16-20, Alabin Str., 1000 Sofia, Bulgaria Tel.: +359 2 932 09 11, fax +359 2 987 26 04 E-mail: office@bia-bg.com

GREEN BLUE ENERGY FACTORY – BULGARIA MARKET ANALYSIS

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Market analysis of industry and commerce HCIU sectors

(Heating and Cooling Intensive Use sectors)

This analysis has been developed in the framework of the Green Blue Energy Factory Project,

Contract number IEE/10/233/SI2.593827, financed under the Intelligent Energy Europe Programme

(CIP Framework Programme) of the European Commission

The present analysis has been made by the Bulgarian Industrial Association – Union of the Bulgarian Business

in pursuance of task 2.5 of the project.

16-20, Alabin Str., 1000 Sofia, Bulgaria Tel.: +359 2 932 09 11, fax +359 2 987 26 04

E-mail: office@bia-bg.com

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CONTENTS

1 Objectives and scope of the GBE Factory project........................................................3

2 Objective of the market analysis...................................................................................3

3 Summarized data of the RES sector’s state in Bulgaria ..............................................4

3.1 National objectives .................................................................................................4

3.2 Legal framework and institutions..........................................................................4

3.3 Prices of energy carriers of RES ............................................................................7

3.4 Funding opportunities............................................................................................8

3.5 Summary data about the production and use of RES in Bulgaria .......................9

3.6 Conclusions to the RES sector’s state survey: .....................................................18

4 Market analysis by focus groups.................................................................................20

4.1 Survey of chemical enterprises in Bulgaria .........................................................20

4.2 Survey of commercial centers ..............................................................................26

4.3 Survey of potential users of bio mass factories....................................................27

4.4 Municipal programmes stimulating the use of RES for the period 2010-2015 in the Stara Zagora region – summary analysis ................................................................32

4.5 Expert assessments ...............................................................................................36

4.6 Survey of enterprises in Bulgaria.........................................................................39

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1 Objectives and scope of the GBE Factory project

Green-Blue-Energy Factory (GBE Factory) - co-financed by the Intelligent Energy Europe Programme, supported by the European Commission. The project promotes the concept of “GREEN-BLUE-ENERGY FACTORY”: industrial and commercial buildings equipped with single or combined renewable energy sources, able to provide electricity, heating and cooling for the air conditioning of premises, as well as for the business activities housed therein. A GBE Factory can be a single industrial or commercial building working with “zero carbon emissions”, or one or more buildings equipped with plants producing renewable energy, which can be distributed to the surrounding companies of the same industrial or commercial area. The project’s main partners are public bodies, organizations and ESCOs coming from the EU (Italy, Germany, Austria, Slovakia and Bulgaria). RE sources that the project intends to consider in GBE FACTORIES will generally be represented by:

Photovoltaic on building: kWel Solar thermal on building: kWth Hybrid integrated systems (PH + ST): kWel + kWth Biomass Generators a. Generators PPO - SVO: kWel + kWth

b. Plant biomass generators: kWel + kWth c. Biomass from waste generators: kWel + kWth

Wind turbines: kWel Geothermal systems: kWth Other: KWel + kWth

2 Objective of the market analysis Main goals and tasks of the market analysis:

To assess the needs and preconditions for the establishment and dissemination of green-blue enterprises and of the preparedness to develop this process in Bulgaria – at least in one region and two sectors

Direct involvement of at least 70 SMEs/companies in the partner countries (7 companies for each of the 2 sectors focus groups

GBE FACTORY projections and market knowledge with special concern to HCIU (heating and cooling intensive use SMEs)

Diffusion of projections and market analysis to key actors (300) of the Supply side (Suppliers, developers, engineering organizations, etc.)

The market analysis will address sectors with intensive use of energy like:

industry: chemical industry, food, textile, metal processing, brick, ceramics, etc. commerce: shopping malls, directional centers, spa, leisure and water parks, etc. others: waste plant, green house, livestock, etc.

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3 Summarized data of the RES sector’s state in Bulgaria

The present survey is not meant to analyze thoroughly the state of the RES sector. Its goal is to present summarized data giving orientation of the situation in Bulgaria in which the project is to be implemented and of choice of fields on which it has to focus. A more detailed description of the state is given in Appendix to the present survey (available only in Bulgarian language upon request).

3.1 National objectives With the Directive 2009/28/ЕC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources, a common framework is being established to encourage the energy of renewable sources and to set mandatory national objectives for the common share of energy of renewable sources in the final gross energy consumption. The mandatory national goal of Bulgaria for the energy of renewable sources in the final gross energy consumption in 2020 is set to 16 %. Based on the requirements of Directive 2009/28/ЕC, the Minister of Economy, Energy and Tourism has drafted a project of a National renewable energy action plan in the Republic of Bulgaria until 2020. The indicative curve to achieve the national target in 2020 includes the following interim indicative targets:

from 2011 to 2012 – 10, 72 %; from 2013 to 2014 – 11, 38 %; from 2015 to 2016 – 12, 37 %; from 2017 to 2018 – 13, 69 %.

3.2 Legal framework and institutions The national policy is set up by the legislative framework and includes the following major legal acts:

Energy Act Water Act Protection of Agricultural Land Act Environmental Protection Act Energy Efficiency Act Renewable Energy Sources Act (operative from 03.05.2011)

This act stipulates the public relations relevant to the production and consumption of

o Electric power, thermal energy and cooling energy of renewable sources; o Gas of renewable sources; o Bio-fuels and renewable energy sources in the transport.

