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Bulgaria (2012)

Source: REEEP Policy Database (contributed by SERN for REEEP)

This policy & regulatory overview is not updated anymore since 2015. We decided to keep it online due to high demand but would like to make you aware of the fact that it might be outdated.

Energy sources

Total installed electricity capacity (2007): 11,263 MW
Thermal: 59%
Hydroelectricity: 23%
Nuclear: 18%

The electricity production by fuel source type was in 2009 as follows (source: Enerdata):
- Coal: 50.92%.
- Nuclear: 35.06%.
- Hydroelectric: 8.41%.
- Natural gas: 3.85%.
- Oil and products: 0.88%
- Wind: 0.83%
- Biomass: 0.05%.

Total Primary Energy Supply (2008, source: IEA): 19,779 ktoe
Coal and Peat: 37.9%
Crude Oil: 37.1%
Nuclear: 20.9%
Natural Gas: 14.7
Combustible Renewables and Waste: 3.8%
Hydroelectric: 1.2%
Other Renewables: 0.2%
Oil Product Exports: -13.6%
Electricity Exports: -2.3%

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Reliance

Bulgaria’s primary energy balance is diversified in terms of the energy sources used, but 76% of the primary energy is imported.

Bulgaria relies on imported oil and natural gas, much of which comes from increasingly unreliable sources in the Ukraine and Russia.

The imports/export balance by energy source in 2008 was as follows (all units ktoe, source: IEA):
Crude Oil: 7418 / 0.0
Oil Products: 1362.0 / 3805.0
Natural Gas: 2804.5 / 0.0
Coal and Peat: 3232.0 / 17.0
Electricity: 266.0 / 726.0
Combustible Renewables and Waste: 0.0 / 30.0

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Extend network

National electrification rate (2000): 99%

Bulgaria's electric power transmission and distribution network consists of transmission lines of 750 kilovolt (kV), 400 kV, 220 kV, and 110 kV. The system of 400, 220 and 110 kV lines, which have a total length of about 12,269 kilometres, operates in a ring mode. The inter-system transmission line of 750 kV from Varna to Isakcha to Yujnoukrainskaya nuclear power plant and the inter-system transmission line of 400 kV from Dobrudja to Vulkanesht are currently in a reserve status. In May 2001, Bulgaria moved to increase the linkage of its electric system to Turkey's by starting the construction of a second 400 kV cable to Turkey. It is estimated that the 42-mile link will cost $35 million.

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Capacity concerns

The domestic power-generating industry (privatised in 2004) suffers from obsolete equipment and limited oversight.

In the electricity sector, increasing demand and the closure of 2 of the four Kozloduy nuclear reactors to comply with European Union (EU) standards, means rehabilitation of existing and the construction of new power stations is required. Construction of two new nuclear reactors at Belene is intended to replace the lost capacity caused by the Kozloduy shutdowns. The new units are expected to be online in 2013 and 2014.

The primary energy balance of the country is well structured in terms of diversity of primary energy sources, but at the same time the import dependence of the latter is about 70%, the main supplier being the Russian Federation.

Bulgaria imports natural gas from Russia. It is used in combined heating plants in most Bulgarian cities, producing electricity during the summer months and heat during winter. Gas remained relatively cheap in Bulgaria until 2008 when Gazprom, the Russian energy firm, changed the terms of the contract. By then the price of gas had skyrocketed.

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Renewable energy

The Bulgarian government has decided to target an 11% share of RES in total electricity generation of the country by 2010, but some administrative obsta­cles are slowing down investments.

Hydropower
The currently booming sub-sector is small-hydro power plants (with capacity under 10 MW). Currently there are 28 such plants and more are planned. Otherwise Bulgaria has limited potential for generating hydroelectric power, though the country operates 87 plants with a combined capacity of 1,980 MW. Although the biggest share of the hydro-potential is already developed and accessible, there is still an untapped potential of approximately 212 MW for small HPP.

