COMPETITIVE DISTRICT HEATING L.GEORGIEVA BULGARIA

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COMPETITIVE DISTRICT HEATINGL.GEORGIEVABULGARI
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WHAT WAS DONE

• Energy prices in line with the justified
  economic costs and phasing
• Financial recovering and establishment of energy
  companies operating on a commercial bases
• Property functioning regulatory authorities and
  mechanisms
• Market rules and structures

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Strategy

• A review of the governmental role in the
  provision of energy services
• Reforms with the main goal of deregulation -
  replacement of regulation with competition
• BENEFITS- economic (cost minimization) and social
  (shift of savings to end prices)

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Strategy

• Strategy Document
• Contents of this document
• -district heating sector status
• -reforms - financial restructuring, institutional
  changes, deregulation, legal changes,
  privatization

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Pricing policy

• Medium- term priorities
• Reduction and phasing out of subsidies for energy
• Introduction of regulatory rules for setting
  energy prices - electricity, heat and natural gas
• Indicative schedule for the increase in
  electricity prices for the household sector

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Pricing policy

• Schedule for the increase in heat prices for
  household purposes
• Block Tariff for heat
• Implementation of measures for improved
  efficiency (substation and individual metering
  and controlling devices)
• To keep the bills at the current level

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Pricing policy

• Prices are controlled by the State Energy and
  Water Regulation Commission.
• They are proposed by the Energy Production and
  Distribution Facilities and, after revision and
  correction of the expenses, and following the
  procedure of public discussions, a decision for
  their approval is taken.

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District heating

• District heating is the most cost effective and
  environmentally friendly option for densely
  populated areas
• It should be provide by flexible and cost
  effective systems whose development and
  introduction is a strategic objective
• Competitiveness

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Alternatives

• The local fired heating plants and the direct
  burning of natural gas is a serious alternative
  to district heating
• The new gas networks is not competitive if
  compared with the already constructed district
  heating network

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Alternatives

• Investments in construction of distribution
  networks for low pressure gas and the costs of
  their maintenance make the cost per heat unit
  significantly higher than are the costs of the
  existing district heating network are modernized
  

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Alternatives

• Electricity was an acceptable alternative for the
  consumers disconnected from the district heating
  system.
• Due to the price, today the electricity is not
  acceptable alternative, especially for
  multi-family houses.

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• The preparation of financial recovering plans for
  the selected companies has shown, that reducing
  the heat consumption of the final consumer is a
  matter of survival for the district heating
  companies.
• This was one important step to make the cost of
  heating affordable and competitive.
• Basically, this can be supported by installing
  efficient heat regulators (such as thermostatic
  valves) and cost allocation.

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Economic analysis of district heating
rehabilitation

• DH Companies had to perform cost-benefit
  analyses of investment programs to support the
  financial recovery of DH systems and to
  demonstrate an efficient district heating system
• Two cities, Sofia and Pernik are under
  implementation the investment programs with loans
  by the EBRD and the World Bank.

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• Network rehabilitation in Sofia-36 km of pipes,
  valves and compensators, variable flow pumps
• Sub-station - about 8 000 -installation of
  regulators and equipment
• This was one important step to make the cost of
  heating affordable and competitive.

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EU Directives

• Promotion of Combined heat and power production -
  high efficiency cogeneration
• new initiatives - a directive on heat from
  renewable source and energy services
• EU requirements on technical institutions