Energy

The Energy Act regulates the generation, import and export, transmission, transit transmission, distribution of electricity, heat and natural gas, oil and oil product transmission through pipelines, trade in electricity, heat and natural gas, as well as the powers of state bodies in formulating energy policy, regulation and control. The Ministry of Economy, Energy and Tourism is responsible for conducting the Bulgarian energy policy. Regulating State bodies in the energy sector are State Energy and Water Regulating Commission, Nuclear Regulatory Agency, and Energy Efficiency Agency. However, according to the Energy Act, the control in the sector is carried out by the Minister of Economy, Energy and Tourism and the State Energy and Water Regulating Commission.

The State Energy and Water Regulating Commission (referred in this section as “the Commission”) is vested with the powers to regulate the activities regarding electricity generation, transmission and distribution, natural gas transmission and distribution, trade in electricity and natural gas, heat generation and transmission. Among the powers of the Commission are the issuing, modification, supplement, suspension, termination and withdrawal of licences in the cases provided for in the Energy Act; drafting of the statutory instruments of secondary legislation in the energy sector and others. The Commission also regulates the prices at which producers sell electricity to the public provider and/or to public suppliers; at which producers sell heat to the heat transmission company and to directly connected consumers; at which the public provider sells any natural gas to end suppliers of natural gas and others.

Certain activities in the energy sector are subject to licenses under the Energy Act.;

Certain activities in the energy sector are subject to licenses under the Energy Act. These activities are the following:

  • generation of electricity and/or heat;

  • transmission of electricity, heat and natural gas;

  • distribution of electricity or natural gas;

  • storage of natural gas;

  • trade in electricity;

  • organizing an electricity market;

  • public delivery of electricity or natural gas;

  • transit transmission of natural gas;

  • electricity or natural gas supply from end suppliers;

  • lectric power grid management;

  • traction power distribution over the railroad transportation distribution networks.

A license can only be issued to a legal entity that is duly registered in accordance with the Bulgarian Commerce Act. Further, license can be issued to legal entities incorporated and existing in accordance with the applicable legislation of a Member State of the EU or state party to the EEAA. In order to qualify for license, a legal person must also meet some additional requirements, inter alia, the entity must possess the technical and financial capabilities, material and human resources and organizational structure required to meet the regulatory requirements for performance of the licensed activity, holds real rights to the energy works whereby the activity is to be performed, furnishes evidence that the energy works whereby the licensed activity is to be performed meet the regulatory requirements for safe operation and environmental protection. The maximum term of a license is 35 years. It is important to note here that a single license may be issued for certain activities or detached area.

A license can be supplemented or amended on the Commission’s own initiative (only in specific cases mention in the Energy Act) or following request by the holder of the license. If a person performs license activities without the necessary license, an administrative pecuniary penalty is imposed on such person.

More about electric power, heat and gas supply can be found in the PDF version of the Guide. Below special attention will be paid to energy from renewable resources.

Energy from Renewable Sources;

It may be useful for investors to know that Energy Efficiency and Renewable Sources Fund was established in Bulgaria under the Energy Efficiency Act adopted by the Bulgarian Parliament in February 2004. This fund combines various capacities - a lending institution, a credit guarantee facility and a consulting company. More information about its activities and project can be found on its website.

Special legislation regulates the production and consumption of electricity, heating and cooling from renewable sources; gas from renewable sources; and biofuels and energy from renewable sources in transport - Energy from Renewable Sources Act (ERSA). Among the main purposes of the ERSA are promotion of production and consumption of energy produced from renewable sources and promotion of the production and use of biofuels and energy from renewable sources in transport.

Bulgaria is obliged by the EU that by year 2020, at least 20% of the produced energy would be of renewable sources. The state policy in this area is conducted by the Minister of Economy, Energy and Tourism whereas the Council of Ministers adopts a national action plan for energy from renewable sources.

Investment intentions for the construction of energy facilities for production of energy from renewable sources must be preceded by an assessment of availability and estimated potential resource of the energy from a renewable source which is intended to be used in the production of energy in the future energy facility.

Producers of electricity from renewable energy sources, whose energy projects are with total installed capacity over 30 kW conclude a contract for access with an operator of the transmission or the distribution electricity network under general terms and conditions approved by the Commission and announced on the website of the operator of the respective distribution network prior to concluding the contract for purchase of electricity.

Electricity from renewable sources is purchased by the public provider, the end suppliers respectively, at the preferential price set by the Commission, effective as of the date of preparation of a statement of findings on the completion of the energy project. Electricity from renewable resources is purchased based on long-term purchase contracts signed for a term of twenty years - for electricity produced from geothermal and solar energy, as well as for electricity, produced from biomass; twelve years - for electricity, produced from wind energy; fifteen years - for electricity produced by hydroelectric power plants with installed capacity up to 10 MW, as well as for electricity produced from other types of renewable sources.

The Commission sets on annual basis, by June, 30 of each year, preferential prices for purchase of electricity produced from renewable energy sources, with the exception of electricity produced by hydroelectric power plants with installed capacity over 10 MW.

Biofuels and their derivatives in transport are consumed either in pure form or as blending components of liquid fuels of crude oil origin. Under ERSA, bioliquids are used for production of electricity, heating and cooling, provided they meet the sustainability criteria.

Blending of biofuels with liquid fuels of crude oil origin can only be done in the tax warehouses licensed pursuant to the Excise Duties and Tax Warehouses Act.

Control over the quality of biofuels and their blends with liquid fuels of crude oil origin, as well as of bioliquids, is exercised by the Chairman of the State Agency for Metrological and Technical Surveillance.

For more information about doing business in Bulgaria, see the complete text of our Guide.