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Various incentives have been introduced, including preferential prices, priority accession of producers of electric power from renewable energy sources to the electric distribution network and compulsory buy-out of electricity from such sources. Institutions: Council of Ministers: lays down the state policy about the promotion of production and consumption of electric power, thermal energy and cooling energy from renewable sources, production and consumption of gas of renewable sources, as well as of the production and consumption of bio-fuels and renewable energy sources in the transport; Ministers of: economy, energy and tourism, of the environment and waters with responsibilities for the realization of the state policy in the ministries they govern. Sustainable Energy Development Agency (SEDA): has a statute of an executive agency by the Minister of economy, energy and tourism. The executive director of SEDA carries out the state policy about the promotion of production and consumption of electric power, heating energy and cooling energy of renewable sources, production and consumption of gas of renewable sources, as well as of the production and consumption of bio-fuels and renewable energy sources in the transport. The agency comprises four directorates, one of which is the „Renewable energy sources” that participates in the development and updating of National renewable energy action plans (NREAP), organizes the implementation of activities and measures included in the NREAP and other. State Energy and Water Regulatory Commission, which sets preferential prices for buying out electric power of renewable sources, develops methodology of fair distribution between the market and preferential prices of electric power produced by renewable sources between all consumers and other. Regional structures The regional governor:

Ensures the state policy putting into practice, coordinates the actions related to the promotion of production and consumption of electric power, thermal energy and cooling energy of renewable sources, production and consumption of gas of renewable sources, as well as of the production and consumption of bio-fuels and renewable energy sources in the transport between the municipalities in the region, etc.

The municipal councils adopt long- and short-term programmes to encourage the use of renewable energy sources and bio-fuels. The mayor of a municipality develops and tables for adoption by the municipal council municipal long- and short-term programmes to encourage the use of renewable energy sources and bio-fuels in accordance to the National renewable energy action plan.

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The non-governmental organizations assist their members to participate effectively in the labour market connected with the use of RES and with the discussion of the legal basis relevant to it:

Association of producers of ecological energy Alternative and renewable energy institute Bulgarian photovoltaic association Bulgarian solar association European wind energy association Bulgarian wind energy association National union of independent energy producers “Ecoenergy” Alliance of the producers of ecological energy – BG” Association Bulgarian-Japanese association for wind and photovoltaic energy Bulgarian hydro energy association Bulgarian sustainable energy association Bulgarian energy forum Hydro energy association Association of Bulgarian energy agencies Association of energy engineers – Bulgarian chapter and other

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3.3 Prices of energy carriers of RES Preferential prices for selling electric power of renewable sources and hydroelectric stations with installed power of up to 10 MW specified by Decision № Ц – 18/20.06.2011.

Price Electric plants BGN/

MWh

Wind electric plants 1. Operating up to 2 250 hours 191,00 2. Operating over 2 250 hours 173,06

3. Operating with asynchronous generator with cage rotor 137,06 Photovoltaic electric plants

1. Up to 30 kW p, installed on roofs and facades 605,23

2. Over 30 kW p up to 200 kW p, installed on roofs and facades 596,50

3. Over 200 kW p up to 1 000 kW p, installed on roofs and facades 583,77

4. Up to 30 kW p 576,50

5. Over 30 kW p up to 200 kW p 567,41

6. Over 200 kW p 485,60

Electric plants operating with biomass 1. Derived from wood residues, from forest clearing, forestry and other tree trimming waste with an installed capacity of up to 5 MW

255,51

2. Derived from wood residues, from forest clearing, forestry and other tree trimming waste with an installed capacity of up to 5 MW combined cycle.

282,15

3. Derived from wood residues, from forest clearing, forestry and other tree trimming waste with an installed capacity of over 5 MW 227,20

4. Operating with agricultural crops with an installed capacity up to 5 МW 195,03 5. Operating with energy crops with an installed capacity of up to 5 МW 185,99 6. Electric plants up to 150 kW, operating through an indirect use of biomass of vegetable and animal substances 432,81

7. Electric plants over 150 kW up to 1 MW, operating through an indirect use of biomass of vegetable and animal substances

405,61

8. Electric plants over 1 МW up to 5 МW, operating through an indirect use of biomass of vegetable and animal substances

335,19

9. Electric plants over 1 МW up to 5 МW, operating through an indirect use of biomass of vegetable and animal substances with combined production of electric and thermal power

348,61

10. EP up to 150 kW, operating through indirect use of the energy of household waste 263,83 11. EP over 150 кW up to 1 МW, operating through indirect use of the energy of household waste 253,03

12. EP over 1 МW up to 5 МW, operating through indirect use of the energy of household waste 243,86

13. EP up to 150 кW, operating through indirect use of the energy от household sewage 158,05

14. EP over 150 кW up to 1 МW, operating through indirect use of the energy от household sewage

132,05

15. EP over 1 МW to 5 МW operating through indirect use of the energy от household sewage 119,27 Note: Value added tax not included in the prices.

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For the sake of comparison, in the next table we show part of the prices at which one of the electricity companies „CEZ Bulgaria”supplies electric energy.

„CEZ Electro Bulgaria"Jsc – Prices of electric energy sold by the final supplier

Electric energy prices as from 1 July 2011 INDICATORS BGN / kWh

І. Sales of electric energy to companies with less thank 50 employees and an annual turnover up to 19.5 million BGN, associated with the electric distribution networks at middle voltage 1. Three scales Peak 0,13434 Daily 0,07167 Night 0,02993

The clients of „CEZ Electro Bulgaria” pay also prices for network services, the result of what is that the average prices for the final consumer are within the limits of 0,100-0,110 BGN/kWh. It is evident that the preferential prices for electric energy buy-out from the different types of plants with the use of RES are considerably higher than the electric energy obtained from the final supplier. With the photovoltaic electric stations, they are about 5,5 times higher, and for the wind electric stations – about 1,7 time. With this ratio, the producers’ motivation of these types of RES is to sell the electric energy at preferential prices instead of consuming it in situ or in regions. At the same time, there is a policy of systematic decreasing of the price differences. The Government of Bulgaria declared its vision about the preferential prices decreasing, especially of the energy of photovoltaic and wind electric stations where we observe a process of saturation. The prices of electric energy of RES with the use of grant schemes are decreasing too. Priority attention in the national renewable energy action plan is paid to the use of biomass and thermal energy accumulated by solar collectors.

