Energy dependency – Western Balkans’ security problem

How much energy is Western Balkans producing? Can it be increased or made greener?

In 2018, the Western Balkans’ total generation capacity for electric energy was 17.6 GW. Of these, 48% were generated by coal-based power plants, 46% by hydroelectric stations, 4% by gas plants and 2% by fuel oil plants. Although renewable energy sources also appeared, these still make a negligible amount of the region’s total energy production capacity.

Albania produces probably most of the energy necessary for everyday use through hydroelectric stations, which ranks the country last in regards to CO2 emissions. Despite this, ensuring its consumption needs also requires importing energy from abroad. Due to climate change and lower water flows on rivers with hydroelectric stations, specialists in the energy field estimate that Albania’s capacity to produce energy through hydroelectric stations might drop by 15 to 20% until 2050.

Alongside hydroelectric stations, Albania also has the capacity to produce energy based on oil and gas, at Vlora. This plant’s capacity is 98MW. Albania’s natural gas production in 2017 was of 50.97 million cubic meters, with the Albanian state not involved in export or import activities of this type of energy resource. Albanian authorities are not involved in projects to develop exploitation systems for other renewable sources.

Bosnia and Herzegovina’s (BIH) energy sector is overwhelmingly based on coal shipping from five mines situated near the power plants in Tuzla (715 MW), Kakanj (466 MW), Gacko (300 MW), Ugljevik (300 MW) and Stanari (300 MW), the last one having become operational in 2016. Another five utilities with even more power capacities will be built with Chinese financing (China Exim Bank and the Industrial and Commercial Bank) in Tuzla and Banovici. The BIH Parliament approved and guaranteed the loans granted.

BIH has solar energy systems installed, and the exploitation of a wind turbine system (50.6 MW), financed by the German company KfW, began in March 2018.

BIH does not have natural gas resources, which forces the Bosnian state to import 226.5 million cubic meters of gas from Russia, through the Beregovo (Ukraine) – Horgos (Serbia) – Zvornik pipeline.

Montenegro’s electricity consumption needs are mainly satisfied by the power plant in Pljevlja (225 MW), which is based on coal consumption, but also on the power plants in Perucica (307 MW) and Piva (342 MW). Furthermore, Montenegro also plans to build hydroelectric stations on the rivers Komarnica and Moraca. Despite this, the EU raised objections on the subject, hoping to cover the areas targeted by Montenegrin authorities to construct these energy utilities with its “Nature 2000”[i] program.

In this context, a possible alternative solution could be the construction of wind turbine or solar systems to satisfy Montenegro’s electricity requirements.  However, approximately 40% of its total electricity production is consumed by the KAP[ii] aluminum factory (currently named Uniprom KAP), which affects the denizens of Podgorica in the form of periodic suspension of energy supply. Montenegro is dependent on the energy produced by hydroelectric stations, because during draughty periods the country’s energy industry cannot fully satisfy internal demand.

Currently, Montenegro does not have natural gas resources and also lacks transports infrastructure for this type of energy resource.

Electricity production in Kosovo is, to a great extent, dependent on two power plants based on coal, Kosovo A (five units with 800 MW installed power) and Kosovo N (two units with 78 MW installed power). Only 2% of the country’s electric energy is provided by hydroelectric stations. Kosovo also has a small wind turbine mark with a 1.35 MW capacity. Taking into account the fact that only 3-5% of the population is connected to its centralized heating system, Kosovo is the biggest greenhouse gas producer in the Western Balkans.

At the moment Kosovo has no natural gas resources and lacks infrastructure to transport this type of energy.

Electricity production in North Macedonia is made through coal and water force capacities: two thermal plants (800 MW installed power), but also some hydroelectric plants with a total capacity of 650 MW. North Macedonia has two coal mines open at Oslomej and Suvodol, with an annual exploitation capacity estimated at 7 million tons and deposits for the next 15 years. North Macedonia remains, to great extent, dependent on electricity imports, which rose to 34% of its total energy consumption, while internal electricity production decreased by approximately 25%. Adopted in 2017, the “National action plan on renewable energy in North Macedonia” stipulates that, until 2020, 24% of the country’s electricity should be provided by renewable sources. Within the scope of this plan, North Macedonia installed a 36.8 MW wind turbine system in the city of Bogdanci.

