Bulgaria - Energy

Energy

Last published date: 2022-09-11

Overview 

Bulgaria’s power sector is diverse and well developed, with universal access to the grid and numerous cross-border connections in neighboring countries. A key driver of the Bulgarian economy, the energy and climate change sector are currently strongly affected by geopolitical, economic and regulatory pressures. The Bulgarian electricity market is currently in transition, but nuclear power is expected to remain dominant. The government is slowly decreasing its coal power capacity to gradually replace it with renewable power capacity. During this energy shift, the government plans to rely on nuclear power generation to meet the major electricity demand. Nuclear power generation was 15.9TWh in 2020 making its share 44% in total power generation in the country. Nuclear energy will remain a dominant source for power generation until 2030, despite government plans to increase renewable power capacity. Bulgaria has 12,668 MW of installed capacity enabling the country to meet and exceed domestic demand.

Bulgaria Nuclear Power Generation 2000-2030 — Bulgaria: Nuclear Power Generation, 2000-2030

Environmentally friendly, efficient and secure energy is critical to Bulgaria’s productivity, competitiveness and growth. The two main pillars of the electricity producing sector are coal and nuclear. Bulgaria is a major producer and exporter of electricity in the region and plays an important role in the energy balance on the Balkans. The country’s strategic geographical location makes it a major hub for transit and distribution of oil and gas from Russia to Western Europe and other Balkan states. 

By the end of 2024, Bulgaria’s Electricity System Operator (ESO) will finalize it investment program aiming to ensure secure the grid connection of new power plants with a total installed capacity of 4,500 MW, primarily renewables.

ESO, the country’s transmission system operator, has invested more than EUR 25 million in the digitalization of the grid. Modernization and digitalization of the medium-voltage grid is expected to be completed by 2024. The deadline was mid-2026, but the activities were implemented much faster.

ESO has signed preliminary agreements for 4,000 MW, and it must secure the connection for 4,500 MW, according to the target set in the National Recovery and Resilience Plan. The plan also sets a goal to increase the cross-border transmission capacity by 2,000 MW. Bulgaria has already finished its part of the new power line with Greece, where neighbouring Greece needs to build the remaining 29 km of the new interconnector with a total length of 122 km. By the end of 2023 it is expected the power line to become operational.

In general, Bulgaria’s electricity system has returned to the levels of 2019, before the coronavirus pandemic hit the economy. According to the data of the pan-European platform ENTSO-E, which receives data from the Bulgaria’s Electricity System Operator, the energy produced last year was 43.5 TWh, while in 2020 it was 40 tWh, and in 2019 - 43.8 TWh. The record electricity prices are not related to lack of capacity or shortage of supply, but are entirely dictated by market forces related to natural gas prices and CO2 emissions.

Domestic electricity consumption increased by about 5% on an annual basis to 38.4 TWh and even slightly exceeded the level of 2019, which can be explained by both the colder weather and the economic recovery after the lockdown. Power generation in 2021 has increase by 9% compared to year 2020, mainly due to the coal-based thermal plants based and the hydropower plants in the country.

Lignite coal is mainly behind the growth of electricity production. Data for 2021 show an increase in electricity production from this local coal by 30.8%, reaching 18,888 GWh. Thus, nuclear energy, which in 2020 had the largest share in the electricity mix, has been displaced from the first place. Despite losing its leading position, nuclear power production remains higher than in 2019 and 2020 at 16,487 GWh (+ 0.1% compared to 2020).

The production of electricity from natural gas, like lignite, also marked a significant jump of 27.7% compared to 2020, reaching 2,788 GWh.

Due to delays in ongoing repair projects and regulatory inconsistencies, Bulgaria uses only one-third of its large, pumped storage HPPs and an even less of smaller run-of-the-river plants. In times of rising prices and shortages of electricity supply, hydropower plants would ease the pressure on the system and offer cheaper electricity during periods of peak consumption.

However, if a more modern solution is sought to support storage technologies, it would be more efficient to invest in the development of battery systems that can be used freely by all participants in the electricity market. Such a solution was proposed in the latest version of the national Recovery Plan, but on a scale that would be difficult to implement in this limited time.