Wind energy
Currently there are projects for more than 600 MW of wind genera­tion capacity, but only two major projects have started – one for 100 MW on the Balkans Mountain and one for 60 MW on the Black Sea coast. The State Energy and Water Regulatory Commission (SERWC) expect RES capacities to reach about 1,500 MW in 2010. A recently-conducted wind resource assessment identifies three main areas with annual average wind speeds in excess of 9 m/s, two areas with more than 7m/s, and several areas with wind speeds between 4.5 - 7 m/s. The data were all measured 10m above ground.

Biomass energy
The potential for biomass applications is also considerable, both for electricity/heating and biofuels produc­tion. Currently, about 4% of total consumption is provided by biomass. Since Bulgaria became a member of the European Union in 2007 it has to comply with the EU Directive on the promotion of the use of biofuels or other renewable fuels for transport. This requires a share of 5.75 % of biofuels in the fuels used in the transport sector until 2010. Energy crops used as raw material for bioethanol are sugar beet, wheat and maize. Biodiesel is generated from rapeseed and sunflower. Landfill biogas is also an option for the country, with over 3 Mt of municipal solid waste produced every year.

Solar energy
The annual mean radiation for Bulgaria is 4.2 kWh/m2/day, meaning the country has a high potential for solar energy uptake. Of the 50,000 m2 of solar collectors installed by the government in the period 1977-90, around 10,000 m2 in the Black Sea coast region are still operational, with an 8% operation rate in the rest of the country. Photovoltaic technology is still in its infancy in Bulgaria, but experimental and prototype installations exist.

Geothermal energy
Bulgaria has a high potential for geothermal energy in the form of low enthalpy geothermal water reserves. 840 wells have been explored as of 2007 with temperatures of 103 degrees centigrade. The explored technical potential for direct-use geothermal systems is roughly 3000 GWh/year. At present in Bulgaria, the installed capacity of geothermal direct-use systems is about 94.5 MWth. Currently a large amount of geothermal energy is used for balneology and heating swimming pools. A rather small capacity is installed for building heating systems (including heat pumps) and greenhouse heating systems.

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Energy efficiency

Over the period 1997 to 2006 the energy efficiency index (ODEX) for all sectors decreases by 13% in Bulgaria compared to 11% for the EU-27. This improvement is due, largely, to the industrial sector. In the same way, the decrease in the energy intensity of the Bulgarian economy as a whole is due to a great extent to the decrease of energy intensity in industry.

Bulgaria's energy intensity is the highest among the Eastern European countries. The Bulgarian government is currently promoting energy efficiency and sustainable energy use. To this end, a National Energy Saving Program was instituted for the years 2005-2015, aiming to reduce energy intensity by 30%. In addition a 3 years action plan for energy saving was launched for the years 2005 - 2007. The amount of saved electricity per year was approximately 125,705 MWh (equating to roughly 453 GJ). The annual economic benefit was about 38,670 mio.

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Ownership

Electricity
The year 2007 was fundamental to the development of the energy sector in Bulgaria. In compliance with Bulgaria’s responsibilities as an EU member, requirements for complete liberalization of energy markets have been met by the amendments made in the statutory framework.

The Government had already privatised seven power distribution companies, selling them to the Czech Republic’s CEZ, Germany’s E.ON, and Austria’s EVN in 2005. NEK, the national electric utility, is currently operating as a single-owner, joint stock company, with the Bulgarian Energy Holding EAD as the holder of the capital. NEK is responsible for: the generation and transmission of electrical energy; the centralised purchase and sale of electrical energy; the supply of electrical energy to customers connected to the transmission network; the import, export of electrical energy, construction and maintenance of power generation and transmission facilities, investment, and the introduction and promotion of energy efficiency in the generation and transmission of electrical energy.

Gas
The National state-owned gas vendor, BULGARGAS is the owner and operator of the gas transmission high-pressure network and the transit system for transfer of natural gas across the territory of Bulgaria to Turkey, Greece and the Republic of Macedonia. 

There are 28 licensed gas distributor companies incorporated with private and municipal capital. Overgas Inc. holds a majority share in most of them.

