schemes or if quota(orobligation) al tariffsschemes orif 2005). Forcomparison, thedraftLawon st. Second,theyaresetupoverfixedperiod. nd continuity.Thesupporttoelectricityprice ussions ofpossiblech ndfall profitsforthoseclosetomarkets or aller than5MW; nofixedperiodforwind; sions ofthethirdForum oftheEuropean s calculatedduringtheproject reach markets thetariffs,are ogies atearlystagesof est’ supportmechanisms on theexperience from First, itisessentialthat, any are:6.5%foropen anges ofthesupport installations; 2% for installations; 2%for with a capacity of 5 145 7.7

CEU eTD Collection cannot compete economically. Suchappro failures oftheROwould becombining theRO buyback agreements forrenewablegenerators to 50kW) andtoamalgamate theoutput,and(i the technology,(ii)ag i.e. foraMWh severalcertificates(ROCs)or experience. Themainmodificationsproposedfo decides toadoptsimilar system itisadvisa by theUKDepartment ofTradeandIndustry In ordertoimprovetheUKrenewableobliga system willcollapse. because ofthedesign shareshould alwaysbe does notprovideenoughsecurityofinvestment large-scale technologiesandifitisnotmodified technologies, whichleadstowindfallprofit remain underdeveloped.Ital number ofdisadvantages.The cost-effective technologies.However,base mechanism providesamarket-based approacha possibility for meeting theobligation if there out pricethatdoesnotallowthecertificatestoincreasebeyondcertainlevelandoffers sources, (iii)developingasyst of DGtoallsuppliers,(ii)developingasystem 2005b). Themain elements oftheUK system are: United Kingdom, Poland,Sweden,ItalyandFla PhD Student: GerganaMiladinova of electricityfrom renewables Setting up of anobligation onthesuppliers or their fuelmix atanytime. requires allelectricitysupplierstohavethesame consumers. Inaddition,topreventhighcostsforsome supplier theGermany Feed-in Act 2005). Finally,nopublicbudgetsshouldbeinvolved andallcostsshouldbebornby wind powerplants;1.5%forbiomass-fuelledand1%geothermal plants(IEA PHD THESIS-DISTRIBUTEDELECTR ents areallowedtoactonbehalfof em fortradingofthecertificat is theothersupportscheme used scheme favoursthecheapestopt so providesexcessiveassistance to certain established ICITY GENERATIONINBULGARIA ach isadoptedinItaly(EC 2005b). d ontheUKexperienceobligationhasa s. TheUKRenewableObligation(RO) favours ble thatitdrawsonthe are notsufficientvolume ofthecertificates. The onlyafractionmight beissued,dependingon tion anumber ofmodifications wereproposed (DTI 2006).Anotherwayfor‘correcting’the consumers tosourceanincreasing proportion forproof thatelectricity comes from eligible shareofelectricityfromrenewableenergyin it isverycomplicatedforsmall generators.It r theUKROare:(i) s asthepriceisnotknowninadvanceand with feed-intariffsforthe technologiesthat nders and Walloon regions of Belgium (EC nders andWalloonregionsofBelgium (EC nd encouragestheinvestments inthemost belowthetargetsasiftheyarereached ii) removal of therequirement for saleand (DTI 2006).IftheBulgarianGovernment (i)settingupofan smaller generators es, and(iv)settingupofabuy- inseveralEUcountries,e.g. ions andothertechnologies obligation for the share obligation fortheshare UK orothercountries' banding ofcertificates, (belowandequal 146

CEU eTD Collection PhD Student: GerganaMiladinova come frominternationaldonors Deployment Fund.ForBulgaria,itismore likel Demonstration Project,Bio-energyCapital countries, suchastheUK’sLowCarbon not realistic toplanthatsignificantstatef development of DGmarket niche. can help banks tobetter price the risks a Therefore itisimportant thatsome wind farms) ortowardsthepurchasin gears theinvestment flowstowardslarge-scaledevelopments (i.e.hydroofabout5MW and projects inBulgaria.Thislimits seriouslytheuptakeofsmall-s a main orhave international partners with the amount of the creditrequeste difficult to obtain credits if they technologies inBulgariaasdiscussedSection The initialinvestment costsareamajor barri PHD THESIS-DISTRIBUTEDELECTR state orlocalbudgets.This might beaconsiderab usually donotprovidethe wholeamountbutre priority areaandthefunding dedicatedtoitis Poland, theCzechRepublicandSl author’s unpublishedreviewoftheNSRFandOPVishegradcounties (Hungary, Operational Programmes (OP),andtheregional (NSRF) document (currentlyfor2007-2013), in thespecificmultiregional and sectoral laid downforeachEUMember Stateintheir NationalStrategicReference Framework forDGprojects. Howthesefundsareutilizeddependsonthepriorities source offinancing With theEUaccession theEUStructuraland that arenotmarket competitive. the introduction,inamedium orlong-term, of Nevertheless, thelackofpublicfundsdoesnot and creditsecuritiesth industry andofrenewableenergysourcesforwhich created. Positively, theEBRDcreatedacredit line for the promotion ofenergyefficiency in 7.3.2. Support oftheInitialInvestment at come from internationaldonors; donothavesecuritiesthatca d. Inthisenvironment investors However, publicfundsarevery and privateinvestments, if formofsupportfortheinitial g ofcheapsecond-handinstallations. ovakia) distributed generati ICITY GENERATIONINBULGARIA unding willbeavailable asisinsome European goodcreditratingarethosewhodevelopDG ssociated withDGproj Grant Scheme, andtheMarineRenewables mean thattheGovernment shouldnotconsider limited. concern is thattheEU Another funds er that significantly limits the uptake of DG Cohesion fundsmight turnintoanimportant quire matching fundstobeprovided from the development programs. However,basedon a grantscheme forsm le limitation totheexte 5, page75.Investorsreportthatitisvery y thatthefinancial sourcesneededmight Buildings Programme,Large-scalePV the supportisdivided andloans-from localbanks. n beseveraltimes higherthan an enablingenvironment is which haveotherbusinessas investment isprovidedthat on isnotconsidered asa limited inBulgariaanditis cale DGtechnologiesand ect and stimulate the all-scale technologies nt towhichBulgaria in twoparts:grants 147

CEU eTD Collection units from other Annex I Parties and use themtowards meeting their emissions targets under the Protocol. PhD Student: GerganaMiladinova 21 20 If atoneofAAUscostsbetweenUSD4and 7thenapotofUSD100million toUSD 25 million tonesofAAUs,aresoldandtherevenuesusedtofundsustaina ble energyprojects. credits thatareestimated tobeavailable by theWorld 2004).Itsuggeststhatof Bank(WB thetotal200 million tones surplusemission ensure thattherevenues fromthistradingare Kyoto mechanism sell AAUstootherindustrializedcountries gases andsurplusquotas(orAssignedAmount Units-AAUs)thatthecountrycanpossibly The transformation ofBulgaria were nodevelopments. Environment andWaters andalthoughthech change requiresspecificactionstobetaken proposals canbecarriedoutinBulgariaatsi projects to‘track one’ isplanned whichin practical terms willmean thatthe validation of procedure fortheexamining ofprojectsfrom ‘track-two’JI In orderfurthertofacilitate Environmental ProtectionandWaters on PrototypeCarbonFund) Projects SectorandNationalFocalPointonClimate Change and Denmark andhasestablishe Netherlands, Austria,Prot Understanding andAgreements tohostJIprojectswiththe projects. BulgarianGovernme mechanism Partial financingunderJointImplementation (JI) its limited resources thatcanbemultiplie thisisalso can utilizetheEUfunding.However, PHD THESIS-DISTRIBUTEDELECTR emissions in another Annex I country. net to that reduce ithelps finance when projects units reduction emissions to receive country, industrialized

Emissions Trading is another mechanismunder the Kyoto Protocol that allows Annex I Parties to purchase Joint Implementation is amechanism underthe Kyoto Protocol which allows Annex I Parties, i.e. an 20 isbecoming apromising opportunityforDG 21 . AproposalforthedesignofaGreenInvestment will Scheme, which otype CarbonFund,Switzerland,

nt hassignedMemorandums of such projectsthe changeof

n economy after1990sledto d aseparateunit(calledJI within theMinistryof todealwithJIprojects. ICITY GENERATIONINBULGARIA d withthe EuropeanCommunitysupport. for thecountryover2008-2012 period,afraction,or ange wasenvisagedfor2006,byJune2007there (Annex IParties)undertheEmissions Trading spend inasustainableway,hasbeenprepared and structuresdevelope gnificantly lowerprice(Official2006).This , animportant opportunityfortheStatetouse a sharpdeclineingreenhouse G. Miladinova project inBulgaria,Map ofthefirstJI Photo: d attheMinistryof

148

CEU eTD Collection including CHPfrom DGones first yearcapitalallowancesoninvestments inenergysaving tec 2005). IntheUKEnhancedCapitalAllowan ce Scheme enablesbusinessestoclaim 100% and groundrentisappliedfo net ofgrants,onasingleprojectupto£7.5M. qualifying company. Thereliefiscappedat50% of adeductionfrom company's a profitsforan energy projects(hydro,solar,windpowerandbiom was 44%)(IEA2005).InIreland deducted fromtaxableprofituptoapercentage in certaintechnologies(energyefficientasse PhD Student: GerganaMiladinova 100% taxreliefofthetotalinvest taxes or taxrelievesfortheinvestments in There aredifferentapproachesappliedbythe benefit fromtaxreductions, step inthis direction and if some projects (s playing fieldforalltechnologies support. Anotherimportant aspect electricity generationinBulgar were abolished(againSection provisions onimport taxesintheLawonEner large scale investments, i.e.VATlevy technology imports,orinitialinvestment costs.In Another approachforstimulation ofDGinve operational inthenearfuture(Official2006). there havenotbeenfurtherdevelopments onthisi substantial opportunityalsoforthedevelopm 175 million wouldbeavailableforsustainabl PHD THESIS-DISTRIBUTEDELECTR 7.3.3. Tax ReliefSchemes this shouldbewellacknowledgedandtheamounts made public.

(Carbon Trustn.d.). r small hydropowerplants(b ia might beauseful,thoughnotprimary, instrument forDG . Theexistingpracticeoflarge- ment costforrenewables.In 3.2.1). Adoptionofsome tax oftaxrelief schemes isth the corporateequityinvest for large-scale projects (see Section ICITY GENERATIONINBULGARIA DG technologies. Forinstan uch asthose forcoalornuclear powerplants) ent ofDGmarket niche(WB2004).However, ts andrenewableenergytechnologies)canbe national government regardingthepreferential Complete taxexemption from naturalresource gy andEnergyEfficiencyfrom 1999butthey stments isto levy certaintaxeson profits, of investment costs(in2005,thispercentage ofallcapitalexpenditure(excludingland), Bulgaria such approach is applied only for Bulgariasuchapproachisappliedonlyfor ssue anditisveryunli investment innewordinarysharesa e energy projectswhichcouldprovide ass) areeligible for tax relief inthe form elow 5MW) inNorway(IEA the Netherlandsinvestment at theyshouldcreatealevel scale projectssupportisnota ments incertainrenewable incentives forsmall-scale hnologies andproducts, ce, inGreecethereis kely thatitwouldbe 3.2.1). Therewere 149

CEU eTD Collection PhD Student: GerganaMiladinova of theamounts availabletheNationalInnov however if thedevelopment of DGisapriority Bulgarian Government may notbeableto To changethepresentsituationinBulgaria distributed energyresearch.Thetotalf spending onenergyresearchpe for DGresearchcanalsobeobtainedfrom initiative waslaunchedin2001andallocat networking intheUKisSustainablePowerGenerationandSupply(SUPERGEN).The initial threeyearperiod(Glaze2006). Anotherinitiative that provide fundingforR&Dand launched in2003andistor development ofnewandemerging energyefficiencyandlowcarbontechnologies.Itwas Kingdom. TheLowCarbonI example, thereareseveralprogrammes and Majority ofEUandEEAcountriesprovide is minuscule compared totheotherEUcountries. 0.6M forDGprojectsyearandahalf(two the BulgarianGovernment. Forexample,the that willpossible gainincreas prospective market nichethatcangivecompe they are notatastage that canbecompetitive at The supportforresearchanddevelopment ofne PHD THESIS-DISTRIBUTEDELECTR for businessshallalsobe placedtoparticipateinDG research anddevelopment. information abouttheEU orothersourcesof be donebyprovidingfundingfromtheexisting in within thecountry,andwithestablishedforeign exchangeofseniorandyoungresearchers collaborate onDGissuesandbyfundingofan capacity should alsobeenhanced,forexample, documents andalsomatching grantsifno1 projects shallalsoencourag Second, theparticipationofBulgarianresear 7.3.4. R&D Support un until1June2008withGB ing importance.However,DGre e byprovidingsupportforthe r annum wasGBP40Mwith alittlemore than30% goingto nnovation Programme (LCIP)aimstoacceleratethe unding wasincreasedtoGBP70Mfor2007/2008. ICITY GENERATIONINBULGARIA significant R&D supportforDGtechnologies.For the EnergyResearchCouncils.For2005/2006 initiatives that support DG R&D in the United initiatives thatsupportDGR&Dinthe dedicate suchlargefundstoDGtechnologies several stepsareimportant. First,althoughthe funding. Last,butnotin importance,incentives roundsin2005andone2006).Thisamount titive advantage tothecountry intechnologies National InnovationFundprovidedonlyEUR itshall considerthe increasingand earmarking 00% fundingispossible. ative FundandtheNa ed aboutGBP 30Mfundingintotal.Funding markets butin thefuture canbea base for a bythecreationofnetw ch organizationsininternationallyfunded w andemergingtechnologiesisessentialas research institutesanduniversities.Thiscan itiatives, andthrou P 75Mfundingprovidedoverthe search isnotwellsupportedby preparation ofapplication tional ScienceFund. Third,theresearch gh theprovisionof orks ofexpertsthat 150

CEU eTD Collection PhD Student: GerganaMiladinova as discussed inSections There islimitedinformation availableaboutth PHD THESIS-DISTRIBUTEDELECTR activities and information can Efficiency Agencywhichalready providessome informationfortheinvestorsbut available toinvestors.Aposit used fordissemination activitie biggest cities.Alternatively,thenetworkof distributed generationpotential, facilitation ofprojectdevel agency, suchastheEnergyEfficiency Agency,orto aprivate consultant. In addition, for the The implementation ofthemeasures totackleth initiatives. the possibilitiesforprojectfinancingundervariousEUfundsandotherforeignsources based mechanism thatcanbeofsignificanthelp Bulgarian bankingsectoronhowto the Government haslimited resources,itcan As thehighinitialinvestment costsareaseri exhibitions. developing website,pressreleasesandannouncements seminars and onconferences, There aremany channelsthatcan beused, constrain municipalitiesandinve financed underpublic-privatepartnership needed assistance toinvestors.the possiblemunicipalDGprojectsthatcanbe Adatabaseon page GIS database whichshould include various DG atleveldifferentregionsof To addressthelackofinformation theGove general population. sufficient number ofexperts, limited information tosupportinvestors,(ii) 142). Thedevelopment ofguide 7.4. INFORMATION BASED MEASURES MEASURES INFORMATION BASED 3.2.4 and opers andbetterdissemination befurtherelaborated. engineers andtechnicians,an s. Information onDGpotential the countryanddevelopment ofresourcemaps ordetailed information centresshouldbeesta ive example in thisaspect is the website of the Energy stors. Oncealltheseareprepared dissemination is needed. 6.2.3. Themainissues that should beconsidered are:(i) evaluatethe risk ofsuch lines ontheadministrative ICITY GENERATIONINBULGARIA Municipal EnergyAgenciescanbesupportedand other limiting factors (as outlined in schemes can providealinkbetweenbudget- ous limitation to DGpenetration in Bulgaria and rnment cansupportstudiesonthepotentialfor including printingpublica e benefitsandpotentialforinvestment inDG limited institutional capacityandlackof support thebuildingofexpertisewithin isapreparationofinformation packageson e lackofinformation canbeentrustedtoan d (iii)lowawarenessamongthe projects. Anotherinformation- of theinformation regarding should bepreparedandmade blished, forexample, inthe procedures willprovidea tions andbrochures, Table 13 151 ,