3.4 Funding opportunities Relatively good opportunities exist in Bulgaria about the funding of RES projects.

The credit line along the EBRD on energy efficiency and renewable sources – grant up to 20%;

Bulgarian fund of energy efficiency and RES и ВЕИ – preferential rate of interest. Necessity to combine the measures about RES and energy efficiency

Credit lines operated by banks (Reiffeisen Bank, ProCredit Bank and other) with grant opportunities up to 15%

Programmes under the Operational programme „Development of the competitiveness of the Bulgarian economy 2007-2013” with grant opportunities up to 50% („Green industry” programme for large companies amd “Green economy for SMEs) and priority axis 2.3.2 – improving the energy efficiency and introduction of energy-saving technologies and RES

Kozloduy fund, Operational programme for rural development Operational programme „Regional development”

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ESCO companies, etc.

The availability of opportunities for projects funding and consumption of RES in situ and in regions is a good precondition for the creation and development of green energy enterprises.

3.5 Summary data about the production and use of RES in Bulgaria

The Bulgarian economy is among the countries with the highest energy intensity – around 5 times higher than the average for the 27 EU member states.

Share of RES in the final energy consumption (11,6% for 2009) is close to the average for the 27 countries.

Share of renewable energy in gross final energy consumption (%)

geo\time 2006 2007 2008 2009 TARGET EU (27 countries) 9 9,9 10,5 11,7 20 Bulgaria 9,3 9,1 9,6 11,6 16 Germany 7,1 9,4 9,3 9,8 18 Italy 5,6 5,5 7 8,9 17 Austria 25,1 27,2 27,9 29,7 34 Slovakia 6,6 8,1 8,3 10,3 14

Source of Data: Eurostat, Code: t2020_3

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Electricity generated from renewable sources in Bulgaria- 9,81 % of gross electricity consumption – 2009 source of Data: Eurostat,

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Primary production of renewable energy in Bulgaria 1475 (1 000 toe) – 2010

Source of Data: Eurostat, Code:ten00081

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Renewable energy primary production: biomass and renewable wastes in Bulgaria 938 (1 000 toe) - 2010

Source of Data: Eurostat, Code: ten00082

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Renewable energy primary production: solar energy in Bulgaria 12(1 000 toe) – 2010

Source of Data: Eurostat, Code: ten00082

…

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At present the installed solar thermal installations in the country have a total area of around 260.000 m2, with a total installed power of around 200 MW(t). By 2015 the increasing of the total area of installed solar thermal collectors in Bulgaria is expected to reach 470 m2 with a total installed power of around 350 MW(t).

There is a sample on the next table of the total energy balance for 2010 in some sectors representing interest from the project’s point of view. We can draw the following conclusions from it:

The chemical industry is one of the most considerable industrial consumers (7,5 % of the total energy consumption in 2010), although this share decreased by around 3 % in the past three years. The RES used in the sector are practically unnoticeable against the background of the total energy consumption and the potential remains significant.

Significant consumers are also entities of the trade sector (11,4 % of the final energy consumption for 2010) in which the commercial centers are encompassed – subject of special attention for the project. As we see, the use of RES in these entities is considerably higher.

TOTAL ENERGY BALANCE FOR 2010 (Energy-6 1 OEB) Unit Total Renewable

fuels and waste Thermal energy of RES

Electric energy (no pumped-storage hydroelectricity) of RES

Primary energy production 1000 toe 10234 779 43 495 Final energy consumption 1000 toe 8691 900 43 -

1000 toe 648 - - - Chemical industry % versus final energy consumption

7,5 - - -

1000 toe 252 7 - - Food-processing industry % versus final energy

consumption 2,9 0,8 - -

1000 toe 987,0 11 37,0 20,0 Trade, public organizations and other % versus final energy

consumption 11,4 1,2 86,0 -

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Renewable energy primary production: wind power in Bulgaria 59 (1 000 toe) – 2010

Source of Data: Eurostat, Code: ten00082

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Supply, transformation, consumption (total renewables and wastes) in Bulgaria – 1475 TOE – 2010

Source of Data: Eurostat, Code: nrg_1071a

The examination of the expected benefits and costs of GBE factories is of interest against the background of energy saving activities – it is of very high priority too. The next table shows the summarized results of energy audits accomplished in over 150 industrial companies. It is obvious that the average period of payback for investments of the proposed energy saving measures is around 3,5 years. Simultaneously the RES systems in the industry and he housing stock have a considerably higher payback period – more than 5-6 years.

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Audited industrial systems – results (consumption of over 3000 MWh/year)

PARAMETER DIMENSION VALUE

Audited industrial systems No. 154

Annual energy consumption GWh/year 2 927

Energy savings from ESM GWh/year 378

Cost savings from ESM Mln. BGN/year 52,1

СО2 reduction th. Т./year 187,7

Required investments for ESM Mln. BGN 183,4

Average payback period Year 3,5

Average share of savings % 12,6 Source: Sustainable energy development association

3.6 Conclusions to the RES sector’s state survey: The accessible potential of all RES in the country is around 6 000 ktoe. The biggest

accessible potential of all RES in the country is for the biomass (~2 700 ktoe) followed by the water energy (~2 280 ktoe), the solar energy (~390 ktoe), geothermal energy (~350 ktoe) and the wind energy (~280 ktoe).

The average payback period of investments from the proposed energy saving measures is around 3,5 years. At the same time, the RES systems in the industry and the housing stock have a considerably longer period of payback – over 5-6 years.

Sustainable energy development in the conditions of our country including optimal use of conventional fuels may be achieved by combining measures introducing RES with measures improving the energy efficiency.

During the next 10 years, the water energy and the biomass will have the most significant share in the production of electric power from RES, and to meet the needs of heating, cooling and boiler hot water – the biomass and geothermal energy.

Substantial particularity of the RES is the economic expedience for the realization of small investment projects as a consequence of the potential redistribution that necessitates decentralization of the transforming/processing powers.