Oil and Products
Neftochim is the principal refining company in Bulgaria. A joint stock company, 58% of their shares were privatised to the profit of Lukoil in 1999. Petrol SA formerly had a monopoly on the distribution of oil products, and is still one of the 3 major distributors in the country. 75% of its capital has been privatised since 1999.

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Competition

Until mid-2000, the national electric utility, NEK (Natsionalna Elektricheska Kompania), set up in 1992, was responsible for power generation and transmission, as well as for energy trade. It owned all nuclear, hydro and pumped hydro power plants in Bulgaria. NEK is an observer in the regional group of four transmission system operator companies, CENTREL.

In pursuance of the Energy Strategy of the Republic of Bulgaria and the favourable privatization environment created after the adoption of the new Energy Act (amended 2006) and the relevant secondary legislation, the Privatization Agency has undertaken the privatization of the electricity generation companies.

The seven regional distribution companies have been privatized. The eighth distribution company "Zlatni piasazi - Service" AD is also in private ownership.

The privatization projects of most of District Heating Companies are already finished successful. The work on the sale of District Heating Company Shoumen EAD and District Heating Company Pernik EAD continues.

The production is ensured by seven companies that are being privatized - the Nuclear Power Plant (NPP) Kozloduy and the Thermal Power Plant (TPP) coal/lignite of Maritza East 2 remaining public. Several hydropower plants are being sold.

Independent producers, concentrated into 9 municipal district heating companies and 17 industrial TPPs make up for 11% of generation in the country.

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Energy framework

Energy Act (as of 2006)
The current Energy Act was last revised in 2006. The main purposes of the law are: to create a legal framework for energy activities related to the change in the market model for elec­tricity and natural gas, to encourage combined heat and power generation (co-generation) and to ensure more conditions for energy production from renewable energy sources (RES).

The Energy Strategy of Bulgaria
The leading priority of the Strategy is to develop a competitive energy market and all priorities are related to this aim. There are several long-term goals of this strategy: to secure energy supplies, to create competition in the energy sector, to protect environment, and to position Bulgaria as a regional hub for the transit of oil, natural gas and electricity. The projects for natural gas transit through Bulgaria are part of the energy policy to diversify the energy mix and supply. New generation capacities are planned.

Renewable and Alternative Energy Sources and Biofuels Act (2007)
This new act on RES was adopted in June 2007 for diversifying energy supply, environmental protection, to set the terms for sustainable local and regional development, and to increase the capacity of SMEs and RES producers, as well as other market actors. Suppliers are required to purchase all renewable electricity that has a certificate of origin. The public utility company and the end suppliers, respectively, shall purchase the entire quantity of energy generated from renewable and alternative energy sources, except for the power generated by hydroelectric power plants with installed capacity of over 10 MW, at preferential prices. In addition, installation of a RES for the generation of electricity with a capacity of up to 5 MW, or for thermal energy production, requires no license. Feed-in tariffs for various renewable energy sources are also in place, ranging from roughly 80 €/MWh for large wind power, to 400 €/MWh for PV installations under 5 kW. Long-term purchase contracts are set to replace this feed-in tariff structure for electricity producers, although this has not yet been implemented.

The Energy and Energy Efficiency Law (EEEL)
The EEEL has been adopted in 1999 within the energy and Energy Efficiency Law framework, for the period 2001 – 2010. By this law, the Government intends to complete the privatization process and to introduce market mechanisms into the sector, in accordance with EU-Directive 96/92/EC.

Energy Efficiency Act (as of 2007)
The Energy Efficiency Act provides for:

  • National long- and short-term programs for energy efficiency
  • The preparation of measures for the harmonization of the Bulgarian legislation with EU legislation in the area of energy efficiency
  • The international collaboration of the Republic of Bulgaria in issues of energy efficiency and renewable energy sources, etc.

The Act further lays down the provisions for Energy Efficiency.

The Bulgarian Energy Efficiency Project
One of the main activities in the Bulgarian energy strategy is the rational use of energy resources. Energy efficiency policy in Bulgaria is focused on two areas – lowering energy intensity and using RES. Some of the main measures in Bulgaria are: introduction of the obligation for energy management; regulation of the possibility for the introduction of energy efficient services; requirements on labelling and stamping; tax reliefs, etc.