It makes more sense to support storage systems for small and medium-sized businesses, which can reduce their dependence on the grid and hence improve its performance at peak consumption. Support measures aimed at industrial consumers are in place in the Recovery plan. However, the proposed financing scheme for RES installations up to 1 MW would also lead to the non-utilization of a large part of the existing market potential.

The past year turned out to be extremely favorable for the hydropower production, which realized an increase of 52.5% and 5,095 GWh were produced. However, it should be noted that the electricity generated by hydropower pumping capacity has fallen almost twice - from 447 GWh (2020) to 222 GWh (2021) according to ENTSOE data.

The production of electricity from other renewable sources turned out to be more modest compared to 2020. In 2021, the amount of electricity produced by solar power exceeds that of wind. The corresponding values are 1,428 GWh (-0.1% compared to 2020) and 1,388 GWh (-2.7% compared to 2020). Biomass electricity decreased by 1.2% to 249 GWh. As a result of higher quantities of electricity produced from lignite, hard coal and natural gas, the share of emission production in the electricity mix has increased from 43% to 47%.

Domestic electricity consumption is 38,411 GWh or 5.2% higher than the previous year.

The export of electricity in 2021 is 10458 GWh or 49% more than the previous year. Significantly larger amounts of electricity were exported from Bulgaria to Serbia - 3.5 times more and from Bulgaria to Romania - nearly 3 times more. Only a drop of 37% in exported electricity to Turkey.

Chart: Distribution of Electricity Generation in Bulgaria in 2021, by Source

Bulgaria: Distribution of Rlectricity Generation in Bulgaria in 2021, by source

Source: https://www.statista.com/statistics/1234904/bulgaria-distribution-of-electricity-production-by-source/

Last year energy from coal was the main source of electricity production in Bulgaria. In 2021, it accounted for 36.8 percent of total electricity generation. Nuclear energy ranked second,making up 35 percent of total production.  

As Russia’s invasion of Ukraine is sending shock waves across Europe, Southeast Europe (SEE) is bracing up to bear the brunt of the economic, financial, and security consequences. The countries in the region are heavily reliant on Russian gas and oil, and for their regular supply Russia is a major trading partner and investor. The sanctions on Russia and the indirect consequences of higher energy and raw material prices and supply chain disruptions are expected to impact businesses across the board, curbing production, further fuelling inflation and slowing down recovery.

Bulgaria’s energy market is dominated by state-owned players which include: 

the Bulgarian Energy Holding (BEH) –which manages the most important companies in the energy sector  
the Kozloduy nuclear power plant (NPP) with two operating units
three thermal power plants 
the National Electric Company (NEK)
fifteen hydro power plants
Electric System Operator (ESO),  Bulgargaz,  Bulgartransgaz.

The highly regulated Bulgarian electricity market is dominated by a few major players that have built a supply monopoly in the country. Despite the legal unbundling of the three distribution system operators from its vertically integrated undertaking, there is no real competition in the distribution market that could enable consumers to choose their supplier as there is only one licensed supplier in each geographical region. Bulgaria’s energy intensity is among the highest in the EU. The country is dependent on imported fuels from Russia and, at the same time, the country is attempting to develop itself as an energy hub.

Bulgaria’s first nuclear power plant was launched in Kozloduy (KNPP) in 1974. Over the years, six units were completed making KNPP one of the largest in the region with the installed capacity of 2000 MW.   In the 1980s, a new nuclear plant at Belene was approved for construction.  Meanwhile, two of KNPP’s units were closed in the early 2000 as a pre-requisite for EU accession; two other KNPP units were closed as part of the 2007 agreement of Bulgaria’s accession into the EU.  Over the years there have been countless discussions by the Government and energy companies about a new KNPP unit (Unit 7), as well as debates of completing the controversial, and incomplete, Belene project with the produced and delivered two Russian reactor vessels, two pressure compensators and 24 hydraulic accumulators.