As a result of the preliminary analysis of the state of the RES sector in Bulgaria the market survey is directed with priority to the following areas:

By types of RES – biomass, solar collectors for heating energy, biogas of recycled waste, thermal sources – with the largest potential

Sectors – chemistry, commercial chains, hotels in cross-country section – with significant energy intensity and suitable for the project purposes

Regions – national scope and Stara Zagora of broad scope of surveyed entities

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Results of the market surveys in the following focus groups are shown in the next sections:

Enterprises of the chemical industry distributed across Bulgaria – 40 companies Commercial centers distributed across Bulgaria – 10 centers Entities interested in the use of biofuels – 10 hotels and 10 greenhouses Sites on the territory of the Stara Zagora region Expert assessment – 17 experts Industrial enterprises distributed across Bulgaria – 25 companies

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4 Market analysis by focus groups

4.1 Survey of chemical enterprises in Bulgaria

The survey goal is to get a representative picture of energy consumption figures and to estimate potentials for GBE F in the sector. The survey is based on the processing of the data of a questionnaire sent out and filled out by the chemical SMEs. Detailed description of the results from the survey is presented in Appendix (available only in Bulgarian language upon request).

A total of 42 companies filled out questionnaires have been received. The list of the responding companies and the replies are available in the BIA and confidential. The Report of the survey is structured in three parts according to the structure of the questionnaires. The following conclusions could be made as a result of the survey:

General characteristics of respondent companies

The largest group (about 43%) is the group medium sized enterprises. About 45% of all respondents fall in the group of staff of between 50 and 250 employees with an annual turnover below ˆ 50 million.

The largest number of respondents is in the sector of rubber industry – about 18%. The largest number of respondents is from the District of Russe– about 14%, followed by the enterprises from District of Stara Zagora – about 11%.

Energy consumption profiles

The purpose of this section is to indicate the profile of the energy consumption and the part of heating and cooling from total energy consumption.

All companies use electricity and four of them use electricity only. About 62% use natural gas and about 1/3 use liquid fuels. The largest energy carrier is the electricity (40%), followed by the natural gas (30%).

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Total annual energy consumption in МWh

30%

40%

5%

25%

Natural gas Electricity Fuels Heat energy deliverd from outsite

About 48% of the companies use liquid fuels and heat energy delivered from outside. About 20% from the total consumption are liquid fuels and heat energy delivered from outside. About 99% from these types energy carriers are consumed by large and medium size companies (see next Table). Significant part of these companies could be considered as are potential GBE Fs – RES producers and consumers.

For 55% of all replying companies the total energy costs are less than 10% of the total operating costs, while for 22,5% they are within 10-20%. For seven of the companies the energy costs are significant and exceed 30%.

The largest consumer of heat energy is technological processes (38%), followed by space heating (35%). Space heating and DHW form about 27% from total heat energy consumption – potential candidates for renewable energy (see next table).

Heat energy balances by size of companies

Technology processes

Domestic hot water (DHW)

Space heating

Other Total Size of

company Average % Average % Average % Average % %

1 Large 95.66% 0.00% 0.00% 4.34% 100.00%

2 Medium 48.24% 5.44% 32.36% 13.95% 100.00%

3 Small 55.50% 8.56% 35.94% 0.00% 100.00%

Total 66.47% 4.67% 22.77% 6.10% 100.00%

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The largest consumers of electricity with almost equal shares of about 20% are Lighting, Motors and Drivers and Electrical Processes. Heating and cooling form about 10-11% from total electricity consumption (see next table).

Electricity energy balances by size of companies

Lightning Motors and drivers

Electrical processes

Refrigera-tion

Space heating & cooling

Other Total Size

Average % Average % Average % Average % Average % Average % %

1 Large 0.80% 53.25% 37.81% 2.31% 1.76% 4.07% 100%

2 Medium 7.47% 33.44% 26.37% 10.15% 10.67% 11.90% 100%

3 Small 1.85% 65.34% 24.86% 1.70% 6.25% 0.00% 100%

4 Micro 2.42% 34.19% 46.74% 7.54% 4.29% 4.82% 100%

Total 3.14% 46.55% 33.94% 5.43% 5.74% 5.20% 100%

Only 8 % of the companies have a very advanced level of energy management. The largest is the group of companies aware of energy management (about 45%).

The highest is the number of energy efficiency and RES measures implemented for the improvement of thermal insulation (14%), efficient lighting (11%), technology improvements (10,5%) and thermal insulation of buildings (10,5%) – measures of relatively low investments and a short pay-back period. The lowest is the number of co-generation and RES measures (1-2), which require relatively high investments.

The highest is the number of the planned measures for implementation of systems of energy monitoring (12%), efficient lighting (12,7%), technology improvements (9,6%) and thermo-insulation of buildings 10,2%), efficient motor control (10,2). There is an increased interest in the cogeneration measures (4,8%) and renewable energy sources (6,6%) which require relatively high investments. In general, the companies with a highest number of implemented measures plan to introduce more measures during the next periods.

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Attitude to GBE F

Do you have implemented or planned to implement RES systems

% from total

Type of RES systems

Solar thermal

Hybrid integrated systems (PH + ST)

Biomass heating

Biomass co-generation / 3-generation

Generators using biogas from waste

Geother-mal systems

Other Neither

Implemented RES systems during the last 3 years

0 0 17 3 0 0 0 83

RES systems planned for implementation during the next 3 years

17 17 8 0 0 0 8 58

83% of companies do not have any implementations of RES. Only 1 company has implemented biomass co-generation using processed wastes as fuel. About 30% of them plan to implement solar thermal or hybrid integrated systems.

Do you have available information about possibilities and characteristics of RES applicable to your specific conditions?

% from total

We have enough information

We have limited information

We do not have any information

We are not interested

33 58 8 0

Most of the companies are relatively well informed according their estimation.

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What is the maximum payback period for RES acceptable for your organization?

% from total

3 years 5 years 8 years 10 years

8 67 25 0

For 75% of the companies the acceptable payback period is less than 5 years, which do not corresponds to the real payback period of the most of RES systems.