CEU eTD Collection PhD Student: GerganaMiladinova increase ofthebudget therelevantauthoritie for engineersandtechniciansisessential.Th The development ofinstitutionalcapacity ofpublicadministration andDGtraining courses PHD THESIS-DISTRIBUTEDELECTR combined cyclepowerplants. The plan alsopromotes thebuildin In itattention isplaced ontheconstruction of Electricity andGasSectors: DevelopmentoftheTransportNetworks2002-2011 An example forcentralizedplanning ofthegrid thatconsiders DGis the Spanish the DSO/TSOcanbeencouraged or requiredtoprepare such. Unified proceduresandstandardsfor gridc opportunities thatatpresentareusedtopos The legal base that isrelevant toDGgrid necessary. development ofelectricalgr Northern partoftheBlackSeaCoast,is developed, and(ii)thegrid experience. Inashort-term itisimportant that proposed basedontheinformation from interv revealing themwasnottheaim onthisresear There islittleinformation andnodetailedstudiesonthepossibletechnicallimitations and developed andinformation dissemi from thegeneralpublic.Inordertoovercome important whichisthelowawarenessand As wasmentioned inSection and universities. develop curricula andfacilitatingof thedialog EEA, oftrainingcoursesforengineersandtec financial expertforexchangeofexperts;de from thegrowth oftheDG market niche.Some institutions. Forthelatterth and otherexchangesofexperience;improve 7.5. MEASURES FOR OVERCOMING TECHNICAL LIMITATIONS FOROVERCOMINGTECHNICAL MEASURES e possibilitiesaremorelimite id thatwillaccommodate the in the areas where the potential isthe highest, such asthe 6.4 thereareno significant socialbarriersbutforonevery nated thoughvariouschannels. ICITY GENERATIONINBULGARIA velopment by some ofagencies, forexample the onnection canbedevelope e former canbe dealtbytheGovernment though tpone ordenygridaccessshouldberemoved. : (i)standardsandclearrulesforconnectionare enhanced. Inalong-term astrategyforthe connection should beclarified and allthe s, sendingtheirexpertsto ch. However,severalpolicymeasures canbe this limitation educationcampaigns shouldbe ue betweenindustryand researchinstitutions powerlinestoconnect renewableunits and measures that can beap ment ofthecooperation lack ofunderstandingthebenefitsDG hnicians; encouragement ofuniversitiesto iews withstakeholdersandinternational d butdevelopment shouldfollow growing importanceofDGis g ofnaturalgaspipelines to plied are:provisionof d bytheRegulatoror courses,conferences between the different between thedifferent (IEA 2005). Planning of 152

CEU eTD Collection PhD Student: GerganaMiladinova base forzoningofthecountry, supporting researchtoevaluatetheenvironmental so thereisa compliance withEIAorComp requirements forscreeningofproj improvement oftheprocedureforEIAandCo precautionary principleinprojects ambiguous fr integration ofenvironmentalc Some oftheshort-term measures thatwillfacilitatethe concerns. transparency andbetter inclusion of interested parties that candecreasetheburdenoninvestorsand to ensurethat thisisnot thecase. Still,therearesolutions environmental degradationandthereshouldbeprocedures problematic ones. Itisimporta related toenvironmental protectionasoneofthemost way. Ontheotherhandinvest developing inunsustainable Environmental NGOssuggestthatDGatpresentis earmarked. fulfilment oftheplanEUR 2.7Bforelectricity reach 13GW installed capacity in2011and provide fuelforCHPandcombined cycleplan PHD THESIS-DISTRIBUTEDELECTR number ofturbines)whenprojectsare su The development ofclearguidelines andalist latter willdecrease theinfluence collected andfrom whic discussed inthefollowingsect might beconsidered: (i) designating areaswhere DGdevelopment ispermissible as willbe The followingmedium tolong-term measures to possible negativeimpacts avoided. interested stakeholderssothat 7.6. MEASURES FOR OVERCOMING ENVIRONMENTAL BARRIERS FOROVERCOMINGENVIRONMENTAL MEASURES h afteratenderexpertsteam to theexperienceandknow and environmentally friendly onsiderations intheDGdecisionmaking are:(i)applyingthe nt thatDGdoesnotleadto ion, (ii)settingupofaFundwh ors identifytheprocedures the investorsonEIA outcomes. and (v)earlyinvolvement in ects, (iii)monitoring ofthe ICITY GENERATIONINBULGARIA bject of EIA screening orComplexbject ofEIAscreening permit. EIA lex permit recommendations,(iv)initiatingand ts. Accordingtoit,windpowerplantsshould andEUR5.2Bfornatu better integrateenvironmental considerations mplex permit byelaboratingmore detailed combined cycleplants -15GW. For the of installations (based effects ofDGinBulgariaandtoserveasa om environmental andsocialpoint, (ii) ledge ofexpertscanbeconsideredand conduct EIAaretobeselected.The Photo: G. Miladinova Fish passage, Arda river operations ofth the projects’development of ere feesforEIAaretobe ral gasnetworkwere oncapacityand/or

e existing units e existingunits 153

CEU eTD Collection what arethepossibleimplicati social justice, (iv) market-based approach, scenarios focus on:(i) presentpolicies, (ii) them theGovernment wouldliketohavefrom elements ofthescenarios iswhataretheperc As DGcanplayaroletotheachievement informed choice.ItisuptotheGovernment expected. They areintenttoprovidevarious show basedondifferentaims wh Bulgaria and analysis of the international expe scenarios arediscussedwhichdevelopedbytheauthorandbased ontheresearchin and theinstruments andresourcesitdedicatesto Different DGfuturescanbeexpe developments of5ormore turbinesormore than5MW. likely toberequiredforhydropowerplan required from small conventionalunits(Commu EIA isrequiredforpowerplantswithathermal procedure withoutpreliminary EIAshouldbeundergoneornoprocedureatall.IntheUK a regular EIA procedures isto be followe threshold is10MW abovewhichpreliminary EI compulsory EIA withpublicconsultation is fermentation output.Forbiogasunitsabove50 installations authorizationis PhD Student: GerganaMiladinova inclusion of thepublic;20and consultation; from 6to19turbines–generalpr 3 to5turbines-asitespecifypreliminary examination oftheneedEIA,nopublic according to thenumber ofwindturbinesinstalled: experience ofotherEU countries.InGerma Examples ofsimplified EIAorComplex pe characteristics oftheenvironment canbe and Complex permit procedures canbesimplified for smaller installations. Inaddition, fewer PHD THESIS-DISTRIBUTEDELECTR 7.7. DG FUTURES – SCENARIOS, POLICY OBJECTIVES, OUTCOMES OBJECTIVES, POLICY DG FUTURES–SCENARIOS, needed forunitsabove1MWthermal outputor10tonesdaily ons ofthecurrentgovernmental over installations–complete at typeofpolicymix isneed cted dependingontheprioritiesofBulgarianGovernment studiedwhenprojectsaresmaller. ICITY GENERATIONINBULGARIA todecidewhichpathisthepreferredone. and (v)optimal. Thepresentscenariodescribes eived Governmentaims andwhatcontributionto highshareof DG,(iii) high employment and d. Forunitsbelow10MW either simplified options from whichtheGovernment canmake rience. Thescenarios arespeculative and aim to of differentpolicyobjectives,onethekey eliminary examination oftheneedEIAwith required. Forotherbiomassinstallationsthe rmit procedurescanbedrawnupfrom the output ofmore not than50MWandisusually A isrequired,above50MW thermal capacity ts withcapacitya ny thetypeofprocedureisdifferentiated nities andLocalGovernment 1999).EIAis MW thermal outputemission permit and achievethem. Inthissectionfivepossible increased DGshares. Basedonthisthe for1or2turbines -noauthorization; from EIA (BMU 2003). For biogas EIA(BMU2003).Forbiogas ed andimplicationsmight be objectivesandpolicy. High bove 5MW wind and 154

CEU eTD Collection PhD Student: GerganaMiladinova coal powerplants(NPP KozloduyandTPPMaritza addition, thereareplans forbundlin have independentofEU energypolicy andto exporter ofelectricityintheBa projects are motivated by inspirations for the reestablishment of Bulgarian roleas the biggest projects. There are also plansfor the construction of additional coal-fuelled capacities. These concluded thatthereisast second nuclearpowerplantatBeleneandofthe the signedinJanuary2008agreem At present,basedontheconclusion Government Aims implications toeachscenario. table.Thisis behaviour attheEUnegotiation EU contextandpolicy.Therefore the DGobjectives With theEUaccession BulgarianGovernment also foresee the various implications resulting from society, jobcreationandlocaldevelopment, and security ofsupply.Theauthorhastriedto of DG,predominant typeof Each ofthescenarioswillinevitably hasdiffere proposed scenariosaresought. first partof conclusionsshouldsettheba Bulgarian circumstances. Inaddition, thegeneralframework thathasbeenproposedinthe existing supportmechanisms, and‘realitycheck’whethertheyaresuitable forthelocal, overview of thebestpracticesinEurope, anal The onethatisproposed undereach scenarioisth Further, inordertomove fromrhetorictor but also,acompromise ofthebene to the markets todetermine DGdeployment. Fi at locallevelandequality.When themarket-bas motivation of theGovernment, whileinthefollo share ofDGpresumes thatlowcarboneconomy andreduceddependencyisthemain PHD THESIS-DISTRIBUTEDELECTR 7.7.1. Present Policies rong tendencytowardsthereali DGtechnology,economic environmental and costsforthe lkans. Italsodemonstrates th fits DGcanofferandtheircost. ents betweenBulgariaandRu s oftheresearch(i.e.Section g ofthelargestenergyassets, ICITY GENERATIONINBULGARIA eal actionasetofpolicyinstruments isneeded. sic conditionsifanydevelopments underthe ysis oftheproblems encounteredwithsome ed approachisadoptedGovernment leavesup nt outcomes orimplications interms ofshare be keypartnertotheRussian Federation. In alsobrieflydiscussedinthesubsectionon each scenario butthese are speculative ones. nally, theoptimal scenarioisacombination, wing scenarioGovernment aims atmorejobs South Stream naturalgaspipeline,itcanbe e author’s selection whichisinspiredbyan participatesinthedefinitionof abroader East 2),thebiggestcoal mines (Maritza itadopts willalsohaveimpacts onits e desireoftheGovernment to zation oflarge-scaleenergy ssia fortheconstructionofa 6.5, page132),butalso,on i.e. thenuclearandlargest 155

CEU eTD Collection PhD Student: GerganaMiladinova that prevent higher penetration of DG.Detaile change ofthesystem torenewablesobligati DG electricity.Verylimited initialinvestment supportisavailable.Th At present,preferentialfeed Policy toPromoteDG Institute JSC 2005)). 1990 levels(orabout50%in2003whilethe‘Kyot priority for the Government asduetotheeco of greenhousegasemissions inordertofulfilBu reduction isnotutilizedandtheconsumption is countries withthehighestener penetration drivenmainly bytheEUaccession Achieving ahighshareofDGis provide financingfortheselarge-scaleprojects. Electricity Company and BulgargazHolding)in East complex), theelectricityandnaturalgas PHD THESIS-DISTRIBUTEDELECTR electricity system. large-scale coal-fuelled units might cause capacities added.Theperspectiveofhavingfour of more electricity generation whichwillinev there willbeovercapacityinthesystem andifno In alongerperspectiveifthe introduced theremight benegativeenvironmental impacts. processes. Microgenerationwillbe only ifthereareadditionalbenefits,i.e.th very limited developments inphotovoltaics sect might leadtosome stagnationof the market withtheapproaching of thatyear.There willbe biomass butthereisnoclarity of whatpromoti In theshort tomedium-term therewillbe de Implications Chapter 3 andofthebarriersinChapter6. -in tariffs areusedwithoblig gy intensitiesinEU.the potentialforenergydemand However, nuclear andcoalpowerplants not highinthepolicyagenda, almost zero.Ifnoimproveme ICITY GENERATIONINBULGARIA on after2011.Thereareanu velopments mainly inwind, hydroandpossibly transmission system operators(i.e.TheNational e steam generatedisneededinsome industrial significant problems withthebalancing of onal system willbeappliedafter 2011 andthis nomic downfallthe country iswellbelowits d analysis of current onemegaholding whichwillhavethe dentto onaconstantrise.In t allofitisexported,theremay notbeaneed itably lead tosmaller number ofnewDG or andCHPunitswillpossiblybeinstalled obligations. Bulgariaremains oneofthe 1GW unitsofnuclearpowerandseveral lgaria’s KyotoProtocol o’ obligationforBulgariais8%(Energy atory connectionandpurchaseof planned areputintooperation with the policy for itswider nt oftheEIAprocedureis addition,thereduction policy wasincludedin ere areplansforthe mber ofconstraints obligationisnota 156

CEU eTD Collection PhD Student: GerganaMiladinova Under thisscenario theGovernment priorities are lowCO Government Aims against thecountrymight be the forthcoming newRenewablesDirectivema addition, theobligationsunderth forthcoming third packageonenergyliberaliz unbundling ofenergymonopolies. Thisshallalsobeconsideredinthelightof energy holdingmay notbeinlinewiththeEU accepted attheEUlevel. Theconcentration of dependency onRussia.Therefore,thisinitiative supported Nabuccoprojectthataims todive States. Furthermore, theSouthStream natural dependency ononecountry.Thesearealsonot well coordinatedwiththeotherEUMember The closetieswiththe RussianFederation wi PHD THESIS-DISTRIBUTEDELECTR communities andgeneral populati raise theawareness ofvariousstakeholders,i. industry development, suchaspreferentialtaxes,reducedred type,andloansforSMEs, governmental loanguaranteefacilitybytheEU long-term loansareneeded.InBulgariath successful by theGermanandSpanishexperien to stimulate technologydevelopment andmarket rather rapid increase of DGshareisdifferentia The main policyinstrument thatcanbeused Policy toPromoteDG investments inhigh-technologies. create a‘greenandsustainable’ image ofht frontrunner countryfrom thetwelvenewmember generation isstronglysupported.The Government dependency andtoachievethesea significant increase of thecontribution of DGtoelectricity 7.7.2. High shareofDG initiatedbytheCommission. e Renewables ElectricityDir on, arealsoessential. ICITY GENERATIONINBULGARIA e countryand topromote itasagoodplacefor e. banks,publicadministration, investors,local ted feed-in tariffs that ted tariffsthat feed-in forashortandmedium-term toprovidefor ey canbeprovidedbyprivatebankswith objectionfor competitive energymarkets and ation tobeproposedbytheCommission. In the energyassets andactivities inthe planned ll alsomean increased and veryhigh energy gas pipeline isadirect competitor to the EU rsify naturalgassuppliesanddecreasethe ofBulgarianGovernment may notbewell y not be mety notbe andinfringement procedures StructuralFunds.Mechanisms tosupport ce. Todecreasetheup-frontcostshortor learning.Thisapproachhasproventobe statescapitalizingon alsoaims atestablishingBulgariaasa 2 emissions anddecreasedenergy ective 77/2001/ECandpossibly are decreasingover time itsDGpotentialto 157