Thermal power plants were encouraged in Bulgaria in the early 2000s as Kozloduy NPP units were being closed as part of Bulgaria’s accession into the EU. Today there is a strong thermal power plant complex (TPPs) known as the Maritza Iztok Mining complex which consists of three lignite-fired thermal power plants (TPPs) known as: Martiza East 1 (ME-1), a 686 MW U.S.-built, owned and operated by AES Corporation; Maritza East 2 (ME-2), a 1,610 MW state-owned plant; and, Martiza East (ME-3), a 908 MW plant owned by the U.S. company, Contour Global.  Other TPPs exist throughout the country.

Bulgaria’s energy generation includes nuclear energy, solid fuels, such as lignite, as well as small quantities of gas. The role of renewable energy sources (wind, solar, biomass, and hydro) has increased dramatically in recent years.

Bulgaria’s Electricity Production

Energy prices on the regulated market are fixed, by reference, or formula- based, indicating low levels of competition in the energy sector. The country’s regulatory regime is unpredictable and American companies have faced problems with enforcing existing contracts.  

Currently, the electricity market in Bulgaria is undergoing certain major changes, including the introduction of new rules for renewable energy producers, the abolition of the electricity export tariff, and market coupling projects, which will also affect the Independent Bulgarian Energy Exchange (IBEX). IBEX has been in operation since early 2016. Bulgaria is among the last countries in Europe that introduced its energy exchange. The purpose was to regulate free trade, to ensure electricity prices are set on a free market basis, and to bring transparency to the trading of energy.

The main issues that the free electricity market in Bulgaria faces are low liquidity, price volatility, and lack of integration with neighboring markets. The legal framework governing IBEX operations is subject to constant improvements and revisions. Some of the most important regulations implemented in 2018 were the abolition of the “single buyer” role (the Bulgarian National Electricity Company), the inclusion of producers of 4 MW and over on the free market, the switch from preferential prices for electricity to premiums, and the purchase of the electricity distribution companies’ technological losses from the market. Centralized trading via IBEX was also introduced. 

Main goals of the current leadership of the state and the businesses are the following aspects:

Decarbonization of the Bulgarian economy
Recovery and Sustainability Plan of the Republic of Bulgaria

Energy security and investments (specific proposals for investment projects; the future of public and private TPPs; network development; use of alternative energy sources, etc.)
Actions undertaken and planned at regional and national level;

Until now, the electricity generated by different plants has been bought by the National Electricity Company (NEK) and sold on the regulated market. Under the new law, producers in the range 1-4 MW switched from preferential prices to a different feed-in tariff structure. They are selling the produced energy at market prices on the IBEX and are compensated for the difference between the market price and the preferential prices granted in 2010, 2011 and 2012 (premium compensation). The premium compensation is paid out by the special State Energy Security Fund. The changes provide for the granting of a premium on a competitive basis. 

It is expected that the IBEX will increase its liquidity, which will inevitably solve one of the main current issues highlighted by the business – high prices. The Government of Bulgaria is considering a stimulus package, aimed at partially compensating businesses hit by surging electricity and gas prices. It is contemplating to keep on paying some 80% of the price of electricity above BGN200.00 ($109.89) per MWh.

Sub-Sector Best Prospects 

Natural Gas 

Bulgaria’s domestic market for natural gas is only 3 billion cubic meters (bcm) per year.  Bulgaria imports 2.9 billion cubic meters of gas from Russia per year under a long-term contract valid through 2022. 

Bulgaria, which was meeting over 90% of its gas needs with Russian imports, saw its gas deliveries cut on 27 April along with Poland after refusing to pay in rubles. The Balkan country, backed by the EU executive Commission, is now pushing for regional cooperation that would include better use of gas and electricity infrastructure as well as joint EU gas purchases to cut dependence on Russian imports.

Bulgaria, which currently transports Russian gas to Serbia and Hungary via an extension of the TurkStream pipeline, can also carry out over 20 billion cubic meters of gas a year through its gas network up north to the rest of Europe. Bulgaria’s gas provider Bulgargaz and Greek gas utility DEPA are looking for gas delivery opportunities for the region. In May 2022, the two companies have agreed to start joint LNG purchases that should improve their negotiating power. Greece plans to double storage capacity of its sole LNG terminal in Revithoussa off Athens soon and build a new LNG terminal off its northern Greek port of Alexandroupolis by the end of 2023.

