Bulgaria’s Recovery and Resilience Plan (RRP) aims to facilitate economic and social recovery from the COVID-19 crisis and to create a more sustainable, equitable, and successful economy. It includes a set of schemes not only to restore the economy's growth potential but to boost it, too. In achieving this, several construction projects to increase energy efficiency and decrease CO2 impact are to be implemented in 2023-2026, says Anita Dangova at EPI, EECFA’s Bulgarian research institute.
The EECFA (Eastern European Construction Forecasting Association) conducts research on the construction markets of 8 Eastern-European countries, including Bulgaria.
How the RRP will impact housing construction
One of the major projects provides support for sustainable energy-efficient renovation of the housing stock since, currently, only 7% of the floor area of occupied residential buildings complies with modern energy efficiency (EE) requirements. The project, to be launched by end-2022 with an implementation period till 2026, will attract a total of €607 million under the Recovery and Resilience Facility (RRF). Multi-family residential buildings will be eligible for financing nationwide and renovated units have to achieve 30% primary energy savings. Residential buildings to be financed under this scheme are divided into two groups depending on the time of application of owners' associations:
Another project with an implementation period till 2025 is dubbed “Program for the financing of single renewable energy measures in single-family and multi-family buildings”. Total planned funding is €123 million (€72 million from the RRP and €51 million in the form of national and private co-financing). The project aims to increase the use of renewable energy in final energy consumption in households by financing new solar systems for domestic hot water and photovoltaic systems. There are two measures:
How non-residential construction will benefit from the RRP
One of the projects finances - between 2022 and 2026 - the sustainable energy renovation of non-residential buildings owned by municipalities and national authorities (regional administrations, ministries); the Bulgarian Academy of Sciences; public-private partnerships for buildings in the field of production, trade and services; non-profit legal entities, municipal enterprises, and commercial companies. The project consists of two components: 1) €189 million (without VAT) to public buildings; 2) €120 million (without VAT) for manufacturing, commercial and service buildings.
Other non-residential projects worth mentioning under the RRP (both with an implementation period until 2026):
RRP schemes in civil engineering
There are three projects in the subsector:
There are two reforms to be finalized by 2026 (to digitalize the construction sector in general):
Risks to implementing RRP projects
These projects might face certain bottlenecks due to insufficient administrative capacity or the short period of implementation given the accumulated major delays. Construction-related projects under the RRP should have been in implementation since 2021 or early 2022, but now they are realistically to commence no sooner than early 2023.
In the field of renovation of residential buildings with public funds, potential risks might come if the lessons from previous programs are not learned when there have been numerous reports of poor-quality construction works, lack of monitoring in the selection of subcontractors, and the absence of clear indicators for energy efficiency, among others.
On top of that, the scale and size of these projects could also be negatively impacted by rising inflation and the hike in construction material prices, as well as steadily increasing labour costs.
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