CEU eTD Collection displace some ofthecoalpowerplantsCO developments will inevitablyleadtodecreas energy generation willlargelyonthe levelsatwh electricity generation.The composition ofthe hydro, landfill gas, andbiomass andnaturalgas PhD Student: GerganaMiladinova DG equipmenttotheBalkans, Turkey, andEU. Bulgariahas traditions intheproduction of This candeliverevenmore jobopportunities, Government might alsoaim atthedevel fact thattheregionstillhasunderdevelope Taking intoaccountthelowcost to more limited extent. distribution, andhighlabourre provide forthisisbiomass duetoitshight support toindustrydevelopment; andeducatio rural areas.Themain elements toachieveitar In this scenario themain Government aim isto Government Aims proper systemfortheevaluationofimpacts, andcompliance monitoring isestablished. are nosufficientgridcapacity.Environmental of large volumes of electricity intothedistri technical upgradesandimproved the final consumers. Additional and possibly significant expenditures might beneededfor significantly duetothe factthat theDSO/TSOw the poorandvulnerablesegments, canbeexpected other sectorswillhavetobe the Government isneededtoprovideincentives expected. Itwillleadtojobscreation andlo Under thisscenariorapidincr Implications PHD THESIS-DISTRIBUTEDELECTR 7.7.3. High EmploymentandSocialJusticeScenario reduced.Alsonegativeimpacts onthepopulation,especially ease ofDGmight beexpected quirements. canalso HeotherDGtechnologies management ofthegridsoth of labour,availabilitymeta ICITY GENERATIONINBULGARIA opment ofDGequipment manufacturing industry. cal development. However,significant support of bution networkandalso d DGnichebutgoodpotential,theBulgarian ed dependency on energy imports. AsDGwill 2 andotherharmfulemissions declinecanbe and canmake thecountryamajor exporterof e: promotion oflabourintensivetechnologies; createmore jobsandeq n andtraining.Themain DGsourcethatcan echnical potential, rela derogation canbeexpect mix ofDGtechnologies andtheirsharein for theinitialinvestme ill transfer thecostsfor the feed-in tarrifs to CHP contributingtoa as the price of electricity might increase ich thepreferential tariffs areset. These with technologies,suchaswind, at itcanaccommodate feeding l refiningindustries,andthe from areas wherethere nt costsandfundsfor uality, andtodevelop tively equalregional ed especially if no significant partof contribute but 158

CEU eTD Collection PhD Student: GerganaMiladinova in most ofthe ruralsettlements aspeoplether consumers andthusassistpoorhouseholds.However,itwillnotbefeasibletointroduceCHP natural gasCHPincitiesandformunicipalbu andpeopleintheru opportunities forfarmers jobs forthepoorest. Biomass canbeplanted This scenariocanalsocontributetotheGove parts forwind turbines. also possibilitiesforthedevelopmentofphot growing oftheexisting,for generators andturbinesthereareopportuniti PHD THESIS-DISTRIBUTEDELECTR research institutes andtheir provide trainingatlocallevel,andtosupportthedevelopmentofcurriculauniversity able toprovideinformation andorganizetrainings Government willneedtostrengthen theexisting Agenciesorcreatenew onethatshouldbe Also important arethemeasures fortraini can alsocontributetoimprovement energy technologyisneededsothatthisno consideration oftheEUlegislation onthestateaidprohibit predominately withvery lowincomes andtheloans willfurther burdenit.However,careful essential. Grantsshouldbepreferredthanloan financial supportcoming undertheStructuralF development ofbiomass plantationsandbiogasuse subsidy programmes. Theestablishment ofa differentiated feed-intariffs(withinclusionof industries. Thefinancingsupportmechanism electricity generationandbiomass CHP,biomass The scenariowillrequire abettertargeting of th Policy toPromoteDG or coal. cooperation withindustry. the productionofcomponentsfo of thesituation inthese areas. ICITY GENERATIONINBULGARIA e useindividualstovesfu ng andacquiringoftheskillsneeded.The t beingagainstthefree ovoltaic manufacturing plantsandevensome on landsthatarenotcultivated creatinglocal s asthepopulationlivinginruralareasis rnment social equity e policyatcertain technologies, e.g. biomass ral areas.The introductionofbiomassand biomass co-firing)an ildings can decrease thepriceofheatfor facility thatwillprovide grants for the should preferablybeacombination of es fortheestablishment ofbusinesses,or co-firing, andatthe unds, butalso,from otherinitiativesis is needed withafull utilization of theEU , toensure that therearestructures that r HPPandCHPunits.Thereare ion exemptionsforrenewable objectives byproviding elled withcheap wood market rules.Training development oflocal d kick-startindustry 159

CEU eTD Collection reached markets might bejustifiedasthiswi the useofbestsites avai sources. Thiswillnotlead tohigh DGsharesbutwillpromote thecheapest technologies and PhD Student: GerganaMiladinova DG andismarket-based istheintroductionof elimination of theobstaclestofree markets. Th A market-based approachpreconceivesveryl Policy toPromoteDG be achievedthroughmarket-based instruments. established. Inaddition, sector but itisveryimportant that a levelplay promote thecheapestDGtechnologies.Theinve dictate DGdeployment. Intheorymarkets will The BulgarianGovernmentmight alsodecideto Government Aims distribution network. However, thismight leadtoaneed for the development orenhancement oftheheating can providecheaperheatinur tariffs. Tocompensate partiallyfor thisCHPat negative socialimplications duetopossibleincrea Along withthepositiveimpacts biomass plantationtheremight be present situationprovestobe management andmonitoring ofthequantities be displaced. However,thisdevelopment might firms andalsosome Bulgarian. TherewillbeCO also, foreign markets are likelytobe established andpossiblywillbeowned bybigforeign sources willhaveimportant contribution.Industr increase, anddependingontheinstruments impl As themostlabourintensive,biomass-fu Implications PHD THESIS-DISTRIBUTEDELECTR 7.7.4. Market-based Scenario internalization ofexternalitiesshoul lable. Additional,support forth ban areasanddecreasethebi a reallyconsiderable problem of localdevelopment andjob negative impacts onbiodiversity. ICITY GENERATIONINBULGARIA elled DGtechnologieswillundergothegreatest ll createfuturemarket opportunities. Depending ittle governmental intervention,limited tothe taken isnotimplemented, whichbasedonthe ing fieldbetween thedifferenttechnologiesis e instrument thatwillprovide some uptakeof districtheatingand ies thatprovideequipment forBulgarian,but adopt liberalapproach 2 quotas for electricity quotasfor have negativeimpacts onforestryifproper deliver security of energysystemandwill reductionsandsome co emented, itcan beexpected that theother stment riskshouldbebornbytheprivate se ofpriceelectricityduetothefeed-in d beenvisagedbutitshouldalso e DG technologies that have not e DGtechnologiesthat have not creation theremight besome . Withincreased number of lls atMunicipalitybuilding. for individualbuildings leaving themarkets to generatedfrom DG al powerplantswill 160

CEU eTD Collection PhD Student: GerganaMiladinova environmental implications. Theobjectivesar benefit oftheopportunities DGcanofferbut The optimal scenarioisthe inwhic Government Aims negotiate lower target at EUlevel. As theshareof DGwillmost probablybelo along theBlackSeacoast). Inthiscasegridenhancements willbeneeded. generation inareathatareno The technical implications might come from thef final consumer willnotbesignificantly affected asinthe‘highDG’scenario. The socialbenefits that willnotbe DGcanoffer some extent forhydroareinnature protection sensitive areas. might benegativesimpacts onenvironment asth and some replacement ofcoalbutonly bythe From anenvironmental perspective this scenario landfill gasbeingthetechnologies Under thisscenarioDGsharewillincreasegr Implications grants. on theinvolvement theGovernmentwants,thes PHD THESIS-DISTRIBUTEDELECTR mature technologies, such ashydro, windandpo In thescenario thefinancial support scheme isacombination between obligation for the Policy toPromoteDG relatively lowandtheriskisbornbyinvestors. obligations, andprovidesfrontrunningexample. However, the costs for thesociety are employment inDGsectorandruraldevelopm emissions ofelectricityandheatgenerationw 7.7.5. Optimal Scenario t closetoconsumers orarew with highestcontribution. The currenttargetsmay notbereached. ICITY GENERATIONINBULGARIA adually andinsignificantlywithwind,hydro h theGovernment decidestohaveamaximum ith decreaseddependencyonfuelimports, high e increasedshares ofDGleadingtolowCO w theBulgarianGovernment willalsotryto at areasonablecostsand minimum negative cheapest DGthatcancompete withit.There ent. TheGovernment complies withtheEU willleadtosome d harnessedbut theprice of electricityfor the e cancome from researchanddevelopment act thatthere willbealotof windelectricity e siteswithbestpotential for wind andto ssibly landfill gas,and feed-intariffsfor ith poornetworkcapacity(i.e. ecrease of CO2emissions 161 2

CEU eTD Collection PhD Student: GerganaMiladinova so far,hasbeenexploited verymuch. The aimof protection andtogreater energy growth, localdevelopment,lead jobcreation, environmental, bebeneficialforBulgariabystimulatingeconomic andeconomic. DGcan achieving sustainabledevelopment bycontributi consumers, orevenbyconsumers themselves, canhelpoursocietyonitsway towards Distributed electricitygenera system. Heatnetworkswillhavetobedeveloped insome areas. introduction ofmanagement systemthatcan Black Seacoastareawherealargeloadfrom To meet theincreasedshare ofDGtherewillbe companies, municipalbuildings and small communities. development andthereductionofheatcosts boundaries. Thisiscompensated withthe significant burden, thecostofelectricityforfinal consumers increasesbutwithinareasonable Because thefinancialsupportmeasures aredetermined inawaythattheydonotpose biodiversity reductioninthela by carefulplanningandstringent wind andhydro placed at environmentally sensitive areas, however, these might bemitigated emissions as some coalpowerplants aredispla The environmental benefitsincludeagainreductionofCO and labourintensiveones.Thesearemostlikel Under thisscenario there willbeincreasedin Implications awareness ofinvestors,publicadministration, of localdevelopment andjobcreation.Information-based mechanisms areusedtoraisethe increase biomass, i.e.grantsforplantations,ar photovoltaics. Initialinvestment issupportedwith these inearlydevelopment stageorundevelopedinBulgaria,suchasbiomassand PHD THESIS-DISTRIBUTEDELECTR 7.8. CONCLUSIONS CONCLUSIONS nds wherebiomass isgrown. tion (DG)orproductionofelect independence. DGcanbeviable alternative forBulgaria, but monitoringofthecompliance.There arealso risksof ICITY GENERATIONINBULGARIA financial institutions,andgeneralpublic. y tobewind,hydro,biomass andlandfillgas. DGtechnologies,especiallythe most mature e introducedinordertoachievetheobjectives creation ofnewworkplaces,DGindustry windpowergeneration ced. Still,negativeimpacts arepossibledueto due totheinstallation of CHPunitsatDH coordinate theincrease intermittence ofthe ing todecreasedimpacts onenvironmental a needforgridenhancement,including atthe thisresearch hasbeentoidentify the reasons shortorlong-term loansandmeasures to ng toall three of itspillars –social, 2 andotherharmfulsubstances ricity andheatcloseto can beexpected,and 162

CEU eTD Collection failures andinsufficient actionoftheGovernmenttolimit theirimpact. Althoughthereare The economicbarrierscome from thelackof predictable policymix tosupport DG. PhD Student: GerganaMiladinova financial, fiscal,nodality,andplanninginstru Government, thereshouldbeacombination of tariffs, andarenot sufficient tocreateanen instruments usedarelimited mainly tosupport in DG,andgiveincentives tolarge-scaleener monitor compliance. These prevent widerintroduc support instruments, lackofpolicyonmicorogeneration, andinsufficientstatecapacityto implementation, policyinconsistenciesandcontradi number andlegalbarriers,suchas ofregulatory the Government isprioritisinglarge-scalegene However, the rhetoric included in these documents isnot substa the EUnegotiatedtargetonshareofrenewa are setoutinseveraldocuments, thatareoftenabolished,and includethe inspiration toreach towards adoptionofDGpolicygoalsandsupportmechanisms. TheprioritiesregardingDG In terms ofthepolicyandregulatoryframewor building developments, andinindustries. potential forintroductionofCHPinmore DHC by thelargestdistrictheatingcompanies (DHC) scale hydropowerunits.Althoughanumber ofna biomass, andsolarissignificanttherearestillsome wind opportunitiesfornewsmall- of DGpenetrationinBulgaria isverysma The researchhasproven thatthere isasignifica between October2003andFebruary2008.Most and otherstakeholders,aquestionnairefor has beenbasedonextensiveliteraturereview,inte great detail,andenvironmental, socialand main barriers. Thepolicy,regula involved hasbeencarriedout.This order todothis,adetailedstudyofthepublic for thisphenomenon, andtoproposeapolicyfram PHD THESIS-DISTRIBUTEDELECTR tory, administrative and economi ICITY GENERATIONINBULGARIA technical oncebrieflytouchedupon.Theresearch ll (apartfrom hydropower).Thepotentialfor gy generationinvestments ratherthanDG.The abling environment. Itsuchistheaim bythe followed byidentificationandanalysisofthe ration from nuclearandcoal.Therearealsoa financing forDGprojects, nt andunexploitedpotentia ments toofferacohe , formunicipal buildingsandnewlarge-scale forDGgridconnectionandatpreferential k, therehavebeensignificantdevelopments of thedataareupdatedasMay2007. in Bulgaria,therestill significant unexplored thelackofastrategic approachand policy bles, butthere islimited attention toCHP. policygoals,instruments, andauthorities investors inDG,andhasbeencarriedout tion ofDG,createinsecu rviews withanumber of ework foranincreasedDGcontribution.In ework arangeofpolicyinstruments, suchas tural gas-fuelledCHPunitswereinstalled cting legaltexts,lackofsecurityinthe ntiated, anditisobviousthat c constraintswerestudiedin rent, longlastingand andduetomarket l, and that the level experts,investors, rity ininvestments 163

CEU eTD Collection CO can beexpected. Theoptimal scenariocombines maximum benefitsfromDG,in terms oflow obvious from theirnames,anddescribes what (iv) market-based approach,and(v)optimal. These are:(i)presentpolicies,(ii)highshareof depending onwhataims theBulgarianGovern This thesis concludes withfive scenarios whichareofferedbased manufacturing ofDGcomponentsinBulgaria. benefits, (vi)betterinclusionof stakehol the potentialandopport investments andthecreationofastableinvestment environmen planning policytoeasetheauthorizationproc and connectionrules,(iii)decreasingthead correcting thelimitations oftheexistingsupport to beundertakenincreaseth the countryandanoverviewofinternationalexpe support ofDGtechnologiesinBulg In Chapter7acomprehensive framework for sufficient gridcapacityinsome areas,andcan technical barriers, but itisexpectedthatthema monitoring ofoperationsisneeded.There notsufficien also lead to environmental pr carry out maintenance and retrof and ofengineers,whounders Another significant limitation isalso thelack of Corruption further limits thein operation arenumerous, complicated, andrequirealotoftime from and efforts investors. of sufficienthigh-qualityinformation. Theau development, possibilityfor system andlimited financing for theinitial investment aswell for research and PhD Student: GerganaMiladinova completely tointernalise externalities whichpu and grantsunderanEBRDcreditline,therearestillmany problems, suchasafailure positive developments, suchasimprovement of PHD THESIS-DISTRIBUTEDELECTR 2 emissions from electricityandheatgene unities forinvestment support,andwiderdissemination ofDG unfair treatment ofDGbytheex terest ofinvestorsinDG. e DGshareare:(i)placinghighonthepolicyagenda,(ii) oblems, thereforecareful cons itting ofunits.Therearealso tand thespecificsofthesetec aria isproposed,basedonth ICITY GENERATIONINBULGARIA thusberesolvedbyadequateinvestment. ration, decreaseddependency onfuelimports, ders intheprocess, improvement ofthepolicyframework forthe ministrative burdenandinclusionof DGin ts disadvantageDG,pr in onesinBulgariawillcome from thelackof ment may wishtoachievebyDGpromotion. qualifiedexpertsinthepublicadministration, DG,(iii)high employment and socialjustice, policy mix isneeded,andwhat implications Each ofthemfocusesonparticularaspects thorizations needed the feed-in tariffs andthe provision of loans ess, (iv)developing mechanisms, inparticularthefeed-intariffs rience. Themost urgent isting monopolies, andthelack t information on the possible indications thatcertainDGcan t, (v)improved informationon ideration of allimpacts and hnologies andt e overviewofthebarriersin for aDGunittostart and(vii)promoting oblems withthe reward support fortheinitial on theresearch,and measures thatneed echnicians to 164