How do you estimate the services proposed by the RES suppliers?

% from total

Supply is more than demand

Proposed services are enough as quantity and

quality

Proposed services are not enough as quantity

and quality We are not able

to estimate

17 42 8 33

Most of the companies estimate positively the services proposed by the RES suppliers.

What are the obstacles for implementation of RES in your company 1= no influence 5 = high level of negative influence

Average estimation

Lack of technical information 2,55

Lack of time and staff resources 3,09

Lack of information about similar companies 3,08

Lack of technical experience in the company 3,17

Lack of available external technical support 2,17

Considered projects do not cover investment criteria 3,09

It is impossible to interrupt the production process for any improvements 2,58

There is no any possibilities for implementation of RES 2,25

Financial problems 2,73

Surviving problems of the company 2,25

Lack of time, information and technical experience are among the obstacles with highest level of influence. The project GBE F could help to decrease the influence of these obstacles.

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All questioned companies have replied positively to the question concerning their desire to take part in the events, organized by the GBE F Project.

Conclusions

This survey conducted in chemical SMEs in Bulgaria was quite successful and it has aroused rather high interest among the sector enterprises. Rich information has been gathered and analyzed concerning the SMEs’ state and attitude towards the efficient use of RES.

Data have been used of 42 companies from the chemical industry – small and medium-sized of various subsectors: rubber, pharmaceutics, plastics, paints, organic and inorganic chemicals, polymers and other. The analysis enables assessment of the interest of the sector in the use of RES. Around 11% of the companies are from the region of Stara Zagora, which gives opportunity to project the results of this analysis onto this region.

Around 22% of the companies have considerable energy consumption – over 20% of the overall production costs and the application of RES to cover these costs or part of them would contribute to increasing the share of green energy in the industry of Bulgaria.

Around 40% of the total consumption of energy is electric, and around 14 % of the liquid fuels – energy carrier of high impact on the greenhouse gas emissions. Enterprises using liquid fuels are serious potential candidates for GBE factories leading to improved competitiveness and decreased greenhouse gas emissions.

Heating and domestic hot water in SMEs are used in the range of 38-44% of the total consumption of heat energy – types of consumers with special priority for the GBE Factory project.

Around 24% of the total consumption of electricity is used for heating and cooling – types of consumers with special priority for the GBE Factory project.

Only 2 of the surveyed companies have been using RES as an energy saving measure, resources and environmental impact during the last three years. The assessments of the introduction of RES are positive. Other 7 companies are planning to introduce RES, and 5 – cogeneration systems in the next 2-3 years. This is an indication of the growing interest in the green industry and readiness for long-term oriented investments.

As a whole, the companies evaluate positively the extent of their awareness as well as the services offered by suppliers of RES.

The obstacles mentioned for the implementation of energy efficiency measures relate in practice unambiguously (and in most cases – to the largest extent) also to the use of RES in companies. Among the impediments mostly mentioned is the lack of specific information (technical, expert best practice related, etc). The tasks of the GBE Factory project are meant to surmount these barriers largely.

All companies show interest and willingness to participate in the activities organized under the project.

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4.2 Survey of commercial centers One of the project target groups are the commercial centers buildings. Survey has been conducted encompassing 10 commercial centers close by size and functions located on the country’s territory. The following data have been compiled and processed:

Areas used Types of energy carriers used Energy balances Specificity of the construction from the viewpoint of capabilities for solar panels

installment and other.

Data of this survey have been show in Appendix (available only in Bulgarian language upon request). The average results of the collected data processing have been put forward in the following table.

Table Commercial centers – average data

Type of the factory Commercial center

Allocation : All country Heating surface 5 147 m2 Energy balance kWh kWh/m2 % Electricity 539 290 104,77 78,15% Heat energy 150 764 29,29 21,85%

Total 690 054 134,06 100,00% Balance by consumers kWh kWh/m2 % Heating 113 451 22,04 16,44% Cooling 37 313 7,25 5,41% DHW 5 750 1,12 0,83% Pumps, compressors, ventilators 91 429 17,76 13,25% Other – specific technologies related 442 111 85,89 64,07%

Total 690 054 134,06 100,00% Possibilities for using of RES Solar panels : Yes Type of the roof: Flat Roof square : 4 289 m2 Shading : No

As seen, the average heating area is over 5000 m2. The commercial centers are significant consumers of electricity – around 78% of the total energy consumption. Heating, ventilation and domestic hot water form a considerable share - around 23% of the total energy consumption. These data show that the commercial centers are serious potential candidate for the GBE Factory.

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4.3 Survey of potential users of bio mass factories The Survey data base has been collected from projects in process of implementation of bio mass boilers for heating and domestic hot water (DHW) - hotels and greenhouses. Detailed analysis of data is presented in Appendix (available only in Bulgarian language upon request).

Aggregated results from the survey comprising 14 hotels are shown in the next table and figures:

Energy consumption of heating energy and domestic hot water Costs of heating energy and DHW, VAT excluded

Diesel fuel Natural gas Electricity Total Diesel fuel Natural gas Electricity Total

No. Name Settlement

(t/year) (МWh/ year)

(1000nm3/ year)

(МWh/ year)

(МWh/ year)

(МWh/ year) (BGN/ year) (BGN/

year) (BGN/ year) (BGN/year)

1 Alexander spa hotel Bansko town 80 924 24 948 176000 2424 178424 2 Samokov hotel Borovetz resort 696 6475 96 6571 582237 9696 591933 3 Devin spa hotel Devin town 107 1236 54 1290 235400 5454 240854 4 Finlandia hotel Pamporovo resort 155 1791 91 1882 341000 9211 350211 5 Gaytani hotel Hisar town 55 635 19 655 121000 1939 122939 6 Piri hotel Bansko town 110 1271 42 1313 242000 4242 246242 7 Zarenitza hotel Narechenski bani village 55 635 22 657 121000 2182 123182 8 Rodopski dom hotel Chepelare town 86 993 43 1037 189200 4363 193563 9 Al Max hotel Blagoevgrad town 70 809 26 835 154000 2666 156666

10 Edelweiss hotel Bansko town 66 762 34 796 145200 3394 148594 11 Borovets hotel Borovetz resort 545 5070 50 5121 343350 5090 348440 12 Alpin hotel Borovetz resort 390 3628 43 3671 245700 4363 250063 13 Rila hotel Borovetz resort 620 5768 53 5821 390600 5333 395933 14 Kamengrad hotel Panagyurishte town 50 578 16 594 110000 1616 111616

Total: 834 9635 2251 20941 614 31189 1834800 1561887 61974 3458661

The total amount of energy used for heating and DHW is about 31 200 MWh/year. 53% from all energy costs are for the expensive diesel fuel.

