BRINGINGEUROPE AND THIRDCOUNTRIES CLOSER

TOGETHER THROUGHRENEWABLEENERGIES

Report: D4.3 Prospects for the use of the renewable energy cooperation mechanisms

by the Western Balkan countries

Brussels, 19.12.2014

Andreas Tuerk, JOANNEUM RESEARCH,

Robert Pascicko, Zoran Kordic UNDP

Reports

• Report: D4.1: Report on Power System Inventory and

Status of RES(-E) Deployment in the Balkans

• Report: D4.2: Future Prospects for Renewable Energy

sources in the West Balkan countries

• Report: D4.3 Prospects for the use of the renewable

energy cooperation mechanisms by the Western

Balkan countries

The process

• More than 150 stakeholders in the region involved

• Involvement of UNDP regional offices

• BETTER became part of a political discussion process

how to accelerate RES implementation in the region

• Initiated by IRENA,

• followed up the European Climate Foundation and

BETTER

• Series of Workshops in close coordination by IRENA,

ECN, BETTER, Energy Community

Key characteristics of the region (1)

• Inefficient, fragmented and monopolized energy

systems

• Regulatory frameworks

continuous changes

market models lead to a lock-in of generation capacities by government-owned incumbents monopolists

• Markets in the region are far from being open and

sufficiently attractive for investors

Key characteristics of the region (2)

Key characteristics of the region (3)

• Institutions are locked in into national thinking

• Countries hardly consider synergies in the region, such

as

common use of shared water resources for hydro power or

sharing peak capacities in order to minimize the investments costs and avoiding over-dimension of new capacity

• Large concerns in the region from energy experts and NGOs

Too strong focus on capacity expansion in particular of hydro and coal

Lack of decentralized solutions

electricity exports may increase environmental pressures

Planned transmission corridors opportunites

Tools used

• Green-X model, TU Vienna • quantitative model-based analysis of future RES deployment and

corresponding cost and expenditures

• CopMex Calculator, JOANEUM RESAERCH

• Designing concrete business cases for the the cooperation mechanisms

• Green Jobs Calculator UNDP

RES expansion under BAU and EU average support

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h

Serbia

Kosovo*

Montenegro

FYR Macedonia

Croatia

BIH

Albania

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RES electricity production per country (SNPave, LowDemand) WEST BALKANS

+50%

Surplus/Shortfall of different 2020 scenarios vs. NREAP – RES electricity

-2.000 -1.000 0 1.000 2.000 3.000 4.000

Serbia

Montenegro

Kosovo*

FYR Macedonia

BIH

Albania

GWh

SNPave(BA-TR)-barC(LowDemand)

BAU(BA-TR)-barA(LowDemand)

Surplus Shortfall

Surplus/Shortfall of different 2020 scenarios vs. NREAP – Hydro large-scale

-1.500 -1.000 -500 0 500 1.000 1.500 2.000

Serbia

Montenegro

Kosovo*

FYR Macedonia

BIH

Albania

GWh

SNPave(BA-TR)-barC(LowDemand)

BAU(BA-TR)-barA(LowDemand)

Surplus Shortfall

based on „Green-X“

Surplus/Shortfall of different 2020 scenarios vs. NREAP – Hydro small-scale

-2.000 -1.500 -1.000 -500 0 500 1.000

Serbia

Montenegro

Kosovo*

FYR Macedonia

BIH

Albania

GWh

SNPave(BA-TR)-barC(LowDemand)

BAU(BA-TR)-barA(LowDemand)

Surplus Shortfall

based on „Green-X“

Surplus/Shortfall of different 2020 scenarios vs. NREAP – Wind onshore

-1.000 -500 0 500 1.000 1.500

Serbia

Montenegro

Kosovo*

FYR Macedonia

BIH

Albania

GWh

SNPave(BA-TR)-barC(LowDemand)

BAU(BA-TR)-barA(LowDemand)

Surplus Shortfall

based on „Green-X“

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Serb

ia

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ro

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sovo

*

FYR

M

aced

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BIH

Alb

ania

GW

h

BAU(BA-TR)-barA(LowDemand)

SNPave(BA-TR)-barC(LowDemand)

NREAP

Expansion potential according to different 2020 scenarios– Photovoltaics

based on „Green-X“

Effects on society

Scenarios S1-Low S2-High S3-

Moderate

Share of domestic component in production (%) 10 80 50

Share of domestic component in installation (%) 20 90 60

Share of domestic component in maintenance (%) 40 100 80

• Effects on society are assessed under three possible scenarios (depending on the share of the domestic component in production, installation and maintenance)

Effects on society – new jobs created each year (direct and indirect)