CEU eTD Collection PhD Student: GerganaMiladinova organizations. cooperation, dialogue,andthesupportofinvestors,NGOs of many interestedparties andtheBulgarian G and buildingoninternationalexperiencebuttailor instruments and theusebyGovernment toall minimal environmental negative implications. and highemployment bothinth PHD THESIS-DISTRIBUTEDELECTR e DGsectorandruraldevelopment, atreasonable costand ICITY GENERATIONINBULGARIA available resources,limita overnment needs to look far andfacilitate for This requiresintroductionofanumber of ed to Bulgarian conditions. DG is an effort ed toBulgarianconditions.DGisaneffort , ECandinternational tion ofthebarriers, 165

CEU eTD Collection GDP isadjusted by acoefficient reflecting purchasing power of the BGL for 1995 PhD Student: GerganaMiladinova 22 onwards. Sources ofdata:(IEA2004c)-forthedata stands forpumpedstorage HPP Note: Data from 2000 onwards for the final consumpti Table 15.Basicelectricitygenerationindicators Sources: (IEA 2004b)-forthedata1990and1995,(MEER2005)2000onwards Table 14.EnergyusetrendsinBulgaria THEBULGARIANENERGYSECTOR OF ANNEX I.BASICCHARACTERISTICS PHD THESIS-DISTRIBUTEDELECTR sectors: Consumption of electricity by Transmission &distribution losses Domestic Supply Export/Import Balance Electricity Generation, Indicator (GWh) TFC/TPES TFC/pppGDP TFC TPES/pppGDP TPES Electricity (export) In order to make comparative analyses on an international basis in determining the PEI and FECpossible, PEIand the determining in basis international onan analyses comparative make order to In Nuclear energy Hydro energy Commerce and PublicServices Natural gas gas Natural Wood etc. Total for these sectors: Coal Oil 22

HPP and PSHPP Industry Sector % ktoe/$95p ktoe ktoe/$95p ktoe year of which: Agriculture Residential Residential % 1 % N/ % N/ % N/ % 19 % 34 % 32 NPP 35 TPP 61 1990 1990 28,820 0.610 0.316 17,640 0.520

30 965 965 30 4 4 4 1990 10474 945 1 454 994 537 166 18 552 -3790 443 5 931 2 141 % % % % A A A 1995 1995 23,530 19,227 19,470 0.52 0.249 0.195 0.187 0.480 0.445 0.433 12,150 4 % % % 5 426 10956 12 167 4 1995 2 4 160 19 27 33 1 789 1 789 5 114 5 114 1 629 N/ N/ N/ 1 ICITY GENERATIONINBULGARIA % % % % A A A 42 55 2000 2000 0.439 0.432 8,435 8,414 3 for 1990and1995,(MEER2005)-2000 % % % 6 290 9 858 13096 4 2 2 2 4 36 307 307 36 26% 15% 22% 35% -2% 0 927 0 927 000 5 486 5 486 366 620 on of electricity exclude thetransport sector.PSHPPon ofelectricity 3% 1% 48 44 7 2001 2001 % % % 6 126 9 751 13555 6 925 4 2 2 2 163 37 044 044 37 3 969 3 969 001 5 799 5 799 330 27% 14% 21% 37% -3% 3% 1%

44 51 5 % % % 20,441 20,441 19,604 19,205 2002 2002 0.444 0.468 0.474 0.181 0.187 0.187 0.407 0.399 0.395 8,521 9,179 9,678 6 151 9 306 13795 1503515340 15762 6 925 166 177 152 156 4 2 2 2 35 776 776 35 2 701 2 701 002 5 312 5 312 045 28% 13% 23% 34% -3% 3% 1% 47 46 6 % % % 2003 2003 5 948 9 303 5 489 1 915 4 2 2 37 065 065 37 2 554 2 554 003 6 430 6 430 23% 22% 13% 13% 24% 24% 38% 39% -2% -2% 4% 4% 1% 1% 41 52 8 % % % 2004 2004 5 082 8 773 5 879 4 2 2 2 35 636 636 35 1 515 1 515 004 6 359 6 359 094 41 52 8 % % % 9 050 5 700 4 2 2 2 4 37 172 172 37 21,030 21,030 0.482 2005e 2005e 0.186 0.386 10,127 2 872 2 872 005e 7 120 7 120 152 980 20% 13% 25% 39% 166 -2% 42 51 4% 1% 7 % % %

CEU eTD Collection PhD Student: GerganaMiladinova preliminary, forelectricitygeneration(IEA2004c)and(MEER 2005) Sources ofdata:ForRES BSRECcalculati Table 17.ShareofDGinelectricitygen 1Bulgarianlev(BGN)isapproximately0.5EUR. Theexistingpowerplantsefficiencyand Note: ThepricesarewithincludedVAT and for biomass areforthecityofSofia. Sources: efficiency of power plantandtheextern Table 16.Specificpricesforsomefuelsa PHD THESIS-DISTRIBUTEDELECTR generation Share RES-el. total in el. RES-electricity(el.)total Generation Electricity Total Indicator Heavy fueloil (mazut) Natural gas for commercial consumers Imported coal Anthracite wholesale for energy generation Brown wholesale for energy generation Lignite wholesale for energy generation Fossil fuels Briquettes and pellets from wood Baled straw Firewood (Sofia) Wood sawdust Biomass grid voltage commercial consumers connectedtomediu Average electricitypriceatdaytime tarifffo generation Share of CHP in el. TotalCHP CHP plants El. output-autoproducer plants CHP El. output-public MW in el. generation ShareRES-el. below 10 Small-scale Wind HPP power (EEA 2006),(NSI2003) Type of fuel of Type 1990 1990 4.5% 4.2% 7.2% 6.5% 3.9% 3.9% 141 42 26.7% 20.1% 14.7% 13.8% 13.1% 11.8% 3 882 7 385 0.4% 0.4% 0.4% 0.4% 0.8% 0.9% 0.0 0.0 0.0 0.0 0.0 0.0 11267 150 150 150 150 352 373 1 878 2 824 5 574 1995 1995 41 789 789 41 8 398 1 751 2 130 3 475 1999 1999 5 605 38 248 248 38 2 753 ICITY GENERATIONINBULGARIA m eration fromRESandCHPinBulgaria alities arenottaken intoconsideration) r nd energy carriersasofOctober2005(the 439.0 10 0.12 BGN /KWh ons, forCHP(IEA2004c)data2002are externalities arenotta 150.0 BGN/t 104.4 BGN/t 186.0 BGN/t 780.0BGN/t 102.5 BGN/t 1 845 3 795 2000 2000 5 640 40927 40927 2 673 68.4 BGN/t 80.0 BGN/t 15.6 BGN/t 41.1 BGN/t Price 3 BGN/nm 1 711 4 054 2001 2001 5 765 43 969 969 43 1 736 3 8000 kCal/10 8000 1 425 3 610 2002 2002 5 035 42 701 701 42 1 656 Specific heat of ~ 1600 kCal/kg ~ 2530 kCal/kg ~ 4185 kCal/kg 6200 kCal/kg 3400 kCal/kg 2700 kCal/kg 4400 kCal/kg 2700 kCal/kg 9300 kCal/kg burning ken intoconsideration. - N/A N/A N/A 2003 2003 6.9% 1.1% 0.0 N/A 450 2 956 42 554 554 42 3 nm 3 55 BGN/Gcal N/A N/A N/A 2004 2004 7.9% 1.3% 1.5 N/A 528 3 296 41 515 515 41 139 BGN/Gcal Specific price 24 BGN/Gcal 31 BGN/Gcal 25 BGN/Gcal 42 BGN/Gcal 30 BGN/Gcal 84 BGN/Gcal84 10 BGN/Gcal 16 BGN/Gcal 24 BGN/Gcal

N/A N/A N/A 8.1% 1.4% 3.0 2005 2005 N/A 583 3 493 42 872 872 42 167

CEU eTD Collection Total PhD Student: GerganaMiladinova Source: Bulgaria byregions Table 20.Distributionofthetechnicalpote Note: Thehighestvaluesareinbold. Source: (REC 2004) Table 19.Theoreticalpotential forbiomassusebyregions Note: Datarefers tousefor h Source: EEA 2006 Table 18.Potentialforbiomasswaste inBulgaria PHD THESIS-DISTRIBUTEDELECTR Region - Sofia South–West Region - Plovdiv South Central - Bourgas South-East Region - Varna North-East Regio Region Rousse North Centra Region - Vidin North-West Region Type ofwaste/ Total Rapeseed oil and fat wastes gas Landfill Agricultural animal waste Agricultural plantwaste Industrial waste Forestry residues (ktoe/year) (PJ/year)

Energoproekt 1994,citedinEEA2006

n l Total for thecountry: Total 1 841.5 77.1 (PJ/year) (PJ/year) biological Urban & 3.6 0.03 15.1 0.1 25.5 17.7 10.8 4.3 0.01 Type of waste waste of Type Sofia - region Sofia -city

Montana 196 Haskovo 41 Plovdiv 79 Lovech 117 Region Burgas 76 Varna 13 Ruse 41 9.6 0.4 0.1 1.5 0.2 3.2 0.03 (PJ/year) (PJ/year) & wooden Industrial eat, electricitygenerationorboth. 300.9 200.6 12.6 8.4 (PJ/year) (PJ/year) solid Municipal 2.8 1.3 3.7 2.1 0.8 0.7 0.6 ICITY GENERATIONINBULGARIA 1.8 0.002 1.2 0.04 1.3 0.000 (PJ/year) (PJ/year) Firewood ntial forsmallhydropower plantsin Total Potential Potential Total 2.4 272.3 0.1 11.4 0.02 0.01 0.002 (PJ/year) (PJ/year) fibres Natural ktoe Technical potential smallHPP for potential Technical 2,692 1,110 1,000 320 117 68 68 77 2.6 0.003 2.5 0.07 1.3 2.8 1.4 0.009 0.9 (PJ/year) (PJ/year) e liquid Agricultur (GWh/year) 756 177 16 7.2 0.3 0.03 0.2 0.001 (PJ/year) (PJ/year) Paper 2,038 1,000 ktoe 510 320 117 Unused Potential Unused Potential 68 68 23

(PJ/year) (PJ/year) 2 634.5 110.3 2 634.5 31.4 750.0 24.9 594.7 9.1 24.0 573.2 14.4 6.5 Total for the region Total fortheregion 100 100 100 100 100

% 76 30 46 (ktoe/year)

217.3 343.9 155.2 168

CEU eTD Collection PhD Student: GerganaMiladinova Source: (CRES production Table 22. Source: (Black &Veatch Table 21. PHD THESIS-DISTRIBUTEDELECTR 10 m aboveground(inbrackets Total Total Other Sewage Waste Energy crops Wood processing Agricultural residues Type ofbiomass Cape Kaliakra, Northeast, near by Black Sea Emine, East, near by BlackSea Obzor, East, near by BlackSea Black Sea by Ahtopol, East,near Peak Murgash, North of Sofia Peak Cherni vrah, Near Sofia. Peak Botev, Central Bulgaria Peak Musala, Southwest Black Sea the on and region central Mountainous In the Location

Potential forbiomass-fuelled CHP,excl Locations withhighpotentialforwindener

etal.2003) 95 95 5 5 35 30 10 10 Estimated availableresource in the long-term, the years in >10 etal.2003) extrapolations for50m) PJ ICITY GENERATIONINBULGARIA 4370 4370 230 230 1610 1380 460 460 uding biomass alreadyexploitedforenergy Description Wind speed 4.6m/s (5.8 m/s) recorded in these areas (8.8m/s) Average wind speedm/s of7 Wi Wind speed 10.3m/s (>12 m/s) Wi Wind speed 6.7m/s (8.4 m/s) Wind speed 9.3m/s (>11m/s) Wind speed 9.1m/s (>11m/s) Wind speed 7.6m/s (9.5 m/s) MW fuel fuel MW gy inBulgaria (wind speedmeasured at nd speed 4.6m/s (5.8 m/s) nd speed 4.6m/s (5.8 m/s)

Estimated potential biomass CHP Estimated potential (installed capacity, MW) (installed

57 57 1082 1082 398 342 114 114 MW electric MW 114 114 797 683 228 2163 2163 228 MW thermalMW 169

CEU eTD Collection Table 23.Procedureforchangingof PhD Student: GerganaMiladinova Source ofdata:LawonForestry (LF),(N 4 3 2 1 Table 24.Procedureforchangingofth Assembly 1996,lastamend.2003) Source ofdata:LawforthePreservation 3 2 1 Change indesignationofagricult 1. PROCEDURES ANNEX II.ADIMINISTRATIVE PHD THESIS-DISTRIBUTEDELECTR Land use and planning-relatedprocedures Land useand Proposal for a decision Proposal for The Mayorforwardsthe request Final decisision Application Request for apreliminary Submitting application for Notification of the changes changes the of Notification theto relevant Commission land status change of Procedure Procedure change the regarding consultations ural landsandforestry Committ of the NFD area below than 100dca) area below Directorate (NFD)(for forests with Director ofthe National Forestry Forests on the proposal ofthe and Agriculture of Minister the more than 100dca) Forestry (for forests with areaof of the Minister of Agriculture and other cases) Committee for theFarm Lands (all settlements) the of borders within is land the and 5ha to up land (for directorates Agriculture and Forests Committee to the regional Mayor the of Municipality Authority Authority Director ofthe NFD Council of Ministers on the proposal Cadastre authority authority Cadastre Director of the NFD designation ofagricultural lands ICITY GENERATIONINBULGARIA e designationofforestrylands ational Assembly 1997,lastamend. 2003) ee, appointed bythe Director AgriculturalLands(LPAL)(National

1 month ? Art. 30 days Timeframe Timeframe 1-month 7 7 days 30 days days 30 ? ? Art. 14c (3) Legal base Legal base Art. 17 (1) Art.14b Art. 25 Art. 25 Art. 20a Art. 20a Art. 14c (1) 14a 170