28

29

The basic results from the projects in progress are shown in the next Table:

Consumption of heating energy and

DHW

Costs of heating energy and DHW

Consumption of wood chips

Costs of heating chips and BHW, no VAT included

Costs of electricity for

own use Economies Investments, no

VAT Pay-back period

No. Name

(МWh/year) (BGN/year) (t/year) (BGN/year) (BGN/year) (BGN/year) (BGN) (year) 1 Alexander spa hotel 948 178424 413 49578 1939 126906 426684 3,4 2 Samokov hotel 6571 591933 2863 343574 7757 240602 792445 3,3 3 Devin spa hotel 1290 240854 562 67456 4363 169035 580544 3,4 4 Finlandia hotel 1882 350211 820 98395 7369 244447 846814 3,5 5 Gaytani hotel 655 122939 285 34226 1551 87162 294560 3,4 6 Piri hotel 1313 246242 572 68641 3394 174208 551357 3,2 7 Zarenitza hotel 657 123182 286 34352 1745 87085 269361 3,1 8 Rodopski dom hotel 1037 193563 452 54207 3491 135866 414680 3,1 9 Al Max hotel 835 156666 364 43663 2133 110870 392479 3,5 10 Edelweiss hotel 796 148594 347 41624 2715 104255 345487 3,3 11 Borovets hotel 5121 348440 2231 267739 4072 76629 358436 4,7 12 Alpin hotel 3671 250063 1600 191966 3491 54607 242309 4,4 13 Rila hotel 5821 395933 2536 304347 4266 87320 395803 4,5 14 Kamengrad hotel 594 111616 259 31039 1293 79284 290872 3,7

Total: 31189 3458661 13590 1630807 49579 1778275 6201830 3,6

The total expected cost savings are about 1 780 thousand BGN and the average pay-back period is about 3,6 years. The projects could contribute to CO2 reduction of about 7590 t/year.

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The next table and figures show the aggregated results of the survey comprising 10 greenhouses:

Consumption of heating energy Costs of heating energy, no VAT included

Diesel fuel Natural gas Electricity Total Diesel fuel Natural gas Electricity Total No. Name Settlement

(t/ year)

(МWh/ year)

(1000nm3 /year)

(МWh/ year) (МWh/year) (МWh/year) (BGN/year) (BGN/year) (BGN/

year) (BGN /year)

1 Odessostroy OOD Varna city 182 2103 12 2115 400400 1260 401660 2 MTJ OOD Berkovitsa town 90 1040 13 1052 198000 1285 199285 3 Eurogreen EOOD Pavlikeni town 154 1779 12 1791 338800 1212 340012 4 K-RB EOOD Novi Pazar town 111 1282 14 1296 244200 1406 245606 5 PIVI OOD Razgrad town 83 959 12 971 182600 1260 183860 6 Bulgartzvet EO AD Elin Pelin town 190 2195 13 2208 418000 1333 419333 7 Navona OOD Parvomay town 540 5024 13 5037 340200 1357 341557 8 Bulcom plus OOD Plovdiv city 710 6605 14 6619 447300 1382 448682 9 ET Angel Peychev Pazardjik town 730 6791 14 6805 459900 1406 461306 10 GCN OOD Perushtitsa town 485 4512 12 4524 305550 1212 306762

Total: 810 9357 2465 22932 130 32419 1782000 1552950 13114 3348064

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The total amount of energy used for heating and DHW is about 32 400 MWh/year. 53% from all energy costs are for the expensive diesel fuel.

The following table shows the basic results of the projects in progress:

Consumption of heating energy

Costs of heating energy

Consumption of wood chips

Costs of chips for heating, no VAT included

Costs of electricity for

own use Economies Investments, no

VAT invluded Pay-back period

No. Name

(МWh/year) (BGN/year) (t/year) (BGN/year) (BGN/year) (BGN/year) (BGN) (year) 1 Odessostroy OOD 2115 401660 922 110588 1134 289938 930601 3,2 2 MTJ OOD 1052 199285 459 55029 1156 143100 484117 3,4 3 Eurogreen EOOD 1791 340012 780 93650 1091 245271 850752 3,5 4 K-RB EOOD 1296 245606 565 67777 1265 176564 570340 3,2 5 PIVI OOD 971 183860 423 50788 1134 131938 427382 3,2 6 Bulgartzvet EO AD 2208 419333 962 115458 1200 302675 971582 3,2 7 Navona OOD 5037 341557 2195 263374 1222 76961 357629 4,6 8 Bulcom plus OOD 6619 448682 2884 346080 1244 101358 509646 5,0 9 ET Angel Peychev 6805 461306 2965 355821 1265 104220 530796 5,1 10 GCN OOD 4524 306762 1971 236545 1091 69126 298579 4,3

Total: 32419 3348064 14126 1695111 11802 1641151 5931425 3,9

The total expected cost savings are about 1 640 thousand BGN and the average pay-back period is about 3,9 years. The projects could contribute to CO2 reduction of about 7626 t/year.

