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The energy sector in Southeast Europe faces a unique dual transition, a challenge without any precedent in the field of energy: transition from a centralised state-controlled system to open and competitive markets, and transition towards decarbonisation. For that reason, the countries of Southeast Europe are a part of the Energy Community, which aims at extending the EU internal energy market rules and principles to countries in Southeast Europe, provides a clear policy framework for transition to green, clean and renewable energy.[1] Southeast Europe economies constitute 25% of total energy consumption in the Energy Community and will most probably grew by about 25% over the period up to 2030[2]. The region, which has a significant transformation potential towards a low carbon energy system, is characterised by the following trends:
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- The current share of renewable energy of gross final energy consumption in the Southeast Europe six is 28%. The renewable energy mix almost exclusively consists of biomass and hydropower. Besides further increase of biomass, significant growth can also be expected in wind and solar power;
- There is a limited variance in the fundamental costs of renewable power generation across the Southeast Europe six. There are significant variations in resource availability within each country, and cost of capital is strongly influenced by differences in renewable energy support schemes[3];
- An increased uptake of renewable energies is aggravated by regulated electricity prices for final consumers, which are substantially lower than current costs of electricity generation;
- Integration of renewable energies into the grid in the region will benefit from stronger interconnectivity. Recent and ongoing investments into national transmission networks and interconnectors will facilitate this development.
- Energy poverty and the widespread use of inefficient individual biomass installations for residential heating represents key barriers for increasing the efficiency of biomass usage in the heating sector. More than 50% of current biomass use takes places in the building sector, often using traditional stoves. The transition to district heating plants or efficient biomass boilers in the building sector could lead to major savings, but still hampered by energy poverty and a limited availability of district heating;
- As noted by CASE[4], the Southeast Europe still continues to invest in substandard and CO2-intensive coal plants (over the last five years, at least nine new lignite power plants have been planned to build across the region, along with over 1.2 billion EUR of coal subsidies).
Political agenda and legal framework
Challenge | Solutions | Actors | Implementation |
· Difficult to pursue regional approach as there is a difference in legal and administrative systems across the Southeast Europe (SEE) | · Introducing the EU’s acquis to harmonise legal and administrative framework in SEE | · National governments · Political parties · European Union | · Working group on governmental level to ensure the process of harmonisation of the EU acquis. |
· Gap between theory (legislature) and practice (enforcement). | · Search for best practices across the EU member states that faced similar problems. | · National governments · Political parties · Relevant ministries and national agencies · European Union | · Establish a platform of best practices across the EU regarding the legislative enforcement in energy field · Working group within Energy Community that is dedicated to the legislative issues and challenges of enforcement in practice |
· Political resistance in building alternative energy plants (e.g. hydropower) | · Raising awareness campaigns of the environmental importance of alternative energy plants · Revisiting the educational curricula’s and introducing the purpose and logic of alternative energy plants | · National governments · Political parties · Civil society actors · Schools · European Union · Media outlets | · Finance bottom-up projects within EU programmes that tackle the issue of resistance of alternative energy plants · Finance projects in schools that aim at introducing complementary content within the existing courses · Facilitate a political fora on the EU level on the importance of alternative energy and strategies to disseminate such content to the domestic electoral constituency |
Technology and market
Challenge | Solutions | Actors | Implementation |
· Energy poverty | · Reducing final price of energy while introducing alternative and sustainable energy solutions | · National governments · EU · Private and public companies · Households | · Introducing subsidies within the national and EU programmes for households |
· Lack of centralised heating systems | · Gasification of central heating systems | · National governments · EU · Private and public companies · Relevant ministries · European Investment Bank and European Bank for Reconstruction and Development | · Financing projects of gasification via EU funds with national participation |
· Small share of renewable energy in gross final energy consumption (28%) | · Introduce alternative power plants (e.g. hydropower, solar, wind) | · National governments · EU · Private and public companies · European Investment Bank and European Bank for Reconstruction and Development | · Working group within Energy Community to prepare needs assessment for the Southeast Europe in order to prepare a comprehensive investment plan that will be co-financed by governments, banks and EU |
· Investment in substandard and CO2-intensive coal plants | · Replacement of coal with gas | · National governments · EU · Private and public companies European Investment Bank and European Bank for Reconstruction and Development | · Financing projects of de-coalisation of gross final energy consumption · Introducing subsidies and other tax incentives for companies that replace the use of coal for their activities with alternative solutions |
[1] Western Balkans Investment Framework. (2019). Investing Clean Energy in the Western Balkans. Available at https://wbif.eu/news-details/new-wbif-publication-investing-clean-energy-western-balkans.
[2] DG NEAR. (2018). Renewable energy status and developments in the Western Balkans Six. Available at: https://ec.europa.eu/energy/sites/ener/files/documents/renewable_energy_in_the_western_balkans_6_ipf_interim_observations.pdf.
[3] For example, hydroelectic power represents 61% of total power production in Montenegro, while the number in Bosnia and Herzegovina stands at 37% and in Kosovo only 2,3%. Available at: https://medium.com/@CASEresearch/sustainable-energy-transition-in-the-western-balkans-why-hydropower-is-not-a-solution-840a086afd0d.
[4] Karunska, K. (2019). Sustainable Energy Transition in the Western Balkans: Why Hydropower is not a solution? Available at: https://medium.com/@CASEresearch/sustainable-energy-transition-in-the-western-balkans-why-hydropower-is-not-a-solution-840a086afd0d.
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