Country total

BAU SNPmax

Albania 700 - 1.300 2.000 - 3.500

Croatia 700 - 1.200 3.500 - 6.000

Bosnia 900 - 1.600 2.600 - 4.800

Macedonia 300 - 500 1.000 - 1.800

Montenegro 200 - 400 800 - 1.400

Kosovo* 100 - 150 200 - 1.800

Serbia 800 - 1.500 3.000 - 5.500

• Depending on the share of local content SNPmax scenario may create 3-5 times more green jobs

* “References to Kosovo shall be understood to be in the context of Security Council resolution 1244 (1999)”

Projected SNPave surplus of different technologies 2020

Hydro large-

scale

Hydro small-

scale

Wind onshore

Photovoltaics

Overall RES (incl. heat) expansion potential of different scenarios 2030

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Serbia Montenegro Kosovo* FYR Macedonia

BIH Albania

GW

h

BAU(BA-TR)-barA(LowDemand)

SNPave(BA-TR)-barC(LowDemand)

SNPmax(BA-TR)-barC(LowDemand)

based on „Green-X“

Key driver to use cooperation mechanisms

Host countries

• Grid limitations when expanding RES (e.g. lack of

balancing capacities)

• Limited financial support for non-hydro techologies

• Technology transfer (lack of technologies and know how)

• Expanding more costly potentials, that can be used by

the host counrty after the export period

Offtaker countries

• Improving cost-effectivness and economic relationships

Design options and business cases

• Each country has following options:

• Domestic projects > only domestic support applies

• Joint projects with partial export > domestic and

foreign support apply to different shares

• Joint projects with full export > only foreign support

applies while host country provides the location of the

projects and necessary legal support

• The share each country has in the project determines

renewable elecricity consumed in each country

counting towards their renewable energy targets

• providing energy security and

• decarbonisation

Cost efficient potentials beyond targets: hydro electricity in from Bonsia and Herzegovina

Required for 2020, 2030?

Joint Projects?

Case Study: Exporting wind from Albania to the EU

• Installed capacity - 230 MW

• Investment - 260 million EUR

• Electricity production - 550 GWh/y

• Listed in Albanian NREAP

• Close to border with Montenegro

Case Study: Exporting wind from Albania to the EU

0,00

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100 90 80 70 60 50 40 30 20 10

FIT/FIP (EUR/MWh)

Export share (%)

Required minumum return in Euro - Export share -

20% IRR 14% IRR 10% IRR

Case Study: Exporting wind from Albania to the EU (NL)

-13,00

-11,00

-9,00

-7,00

-5,00

-3,00

-1,00

1,00

3,00

5,00

7,00

100 90 80 70 60 50 40 30 20

EURc/kWh

Export share (%)

- Lower value 20% IRR and higher value 10% IRR -middle value 14%

Case Study: Wind Albania-Kosovo

• New 400 kV interconnection planned to be constructed

in 2015.

• Kosovo plans 300 GWh wind by 2020, Albania only 165

GWh

• Wind in Albania is cheaper than in Kosovo

– Kosovo* could carry out joint projects in Albania to meet its targets

– It could define specific project sites in Albania eligible for joint projects or open up its support scheme for installations in Albania.

– Albania could keep cheap potentials it needs for 2020/2030 itself

Case Study: Wind Albania-Kosovo

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€/M

Wh

GWh

Cost-potential curves Kosovo and Albania

Albania

Kosovo*

Key constraints for cooperation on RES

• Lack of demand by EU offtakers and lack of willigness to

cooperate within the region

• Unclear to what extent new transmission lines will be

available

• Administrative, legal and institutional bottlenecks that

apply to RES projects in the region in general

Outlook on Joint Projects up to 2020

• Italy-Montenegro undersea cable likely to be built

• Other transmission corridors unclear

• Export to the north of the region possible

The role of cooperation up to 2030

• EU member states start to open their support schemes

to RES from abroad: Netherlands, UK, German

• The need for region cooperation was highlighted in the

2030 Energy and Climate council conclusions

• Regional clusters are emerging in the EU

The role of cooperation will increase regardless of the

specific mechanism!

Key messages for the West Balkans

• Meeting 2020 RES targets, before focusing on exporting

renewables, opportunities for significant RES expansion

exist

• Regional cooperation on use of renewable energy is one

of the prerequisite for cost efficient RES expansion and

energy security in the region

• Cooperation mechanisms could be a starting point to

integrate the region’s energy systems with the EU

BRINGINGEUROPE AND THIRDCOUNTRIES CLOSER

TOGETHER THROUGHRENEWABLEENERGIES

Andreas Tuerk

JOANNEUM RESEARCH

Elisabethstraße 18

8010 Graz