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4.4 Municipal programmes stimulating the use of RES for the period 2010-2015 in the Stara Zagora region – summary analysis

Macroeconomic tendencies for the Stara Zagora region

The values of major macroeconomic indicators in the period 2005 -2008 outline parallel positive tendencies of change: INDICATORS

Bulgaria 2005 2008 CHANGE GDP – mln. BGN 42797 56520 +32,1% GDP/person - BGN 5529 7379 +33,5% Revenue from sales - mln. BGN 123110 209257 +70,0%

Fixed assets - mln. BGN 49552 97287 +96,3% Enterprises - No 252519 307831 +21,9% Employed persons - No. 1945492 2266485 +16,5%

Stara Zagora region 2005 2008 CHANGE

GDP – mln. BGN 2157 2489 +15,4% GDP/person - BGN 5974 6971 +16,7% Revenue from sales - mln. BGN 5043 7376 +46,3% Fixed assets - mln. BGN 2619 5247 +100,3% Enterprises - No 11564 12913 +11,7% Employed persons - No. 94910 102436 +7,9% Summarized characteristics of the municipalities in the region Stara

Zagora Radnevo Kazanlak Galabovo P.

Bania Chirpan Gurkovo Bratia

Daskalovi Maglij Opan Nikolaevo

2005 54,3% 18,9% 12,6% 10,1% 1,4%

1,2%

0,5% 0,4% 0,2%

0,2%

0,1%

2008 58,5% 16,5% 11,9% 8,0% 1,2%

1,9%

0,5% 0,3% 0,3%

0,6%

0,1%

NET REVENUES BY SECTOR Share

Trade and repair of motor vehicles 35,1% Processing industry 22,4% Energy and gaseous fuels 14,0% Construction 11,9% Extractive industry 5,4% Agriculture, forestry and fishing 3,0% Other of the third sector 8,3% Source: National statistics institute – current data

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Goals the objectives of the Stara Zagora region by 2013 are as follows: Share of RES in the final energy consumption 9,0% Improvement of the energy efficiency 8,0% Decrease of the energy intensity of the GDP 16,0%

Source: Updated document for the implementation of the regional development strategy of Stara Zagora region 2011-2013.

Approach with the programming preparation Municipal programmes have been developed in the Stara Zagora region to stimulate the use of RES for the period 2010-2015 in the following municipalities:

Stara Zagora Kazanlak Galabovo Gurkovo Nikolaevo Maglij Opan

These documents have been written in the framework of the project „European cooperation for European prosperity” realized with the financial support of the Operational programme “Regional development” 2007-2013 co-financed by the European Union through its European regional development fund. Municipal programmes on encouragement of the RES using – main priorities Priority №1: Reducing the consumption of energy in the municipal sector through the use of RES Objective 1.1: Reducing the consumption of energy in the municipal buildings through the use of RES Expected results: а/ Cutting down the costs of fuels and energy by 5% annually; b/ Reducing the СО2 emissions and delivery of environmental effect by 5 % annually; c/ Improved comfort of inhabitation in the renovated buildings; Investment projects: Total for the 6 municipalities 1.1.1. Installation by 2015 of 55 thermosolar installations for hot water of municipal buildings with all-year using (municipal administration, children and social establishments). 1.1.2. Installation by 2015 of 10 photosolar installations for electricity generation for the municipal sector’s use. 1.1.3. Installation by 2015 of photosolar installations with a power up to 16 MWp, installed on roofs or on recycled surfaces.

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Priority №3: Increasing the using of RES by the local business Objective 3.1: Stimulation of the RES using in companies on the territory of the municipality. Expected results: а/ Reducing the consumption of energy in the industrial sector by 10% by 2015; b/ Reducing the greenhouse gas emissions and delivery of the environmental outcome; c/ Raising the business competitiveness. Investment projects: 3.1.1. Building up 115 thermosolar installations for hot water. 3.1.2. Building up 15 heating installations for biomass. Objective 3.2: Stimulation of businesses and investors canvassing for the building up of large RES installations on the municipal territory. Non-investment activities: 3.2.1. Popularize the RES potential in the municipality, as acknowledged within the framework of a local best practice exchange project stimulating the use of RES in the Stara Zagora region, funded by the “Regional development” Operational Programme. 3.2.2. Popularizing sources of RES projects funding. 3.2.3. Canvassing investors and public-private partnership setting up. Priority № 4: Putting in place an energy management system on the territories of the municipalities, RES inclusive Objective 4.1: Building municipal capacity with personnel specialized in the field of energy efficiency and RES Expected results: а/ Trained municipal managers and specialists to work with the municipal administration in the field of EE and RES. b/ Setting up a municipal unit on EE and RES with skilled specialists to work with it. Non-investment activities: 4.1.1. Carry out training courses for municipal managers and specialists in the field of EE and RES who will work with the municipal administration. Objective 4.2. Mobilization of the public support to the implementation of the energy efficiency programme and the RES programme on the basis of a wide partnership with the business and the civil society organizations. Expected results: а/ Wide public support ensured to the implementation of the municipal programmes on EE and RES. b/ Stable partnership established between the municipal administration, businesses and the citizens.

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c/ Energy management system put in practice on the municipal territory. Non-investment activities: 4.2.1. Preparation and holding a broad awareness-raising campaign among the society and the local business for the purposes of the municipal programmes on energy efficiency and RES, and about the need of partnership between the stakeholders in its realization. 4.2.2. Putting in place a permanent supervision, analysis and assessment of the performance status of the municipal programmes in terms of energy efficiency and renewable energy sources and publication of periodic information. SWOT analysis of the programmes Strengths

o Availability of good potential of RES in the municipality; o Good structured and balanced energy sector; o Good communications and infrastructure; o Political will of the local authority to stimulate the using of RES; o Availability of specialized organizations, companies and specialists at the

municipality for projects development and implementation in the sphere of RES; Weaknesses

o Lack of adequate capacity in the local administration in the sphere of RES; o Lack of sufficient information, motivation and resources with the parties interested

in the use of RES; o Insufficient financial resources for pursuing the local policy in the field of RES.