CEU eTD Collection Table 25.Procedurefor changingofaDeta PhD Student: GerganaMiladinova most DGprojects.Otherwise thepr properties beyondthebordersofurbanareas(A *Note: theprocedureisforprojectsthathave 2006) Source ofdata:LawonSpatialDevelopmen 8 7 6 5 4 3 2 1 Change ofdetailedregionaldevelopment plans PHD THESIS-DISTRIBUTEDELECTR Public announcement ofdraft Final decision – projects Final decision Additional process Development of proposal for Procedure technical infrastructure and transport concerning repeated changes, the procedure should be PUP isrejected or returned for Ifthe draft procedure: Additional PUP of draft approval and institutions Consultation with other PUP procedure for changes in the PUP of initiation on Decision shouldfollowed be public procurementprocedure For?? developmentof PUP application) inthe included maythese be a draft plan for changes of PUP wants investor (ifthe Application detailed developmentplan ocedures aremorecomplicated. Development and Public Works Minister of Regional approval National) Expert Committee for (or Municipal consultation, for institutions Interested Interested stakeholders Municipal Mayor Municipal Mayor importance) regionthan 1 or ofnational Public Works (projects for more Regional Development and importance); orMinister of ofregional or municipality (projects for more than 1 Governor or Regional projects); Municipal Mayor (for local decision on the application make preliminary to committee Municipal Mayor the of approval after investor of the proposal on beinitiated Can Authority Chief Architectmay askexpert ICITY GENERATIONINBULGARIA iled TerritoryDevelopmentPlan(PUP)*

t, (NationalAssembly 2001,lastamend. ascopeoflessthan3districtsorare rt. 128(3).LSpD),whichisthecaseof No deadline contestation contestation its Timeframe 1 month decide 1 month to 14 days days 14 1 month No deadline No deadline 14 days for 14 days Art. 129 (4) Art. 128 (5) (5) 128 Art. Art Art and (8) (7) 128 Art and (3) (1) 128 Art. Art. from ZUT from ZUT (3) 135 Art. Legal base and (3) r. 3 (3) 135 Art. Art. 129 (2) (2) 129 Art. Art. 124 (2) Art. 124 128 128 126 126 171 (10) (10)

CEU eTD Collection 2. Table 26.Proceduresrelatedtoconstruction PhD Student: GerganaMiladinova 3. 2001, lastamend. Regulation 2006); Sources ofdata:Art.139LawonSpatia 9 8 7 6 Application Permit the start of for operation relevant of Notification 5 4 Construction permit 3 Coordination and approval of investment project 2 Provisional project proposal consultation 1 Design visa PHD THESIS-DISTRIBUTEDELECTR Procedures relatedtoconstruction Decision appointsThe Directorof DNCS Applicaion Chairperson of thecommittee special committee legal contesting the decision for /stakeholders possibility investment project the technical orworking of consulting and Coordination of request a written Submittion of request a written Submittion Procedure prepares and signs aminutes

Chief municipal architect Director, Construction Supervision (DNCS) Committee Committee Stakeholders projects) architect ofthe region (for regional andChief Council Municipal national importance) with projects (for Works Public and Minister of Regional Development municipality) more1 than concerning GovernorDistrict (for projects Chief municipal architect national importance) with projects (for Works Public and Minister of Regional Development municipality) more1 than concerning GovernorDistrict (for projects Authority Committee 5 Director, DNCS Chief m Chief Chief municipal architect Chief 2 (MRDPW2003,lastamend. 2005)

unicipal architect architect unicipal ICITY GENERATIONINBULGARIA Directorate for National l Development (LSpD),(NationalAssembly

10 to 20 to 10 days working 7 7 7 days firm) by licenced daysor 7 (if the investor) by prepared 1 month (if 1 month Timeframe meeting last the days 14 days 14 days days 14 5 days days after Art. 148 (3) (3) 148 Art. Art. 177 (2) (2) 177 Art. 144 (3) 1-2 and Art. (6) 142 Art. LSpD (6), and (7) Art. 141 (1), Legal base LSpD Regulation 2 of (1) 17 Art. Regulation 2 6of Art. Art. 149 r. 4 of 140 Art. 172

CEU eTD Collection Assessment (EIA)or‘complexpermit’ Table 27.Procedureforassessment oftheneedforEnvironmentalImpact PhD Student: GerganaMiladinova 3 2 1 Table 29.Procedureforissuing‘complexpermit’ Complex permit (Integrated Pollution PreventionandControl(IPPC)permit) amend. 2006) Source ofdata:LawonEnvironmental Protec 7 6 5 4 3 2 1 Table 28.ProcedureforthedecisiononEIA Source ofdata:RegulationonEIA(Counc 5 4 3 2 1 PHD THESIS-DISTRIBUTEDELECTR Environmental protection-relatedprocedures Announcement ofthe decision Public hearing Decision on whetheralllegal Announcement ofthe decision EIA screening and decision on the Decision on whether the project is Additional process: Completion of Contestation of the decision Submission minutes of the Submitting of EIA report Additional process: Completion of Application data supplied supplied data to inspections Onsite verify the ismissingfile ifinformation Application to be verified by the on the EIA negative or positive – Decision stakeholders interested the of comments public hearing and the requirements aremet ofcomplete EIA need ismissingfile ifinformation procedures permit complex toEIAor subject Procedure Procedure Procedure competent authorities authorities competent

Project developer Project developer, competent Competent authority (asin row authority Competent 2) Competent authority (asin row 2) (as in row 2) authorities to thecompetent Investor Interested stakeholders authorities (asregional row2),and in authorities one RIEW are concerned) Or Minister of MOEW (if more than RIEW Director of Authority Interested stakeholders Authority Authority (additional to1 or no??) to1 no??) or (additional MOEW, EEnAor RIEW Project developer (asin row authority Competent 2) Competent authority (asin row 2) row 2 is stopped) Project developer (the timeunder than one RIEW are concerned) Or Minister of MOEW (if more RIEW Director of (EEnA) Executive Environment Agency Project developer ICITY GENERATIONINBULGARIA il ofMinisters2003,lastamend. 2006) tion (LEP),(NationalAssembly 2002,last

Art. advance days in nt atleast30 Announceme 14 days Timeframe Timeframe Timeframe days 30 Within N/A 14 days 45 days

30 days 1 month 3 months 7 7 days 14 days 3 3 days

Art. 97 Legal base Legal base Legal base Art. 10 (3) Art. 5? Art. 96 (6) Art. (8) Art. 5 Art. 10 (1) Art. 99 (2) Art. 96 (1) Art. 5 Art. 10 (4) Art. 99 Art. 99 (4) Art. 99 (6) Art. (8) Art. (8) 99 173 (1)

CEU eTD Collection 4. amend. 2006) PhD Student: GerganaMiladinova ( LW); ortransferofwatersbetween water bodyuseofcertainbigdamcomplexe Note: ( Source ofdata:LawonWaters(LW),(N 7 6 5 4 3 2 1 Table 30.Procedureforissuingpermitswater andwater bodyuse Source ofdata:LawonEnvironm 13 Issue ofthe permit, announcement 12 11 10 Comments by investor 9 8 7 6 5 4 PHD THESIS-DISTRIBUTEDELECTR 2 ) Basin DirectorateDirector– allother cases. Resource use-relatedprocedures Decision Public anno Contestation of t Technical review submission of application) the days of 14 1,within row to (simultaneously application. Additional process: After 6 EEnA coordinates the Note to the Municipal Mayor Application via mass media media mass via decides parties, Committee interested of ofthe Issue permit by interested parties Comments ismissing fileifinformation of process:Comp Additional o disposal Public consultation the of outcomes the of municipality applican ofthe Notification (simultaneously to row 1) interested the by Comments Notificat institutions other with report Procedure Procedure the competent authorities competent the authorities (Simultaneousrow to 9) 1 ) application totheMinister of Envir o fteapiat optn uhrt a o ) 0dy (Art. 70) days 10 1) (asrow authority competent applicant ion the of to be verified by uncement ofthe edcso Interested parties he decision f the application Municipality Municipality application f the If objection letion letion parties t and t and

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ational Assembly 1999,lastamend.2006) ICITY GENERATIONINBULGARIA ed institutions institutions ed nvironment and Waters onment andWaters:forwaterextractionor s andsignificantdams (Art.52.(1)2. tion (LEP),(NationalAssem s row 11) w 1) 2

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CEU eTD Collection 5. PhD Student: GerganaMiladinova SEWRC (CouncilofMinister Sources ofdata:Regulation on 5 4 3 2 1 electricity andheatgeneration Table 32.Procedureforissuingofalicen be filed. Table. ( Note: Source ofdata:Regulation6from 9.06.2004,(MEER2004c) 9 8 7 6 5 Additional questions 4 3 2 1 electricity grid andsigningofconnectioncontract Table 31.Procedureforrequestingastudyconditionsconnection to PHD THESIS-DISTRIBUTEDELECTR Electricity/heat generation -relatedprocedures; Notificationthe of decision Additional process –if the TSO decides to Request for commencementof exercising Consideration of the application Application for ac Additional processCompletion – the of Additional process– Request for the licence formodification, activity, of withdrawal or commencement ofexercising of licensed the for apermit of issuing on Decision modification or activity licensed of (SWERC) Commission Energy and Water Regulatory the State to submitted for licence Request signs contract the Applicant request redirect the request tothe DSO to electricity grid electricitygrid to preliminary contract and electricitygrid to connecting way of and conditions the Request on for astudy Procedure Procedure to electricitygrid connection for Contract proposed contract / study Preliminary ofthe Elaboration additional information information additional

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s 2004,lastamend. 2005) licensing (CouncilofMinist

ICITY GENERATIONINBULGARIA SWERC Applicant Applicant Applicant Applicant the applicant Applicant TSO/DSO DSO TSO Applicant institution Actor / institution Actor / DSO/TSO DSO/TSO TSO/DSO to SWERC SWERC ce forelectricitygenerationand for ods describedinrows3,4and5ofthe w requestforstudyandcontractshould

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2 Art. 58 licensing Legal base the SEWRC the Art.39 (1), of Statue of licencing Art.(2) 22 Reg. on Art. 8 (4) 1 of Reg. on Reg. of 1 (4) 8 Art. (3)). Art. 56, (4) Legal base

Art. 56, (5) At 50, (Art.

Art. 56, (1) 2 2 (1) 56, Art. Art. 57. (2) Art. 56, (6) 175

CEU eTD Collection Тел In Bulgaria: PhD Student: GerganaMiladinova e-mail: Nador u.9,room 606,Budapest 1051, Hungary Environmental Sciences&Policy Dept Assistant Research Doctoral Candidate, Gergana Miladinova For contact: want toprovidethemplease feelfreenottoanswer them. consider that someoftheanswers tothe which canbeconsideredsensitiveforyou The information from allquestionnaires will besummarized andnoconcrete data, The questionnairewill beusedSOLELYfortheneedsofPhDresearch. Main supervisorProf.DianaUrge-Vorsatz PhD Student:GerganaMiladinova Distributed ElectricityGe Developing SustainableEnergySystems: The datacollected will beused INVESTORS FOR QUESTIONNAIRE ANNEX III. PHD THESIS-DISTRIBUTEDELECTR BARRIERS TODECENT BARRIERS : +3592-989-5104 (BG), [email protected] THANK YOUFORYOURCOOPERATION!!! (QUESTIONNAIRE FORINVESTORS) (QUESTIONNAIRE Моб neration inBulgaria : +359-8888-92468 (BG)

foraPhDresearch,entitled: RALIZED ELECTRICIT или ., Central European University ., CentralEuropeanUniversity BULGARIA [email protected] ICITY GENERATIONINBULGARIA (Central EuropeanUniversity,Budapest)

questions can be confidential and do not questions canbeconfidentialanddonot Policies,Barriers and Prospectsfor , willbemadepublic.However, ifyou

Y GENERATIONIN 176

CEU eTD Collection PhD Student: GerganaMiladinova purchased Price atwhichelectric (andthermal) energy is Anticipated periodofretu Construction workscosts Equipment costs initiation oftheconstructionworks) Costs oftheprojectdevelopment phase(untilthe Total investment Financial data Location oftheinstallations The unitsareboughtnewor‘secondhand’ The unitisconnectedtogridat..voltage Efficiency ofelectricity Annual operatingtime Annual electric/heat Total installed electric (and thermal) capacity Number units ofinstalled Type oftechnology Type ofrenewablesourceorco-generation Technical parameters 2. Name oftherespondent Е Web site Telephone Director Address Main activities Firm 1. PHD THESIS-DISTRIBUTEDELECTR -mail DATA FOR THE INVESTMENT FORTHEINVESTMENT DATA FORTHEINVESTOR DATA output MWh/year (andheat)generation rn oftheinvesmnet

ICITY GENERATIONINBULGARIA

BGL/MWh € orBGL € orBGL

kWth %

h kWe

177

CEU eTD Collection 3.1. construction, production) At whichphaseistheprojectnow(i.e.development, 3. PhD Student: GerganaMiladinova - - whole process) subphase. (Thisseparationinphase For thedifferentphases,pleaseprovidemore Date ofstartoperation(month, year) Initiation ofconstructionworks(month, year) Initiation ofdevelopment phase(month, year) PHD THESIS-DISTRIBUTEDELECTR and technicalfeasibilitystudies;envi of differentfinancingscheme terms ofacontract;visi

PROJECT PHASESA Subphase negotiation/development Recommendations: Main problems andhowdidyouovercome them: estimation, ifconcretefigureisnotavailable): How longthecompletion ofthissubpha measurement campaigns;accomplishmentof site; choiceofdesiredtechnology;r Subphase search/pre-feasibility Project development phase Recommendations: Main problems andhowdidyouovercome them: estimation, ifconcretefigureisnotavailable): How longthecompletion ofthissubpha ts totheproject site;hiring law ND THEIRDURATION s fortheproject;negotiations s isindicativebuthelpsfor ronmental impactandpublicenquiry) (includesactivitiessuchas:searchforasuitable ICITY GENERATIONINBULGARIA

ough determination of the available budget; ough determinationoftheavailablebudget; (includes activities su detailedinformation oneachphaseand one ormorepre-feasibilitystudies) se took(inmonths) (pleaseprovide se took(inmonths) (pleaseprovide yers todraftcontracts; evaluation regardingloans;economic better understanding ofthe

ch as:negotiatingthe 178

CEU eTD Collection 3.3. 3.2. - PhD Student: GerganaMiladinova PHD THESIS-DISTRIBUTEDELECTR

Recommendations: them: infrastructure; duetothe lackofqualified technicians) (Moredetailedquestionsonthissubphase estimation, ifconcretefigurenotavailable): How longthecompletion ofthissubpha Recommendations: with changesinthelegalframework) maintenance costsandproblems;problemsw Main problems Phase ofelectricity/heatgeneration Main problems concrete figurenotavailable): How longthecompletion ofthisphasetook Construction phase of variouslicences,permits procedures Subphase administrative (such as:problemswithconstruc (i.e. technicalproblemswhich , concessionsrequired) andhowdidyouovercome them: ICITY GENERATIONINBULGARIA

(includes allactivities related to theobtaining areincludedfurther (in months)(pleaseprovideestimation, if se took(inmonths) (pleaseprovide ith thepurchasingofenergy;problems

have led to stop of operation; have ledtostopofoperation; tion works,withtheexisting and howdidyouovercome in thequestionnaire) 179

CEU eTD Collection Own capital How isyourprojectfinanced? 4. Have yousignedacontract How much didtheprocesstook time describe them Did youhaveproblems withthepreparation of relevantdocuments? Ifyes,please Did youhaveproblems withensuringthefi accessible opportunity forfinancing? BEEF, EBRDcreditlines)?Doyouthinkth PhD Student: GerganaMiladinova Please provideyourrecommendations on the JointImplmentation scheme? If Do youknowaboutthevariousopportunitiesforpr credit securities)? took itandunderwhatconditions(period,inte If youhaveobtainedcreditpleaseprovide Other (pleasespecify) Preferential loan Bank credit PHD THESIS-DISTRIBUTEDELECTR SOURCES OFPROJECTFINANCING SOURCES fortradingoftheCO yes, what are the conditions? yes,whataretheconditions? ? Did you use external consultant? Didyouuseexternalconsultant? ? % orBGLEUR % orBGLEUR % orBGLEUR % orBGLEUR ICITY GENERATIONINBULGARIA how theprocesscanbeimproved: nancing? Ifyes,pleasedescribethemnancing? information from whichbank/institutionyou rest rate,gracepe 2 at theyprovidetransparentandeasy emission reductionunits,ifany,under eferential creditsin

riod, requirements for Bulgaria(suchas 180

CEU eTD Collection of preparationdocuments Please, ifpossible,provideinformation on problems. Please usethesp For theactivities that weremost problematic to obtain-requiressignificant and cheap;3-normal; 4-require 0 -notrelevant;1noproblem -quicklyand To evaluatethedifficultypleas obtaining therelevantdocuments. Please, fillinthetablebelowbyevaluating,as 5. Did youreceiveenough information and support problems arising. PhD Student: GerganaMiladinova Please describetheprocedures Other Permit forentering inoperation Permit forconstruction Design visa Permits relatedtoconstruction Complex Environmental Impact Assessment (EIA,andalsopre-EIA) Permits relatedtoenvironmentalprotection Other and heat generation Licence forelectricity generation Licence forelectricity Permit grid forconnectiontothermalAgreement/contract transmission thermal transmissiongrid ofconditionsRequest forastudy andway ofconnecting to grid forconnectiontoelectricity Agreement/contract grid electricity ofconditionsRequest forastudy andway ofconnecting to tothegen Documents related Other Concessions useandofwatersite Permit forwater toresourcesuse Permits related Permits relatedtothechange ofstatus ofland Document Difficulty PHD THESIS-DISTRIBUTEDELECTR LICENCES, PERMITS AND CONCESSIONS ANDCONCESSIONS PERMITS LICENCES, from permit

