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01 February 2016

Bulgaria: The New Energy Efficiency Act

The new Energy Efficiency Act (SG 352015, “EEA”) implements Directive 2012/27/EU into Bulgarian law and aims to achieve energy efficiency by establishing national targets.

Why does Bulgaria need a new Energy Efficiency Act?

Bulgaria, as an EU member state, has acknowledged that the continued application of the mechanisms promoting energy savings envisaged in the old Bulgarian Energy Efficiency Act (SG 982008) will fail to ensure the achievement of new energy saving targets as set out by the EU. Bulgaria has no choice but to incorporate the EU Directive 2012/27/EU on energy efficiency into its national law.

The EEA was adopted by the Bulgarian Parliament on 30 April 2015 and entered into force on 15 May 2015. It introduced obligations to be met in relation to the achievement of national energy efficiency targets, as well as of an EU common target, by 31 December 2020.

What are the 2020 targets for Bulgaria?

The following national energy saving targets are set out in the National Energy Efficiency Action Plan, to be met by 2020:

(i) A saving of a 716 kiloton oil equivalent per year, at the final energy consumption level; and

(ii) A saving of a 1,590 kiloton oil equivalent per year, at the primary energy consumption level, including a 169 kiloton oil equivalent saving per year in energy transformation, transmission and distribution processes.

In order to achieve and to sustain the national targets by 2020, the EEA determines who shall be obliged to follow annual targets and what they are obliged to do.
Who are obligated persons under the EEA?

The common cumulative target for energy savings is distributed between the following obligated targets:

(i) End suppliers, last instance suppliers and licensed electricity traders selling more than 20 GWh per year to end consumers;

(ii) Heating distribution enterprises, and heating suppliers selling more than 20 GWh per year to end consumers;

(iii) Liquid oil traders selling more than 6,500 tons of liquid oil per year except for oil used for transport needs; and

(iv) Solid fuel traders selling more than 13,000 tons of fuel per year.

It is worth noting that the range of obligated persons is narrowed in the EEA in comparison with the old Energy Efficiency Act, and excludes, among others, traders (both wholesalers and retailers) of liquid oil used for transport needs.

What are the energy savings measures under the EEA?

The obligated persons may choose from various options, or a combination of options for achieving their individual targets as set out below:

(i) Offering energy effective services at competitive prices through energy efficient service suppliers;

(ii) Making cash contributions to the Energy Efficiency and Renewable Sources Fund, or to other financial intermediaries for financing activities and measures for energy efficiency. The quantum of such contributions shall be equal to the investment necessary for achieving the individual goals of the respective obligated persons, calculated on the basis of specific methodology as set out in the EEA; and

(iii) Executing agreements with energy efficient service suppliers or with other third parties (non-obliged persons) for transferring of energy saving certificates.
The concrete energy savings measures, the achieved method of proving such savings, the requirements and methods for energy saving assessment and confirmation, shall be specified in detail in ordinances expected to have been adopted by the end of 2015.

What other measures are envisaged in terms of the EEA?

Compulsory energy efficiency inspections every four years are stipulated for:

(i) Production and service providing enterprises, except for small and medium enterprises;

(ii) Production systems with annual energy consumption of over 3,000 MWh; and

(iii) Systems for external lighting in residential areas with a population of over 20,000 residents.

A compulsory energy efficiency examination shall be performed not earlier than three and not later than six years after the commissioning of existing buildings, designated for public services having a built-up area exceeding 500 m² or 250 m², depending on when the building was commissioned. If the result of the examination is positive, a certificate for energy characteristics shall be issued. The certificate may also be issued for a part of an existing building.

Energy efficiency requirements for constructing a new or reconstructing (incl renewal and repair) an existing building, are also envisaged in the EEA, together with a number of other measures aimed at achieving national targets.

What are the sanctions?

The EEA envisages a set of sanctions for transgressors linked to each particular measure. The quantum of the sanctions varies between approx. EUR 500 and EUR 50,000 in most cases, but may also reach as much as EUR 255,000.

The implementation of the new energy savings measures and achievement of national targets depends not only on their effective implementation through the measures set out in the EEA, but also on strict supervision by competent regulatory authorities.

author: Stefana Tsekova