2. Scaling up of Renewable Energy for Power Generation in the Western Balkan countries
Tatyana Kramskaya, The World Bank
Senior Energy Specialist

4. Total Primary Energy Supply in the Western Balkan countries

5. Path towards a clean energy model in the Western Balkan countries: Challenges
Avoiding a lock-in to coal-based and non-competitive infrastructure
Meeting large investment needs in a sustainable and efficient manner
Unlocking the economy’s large renewable energy (RE) and energy efficiency (EE) potential

6. Path towards a clean energy model in the Western Balkan countries: Opportunities
Driven by supply security and affordability concerns, some WB6 countries’ planned large investments in the power sector continue to focus on coal.
This may be economically not viable if these countries plan to meet their RE and EE targets as committed under the Energy Community Treaty.
The integrated energy and climate plan until 2035, which WB6 is currently developing in line with its commitments under the Energy Community Treaty, will be an important instrument to improve the coherency between domestic energy policies, EE, RE and carbon emissions.
Given the socio-economic importance of the sector, planning and managing for a sustainable and inclusive coal sector transition will be critical.

7. Electricity Tariffs in the WB6 countries, 2017
Electricity Pricing
Electricity pricing is the key determinant in the overall financial condition of the countries’ power sector and thus of their ability to finance the large investments required going forward.
Electricity Tariffs in the WB6 countries, 2017
Below-cost-recovery
tariffs often result in revenue shortfalls, undermining the utility’s ability to finance new projects.

8. Transition to Market Based Support Mechanisms
The transition to market-based support mechanisms will be critical to promote cost-effective RE. Currently, most WB6 countries provide support for RE through feed-in-tariffs (FiT) in combination with annual quotas/ capacity limits. Some countries are slowly moving toward a renewable energy auction system.
Although the impact of current RE subsidies on residential bills is low, the attainment of the future RE targets may increase the burden on consumers electricity bill if the current level of support remains unchanged.
In order to harness decreasing costs of RE technologies in the past years, reduce the impact on household electricity bills and ensure cost-effectiveness of RE deployed, the introduction of market-based support mechanisms, such as auctions, will be important. This will also be required to comply with the Guidelines on State aid for environmental protection and energy.
Source: The World Bank, 2019 Regulatory Indicators for Sustainable Development (RISE)

9. Other barriers also need to be addressed
High administrative barriers with lengthy and cumbersome permitting processes,
Inadequate policy and regulatory instruments,
Weak local developers, small project sizes, poor feasibility studies and environmental and social assessments,
Bankability of PPAs, limited credit and capacity from local banks, financially weak utilities, political and other country and regulatory risks limited local awareness and capacity, etc.

10. Market Regulation

11. Regional Markets
The small size of the individual markets in the Balkan area makes these markets less attractive for renewables industry
Currently, markets are still highly fragmented and cross-border electricity trade remains at a low level.
Functioning electricity markets with low entry barriers are, however a precondition for enabling the trading of renewables power plants.
Due to the increasing forecast quality closer to real time, the establishment of functioning intraday trading opportunities is also crucial for the market participation especially of variable renewables such as wind and solar.