Western Balkan Power Sector - About

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Brief Description of the Project

The regional project "Green Agenda: Decarbonization of the Electricity Sector in the Western Balkans" is funded by the German Federal Ministry for Economic Cooperation and Development and implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit und Entwicklung (GIZ) GmbH over a period of three years between 11/2022 and 10/2025.

The project generally aims to strengthen power sector key actors’ confidence in the feasibility of an energy transition based on renewable energies. It is assumed that an increase of respective confidence translates into the project objective, i.e. "increased demand for technological, regulatory and personnel solutions for an ecologically sustainable and climate-friendly energy transition." As a regional project, the focus is on providing fundamental knowledge that is of equal importance for as many as possible of the Western Balkan (WB) countries. The transfer of this non-country specific knowledge on energy transition shall accelerate the demand for country-specific further elaboration, detailing and implementation of solutions. Corresponding in-depth support should subsequently be provided by other projects of the development partners’ community, especially within the framework of specific bilateral development measures.

The project focuses on building competencies and providing up-to-date knowledge on innovative technological solutions for the electricity sector in the Western Balkans and on improving the regulatory framework for an increased use of renewable energy. In addition, the project aims to create the basic awareness for the need to establish appropriate education and training opportunities for a RE-based energy transition among the relevant organizations. Thus, the project consists of the following three components:

1. Familiarizing grid operators and, to a lesser extent, national ministries with solutions for handling large shares of variable RE, mainly through trainings and workshops, e.g. on RE generation forecasting or digital automation especially at the distribution grid level;
2. Familiarizing ministries and regulators and, to a lesser extent, grid operators with regulatory options to design conducive framework conditions for the transition to renewable energy;
3. Advising vocational education and training organisations on the opportunities, needs and content requirements of vocational education and training for a RE-based energy transition.

Thus, at the working level, the main partners of the project include grid operators, regulatory authorities and national ministries responsible for energy as well as networks and organisations of vocational education and training in the Western Balkan region. Wherever possible, workshops and training events shall be organized regionally and in cooperation with the Energy Community (EnC), or coinciding with the meetings of the corresponding thematic and sub-sector-specific EnC working groups. This underlines the project’s regional approach, reduces travel requirements, and ensures efficient use of time both on the sides of the project and its partners.

Background

In the Sofia Declaration on the adoption of the Green Agenda for the Western Balkans (GAWB), the WB 6 committed to full climate neutrality by 2050. With the exception of Albania, whose electricity is derived mainly from hydropower, WB countries will need to replace around 50% of their electricity generation capacity by 2030. Excluding Albania, the average CO2 intensity of the power sector is more than five times higher than EU average. As such, the decarbonization of the electricity sector, which is about 70% reliant on coal, is of key importance for achieving the objectives of the GAWB as well as for the coupling to the EU energy market.

Some of the youngest coal-fired power plants were built in 1988, before the break-up of Yugoslavia; most were built more than 40 years ago. Given their poor technical condition and lack of modernization, they are particularly dirty air polluters that violate the protection of human and fauna habitats. The WB power plant fleet is being operated at wear and tear, and many of the adjacent coal mines are in poor condition. Expensive imported electricity (i.e. for peak balancing) is now being used to compensate for the increasing failure, not only of coal-fired power generation, but also of hydropower resulting from shifts in precipitation patterns.

Following the collapse of the former Yugoslavia, deeply ingrained lines of conflict between countries and ethnic groups in the Western Balkans continue to threaten stability and peace in the region. Energy policy is commonly at heart of political power games. It remains a challenge to devise and implement common solutions.

Positive potential for development results from the collective WB’s desire for EU accession, as well as from the common treaties of the EnC and from jointly formulated positions and goals, such as the GAWB. The development of the National and Energy Climate Plans is progressing, as is the transposition of EU directives into national law. Corresponding adjustments to the regulatory framework, for example with respect to RE tendering procedures, are already yielding initial successes in the form of the construction of large wind and solar power plants, which have become competitive with fossil power generation. The number of small-scale autoproducers or prosumers in the WB rose from 105 to 911 in 2021. Now that the basic provisions of the EU directives on self-consumption and citizen energy have been adopted, a rapid increase in interest from households, trade and commerce is to be expected in this market segment.

This confronts grid operators with numerous technical and conceptual questions regarding expansion planning and, above all, the operation of the grid infrastructure, which is still poorly been digitised as yet. For example, faced by a large number of requests for grid connection, there is little knowledge how to forecast the yields of future wind and solar plants, nor how to determine the absorption capacity or the needs for grid-expansion. While the ministries and regulatory authorities responsible for energy receive support in transposing EU regulation into national laws, problems often arise at subordinate levels when it comes to developing appropriate requirements, regulations and rules for implementation, as well as the streamlining of permit procedures.

The WB energy transition goes hand in hand with the decentralisation of power generation infrastructure and resulting increase in the diversity of actors, higher employment and broader participation. The available electricity varies depending on the sun and the wind. Power grids require new operating routines, technologies and know-how while grid operators are not sufficiently familiar with methodological and technological solutions that ensure the safe and reliable grid integration of large shares of RE. Coordination and regulatory requirements are increasing while ministries and regulators are not sufficiently familiar with options for shaping conducive framework conditions. Also the need for skilled employees for the transition to RE increases while most of those responsible for the sector seem unaware of vocational education and training for the energy transition as either an opportunity or a challenge for the labour market. Yet, vocational training organisations are insufficiently familiar with the opportunities, needs and content requirements of education and training for the energy transition. The extent of these challenges prompts reservations and uncertainty about the transition to RE and causes key actors in the power sector to hesitate. Lack of confidence in the feasibility of an energy transition based on RE is slowing down decarbonization efforts.