The IGB gas interconnector link between the two countries, which will carry gas from LNG terminals and Azeri pipeline gas to Bulgaria, is expected to become operational in July 2022. Bulgarian gas operator has also signed a contract with a Bulgarian company to start building a gas link with neighbouring Serbia. The interconnector Greece- Bulgaria will play a key role in meeting Bulgaria’s objectives of diversifying energy sources, energy security and independence.

Bulgaria will import some 1 bcm of natural gas per year from the Shah Deniz II field in Azerbaijan for a period of 25 years under a contract between public gas supplier Bulgargaz and Azerbaijan’s state-owned oil and gas company SOCAR. Azerbaijan is a strategic partner for Bulgaria in its efforts to guarantee energy security and independence. The disruption of gas supply by Gazprom has made a priority the need to search for alternative solutions, where Azerbaijan supplies are of crucial significance.

In the context of the gas supply crisis, the government held accelerated talks with our Azerbaijan partners to purchase additional quantities.

Bulgaria has one underground gas storage in Chiren /UGS Chiren/, which serves to cover seasonal fluctuations in consumption and is one of the instruments that contribute to the security of gas supplies. During the spring season, the UGS is filled and through the autumn-winter period gas is drawn from it. The storage capacity of natural gas in the UGS Chiren is 550 m.c.m – approximately 1/6 of the annual consumption in Bulgaria. To enhance the security of natural gas supply, the storage operator – Bulgartransgaz EAD is working on a project to expand its capacity. It is planned to reach up to 1 billion cubic metres after the project is completed.

The project is of strategic importance for improving energy security, increasing competition and liquidity in the natural gas market in Bulgaria and the region. Since 2013, it has the status of a “Project of common interest” under Regulation (EU) No 347/2013. It is also a priority project under the Three Seas Initiative. In April 2022, Bulgartransgaz announced the launch of a EUR 68.4 million tender for the drilling and construction of new wells as part of a project to expand Bulgaria’s Chiren underground natural gas storage (UGS) facility. The call for proposals covered spatial planning, investment design, supply of necessary materials and equipment, construction, and commissioning of underground wells at Chiren, Bulgartransgaz. The deadline for submitting offers was May 4. The activities within the scope of the procurement procedure will be financed out of the gas network operator’s own funds and a grant awarded under the EU’s Connecting Europe Facility, Bulgartransgaz said. The European Commission in January granted EUR 78 million to Bulgartransgaz to fund the expansion of Chiren UGS, which is seen as crucial for the security of gas supply in Southeast Europe.

This is the fourth tender by Bulgartransgaz relating to Chiren’s expansion project, which foresees a near-doubling in gas storage capacity up to 1 billion cu m from the current 550 cu m. The daily injection and withdrawal capacities are also projected to rise to up to 8 million cu m and 10 million cu m per day, respectively.

In March 2022, Bulgartransgaz invited bids for 2 contracts worth an estimated EUR 153.7 million for the construction of above-ground infrastructure facilities as well as of a pipeline that would connect the Chiren storage facility to the company’s gas transmission network at Butan, northwestern Bulgaria.

There is also a third open procedure to select an operator for the capacity reservation platform at the interconnection points and the internal points of the gas transmission network, data from the public procurement portal shows. That tender is worth EUR39 million and like the other two, had a deadline for submitting proposals - in April 2022. 

Bulgargaz has booked a capacity of around 500 m.cu m of natural gas per year for a 10-year period at the Alexandroupolis Independent Natural Gas System (INGS), offshore Greece. Bulgaria’s participation in the gas terminal project is in line with the government’s strategy for diversification of its natural gas sources, aimed at guaranteeing the country’s energy security. Bulgarian gas transmission system operator Bulgartransgaz holds 20% interest in Gastrade, which is developing the floating LNG terminal off Greece’s northern coastal city of Alexandroupolis. 