DKEWR eration of electricity (heat) eration ofelectricity (heat) ace belowifnecessary. untiltherelevantadminist

financial resourcesandtime. thatyoufindmost complicat e use the following scale: s time andmoney butisobtainable;5-hardlypossible ICITY GENERATIONINBULGARIA how longwastheprocess(frombeginning pleasegivemore explanationsonthemain cheap, 2-requirespreparationbutisquick from therelevantpublicauthorities? farasitispossible,thedifficltyof

rative document isissued).

ed andhowdidyousolvethe

Problem

Duration 181

CEU eTD Collection enough information intime? If youhadquestionsorproblems to related Were yousupportedfromgovernmental necessary information? How didyoudecidetoinve 7. Please provideyourrecommendationson Do youthinkthatsome oftherequirements arenotnecessary? are clearand transparent? Do youthinkthattheprocessis Did youhaveproblems infulfillingtheproced In caseofCHPwasitcalculatedwellenoughtomeet theheatdemand? Did youhavetechnicalproblems withtheunit? 6. Please provideyourrecommendationson are yousatisfiedwith Did youuseexternalconsultant fortheprepar Ifnotpleasegiveexamples.respected? Were the legally set time deadlinesfor issuing orthe relevant administrative document PhD Student: GerganaMiladinova PHD THESIS-DISTRIBUTEDELECTR AVAILABILITY OF INFORMATION OFINFORMATION AVAILABILITY TECHNICAL ANDCONNECTION his/her services? his/her services? st inRES/CHPandfrom wh wellregulatedandthatth institution? If yes, by which? Ifyes,bywhich? institution? ICITY GENERATIONINBULGARIA how theprocesscanbeimproved: how theprocesscanbeimproved: TO THE GIRD CONSTRAINTS TO THEGIRDCONSTRAINTS the differentproceduresdidyoureceive ures forconnectingtoelectricitygrid? ation ofthenecessary documents? Ifyes, ere andhowdidyouobtainthe e existingrulesandstandards 182

CEU eTD Collection Yes/No energy sourcesorco-generation. Are yousatisfiedwiththecurrentlyexisti 8. PhD Student: GerganaMiladinova investment process Lack ofinformation regardingthe potentials Lack ofinformation onthe Frequent changesoftheregulations RES/CHP promotion Lack ofnationalstrategyfor Barrier Importance 5 impossible toovercome 4 verydifficulttoovercome 3 itisasignificant barrie 2 itisnotasignificantbarrier 1 itdoesnot existinBulgaria For theevaluationofimportan recommendations onhowinyourviewtheycanbeovercome. Please evaluatetheimportance 9. What changeswouldyourecommend Other other) Investment subsidy(BEEF Purchasing ofelectricity Preferential connection Preferential tarrifs PHD THESIS-DISTRIBUTEDELECTR LEGISLATIVE FRAMEWORK BARRIERS r butcanbeeasilyovercome

they exist) and give your of thevariousbarriers(iftheyexist)andgiveyour ce pleaseuse the followingscale: in the existing legislation? in theexistinglegislation?

Problem

ICITY GENERATIONINBULGARIA ng mechanisms forthesupporttorenewable Recommendation

Solution

183

CEU eTD Collection Barrier Importance PhD Student: GerganaMiladinova Other Conflict withlocalpopulation Conflict withNGOs protection Problems relatedtoenvironmental Lack ofexperts existing monopolies Unfair competition from the Connection tothegrid High fuelprice Lack offinancing Long administrative procedures PHD THESIS-DISTRIBUTEDELECTR THANK YOU!!!

ICITY GENERATIONINBULGARIA

Solution

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CEU eTD Collection PhD Student: GerganaMiladinova PV 7 Dimitar Donchev 6 5 4 Wind power 3 2 Bogan Siromahov 1 HPP Expert Respondents tothequestionaireonBarriers (position) ANNEX IV.LISTOFINTERVIEWEES PHD THESIS-DISTRIBUTEDELECTR Also owner of several wind turbines Association of Producers of Ecological Energy Wind parkdeveloper and owner GEO powerLtd Wind parkdeveloper and owner Eolica Bulgaria Stilian Burhanlarski, manager Wind parkdevelopersandowners Mitsubishi Corporation Krassimir Kostadinov(advisor) Kaliakra Wind PowerAD Georgi Petkov,(ExecutiveDirector) Development andconstructionofHPPs, ownerofHPPs Delektra Hydro Georgi Denkov(Generalmanager) andprojectdeveloper HPPs owner Development andconstructionofmicroHPP,ownerHPPs Hydroekoenergo –TACLtd Evgeni Angelov(Director) Firm/relevant activity Velizar Kiriakov ( President )

ICITY GENERATIONINBULGARIA to DistributedGenerationinBulgaria 21/09/06 Interview/Questionnaire 6/08/06 Interview/Questionnaire 30/08/06 Interview/Questionnaire 18/08/06 Interview/Questionnaire 1/09/06 Interview/Questionnaire Type ofcommunication 6/08/06 Interview 22/08/06 Interview/Questionnaire

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CEU eTD Collection 8 Petar Ivanov PhD Student: GerganaMiladinova 15 14 13 12 11 10 CHP 9 Biomass PHD THESIS-DISTRIBUTEDELECTR Developer pv systems EOS-Technologies Generation ofelectricity,ge District HeatingPravetzJSCo landfill gasprojects Developer co-generation installations, naturalgas engines, Dr EnergySystems Owns severaldistrictheatingcompanies LM Impex Ltd Development) Generation ofelectricity,gene District HeatingVratzaEAD Generation ofelectricity,gene District HeatingVarnaEAD Generation ofelectricity,genera District HeatingBurgasEAD Valio Duchev(DeputyExecutiveDirector) Biomass projectdeveloper National AssociationforTransferofTechnologies Kostadin Madgarski(president) Valentin Vassilev (Executive Director) Valentin Terziyski (Director Investment andBusiness Angel Angelov(Director) Dimitar Dimitrov (Director) Ilia Nikolaev (Director) neration anddistributionofheat ration anddistributionofheat ration anddistributionofheat tion anddistributionofheat ICITY GENERATIONINBULGARIA

18/08/06 Telephone interview 31/08/2006 Interview 7/09/2006 Interview/ questionnaire 15/09/2006 Questionnaire 22/08/06 Interview/Questionnaire Interview 14 and25/09/06 Telephone interview questionnaire Email comm../

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CEU eTD Collection STATE INSTITUTIONS significant information orideasduringmy research) (Note: Thelistisnotexhaustiveandinclude occasions List ofexperts with whom aspects relevant toDGwere discussedonvarious PhD Student: GerganaMiladinova Nikolaj Nedialkov(senior expert Interview ontheEIAand windparks Regional InspectorateofEnvi Todor Kolev(HeadofUnit,PreventiveActions) Discussion ontheactivities Bulgarian Energy EfficiencyFund(BEEF) Ivan Gerginov (ExecutiveDirector ) Administrative requirementsrelatedtoDG State Energy andWate Vasil Koutinchev Kinka Boneva Venelin Barosov Number ofmeetings anddiscussionson Energy EfficiencyAgency Krasimir Naydenov(HeadofDepartment) Nikolay Nikolov(chiefexpert) Michael Bulgarenski(chief expert) Kolio Kolev (Director) Interview ontheopportunities forJI Ministry ofEnvironment andWaters, Climate ChangeandPolicyDepartment Valko Koparanski Meeting autumn 2005 Ministry ofEnergyandResources Vladislava Georgieva(expert) Kostadinka Todorova(HeadofUnit) PHD THESIS-DISTRIBUTEDELECTR r RegulatoryCommission and supportprovidedbyB ronment andWaters –Varna , ProtectionofBiodiversity) co-financing, 09/2006 development inVarnaregion23/08/2006 the DGdevelopments inBulgaria,2004-2007 ICITY GENERATIONINBULGARIA s theexpertsthathavecontributedwith EEF, 7/09/2006,SOFENA Workshop 187

CEU eTD Collection Interview ontheimpacts ofRESon Regional InspectorateofEnvi PhD Student: GerganaMiladinova Overgas Svetoslav Nikolov (DeputyExecutive Director) September 2005,May2006,June2006 Discussions ontheinvestment opportunitiesandbarrierstoDGdevelopmentinBulgaria Ecofys Bulgaria Arjan Visser(countrymanager) Discussion ontheopportunitiesof Association ofBulgarian EnergyAgencies Zdravko Georgiev(DeputyPresident) Sofia EnergyAgency–SOFENA Assoc.Prof. IvanShishkov(ExecutiveDirector) Interview, 08/2007 –Bulgaria COGEN Veneta Uzunova(ExecutiveSecretary) A number ofdiscussionsonpolicyandlim Black SeaRegionalEnergyCentre Angel Nikolaev(expert) Lulin Radulov(Director) FIRMS CONSULTANCIES, AGENCIES, January 2006 Informal discussionontheimpact ofbi Executive Agency ofEnvironment Radoslav Stanchev(expert) September 2007 mountain hutsinBlagoevgradRegion Informal discussion ontheimpacts ofsmall Regional InspectorateofEnvironm Rossen Aleksov(expert) PHD THESIS-DISTRIBUTEDELECTR ronment andWaters –Varna DGandprojects’funding,2005-2007 ent andWaters –Blagoevgrad biodiversity inVarnaregion22/08/2006 odiversity ofRESdevelopment projects ICITY GENERATIONINBULGARIA itations toDGinBulgariaduring2004-2007 HPP andtheopportunitiesforsmall unitsin 188

CEU eTD Collection units, May 2005 (?) units, May2005(?) Short discussiononthe PhD Student: GerganaMiladinova CONTRIBUTIONS INTERNATIONAL Wind turbinesandtheirimpact onbirds’migration, 2006 Bulgarian Society forth Irena Kostadinova(officerEUpolicy) Environmental impact ofDG, CEE BankwatchNetwork Fidanka Bacheva-MacGrath(regionalcoordinator) A number ofdiscussionson WWF Bulgaria Ivan Hristov (officer) NGOs Information project,May2005(?) onDGNET Technical University -Sofia Assoc. Prof.AnastasiaKrasteva (ViceDirector) Current RES policyanditshistoricaldevelopment, September 2005 Institute ofMeliorati Valden Georgiev(seniorexpert) September 2005andMarch2007 Feasibility ofPV,policyneededand Bulgarian Academy ofSciences Central Laboratory ofSolar Assoc. Prof.TzvetankaToneva Prof. PetkoVitanov(Director) ORGANIZATIONS RESEARCH A number ofdiscussionsonpolicyandlim Energy consultant Jordan Ignatovski PHD THESIS-DISTRIBUTEDELECTR on andMechanization e ProtectionofBirds activities of Overgasregarding th Energy andNewSources the consequencesofRESon EBRD activities in Bulgaria ICITY GENERATIONINBULGARIA itations toDGinBulgariaduring2004-2007 biodiversity protection,2004-2007 e promotion ofsmall scaleCHP 189

CEU eTD Collection Directive, Belgium, March-July2006 Information onthenegotiationsbetween theEU European Commission, DGTREN,UnitD1 Karina Veum(Policyofficer) Norway, July2005 PhD Student: GerganaMiladinova 2005 Discussion onthedevelopment ofCHPtechnol Netzwerk DezentraleEnergie Nutzung Ulrich Jochimsen Interview ontheJIopport DNV (leadingindependentgreenhousegasverifier) Susanne Haefeli(expertCDMandJI) Occasional discussionsonrenewableenergypo European RenewableEnergy Council Oliver Schäfer (PolicyDirector) Bulgaria, Belgium, 2006 Extensive discussiononthepenetrationandopportunitiesforDGdevelopment inBulgaria, Province Zuid-Holland,TheNetherlands (energypolicyadvisor) Arend Bosma PHD THESIS-DISTRIBUTEDELECTR unities andhownationalgovernme ICITY GENERATIONINBULGARIA licy intheEU, Belgium, April,May2006 and BulgariaregardingtheRES-electricity ogies andpolicyinEurope, Spain,August nts cansupporttheprocess, 190

CEU eTD Collection AES. 2006.AESexpandswindgenerationbusine AEAF, AgencyforEconomic Analysisand Forecasting. 2003. REFERENCES BMU, FederalMinistryfortheEnvironment, Black &Veatch,AgresEnerjiSistemleri PhD Student: GerganaMiladinova ______. 2007b.Officialwebstie-Aboutthe Agency. [on-line]BSMEPAcitedat: BSMEPA, BulgarianSmall andMedium Ente Brunwasser, M.,Georgiev,A.,Georgieva, S., Skodrova, A.andGuev,I.2004.Special Bradley, R.2001.Why renewableenergyis ______. 2003.Reportonadministrative proceduresfortheauthorisationof PHD THESIS-DISTRIBUTEDELECTR October 18,2006,citedat: economic development ofBulgariafo Sofia, AEAF. http://www.bmu.de/files/pdfs/allgem in thecontextofitsnationalsustaina 2002. StrategyoftheGerman Government ontheuseofoff-shorewindenergy line] citedat: Bulgaria. RenewableEnergyCountryProfile, Version1,13January2003.[on- http://www.sme.government.bg/IANMSP/story.aspx?id=24 http://www.sme.government.bg/IANMSP/story.aspx?id=64 at: Innovation Fund-results.[on-line] BSMEPAcited http://www.mediapool.bg/site/project/index.shtml supported byOpenSocietyFoundation. [on-line]citedat: report: Kozlodujactiveelements (inBulgarian).Journalisticinvestigation cited at: energien.de/files/pdfs/allgemein/application/pdf/ee_bericht_stromvb1_eng.pdf [on-line] BMUcitedat: installations for thegeneration ofelectricityfrom ir.net/media_files/irol/20/202639/ http://www.ncpa.org/studies/renew/renew.html http://projects.bv.com/ebrd/profiles/Bulgaria.pdf ICITY GENERATIONINBULGARIA presskit/windGen/101806PR.pdf San.VeTic.A.S.andInterwind.2003. ein/application/pdf/offshore.pdf rprises Promotion Agency.2007a.National NatureConservation and NuclearSafety. not cheapandgreen.[on-line]2001?, r the period 2000-2006. Revisedversion bility strategy. [on-line] BMU cited at: bility strategy.[on-line]BMUcitedat: ss intoFranceandBulgaria. [on-line] . renewable energysources. . http://www.erneuerbare- http://media.corporate- . . National planfor . . . 191 . .