Residential Energy Efficiency Credit Line (REECL)
The REECL facility aims to give householders across Bulgaria a opportunity to realize the benefits of energy efficiency home improvements by providing them with loans and incentive grants through local participating banks.

Bulgarian Energy and Renewable Energy Credit Line (BEERECL)
The BEERECL has been developed by the European Bank for Reconstruction and Development (EBRD) in 2004 in close co-operation with the Bulgarian Government and the European Union.
The facility extends loans to participating banks for on-lending to private sector companies for industrial energy efficiency and small renewable projects.

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Energy debates

Bulgarian National Programme on Renewable Energy Sources (NPRES) Draft
The National Programme on Renewable Energy Sources (NPRES) draft contains nearly 1,000 concrete real investment projects and project proposals from all administrative regions and public sectors in Bulgaria including projects on:

  • Solar hot water, heating and PV systems
  • Wind farms
  • Small Hydro Power Stations (SHPPs)
  • Geothermal
  • Biomass
  • Biogas and Natural (detander generators) gas

 
The NPRES aims to considerably increase the share of Renewable Energy Sources (RES) in the National Energy Balance (currently only 0.4%).

On the 16th of June 2010, the Bulgarian Prime Minister announced the cancellation of the proposed Burgas–Alexandroupolis (Greece) oil pipeline project, and suspended the Belene nuclear power plant construction. This move was perceived to be a clear tilt in favour of national interests in terms of energy independence, due to the high level of Russian involvement in both projects.

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Energy studies

In 2001, 35 Bulgarian cities established the Municipal Energy Efficiency Network (MEEN). MEEN promotes the development of two key elements: an energy database and a training program form municipal officials.

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Role of government

In June 2006, the Government transformed the former Committee of Energy into the Ministry of Energy and Energy Resources.

The Ministry of Energy and Energy Resources is in charge of Bulgarian Energy Policy. The ministry makes medium and short-term plans, forecasts and programs for the energy balance of the country, production, generation, import, export, and effective use of the energy resources (electric, heat and natural gas) as well as investments related to these resources. It is also in charge of the technical condition and operation of these energy facilities. It is also responsible for national policy towards wider use of Renewable Energies as well as increasing energy efficiency.

This new Ministry and the State Energy Regulation Commission are the two main government departments involved in energy policy.

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Government agencies

The Energy Efficiency Centre is within the Ministry of Economy.

The Energy Efficiency Agency (EEA), established in 2002, develops programs and projects for energy efficiency improvement and electric and heat power generation via Renewable Energies. It also monitors and coordinates energy efficiency programs analyses and summarises the results for the preparation of the national energy balance. The EEA is a legal budgetary entity to the Minister of Energy and Energy Resources.

The Bulgarian Energy Efficiency Fund (BGEEF) was established in 2004 and initially capitalized entirely through grants - its major donors being: the Global Environment Facility, the Government of Austria, The Government of Bulgaria and several private Bulgarian companies. BGEEF supports the identification, development, and financing of viable Energy Efficiency projects predominantly implemented by Bulgarian private enterprises and municipalities. These projects shall result in substantial reduction of greenhouse gases which is the main environmental objective of BGEEF as a donor project.

The underlying principle of BGEEF’s operations is a public-private partnership. This means that the Fund pursues an agenda fully supported by the Government of Bulgaria, but it is structured as an independent legal entity, separate from any governmental agency or institution. The Fund is profit-oriented and pursues financial sustainability of its own operation.

The Municipal Energy Efficiency Program (MEEP) has funding for five energy efficiency projects; four of them in the municipal sector. These projects include investments in all parts of the municipal infrastructure, including street lighting, municipal building heating, water and gas supply, urban solid waste treatment and renewable energy.

The Black Sea Energy Centre –Bulgaria was inaugurated in 1995 and acts as a focal point for energy related activities, aimed at developing co-operation between the Black Sea region countries and the EU in the energy field.