Potential gas project opportunities (for suppliers, principal contractors, etc.) include:

LNG technologies and liquefaction know-how provides opportunities for further diversification of natural gas supplies in Bulgaria

Significant booking capacity exists for expanding the Bulgarian gas transition system to Turkey and Serbia

Depleted fields are being considered for the construction of underground gas storage (UGS) in the Black Sea

Expansion of the existing Underground Gas Storage facility located at Chiren. The project should be completed by 2024 and USD 330 M will be needed

Onshore gas exploration opportunities in Western and Northern Bulgaria

Setting up Bulgaria’s gas exchange market to facilitate the establishment of a distribution center (hub) on the territory of Bulgaria, as well as a suitable market environment, by establishing a new subsidiary company

Bulgaria’s state energy holding company (BEH) and Greek natural gas company Gastrade are participating in an offshore liquefied natural gas (LNG) terminal in Alexandroupolis (northern Greece). The expected cost is USD 413 million

The EU supports the construction of EUR 220 million Interconnector Greece-Bulgaria (IGB) with an initial annual capacity of 3 billion cubic meters per year

The gas interconnector with Romania is completed and the current Government committed to advance the ones with Greece and Serbia. There is a plan for increased capacity for electricity interconnectivity, primarily with Greece.

Over 2015-2020 Bulgaria’s annual consumption of petroleum products was relatively stable, at around 4.5 million tons of oil equivalent per year (toe/year). The country only produced about 25000 toe/y of crude oil and condensate, equivalent to less than 1% of consumption. The vast bulk of the petroleum consumed in Bulgaria ultimately originates in imports, either as crude oil and other feedstock processed in the country’s refineries and then sold as products on its markets, or as products imported from other countries.

Diversifying crude oil supplies away from Russia is going to be only the staring point in a long uphill battle for Bulgaria and its government, on the road to its energy security and independence. Taking the wrong political step at European level at the fork in the road to such security and independence is hardly the right choice.

Bulgaria has three refineries:

o INSA’s facility located in the village of Belozem, Central Southern Bulgaria;

o The Bulgarian Petroleum Refinery in Dolni Dabnik in Central Northern Bulgaria;

o The Lukoil Neftochim Burgas Refinery - located on the southern Black Sea coast.

Today Lukoil Neftochim refinery is ranked among the top 10 percent of refineries worldwide in terms of Nelson Complexity Index (NCI), with its NCI value assessed at 13, and the crude oil conversion factor (depth of refining) standing at 87. This means that the refinery is capable of processing lower quality (heavier, higher sulfur content) grades of crude oil, as well as other heavy feedstock - refinery residuals into highly refined more valuable products.

Lukoil refinery is technically able to efficiently process the widest variety of crude oil traded on international markets, as well as other feedstock such as refinery residuals. Any claim that the Burgas-based refinery can only process Russian crude oil grades, notable Ural, is false.

According to the European Union’s sanctions against Russia, Bulgaria would get a transition period until June or December 2024 to phase out imports of Russian oil. The European Commission also proposed restricting re-exports of Russian oil supplied by pipeline to other member states or third countries. Member states would phase out their imports of seaborne crude in six months and refined petroleum products in eight months.

The Bulgarian energy ministry announced in April 2022 that it extended by two years the oil and natural gas exploration permit for the 1-21 Han Asparuh offshore block in the Black Sea granted earlier to units of French energy major TotalEnergies and Romanian oil and gas group OMV Petrom, acting at their request.

Total E&P Bulgaria and OMV Offshore Bulgaria plan to make total investments of roughly EUR1.46 million ($1.58 million) during the next period of exploration, the energy ministry said in a statement. Of that amount, Total E&P Bulgaria and OMV Offshore Bulgaria will spend EUR900,000 on geological and geophysical works, EUR 335,000 on health, safety and environmental safeguard measures as well as EUR 200,000 on training local staff.

Smart Grids 

Bulgaria’s energy strategy foresees the replacement of ordinary power transmission networks with smart grids by seeking EU funds for the replacement of conventional electricity meters with smart ones. The issue how to deal with overcapacity in the electricity market is critical for the integration of renewables into the electricity grid in Bulgaria. Priority of the Bulgarian Government are A) increasing the transmission capacity and B) introducing of a smart grid development as solutions handling the overcapacity in the power market.  