Opportunities

o European and national legislation stimulating the production and consumption of electricity of RES;

o Availability of national and European programmes for RES use encouragement; o Availability of organizations of companies and specialists in the municipality and

the region having experience in the development and implementation of projects in the field of RES;

o Resource available to attract local and foreign investments o Potential to create new places of work o Potential to preserve the ecology and decrease the carbon emissions

Threats

o Lack of sufficient own resource to put in practice an effective municipal policy encouraging the using of RES and realizing concrete projects;

o Inconsistent national policy in the field of RES influencing the investment interest in the sector;

o Possible future change of the national policy to stimulate the using of RES.

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4.5 Expert assessments An addition to the market analysis of focus groups, expert assessments have been conducted, including questions oriented to the level of development of the market of GBE Factories in Bulgaria. As experts have been involved totally 17 leading specialists and managers in the field of energy, energy efficiency and RES with high qualification, proven experience and active role and positions in Bulgarian energy society. All processed replies are presented in Appendix (available only in Bulgarian language upon request).

The names of the involved experts and the results from their assessments are presented in the following tables and pictures.

No. Name of the expert Company/organization Position

1 D-r Pavel Manchev Center for energy efficiency Eneffect Vice president

2 D-r eng. Borislav Manchev Lintech Co C.E.O. 3 D-r eng. Alexander Vodenicharov Enersyst Bulgaria C.E.O.

4 D-r eng. Borislava Georgieva

Agency of Sustainable Development and Integration - Ecoregions Signore Expert

5 D-r eng. Alexander Penchev ESD Bulgaria Executive Director

6 Prof. eng. Ivan Shishkov, CEM SOFENA Energy Agency President of the Managing Board

7 eng. Alexi Krastev Dalkia Bulgaria Signore Expert

8 Prof. D-r eng. Ilia Iliev EnCon Services Manager

9 Prof. eng. Tsancho Tsanev, CEM Science and Technical Union of Power Engineering President

10 Prof. D-r eng. Kristian Spassov EcoTech Products C.E.O. 11 D-r eng. Ivan Hinovski Bulgarian Energy Forum President

12 Prof. eng. Nikola Stankov, CEM

Association of Energy Engineers (AEE) - Bulgarin Chapter President

13 Prof. D-r eng. Bogdan Ugarchinksi Bulgarian Energy Company President

14 Prof. D-r eng. Svetlana Tsvetkova Technical University - Sofia

Head of Department of Electric Power Supply, Electrical Equipment and Electrical Transport

15 eng. Kostadinka Todorova President Bulgarian association for sustainable energy

16 eng. Ivan Zhelyazkov Kavarna Wind Energy Signore Expert

17 eng. Liyana Adjarova Association of Bulgarian Energy Agencies President

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Please, estimate at 10-points scale (10 - the highest assessment)-

Average assessment

Average Deviation

Standard Deviation

N Questions addressed to 17 experts average avedev stdev.p 1 How do you estimate the prospective for GBE F in the next 3

years using the following types of RES: Photovoltaics 4,88 1,91 2,29 Thermal Sollar Collectors 6,19 2,16 2,40 Wind generators 3,75 2,44 2,77 Biomass for: heat production 7,00 1,63 2,18 electricity production 4,63 2,38 2,57 co generation 5,71 2,08 2,44 Processed wastes and wastes waters heat production 4,75 1,50 1,79 electricity production 4,38 2,09 2,42 co generation 4,94 1,95 2,36 Geothermal energy 4,25 1,66 2,08 2

How do you estimate the prospective for GBE F in the next 3 years functioning in the following sectors:

Chemical industry 4,13 1,30 1,80 Food industry 4,69 1,64 2,05 Metallurgy 3,88 1,86 2,23 Wood processing 6,71 1,49 1,81 Machine building and electronics 3,63 1,70 2,00 Commercial buildings 5,63 1,52 1,90 Other (please, describe) 6,33 1,56 1,70 3

How do you estimate the supply of equipment for GBE F in the Bulgarian market 6,56 1,74 1,94

4 How do you estimate the demand for equipment for GBE F in the Bulgarian market 4,76 1,81 2,04

5 How do you estimate the financial tools for GBE F in the Bulgarian market 4,00 1,29 1,88

6 How do you estimate the level of available information related with GBE F. 3,71 1,25 1,45

7 How do you estimate the level of following obstacles before GBE F

Lack of information 6,29 2,60 2,84 Lack of experts 5,88 1,80 2,14 High payback period of investments 6,41 1,99 2,30 Existing structure of prices for RES 7,50 1,75 2,03 Other priorities: technology innovations, energy efficiency,

etc. 7,50 1,50 1,72

38

0 1 2 3 4 5 6 7 8

How do you estimate the prospective for GBE F in the next 3 years using the following types of RES:

Photovoltaics

Thermal Sollar Collectors

Wind generators

Biomass for:

heat production

electricity production

co generation

Processed wastes and wastes waters

heat production

electricity production

co generation

Geothermal energy

How do you estimate the prospective for GBE F in the next 3 years functioning in the following sectors:

Chemical industry

Food industry

Metallurgy

Wood processing

Machine building and electronics

Commercial buildings

Other (please, describe)

How do you estimate the supply of equipment for GBE F in the Bulgarian market

How do you estimate the demand for equipment for GBE F in the Bulgarian market

How do you estimate the financial tools for GBE F in the Bulgarian market

How do you estimate the level of available information related with GBE F.

How do you estimate the level of following obstacles before GBE F

Lack of information

Lack of experts

High payback period of investments

Existing structure of prices for RES

Other priorities: technology innovations, energy efficiency, etc.

Expert Assessments - Average Values

Conclusions:

Most prospective types of GBE F for Bulgarian market – based on biomass for heat production and thermal solar collectors

Most prospective sectors for implementation of GBE F – wood processing and commercial buildings

The supply of equipment of GBE Factories exceeds the demand The level of information for GBE Factories in not enough The existing structure of prices for energy from RES in Bulgaria and the existence of

other priorities for SMEs are among the main obstacles before GBE Factories.

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4.6 Survey of enterprises in Bulgaria In processing phase