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Bulgaria: Sofia District Heating
(Prototype Carbon Fund)

Project Photo 1
This project is designed to rehabilitate and modernize the heating system of the Bulgarian capital Sofia. As many cities in central and eastern Europe, Sofia has a centralized heating system whereby heat is produced at four centralized sites and piped to industrial and residential customers. With the passage of time and lack of investment capital, the system was falling into disrepair. In addition, with the absence of proper metering at the customer level, many households were required to pay for heat they did not consume, while others were getting a free ride. As a result, large numbers of households decided to physically disconnect themselves from the system. These disconnections compounded the cash revenue problems of the district heating company “Toplofikacia Sofia”. Nevertheless district heating is the most economical way to provide heat to a high-density urban area.

The year 2000 saw significant improvements in the Sofia district heating system, including tariff increases, which are helping to improve Toplofikacia Sofia’s financial situation; the elimination of disconnections from the district heating system; an increase in demand-side measures through metering of consumption; and the rehabilitation of some sub-stations.

The Project

Then, in 2003, with the support of loans from the International Bank for Reconstruction and Development (IBRD), the European Bank for Reconstruction and Development, a grant from the Kozlodui International Decommissioning Support Fund from the European Union and the PHARE Program, also funded by the European Union, and using its own resources, Toplofikacia Sofia launched the implementation of the three-year District Heating Rehabilitation Project. The overall investment program is expected to improve Toplofikacia Sofia’s efficiency and encourage consumers currently using other forms of heat to switch back to district heating. This change will enhance Toplofikacia Sofia’s financial position and contribute to greenhouse gas emission reductions.

The investment program will rehabilitate both the network and substations. Specifically, the project will replace about 60 km of outdated heat transmission pipelines, mainly in areas that use pipes that are laid in foam concrete channels and that are prone to high leaks and breaks. Network interconnection between the four heating zones will also be strengthened to optimize the heat supply, making it possible to maximize the use of the combined heat and power boilers, while the heat-only boilers will be used for reserve and peaking capacity only. Further, the rehabilitation will support the transfer of the present constant flow operation to variable operation mode through improvements in the heat sources. This use of variable flow pumping will reduce operational costs. Finally, 7,000 substations in residential buildings in Sofia will be replaced.

Project Photo 2
As the project is implemented it will save greenhouse emissions through the efficiency gains stemming from improved heat exchangers and better control systems at substations, reductions in heat and water losses in the pipeline distribution system, improved interconnectivity among the four zones in the Sofia district heat transmission system, and installation of variable-frequency pump drive systems at the main transmission lines at the various district heat plants. All these efficiency gains lead to lower consumption of fossil fuels and thus lower CO2 emissions. The ERPA signed July 8, 2004 by the IBRD and Toplofikacia Sofia provides for 1,084,000 tCO2e to be purchased by the PCF over 9 years (2004-2012). About half of the emission reductions are expected before 2008 and half between 2008 and 2012. The emission reductions expected between 2008 and 2012 would be delivered to PCF Participants as Emission Reduction Units, while the emission reductions before 2008 would lead to the transfer of an equivalent number of Assigned Amount Units under a scheme currently being designed by the Bulgarian government, with support from the World Bank, designed to green revenues of AAU sales, i.e. reinvest in climate-friendly projects the sales proceeds of excess emission quotas by Bulgaria to other Annex I countries in need of credits to meet their obligations under the Kyoto Protocol.

The baseline study and monitoring plan were drafted by the engineering consulting firm Nexant, with close support from World Bank staff. The project was validated by TÜV Süddeutschland, a firm with Designated Operational Entity status, and approved by the Minister of Environment and Water on June 22, 2004 based on the review of the national Steering Committee on Climate change.

The project is envisaged as Joint Implementation project and is the second PCF project in Bulgaria, a country which has also signed a Host Country Agreement with the IBRD.

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