In mid -2021 an innovative mobile power flow control system was installed in the Bulgarian transmission grid which will increase renewable energy penetration and improving cross-border flows between Bulgaria and Romania. In Bulgaria, the installation of a novel mobile power flow control system is made it possible to greatly increase the amount of renewable energy that the country’s power grid can handle. It also unlocked cross-border electricity flows. The technology was installed in Bulgaria’s transmission system as part of the EU-funded FLEXITRANSTORE project, with collaboration between the Bulgarian transmission system operator, electricity system operator (ESO) and global power technology company Smart Wires. Power flow control technology made the power grid infrastructure more efficient and resilient. Grid congestion was reduced, and quicker connections were made possible between new renewables and demand. The pioneering mobile power flow control solution developed by Smart Wires was installed in north-east Bulgaria, where 750 MW of wind energy is generated.

Nuclear Energy 

Bulgaria has a long-standing positive experience of nuclear energy, recognizing the benefits it brings to people and the environment. Bulgaria currently has two nuclear reactors, generating about one-third of its electricity.

In 2020, the country has only one nuclear power station known as the Kozloduy nuclear power plant (NPP) which has six units. After the decommission of Unit 1 and 2 Kozloduy NPP in 2002 and unit 3 and 4 in 2006, all the nuclear power is generated through unit 5 and unit 6. In December 2016, following international arbitration, Bulgaria paid some EUR 600 million ($642 million) in compensation to Russia’s Atomstroyexport for the equipment already manufactured by the company for the new nuclear capacity project. The equipment is now stored at the site designated for the construction of the power plant.  

In line with the National Recovery and Resilience Plan, Bulgarian government announced plans for creating energy storage capacity for 6 GWh by 2026 and a new battery plant is planned near Stara Zagora. It is part of the proposed changes in the National Recovery and Resilience Plan. The project includes the implementation of smart grids to reduce technological losses in the network and improve transparency, accuracy, and rapid response to accidents. The idea with batteries is to divert electricity exports toward Bulgarian businesses.

The leadership of the state is currently negotiating with the United States on nuclear power technology for Kozloduy, as well as options for supply of U.S. liquefied natural gas (LNG) and CO2 capture systems.

Bulgaria has taken multiple steps toward the development of nuclear power in the country in recent times. The country even joined Nuclear Energy Agency (NEA) in January 2021. Moreover, Kozloduy NPP also signed a memorandum of understanding (MoU) with US-based NuScale Power for the deployment of NuScale’s small modular reactor (SMR) technology. Such steps provide a clear indication that the government, despite plans to shift toward renewable power, is still keen on developing nuclear power. 

   Project opportunities exist in the following areas: 

Equipment of the Turbine Hall of the new nuclear capacity, including switchgears, transformers and other power evacuation
Maintenance and upgrade of steam turbines at Kozloduy NPP (see https://www.kznpp.org/) 
Activities related to the decommissioning of four NPP reactors
Small /Advance Modular Reactors
Diversification  of Kozloduy NPP’s fuel supply
Removing and packaging of historical nuclear waste
Nuclear safety and radiation protection
Technical support for the regulatory body, and 
Working with Bulgaria’s universities on training and educating nuclear engineers

In May 2022, the 20 unions representing Belgian, Bulgarian, Czech, Finnish, French, Hungarian, Lithuanian, Romanian, Slovakian and Slovenian energy workers stated the inclusion of nuclear and gas in the EU taxonomy is vital for tackling climate change and increasing energy independence.

Renewables

With Moscow’s snap decision to halt all gas exports to Bulgaria and the military invasion in Ukraine the crisis created an opportunity for Bulgaria to expand renewable energies and invest in energy efficiency solutions – rather than merely replace one gas supplier with another.

Currently, Bulgaria has the goal of using 27% of renewable energy sources (RES) by 2030. The planned investments in the renewable energy sector are insufficient for the transformation of the energy mix. Some analysts argue that Bulgaria should shift its focus away from large-scale energy projects and towards the decentralization of electricity production with a leading role and thought for households and small and medium enterprises.