CEU eTD Collection BSREC, Black SeaRegionalEnergyCentre BSREC, Black ______. 2004d.Fees collected bytheStateEner PhD Student: GerganaMiladinova ______. 2004c.Regulationonthelicensingof ______. 2004b.Feesfortheservicesprovided bytheMOEW anditssubordinate ______. 2004a.Regulationontheregulation ofelectricityprices. Council ofMinisters.2003,lastamend.2006. Communities andLocalGovernment. 1999.Circ Cole, N.,Skerrett,P.andGallagher,K.1995. CBD, CenterforBiological Carbon Trust.n.d.EnhancedCapitalAllowanc Bunge, T.,Dirbach,D.,Dreher,B.,Fritz,K., PHD THESIS-DISTRIBUTEDELECTR Package 1,deliverable 1. medium andlong-term. Unpublishedrepo following therequirements intheLaw onEnergy. from 22.06.2004 organizations. 2.03.2004 amendment SG3from10.01.2006 carrying outEnvironmental Impact Assessment. http://www.communities.gov.uk/index.asp?id=1144405#P476_109592 assessment. [on-line] cited at: Publishing Co. renewable energysolutions ml http://www.biologicaldiversity.org/swc Center forBiologicalDive Altamont Passisthe most lethal wind farm inN.America for raptors. [on-line] http://www.eca.gov.uk/ source ofrenewableenergy Steudte, CarolaandVoigt,Dr.Thomas. 2003. Schmitz, E.,Schwermer,S.,Seidel, . SG 486from1.10.2004

Diversity. 2004.Cleanwinden .

. Berlin,German FederalEnvironmental Agency. . White RiverJunction,Vt.:ChelseaGreen ICITY GENERATIONINBULGARIA

rsity May 7, 2004, cited at: rsity May7,2004,citedat: Regulation ontheterms andconditionsfor Lell, O.,Rechenberg,B.,J., . 2007.DGpenetrationinBulgaria

Renewables areready:peoplecreating bd/Programs/bdes/altamont/altamont.ht es. Officialwebsite.[on-line]citedat: theactivitiesinenergysector. Dr. Wolfgang,Steinhauer,Manfred, gy andWater Regulat ular 02/99: Environmental impact rt from DINEMOproject,Work Hydroelectric powerplantsasa SG 25from25/18.03.2003,last SG 89from12.10.2004 ergy atAltamont Pass? ory Commission SG 17from . SG 5c3

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CEU eTD Collection CRES, CentreforRenewableEnergySources, Agency,Decree353 ______. 2005,lastamend.2006.StatueoftheEnergyEfficiency ______. 2004,lastamend. 2005.Statueofthe PhD Student: GerganaMiladinova ______. 2006b.PlanningPolicyStatement:Pl Department forCommunities Datta, E.,Feiler,T.,Lehmann, A.,Lovins,A DAI Europe&EnConServices.2007.Bulgar PHD THESIS-DISTRIBUTEDELECTR DOE, U.S.Department of Dimitrov, M.2005.Theunnecessarynuclear line] citedat: cogeneration network(BioCogen).Final TUBITAK- Marmara Researchanda/s,EnergiGruppenJylland.2003.Biomass Slovenian Forestry,Committee, Ecoli Forschungsgesellschaft, Finland,TechnicalResearchCentreof,Institute, Europeen duBois-,Lantbrukeuniversite from 21.12.2004. 49 from14.06.2005 Commission anditsadministration. Supplement toPlanningPolicyStat Local Government Publications. Towards zerocarbondevelopment.Consultation 2004. Smallisprofitable 06, 2007,citedat: Energy CreditLine(BEERECL). HMSO. http://fossil.energy.gov/inte Energy November 15,2004, citedat: the RepublicofBulgaria.[on-line]U.S. http://www.mediapool.bg/site newspaper) January16, cited at: http://www.cres.gr/bioc Energy, OfficeofFossilEner SG 1from4.01.2005,lastamendment284.04.2006 http://www.beerecl.com/index.htm

and LocalGovernment. 2006a. . Snowmass, Colorado:Rocky MountainInstitute. rnational/CentralEaste /business/2005/01/16/04_160105bu.shtml ICITY GENERATIONINBULGARIA Official website ofthe project. [on-line]July ement 1.ConsultationDocument SG 52from18.06.2004,lastamendment ., Rábago,K.,Swisher,J.andWicker, K. ogen/pdf/market_analysis.pdf Energy, TV,Energie,InstitutTechnique Department of Energy, OfficeofFossil Department ofEnergy, ian EnergyEfficiencyandRenewable nks- RegionalEnvironmental, Centre, t, Sveriges, mbH, Joanneum Research gadget. [on-line]Mediapool(online technical report:Ma State Energy andWaterRegulatory gy. 2004.Anenergyoverviewof anning andClimateChange. rn%20Europe/bulgover.html . London,Communities and . Building agreenerfuture: rket survey.[on- . . Norwich: . 193 .

CEU eTD Collection E.V.A., TheAustrianEnergyAgency.2004. DTI, Department ofTradeandIndustry.2006. EC, DGJRC,Commission of the European ______. 2007.CommunicationfromtheCommissiontoEuropean Councilandthe ______. 2005b.CommunicationfromtheCommission.Th ______. 2005a. ______. 2003b.Secondbenchmarkingreport.Annualreportontheimplementationof oftheEuropeanCommunities.2003a. EC, Commission ______. n.d.KozloduyInternationalDecommissioning SupportFund.[on-line]cited E.V.A., TheAustrian EnergyAgency andÖEKV,TheAustrianEnergyConsumer`s PhD Student: GerganaMiladinova EBRD, EuropeanBankforReconstruction PHD THESIS-DISTRIBUTEDELECTR 21, citedat: review consultation statutory consultationontheRenewabl at: http://re.jrc.ec.europa.eu/pvgis Research Centre. 2006.Photovoltaic Solar Brussles, EC. European Parliament-Anenergypo renewable energysources,COM(2005) 627final COM(2004) 863 the gasandelectricityinternalmar Countries). Commissionstaff the gasandelectricityinternal market(updatedreportincorporatingCandidate Brussels: EC. Europe. Distributedgeneration:Keyissues,challengesandproposedsolutions. at: http://www.opet.dk/download/wp2/ 8, 2003,citedat: Association. 2003.Small andmicro scale March, cited at: landmark energy-efficiencyfacilityin http://www.ebrd.com/country/sector/ Fourth benchmarkingreport.Annual http://www.eva.ac.at/(en)/enercee/bg/index.htm http://www.ebrd.com/new/pressrel/2004/33mar16.htm . Brussles,EC. . London:DTI working paper,SEC(2003)448.Brussles,EC. ICITY GENERATIONINBULGARIA and Development. 2004.EUR50million for WP2_Country_Report_Austria.pdf Energy profileBulgaria.[on-line]2004-12- ket. CommunicationfromtheCommission, Reform oftheRenewablesObligationand Communities, Directorate General Joint licy forEurope/COM/2007/0001final/ nuclear/overview/funds/kidsf.htm es ObligationOrder2007:Anenergy Bulgaria. Press release. [on-line] 16 CHP inAustria.[on-line]December Electricity Potentia report ontheimplementationof . Brussels,EC. e supportofelectricityfrom New eraforelectricityin . l. [online]cited . . . 194 .

CEU eTD Collection ______. 2005a.Investment processforutilizat ______. 2003b.Nationalprogramforenergysavinguntil2014 EEA, EnergyEfficiencyAgency.2003a. oftheEuropeanCommunitiesEC, Commission PhD Student: GerganaMiladinova Energy InstituteJSC.2005.Greenhousegasem ______. 2006.Nationallong-termprogramforthe ______. 2005e.Investment processforwind ______. 2005d.Investment processforutilizat ______. 2005c.Investment processforgeotherm ______. 2005b.Investment processforrenewa PHD THESIS-DISTRIBUTEDELECTR http://www.seea.government.bg/documents 05/08/2005, citedat: saving. Sofia,EEA. Pocket book2007.Brussles,EC. Institute JSC. 1990-2003. Nationalinventory sources (2005-2015). versionSeptember2006. Sofia,EEA. Final DF http://www.seea.government.bg/documents/Informacia/VEI/InvestmentWIND.P cited at: YDRO.PDF http://www.seea.government.bg/documents line] EEA02/08/2005,citedat: RM.PDF http://www.seea.government.bg/documents/Informacia/VEI/InvestmentGEOTE 05/08/2005, citedat: F http://www.seea.government.bg/documents/Informacia/VEI/InvestmentBIO.PD biogas. [on-line]EEA05/08/2005,citedat: PDF . . . . . ICITY GENERATIONINBULGARIA report 2003.Submission 2005.Sofia,Energy Three-year nationalac power plants.[on-line]EEA02/08/2005, and Eurostat. 2007. EU energy infigures: and Eurostat.2007.EUenergy ion ofsolarpower.[on-line]EEA ion ofhydropowerbelow10MW. [on- ble energysources-biomass and issions inRepublicofBulgaria1988, al energyutiliza /Informacia/VEI/InvestmentSOLAR. /Informacia/VEI/InvestmentSmallH promotion of renewable energy promotion ofrenewableenergy . Sofia,EEA. tion. [on-line]EEA tion planforenergy 195

CEU eTD Collection ENIRDGnet. 2003.WP1:concepts ENIRDGnet. ESD, EnergyforSustainableDevelopm ESD, EnergyforSustainableDevelopmen PhD Student: GerganaMiladinova Golove, W. andEto,J.1996. GENI, GlobalEnergyNetworkInstitute. 200 Fisher, A.andRothkopf,M. ESD, EnergyforSustainablyDevelopment ESD, EnergyforSustainableDevelopment Ltd.2001. PHD THESIS-DISTRIBUTEDELECTR Glaze, G. 2006. The UK energy research landscapereport.[on-line]Glaze, G.2006.TheUKenergy citedat: http://www.dgnet.org/ENIR and trends.[on-line] http://tecs.energyprojects.net/li program. the SAVE European market.'Future cogen' projectNo4.1031/P/99-169,financedunder KAPE S.A.,VTTandSigma Elektrotekni Association forthePromotionofCogeneration, ETSU-AEATechnologyplc, 4.1031/P/99-169. Brussels,COGENEurope. European market:CountryreportBul KAPE, VTTandElektrot European AssociationforthePromoti US DOE. of therationale forpublic policie juelich.de/ptj/lw_resource/datapool/__pages/pdp_105/UK_EnRes.pdf Sofia, BulgarianCommittee ofEnergy. Technical andeconomicassessmentof Polish MinistryofEconomics, ECBREC. energy-resources/world/europe/index.shtml Maps. [online] cited at: http://www.geni.org/globalenergy/library/renewable- selective conservation. http://www.fz- Market barrierstoenergyeffi 1989.Marketfailureanden Energy Policy and opportunitiesofDG:the eknisk., Sigma. 2001a. DGnet/docs/2/4/_Toc42410542 nks/final_publisha ICITY GENERATIONINBULGARIA s topromoteenergyefficiency Ltd. andEcotherm-Engineering1997. t, Ltd, Europe, Cogen, Cogeneration, The t, Ltd,Europe,Cogen,Cogeneration,The ent Ltd,CogenEurope,TheEuropean May 31,2003,citedat: 17. (4):397-406. on of,ETSU-AEATechnologyplc,S.A., 7. Library: RenewableEnergyResource Bulgarian renewableenergyresources garia. 'Futurec sk. 2001b.ThefutureofCHPinthe [on-line] cited at: [on-line] citedat: Polish RenewableStrategy ble_report.pdf ciency: A critical reappraisal ergy policy: A rationale for ergy policy:Arationalefor The future ofCHPinthe driving Europeanforces . ogen' projectNo . . Washington, . . ESD, 196 .

CEU eTD Collection Hewitt, A.2006.TheMertonRule10%(+) Haas, R.,Eichhammer, W., Huber,C.,Langniss,O.,Lorenzoni,A.,Madlener,R., ______. 2006c.Investment incentivesunderthe ______. 2006b.InvestBulgaria2006:Legalguide PhD Student: GerganaMiladinova ______. 2004b.EnergybalancesofNon-OECD countries,2001-2002,2004edition ______. 2004a. ______. 2003.Renewablesforpowergenera ______. 2002.Distributedgeneration in liberalised electricity markets ______. 1998a. IEA. 1997.RenewableenergypolicyinIEA ______. 2006d.Bulgariainvestmentguide2006:Businessenvironmentandkey IBA, InvestBulgariaAgency. 2006a.Legalfr Howlett, M.andRamesh, M.2003. Hood, Ch.1986.Thetoolsofgovernment PHD THESIS-DISTRIBUTEDELECTR http://themertonrule.org/system/f successfully andeffectively. Vass, Z.andVerbruggen,A.2004.How Menanteau, P.,Morthorst,P.E.,Martins, http://www.investbg.government.bg/?sid=18&ssid=46&c=81.com [on-line] cited at: Paris: OECD. OECD. OECD/IEA. OECD/IEA. reports OECD/IEA. sectors. Sofia,IBA. http://www.investbg.government.bg/index.php?sid=18&ssid=47&c=88 ownership ofrealestatein subsystems 20Aug%2006_0.doc . Paris:OECD/IEA. Energy balancesofOECDcountries,2001-2002,2004edition Renewable energypolicyinIEAcountries.VolumeII:Country . 2nded.Oxford:OxfordUniversityPress. . Energy Policy Studying publicpolicy:cyclesand ICITY GENERATIONINBULGARIA . Chatham, NJ: Chatham House. iles?file=LBM%2010%%20briefing%20022% amework: Investment relatedlegislation countries. Volume I:Overview policy -Briefing.[on-line] citedat: A., Oniszk, A., Schleich, J., Smith, A., A., Oniszk,Schleich,J.,Smith, to promoterenewableenergysystems tion: Statusandprospectus Bulgaria. [on-line] citedat: . Sofia, IBA. . Sofia, 32. (6):833-839. Encouragement ofInvestment Act. . . . Paris: . Paris: . Paris: . Paris: . Paris: . Paris: 197 .