The Association of Bulgarian Energy Agencies (ABEA) is a non-government organization, registered by the law as a legal entity with non-profit purpose. The founder members of the Association are legal entities - agencies for energy management on local and regional level, constituted with the financial and methodological assistance of the European Commission.

The Bulgarian Energy Efficiency and Renewable Energy Credit Line (BEERECL, http://www.beerecl.com/) is a credit facility offered by the European Bank for Reconstruction and Development (EBRD), in conjunction with the European Union and the Government. Under the BEERECL, companies may apply for loans of up to EUR2.5 million to private sector companies for industrial energy efficiency projects and small renewable energy projects.

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Energy procedure

A new National Energy Strategy was developed by the government in 2002. This strategy includes proposals to introduce market relations based on effectively-priced tariffs; encourage the state to take an active role in commercial activity and the protection of public energy interests, and promote Bulgaria as a secure and reliable country for the future transport of natural resources.

The 2003 Energy Act (last updated 2006) was created in order to secure Bulgaria's energy future. Its main purposes are to develop infrastructures for the transmission of energy resources throughout Bulgaria's territory, as well as to develop the use of renewable sources of energy in a sustainable way, and promote the cogeneration of electricity and heat energy.

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Energy regulator

The State Energy Regulation Commission (SERC) regulates the energy sector activities (“Law on Energy”, Article 21). The SERC implements the reforms contain in the Energy Law with the view of opening the market to competition. The regulation of water supplies and sewer services was added to functions in February 2005 (SEWRC).  

SEWRC implements the energy regulatory process based on the activities, structure and organisation as stipulated in the rules accepted by the council of Ministers. It also supplements, terminates, cancels and revokes permits for construction of generation capacities, heat transmissions, gas transmissions and distribution networks, natural gas storage facilities, electric power lines and gas pipe lines as well as granting permits and licenses to the companies within the power sector.

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Degree of independence

The SEWRC is an independent specialized state body located consisting of seven members, including a chairman and a deputy chairman. The chairman, the deputy chairman and the members of the SEWRC are appointed by the Prime Minister and discharged with a resolution from the Council of Ministers for 5 years. The budget for the SEWRC is split roughly equally between fees from regulated bodies and funds from the state.

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Regulatory framework

Law on Renewable and Alternative Energy Sources and Biofuels:

- Preferential tariff for electricity produced from RES for projects in operation by Dec. 31, 2010 – 2 components
- 80% of the average electricity sales price achieved by public or end-user suppliers in the preceding calendar year
- Price premium determined by State Energy and Water Regulatory Commission (SEWRC) – no less than 95% of previous year premium;
- Obligatory off-take of RES electricity (for projects in operation by Dec. 31,2010) - 12-year power purchase contracts,
- Connection to the transmission and distribution grid within 3 years of applications.

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Regulatory roles

SEWRC’s (State Energy and Water Regulation Commission) roles:

  • Issues, revises, amends suspends, terminates and withdraws licenses in the cases defined under the Law on Energy.
  • Performs price regulation.
  • Sets the trade rules for electricity and natural gas and the technical rules for the networks (proposed by energy companies) and controls the compliance with these rules.
  • Adopts and controls the implementation of a methodology for setting of prices for balancing electricity as part of the rules for trade with electricity.
  • Sets the rules for access to the electricity and natural gas transmission networks, respectively to the electricity and natural gas distribution networks (rule on network access). 
  • Decides on the classification of the electricity lines, heat energy pipelines, natural gas pipelines and their ancillary facilities within the transmission or distribution networks proposed by the transmission or distribution companies and issues mandatory directives for the acquisition and/or providing access to them.
  • Develops and controls compliance with the rules on supply of electricity, heat energy and natural gas to consumers, including quality service.
  • Reviews the requests of energy companies for compensation of no recoverable costs as well as on the manner of their compensation.
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Energy regulation role

The Agency for Nuclear Regulation implements the state regulation on safe use of atomic energy and ionising radiation as well as the safety management of radioactive waste and nuclear fuel.