Currently, the focus is on financing a large-scale projects for RES investment tenders, under which a minimum quota of 25% is set for the installation of battery storage systems. This project to connect 1.7 GW of RES capacity puts excessive focus on the use of batteries. In the framework of well-interconnected power markets in the SEE region, the excess power storage capacity does not make economic sense.

The transformation of the electricity mix on the part of RES and Kozloduy nuclear power plant should put an end to rising electricity prices, and volatility may occur at limited times of the year, when a combination of imports, demand management systems and energy efficiency, would smooth out the peaks and ensure security of supply.

Bulgaria started renewable energy promotion, including the establishment and implementation of the institutional and legal framework only in 2007. The state experienced the strong RES development in two periods (2007-2012 and 2012-2016) and increased its share dramatically. Bulgaria will increase the installed capacity for renewable energy from 1.8 GW to 4.3 GW by 2024. By the end of 2030, Bulgaria is targeting a further 2,645MW (2,174MW solar plants, 249 MW wind parks, 222 biomass powered plants ) of electricity generation installed capacity from RES, mostly photovoltaic plants, in line with the EU goals for green energy transition. In accordance with the ESO’s plan, by 2030 the share of the energy produced by RES in Bulgaria’s gross final consumption should reach 27.1% where the EU target is 32%.

In Bulgaria, there are 242 hydropower plants in operation. In total, the National Electric Company (NEK) owns 30 conventional hydro and pumped storage plants with a total installed capacity of 2,713 MW in generating mode and 937 MW in pumping mode. Hydropower’s importance is not limited to the production of energy because it plays a key role in greenhouse gas emissions reduction.

Hydropower contributes to an annual avoidance of 491,690 tons of CO2 emissions, which translates into an annual CO2 cost savings of $3.5 million. Another significant benefit of the sector is the opportunity for integrated water resource management to reduce the risk of natural disaster. Bulgaria must take urgent control measures on small hydropower to avoid EU sanctions: the local authorities need to take urgent measures to effectively control small hydroelectric power plants.

Energy Efficiency 

Bulgaria remains the most energy-intensive economy in the EU by a wide margin. The structure of Bulgaria’s final energy consumption is quite like that of the EU. The economy in Bulgaria consumes 3.5 times more energy resources per unit of its GDP than the EU average. That may not sound so alarming, but Bulgaria is highly dependent on coal and nuclear power. The energy sector is the biggest greenhouse gas emissions polluter in the country. It is responsible for 70 percent of the total greenhouse gasses nationwide. The low levels of the wages and pension benefits also contribute to many people being unable to afford more sustainable means of heating during winter. The National Energy and Climate Plan stresses Bulgaria’s commitment to decarbonize its economy by 2050 in the context of the European Green Deal, but also states the intention to keep Bulgaria’s reliance on domestic lignite sources for 2050 and beyond.

The Bulgarian Government expects to allocate EUR 230 million of EU funding to local companies in the next months to improve energy efficiency, reduce energy costs and launch reforms under the country’s recovery and resilience plan. In July 2022, the government will kick off the first procedure under the EUR6.3-billion plan for Bulgaria’s economic recovery from the pandemic approved by the European Commission. The first portion of the grant financing, which aims to stimulate companies’ technological modernization, will amount to some EUR 260 million. Separately, under the EU’s Recovery Assistance for Cohesion and the Territories of Europe instrument, or React-EU, Bulgarian authorities will start providing energy efficiency grants to companies which will enable businesses to bring down their electricity overheads in the face of record-high power prices.

In 2020 Bulgaria requested a derogation from Europe for the implementation of the National Energy Savings Plan, under the energy efficiency obligation scheme. The reason was that this proposal was put in place about three years earlier than the relevant European directive. In Bulgaria, the energy efficiency obligation scheme is implemented through a combination of individual energy savings targets for energy traders and alternative measures. To date, Bulgaria is experiencing difficulties in implementing properly the energy efficiency obligation scheme. For the 2014-2018 period, the country met 48.4% (935 ktoe) of the total target of 1942.7 ktoe for energy savings.  