Bulgaria has failed to prepare projects in the energy sector to secure EU funding through the Modernization Fund.
This is a special instrument for ten low-income EU member states that will support projects until 2030. However, Bulgaria and Latvia missed the first application deadline at the end of 2021, when the Fund provided almost 900 million euros for eight beneficiary countries. The funds were allocated to the Czech Republic (320 million euros), Estonia (26 million), Croatia (2 million), Hungary (34 million), Lithuania (28 million), Poland (346 million), Romania (23 million) and Slovakia (120 million euros). Because it missed the deadline, Bulgaria should now receive close to 6 % of the fund’s total assets, or around 16 million euros.
The majority of the funds of the Modernization Fund (at least 70 %) should be invested in priority areas, such as: production and use of electricity from renewable sources; improving energy efficiency (including transport, buildings, agriculture, waste); energy supply; modernization of energy networks (including district heating and electricity transmission networks, increasing interconnections between EU member states) and supporting a fair transition in coal-dependent regions.
All investments that are qualified but do not fall into the priority areas are considered “non-priority investments”. The Modernization Fund can cover up to 70 % of non-priority investment costs, as long as the remaining costs are financed from private sources. The Fund will not finance investments involving solid fossil fuels unless they relate to efficient and sustainable district heating in Bulgaria and Romania (member states with GDP per capita below 30 % of the 2013 EU average). This means that funds could be provided for the modernization of the Sofia district heating system, so that Toplofikatsiya Sofia could stop incurring losses.