The countries of the Western Balkans are taking their first steps in the energy transition. And if we are witnessing these days several important commitments made by the electric utilities and governments of the region, such as the introduction of internal calculations of CO2 emissions, the halt of the construction of a coal-fired power plant or facilitating investment in renewable energy by providing a new regulatory framework, there is still a long way to go to tackle the problem more seriously. On this route, a project implemented by Agora Energiewende will support regional governments in developing strategies and plans for phasing out coal, increasing the share of renewable energies and identifying sources of funding. .

A new project by Agora Energiewende which was recently launched in partnership with local partners ASOR from Serbia, INDEP from Kosovo *, RESET from Bosnia and Herzegovina, and the consultancies enervis and IEEFA, aims to support the authorities of the Western Balkans in the conduct of the transition in the electricity sector from lignite phasing out towards an in-depth deployment of renewable energies.

The project entitled “Western Balkans energy transition – towards a green deal for the Balkans»Is a regional project of the German think tank implemented under the umbrella project “On the path to the Green Deal for the Balkans: supporting the transition of the electricity sector to renewable energies in the Western Balkans”.

“The region has seen some bold moves in recent months and weeks,” according to Sonja Risteska, project manager for SEE at Agora Energiewende. “The public service of North Macedonia Elektrani na Severna Makedonija (ESM) announced the introduction of internal carbon pricing, it is the counterpart of Bosnia and Herzegovina – EPBiH decided to do the same, but also to cut jobs in ailing coal mines, while Serbia has decided to stop construction of the coal-fired power plant – Kolubara B, ”explained Risteska.

Governments in the region are also finalizing their National Energy and Climate Plans (PNECs), as power companies begin to announce large renewable energy projects.

Announcing its plans to support the region in achieving the Green Deal in the energy sector, Agora Energiewende and its partners will work in a year and a half on:

• Inform governments on strategies for phasing out coal and replacing coal with renewable energies;
• Demonstrate the economic feasibility and energy security of an electricity system based on renewable energies, while limiting the use of fossil gas;
• Determine electricity storage needs in addition to the construction of variable renewable energies;
• Present the financial opportunities of the EU Green Deal framework for the Western Balkans;
• Provide an evidence base for informed decisions that lead to more ambitious renewable energy policies and trigger a controlled decline of coal;
• Contribute to a regional dialogue on the challenges and opportunities of the transition from coal to renewable energies.

Building new lignite plants is not financially viable under any form of carbon pricing

In its activities, Agora Energiewende intends to use the results of the 2040 lignite phase-out study which has developed robust scenarios for lignite phase-out in the Western Balkans region, both cost-effective and ensuring the security of supply. The study is produced as part of the project called The future of lignite in the Western Balkans, implemented in 2020.

As a reminder, the electricity system in the Western Balkans is mainly based on lignite units where 90% are over 30 years old and 40% are even over 40 years old (graph 1), it is therefore urgent to review their energy strategies.

The study shows that the construction of new lignite plants is not financially viable under any form of carbon pricing (Figure 2) and that a gradual and planned phase-out of lignite based on the deployment of wind and photovoltaic energy in WB-6 countries, the integration of the regional electricity market, and limited investment in gas plants ensure security of supply, said Risteska.
The expansion of renewables helps maintain the region’s electricity export position while relying on lignite would create import dependency for the energy sector.

Investments in the event of a lignite exit until 2050 amount to around 38 to 40 billion euros, double the amount compared to when countries expand the use of lignite. This level of investment activity in the event of lignite exit also indicates increased business activity, growth and employment potential across the Western Balkan region, she added.

Strengthen the factual dialogue on energy planning in the energy transition

“The objective of the project is to support a factual dialogue on energy planning and the political environment for energy transition in the Western Balkans and to create a space for making inclusive alliances of local, national and regional authorities with the objective of the end result is a carbon-free electricity system for the whole of the Western Balkans, ”she said.

Activities under the project will also add to the EU’s Green Agenda for the Western Balkans by informing the debate on two key aspects of the process:

• financing the transition from coal to cleanliness and
• the technical feasibility of an accelerated coal phase-out while being mindful of the risk that stranded countries’ assets will build additional gas infrastructure that risks another fossil fuel foreclosure.

“We will show concretely what an electricity system in the Western Balkans that does not use fossil fuels can look like. We will also support WB-6 decision-makers by translating various EU policy initiatives into the local context, for example the expected European Commission proposal to introduce a carbon border adjustment mechanism that puts a price on CO2-intensive energy exports from the region to EU countries, ”said a representative of one of the leading think tanks on energy transition in Europe.

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