North Macedonia has no natural gas resources, which forces it to import 136 million cubic meters, through the Dupnitsa (Bulgaria) – Skopje pipeline.

Electricity demands in Serbia are fully met by internal production. For its energy, the Serbian state is relying on production from coal and gas plants (70%) and hydroelectric stations (30%). The country’s coal reserves are estimated at 4.5 billion tons, while it consumes 30 million tons yearly. Although Serbia committed to the objective of producing 27% of its necessary electric energy from renewable sources by 2020, Serbian authorities have not managed to lay the foundation necessary to accomplish this objective as of the present date.

Serbia’s natural gas resources are small, and this forces the Serbian state to import quantities necessary for consumption (2 billion cubic meters by way of Hungary and Ukraine) from Russia (the main provider for the entire Western Balkans region).

Serbia is making efforts to diversify its gas supply sources by constructing a new connection with Bulgaria, with the project conceived in 2018. The line will allow the transfer of a maximum of 1.8 billion cubic meters of natural gas yearly.

Starting with 2016, Western Balkans entities consume approximately 61 million barrels of crude oil yearly. Daily demand is as follows: Albania – approximately 27,000 barrels, BIH – approximately 35,000 barrels, North Macedonia - approximately 21,000 barrels, Montenegro - approximately 7.000 barrels; Serbia - approximately 74.000 barrels. Ensuring the oil products requirements relies heavily on imports. Albania imports 28% of these products, Serbia 71%, while the other entities (BIH, Kosovo, North Macedonia and Montenegro) import 100%.

In conclusion, the energy sectors of Western Balkan states are based mainly on coal and gas, and less on water energy for producing electricity. Renewable sources are used in a very small proportion. At the same time, there are various levels of dependency on oil and gas resources from Russia. The exceptions are Albania, which has its own resources of this kind, as well as Montenegro and Kosovo, which do not have the adequate infrastructure to import gas. All these combined elements endanger the energy security of Western Balkan entities.

Regional realities: low security, energy dependency and high level of pollution

Western Balkans entities rank along the first sports in Europe with regards to air pollution with elements resulted from the burning of fossil fuels. This environmental problem is highlighted in a recent report published as part of the “Europe beyond coal” campaign and promoted by NGO’s such as HEAL, Sandbag, Climate Action Network Europe and CEE Bankwatch Network. According to the report, noxious elements sent into the atmosphere by coal burning caused, in 2016, the death of 2013 individuals throughout the EU and 1239 persons in the Western Balkans. Furthermore, the report also mentions the medium and long-term effects of respiratory and cardiovascular illnesses it provokes in adults and children. All these elements also impact national health systems, as the same reports specifies that health problems caused by coal pollution generated additional costs of 2-4 billion euro for Western Balkan entities and 2.5-5.8 billion euro for EU states.

Developing energy systems in the Western Balkans is also perceived differently by the main actors operating in the region. While the EU is opting for renewable energy resources, China remains engaged in financing capacities based on the use of coal, while Russia exerts a significant pressure to increase the dependency of regional entities on its gas.

Energy debates in Brussels frequently ignored the Western Balkans when aspects of energy security, durability and energy transition were discussed. However, this region of Europe has become extremely important for the EU because of the energy transport routes crossing it, where Russia’s presence tends to be felt more and more significantly. Many EU member states intend to suspend, until 2030, electricity production reliant on the use of coal. Discordant to Europe’s objectives and standards, and to the idea of maintaining significant levels of energy poverty, Western Balkans entities will continue to be based on very polluting plants and resources.

In 2005, the EU established the Energy Community[iii], an international organization whose main purpose is to integrate the Western Balkans’ electricity market and permit the access of non-EU states in Central and Eastern Europe to the European energy infrastructure.