CEU eTD Collection IEA, InternationalEnergyAgency.1998b.ID- ______. 2004c. Jenkins, N.,Headley,A., Becret,JP., Dussart, PhD Student: GerganaMiladinova Kirkova, Tania.2005.BeleneNPPwillstartoperation in 2011. Jenkins, W.I. 1978. ______. 2005.GlobalRenewableEnergyPolicies PHD THESIS-DISTRIBUTEDELECTR Koeppel, G.2003.Distributedgeneration.Lite ______. 2005b.Theexportofelectricityisan e Kaschiev, Georgi.2005a.Thereisno Jorss, W., Wehnert,T., Loffler,P.,Nort http://library.iea.org/dbtw- plan and Energy efficiencylaw.[on-line] IEAcited at: 2002P). Electricty[electronicversion] generation. Preliminary reportfordiscu JO. andZabala,L.1999.ReportofCIREDWorkingGroupNo4ondispersed Hodemaekers, J.,Jenkins,N.,Kiokys, line] citedat: cited at: wpd/textbase/npold/npold_pdf/Eff Martin Robertson. http://e-collection.e situation. Internalreport.EEHpowersy http://bluelink.net/belene/news.shtml?x=6075 antiBelene coalition.[onenvironmental consequencesremain with Jenbacher. energy markets. Berlin,IZT,COGENEurope technologies: Potentials,successfacto Wagder, M.2002. Uyterlinde, M.,Sambeek, E.van,Groe http://www.iea.org/textbase/pamsdb/grindex.aspx Energy balancesofNon-OECDc Policy analysis:Apoliticaland organizationalperspective www.cired.be/docs/wg04_report.pdf thbib.ethz.ch/ecol-poo Decent -Finalreport.Decentralisedgeneration placeforBelene inBulgaria. ICITY GENERATIONINBULGARIA line] May26,2005,citedat: iciency1998/09efficiency2.HTM es, M.,Morthorst,P . Paris:OECD. 45, Bulgaria:Nationalenergyefficiency M., Faure,R.,Fraisse E., Palenzona,W., Sorenson,L.,Tande, rature reviewandoutlineoftheSwiss ssion atCIRED1999, rs andimpactsintheliberalised EU xport of national capital in which all the xport ofnationalcapitalinwhichallthe nendaal, B, Schwarzenbohler, H.and nendaal, B,Schwarzenbohler, l/bericht/bericht_312.pdf us.Articlepublishe stems laboratory.[on-line]citedat: ountries. SouthEastEurope(1990- . and MeasuresDatabase. [on-line] . , RISØ,ECN,unit[e]and Novinar Capital . oul, Jorgensen,B., , JL.,Grainger,J., , Sofia. Nice, 2June.[on- d attheciteof (6): 18,22. . . . London: 198

CEU eTD Collection Mavel a.s.2007.Officialwebsiteof Marshall, C. andRossman ,G.1989. Lofland, J.andL.1995. MEER, MinistryofEnergyandRes ME, MinistryofEconomy. 2005.Creditline oftheEBRD forprojectsenergy McLaughlin, J.andJordan,G.1999.Logicmodels:atoolfortellingyourprogram's PhD Student: GerganaMiladinova MEER, MinistryofEnergyandRes ______. 2005.Analysisoftheresultsachieved ______. 2004c.Regulation#6from 9.06.2004forth ______. 2004b.Regulation#13from 27.08.2004fordetermination ofthequantity ______. 2004a.Bulgarianenergysector.[on- PHD THESIS-DISTRIBUTEDELECTR Miladinova, G.2006.Theprospectsofnuclear http://www.mavel.cz/home2.html observation andanalysis Calif.: SagePublications. http://www.doe.bg/download/dokumenti/direktiva.pdf [on-line] MEERMarch21,2003,citedat: http://www.mi.government.bg/ind/inov/docs.html?id=98671 efficiency andrenewableenergy performance story.EvaluationandProgramPlanning MEER. implementation oftheEnergyStra SG 75from24/08/2004 and distributionelectricitynetworksof from 30.11.2004 electricity produced from combined http://www.doe.bg/download/mip/bes.pdf 2005. Nationallong-termprogramfo Disaster 17.(3):401:416. Issue onEnergyPolicy andNuclearPower-20YearsaftertheChernobyl construction ofBeleneNuclearPowerPlant.Energy&EnvironmentSpecial

. Belmont, Calif.:Wadsworth Pub.Co. Analyzing social settings : aguidetoqualitative Designing qualitativeresearch ICITY GENERATIONINBULGARIA . ources andEEA,EnergyEfficiencyAgency. sources.[on-line]30.03.2005,citedat: ources. 2002.Energy strategyofBulgaria. tegy oftheRepublicBulgaria r energyefficiencyuntil2015 generation ofheatandelectricity. thecompany.[on-line]citedat: energy inBulgaria: th producersandconsumers ofelectricity. line] MEEROctober2004,citedat: . intheenergypolicyand the e connectiontothetransmission . 22. 65-72. . e rushtowardsthe . NewburyPark, . Sofia,EEA. . Sofia, SG 105 199

CEU eTD Collection MOEW, ofEnvironment Ministry andWate Mintrom, M. 2003. People skills forpolicyanalysts Miles, M.andHuberman, M.1994. PhD Student: GerganaMiladinova ______. 2005b.Secondnationalprogramonclimatechange2005-2008 MOEW, Ministry ofEnvironmental ProtectionandWaters. 2000. PHD THESIS-DISTRIBUTEDELECTR ______. 1999.Lawon energyandefficiency.SG34from15.06.1999 ______. 1997,lastamend. 2007. Lawontheencour ______. 1997,lastamend. 2003.Lawonforestry. National Assembly. 1996,lastamend. 2003.Lawforthepreservationofagriculturalland. MRDPW, MinistryofRegionalDevelopment a ______. 2005.Nationalregional developmentstrategyfortheperiod2005-2015 MRDPW, MinistryofRegiona University Press. Thousand Oaks:SagePublications. financing ofsmall-scale hydropowerplan http://www2.moew.government.bg/recen Management ofEnvironmental Protectio environment andnationalactionplan2005-2014 VEZ%20P.doc MOEW. from 24.10.1997,lastamendment SG42from 29.05.2007 amendment SG107from9.12.2003 SG 35from24.04.1996,lastamendment112 from23.12.2003 September 5,2006. distribution ofelectricEner technical rulesandnorms fordesi Economy andEnergyResources.2006. Sofia, MRDPW. the constructionworks. in theRepublicof Bulgarianandthe mi Regulation 2from 31.07.2003ontheentrancein . l Development andPublicWorks. 2003,lastamend. 2005. SG 72from2003,lastamendment492005 Qualitative dataanalysis:anexpandedsourcebook gy InitiativeandEnvironment. ICITY GENERATIONINBULGARIA nd PublicWorks, andMEER,Ministryof rs. 2005a.Criteriaa nimum timeframe forthecarryingoutof gn, transformation,transmission, and t_doc/funds/predpri Regulation 14from15.06.2005onthe n Activities. [on-line] MOEW citedat: ts withfundingfortheEnterprise . WashingtonD.C.:Georgetown agement ofinvestments. SG97 SG 125from29.12.1997,last to exploitationofthebuildings . Sofia,MOEW. National strategy for National strategyfor nd requirement for atie/kriterii- SG 73from

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CEU eTD Collection Netinfo. 2005.Thediscretemillionaire -Hris ______. 2004b.Smallhydropowerplants:Toinvestinfuture NEK, NationalElectricCompany. 2004a. ______. 2006.Lawonconcessions. ______. 2004,lastamend.2006.Lawonpublicprocurement. ______. 2003,lastamend. 2006.Lawonenergy. ______. 2002,lastamend. 2006.Lawon ______. 2001,lastamend.2006.Lawonspatialdevelopment. ______. 1999,lastamend. 2006.Lawonwaters. PhD Student: GerganaMiladinova ofGasand Ofgem, Office 2002. Ofgem. ODPM, theOfficeofDeputyPrime Minister.2004. NSI, NationalStatisticalInstitute.2003. Novinar. 2005.MilkoKovatchev-intheenergysectormoneyarelaundered.[on-line] Novem andEneffect.2000. PHD THESIS-DISTRIBUTEDELECTR cited at: plan 2004-2020/Shortreport/ from 11.08.2006 last amendmentSG37from5.05.2006 amendment SG74from8.09.2006 25.09.2002, lastamendmentSG105from22.12.2006 last amendmentSG37from5.06.2006 amendment SG65from11.08.2006 steps. Decisiondocument. Ref:184/06 Ofgem. Renewable energy. ODsxMQ== http://www.novinar.bg/?act=news&ac September 25,2004,citedat: and Eneffect. project operative OrganisationofRationalEnergyUse) Distributed generation:“Thewayforward”.Ofgem factsheet15 http://www.netinfo.bg/?tid=40&oid=808646 .

Electricity Markets.2006. OfgemandMicrogeneration: next London:TSO,TheSt Bulgaria countrydocumenttoSCORE(SupportingtheCo- . Sofia,NEK. SG 36from02.05.2006,last Energy balances.Sofia:NSI. ICITY GENERATIONINBULGARIA Bulgarian power sector least-cost development Bulgarian powersectorleast-costdevelopment

to Kovachki.[on-line] November 30,2005, t1=det&sql=MTQwODs0&mater=MTQw environmental protection. . London,Ofgem.

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. Sofia,NEK. . Sofia, Utrecht, Novem . Sofia,Utrecht,Novem SG 28from6.04.2004, SG 1from2.01.2001, amendmentSG65 SG 91from . London, 201

CEU eTD Collection OXERA Environmental andARUPEconomics &Planning.2002.Regionalrenewable Pepermans, G.,Driesen,J.,Haeseldonckx,D Parsons E&C–EuropeLtd.2004. Papazian M.2007.Energyinfrastructureof PhD Student: GerganaMiladinova Salamon, L.(ed).2002.Thetoolsofgovernment:Aguidetothenewgovernance Resch, G.,Faber,T.andHuber,C.2005.Electricityfromrenew Reisinger, DulleandPittermann. 2002.Monograph:Distributedgenerati REC, ReginalEnvironmental Centre.2004. Reagan, M.1987.Regulation:ThePolitics ofPolicy PHD THESIS-DISTRIBUTEDELECTR SCEER, State CommitteeSCEER, State ofEnergyandEner Save KresnaGorge.2007.Officialwebsite http://www.dti.gov.uk/files/file30589.pdf energy assessments (Areportto the DT line] citedat: Distribute generation:defi summary. investment proposalforth cited at:http://www.nek.bg/cgi- development. Presentation project REXPANSION EU15 countries-Futurepotentials&costsReportofWorkPhase1the http://vleem.org/PDF/anne Environment Modelling)Project. generation. Annex8tothefinalreport Eastern Europeancountries 08.PDF York: OxfordUniversityPress. cited at: Development oftheEnergySector line] ,citedat:May22,2007,http . http://www.doe.bg/download/dokumenti/direktiva.pdf Sofia,NEK. http://www.econ.kuleuven.ac.be/ete/downloads/ETE-WP-2003- . Vienna,ViennaUniversityofTechnology. Report ontheEnvironmentalImpact Assessment of the nition, benefitsandissues x8-monograph-distribution.pdf at the10th CEISummit EconomicForum. [on-line] . Szentendre,REC. e constructionofBeleneNPP. Non-technical ICITY GENERATIONINBULGARIA bin/index.cgi?l=1&d=747 ://www.kresna.org/nature_en.php oftheSaveKresnaGorgeCampaign. [on- till 2010.[on-line]SCEERMarch21,2003, Assessment ofJIpotentialinCentraland ., D’haeseleer,W. andBelmans, R.2003. gy Resources.1998.NationalStrategyfor [on-line]Verbundplancitedat: forVLEEM(VeryLongTerm Energy Bulgaria andtheperspectivesofits . I andtheDTLR).[on-line]citedat: . Boston:LittleBrown. (Preliminary version).[onable energysourcesin . . on versuscentral . New 202

CEU eTD Collection ______. nodate.Officialsiteof EnergyandWaSEWRC, State ______. 2001b.NationalenergysavingprogramofBulgaria.SAVEIIproject.Study SEEA, StateEnergyEfficiency Agency,E.V.A., TheAustrianEnergyAgencyand The AccessInitiative.2004.Reportforevalua Strauss, A.andCorbin,J.1990.Basicsofqualitative research:groundedtheory Strabac, G.,Mutale,J.andBopp,.T.2002.Bu Sloman, J.2004. Skytte, K.,Meibom, P.,Uyterlinde,M.,Lescot,D.,Hoffmann, T.anddelRio,P.2003. Singleton, R.andStraits,B.1999. Simeonova etal.1996. PhD Student: GerganaMiladinova PHD THESIS-DISTRIBUTEDELECTR the accesstonaturalgastrans SEWRC. SEWRC. program inBulgaria on thepossibilityforanimplementati wide spreadenergysavingprograminBulgaria.Vienna:E.V.A. action plan.SAVEIIproject.Studyonthe I.C.E., InternationalConsultingOnEnergy.2001a. [on-line] November 30,2004, citedat: [on-line] November participation andaccesstojusticeforissues relatedtoenvironmental protection. procedures andtechniques characteristics. [on-line] citedat: distributed generation(BUSMOD).D1.2: Background reportintheADMIREREBUSproject.Petten,ECN. Challenges forinvestment inrenewable University. Energoproekt. change. Chapter4.Renewableener bg.org/documents/reportTAI.doc Economics. Fourthedition.Harlow,England:PearsonEducation. Bulgarian countrystudydirected . Vienna:E.V.A. ter RegulatoryCommission. 2004. SEWRC. citedat: [on-line] . NewburyPark,Calif.: SagePublications. Approaches tosocialresearch ICITY GENERATIONINBULGARIA . mission and/ordistributionnetworks siness models inaworldcharacterisedby gy sourcespoten tion oftheaccesstoinformation, public on ofawidespreadenergysaving possibility foranimplementationofa electricity intheEuropeanUnion- Analysis ofdistributedgeneration Analysis to global issues of climate toglobalissuesofclimate http://www.dker.bg/ National energysaving . Sofia, tial assessment.Sofia, Rules forauthorizing . New York: Oxford . NewYork:Oxford http://www.aip- . Sofia, . 203

CEU eTD Collection ______. 2004.WADEsurveyofdecentralized energy-2004 ______. 2003.GuidetoDEtechnologies WADE, WorldAllianceforDecentralized van Sambeek, E.andScheepers,M.2004. Uyterlinde, M.,Daniels,B.,deNoord, Uyterlinde, M.,Sambeek, E.van,Cross,E.,Jörß,W., Morthorst,P.andJørgensen,B. Urge-Vorsatz, D.,Mez,L.,Miladinova,G.,An UNEP, (UnitedNationsEnvironmental PhD Student: GerganaMiladinova PHD THESIS-DISTRIBUTEDELECTR decentralized energy.[on-line] citedat: internal electricity market European policypaperontheintegrationof distributedgenerationinthe the EuropeanUnion:finalre Rio, P.andHernández,F.2003.Renewableelectricitymarketdevelopments in Skytte, K.,Meibom, P.,Lescot,D.,Ho Jenbach, Austria. Unit[e] -UnitEnergyEuropeAG,Ba Brussels, Belgium, RISØ-Na -EuropeanAssociation Europe COGEN Research Centreofthe ECN -Energy Futures StudiesandTechnologyAssessmen 2002. the EuropeanParliament. and accessconditionsforlowincomeconsumers. ProjectNoIV/2002/07/03for friendly energyandtheimpactofsucha sustainable energypath. Specialfocu structural changesintheenergysector J. ,Beranek,J.,Nezamoutinova,D.andDrucker,G.2003.Theimpactof Information kit Framework ConventiononClimate Change).2002. Policy Studies. Decentralized generation: . France: UNEP, UNFCCC. . France:UNEP,UNFCCC. . Petten,ECN. port oftheADMIR ICITY GENERATIONINBULGARIA Development ofEUpolicy . Edinburgh,WADE. Program) andUNFCCC,(UnitedNations typas, A.,Bursik,M.,Baniak,Janossy, Regulation ofdistributedgeneration:A de Vries,H. ,deZoeten-Dartenset,C. Energy. 2002. ?The realbenefitsof Energy. 2002.?The d Homburg, Germany, JenbacherAG- tional Laboratory,Roskilde,Denmark, ffmann, T.,Stronzik,M.,Gual,del sustainable energypathonemployment of CEEcountrieson s oninvestment inenvironmentally Netherlands, Petten,The for thePromotion ofCogeneration, t, Berlin,Germany (coordinator), E REBUSproject . Edinburgh,WADE. . IZT-Institute for Climate change: the creation of a the creationofa . Petten,ECN 204

CEU eTD Collection Wilson, James Q.1974.ThePoliticsofRegulation.In WEC, WorldEnergyCouncil.2004. ______. 2005.Projectdocumentonaproposedgrant WB, theWorldBank.2004.Optionsfordesi PhD Student: GerganaMiladinova PHD THESIS-DISTRIBUTEDELECTR Institute. Business Predicament. Bulgaria foranenergyefficien Facility Trust Fundin theamountofUS$10.0 milliontotheRepublic of http://carbonfinance.org/docs/ Bulgaria. ReportNo29998.Citedat: ed.J.W. McKie, 135-168.Washington: Brookings Survey ofEnergy Resources2004.Oxford:Elsevier. BulgariaGreeningAAUsPaper.pdf. cy project.ReportNo:27545-BUL. ICITY GENERATIONINBULGARIA gning aGreenInvestment Scheme for from the GlobalEnvironment Social Responsibilityandthe 205