The Electricity System Operator (ESO) is a subsidiary of the NEK, and is responsible for co-ordination and control of the electrical power system, as well as the transition of electricity through the country, and monitoring of the nation's electricity market.

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Regulatory barriers

Bulgaria's regulatory framework, whilst relatively recently-introduced, is well-established. A possible barrier in the form of the country's continued dependence on imported energy resources exists, in that regulatory policy may be dictated by the fact. However, a legal framework exists for a number of regulatory issues.

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References

IEA Energy Statistics (2010). Available at: http://www.iea.org/countries/non-membercountries/bulgaria/ [Accessed 15th September 2013]

Austrian Energy Agency Country Profile - Bulgaria. Available at: http://www.enercee.net/countries/country-selection/bulgaria.html [Accessed 15th September 2013]

Library of Congress. Federal Research Division. Country Profile Bulgaria. October 2006. Available at: http://lcweb2.loc.gov/frd/cs/profiles/Bulgaria.pdf [Accessed 15th September 2013]

P. Ganev. Institute for Market Economics. Bulgarian Electricity Market Restructuring. CCP Working Paper 08-8. Available at: http://competitionpolicy.ac.uk/documents/107435/107587/ccp08-8.pdf [Accessed 15th September 2013]

A. Georgiev, N. Aleksandrova. Bulgaria´s Energy Policy after Accession to the EU. International Association for Energy Economics 31.

Odyssee. Energy Efficiency Profile Bulgaria. May 2011. Available at: http://www.odyssee-indicators.org/publications/country_profiles_PDF/bgr.pdf [Accessed 15th September 2013]

Penkov, Markov and Partners. The Bulgarian Energy holding, consolidation in the context of liberalization. Projects, Energy & Natural Resources. December 2008. Available at: http://www.legal500.com/c/bulgaria/developments/6025 [Accessed 15th September 2013]

Natsionalna Elektricheska Kompania (EAD). http://www.nek.bg/cgi [Accessed 15th September 2013]

Bulgargaz. http://www.bulgargaz.bg/en/index.php [Accessed 15th September 2013]

Lukoil oil company. http://www.lukoil.com [Accessed 15 September 2013]

Residential Energy Efficiency Credit Line website. Available at: http://www.reecl.org [Accessed 15 September 2013]

EU Observer website. T. Tsakiris. Near death experience and the Burgas-Alexandroupolis pipeline. 23 June 2010. Available at: http://euobserver.com/7/30337 [Accessed 15 September 2013]

Municipal Network for Energy Efficiency. http://www.munee.org/node/78 [Accessed 15 September 2013]

Ministry of Energy and Energy Resources. http://www.mi.government.bg/eng [Accessed 15 September 2013]

Energy Efficiency Agency. http://www.seea.government.bg/index.php?lang=en [Accessed 15 September 2013]

Bulgarian Energy Efficiency Fund. http://www.bgeef.com/display.aspx [Accessed 15 September 2013]

The Association of Bulgarian Energy Agencies. http://www.abea-bg.org [Accessed 15 September 2013]

SERC. http://www.dker.bg/ [Accessed 15 September 2013]

K. Lefkowitz. Current state of play in renewables in Bulgaria. New Europe Corporate Advisory 4th International Congress for South Eastern Europe. Energy Efficiency and Renewable Energy Sources. Available at: http://necadvisory.com/uploads/news/Renewables_Presentation_KLefkowitz.pdf [Accessed 15th September 2013]

Agency for Nuclear Regulation. http://www.bnsa.bas.bg [Accessed 15th September 2013]

Electricity System Operator. http://tso.bg/default.aspx/en [Accessed 15th September 2013]

GMF Blog (2010) Bulgarian Energy Policy: Tilting Toward National Interest. Available at: http://blog.gmfus.org/2010/06/16/bulgarian-energy-policy-tilting-toward-national-interest/ [Accessed 15th September 2013]

SERC Budget 2011. Available at: http://www.dker.bg/PDOCS/budget11.pdf [Accessed 15th September 2013] Close References