The organization will set global objectives for 2030 of integrated national energy and climatic plans (NECP)[iv]. Objectives should be elaborated and presented to the organization’s member for regional consultancy in 2020.  NECP objectives include quotas for renewable energies, energy consumption reduction, at the same time with growing the efficiency of the production capabilities and reducing greenhouse gas emissions.

In these context, BIH and North Macedonia are privileged, due to their access to numerous renewable energy sources. In both countries, it is estimated that it is very possible to reduce electricity obtained from fossil fuels by 85% until 2050. Through this step forward, both countries would respect orientations set by SEERMAP (the South East Europe Electricity Roadmap), a project which promotes energy the long-term development of energy production based on renewable sources.

Although these programs would ensure the energy security and appropriation of the Western Balkans from the EU, analyses in the area show the reluctance of the entities’ political classes, which perceive energy transition as a threat to short-term privileges and gains. This perception is visible in the context of the EU’s fight against pollution which would impose that Western Balkan entities urgently adopt the measures stipulated by the EU directive. More precisely, they should shut down the most polluting power plants as soon as possible, follow the standards out outlined in the 2015 Paris Agreement and opt instead for exploiting renewable energy sources.

At the same time, the Energy Union incorporates, in a comprehensive package, measures which must be adopted in various sectors, including those of energy resources, innovation and research, transports, foreign policy, regional and neighborhood policy, environment, trade and agriculture, in order to ensure European energy security, including in relation to environmental aspects.

The interconnection of gas and electricity networks is a main objective for the EU and is considered an essential means to reduce dependency on Russian gas and encourage the diversification of energy sources, including a real and rapid transition to renewable sources. As consequence, until 2020, the EU’s objective in the field of energy consists of reducing greenhouse gas emissions with 20%, growing the share of renewable energy by 20%, raising the efficiency of production capabilities with 20% and reaching an interconnection level of 10%. By 2030, the EU aims to grow these numbers ambitiously: a 40% reduction in greenhouse gas emissions, a 27% growth in the share of renewable energy sources, a 30% growth in energy efficiency and a 15% growth of the interconnection level.

In this context, states in the [v]region are facing numerous energetic weaknesses: the lack of certain and diversified supply sources for raw materials necessary to produce energy, but also the lack of adequate infrastructure. All these weaknesses are translated into energy dependency on unique providers who, in some cases, are interested to exploit these weaknesses in political and economic purposes. In this regard, the EU is supporting an ongoing GNL project in Croatia.

We should not omit the fact that the Western Balkans are situated at the intersection of East-West energy transport routes, and are facing simultaneous challenges regarding the dynamic of economic perspectives and transforming energy infrastructure.

The key to the solution is with the EU. Will it be used?

The development of the Western Balkans is, in great measure, stimulated by both the EU and China, while Turkey and Russia limit themselves to some areas of interest, but do not offer comprehensive solutions and neither significant financial resources compared to Brussels or Beijing. In the context of negative consequences generated by Chinese loans, the EU must develop and implement an increasingly more dynamic investment policy, including in the field of energy, to satisfy all the region’s needs.

The Western Balkans’ current dependence and the energy security rate bring the necessity to rapidly extend the process of exploiting renewable energy sources in order to replace current power plants based on coal consumption, both very old and very polluting. As consequence, in the context of the ongoing integration process of the Western Balkans, the EU holds the key to rapidly present viable solutions in this regard to help the region in its transition process.

Although the EU offers significant support to the interconnection of energy networks and markets, bigger attention is necessary to the Western Balkans’ energy infrastructure which, for the moment, does not serve import-export interests in the field of energy sources, thus impeding the transition to more durable energies.

Taking into account the high amount of shortcomings and dysfunctions in the energy systems of each Western Balkans entity, combined with other factors, such as Russia’s and China’s influence, the EU must draft an efficient strategy for the Western Balkans’ future, with regards to protecting and increasing the security level of energy supplies and reducing the level of energy dependence.

This kind of attitude from Europe would be all the more necessary in the context of Russia’s decision to supply the Western Balkans with additional energy resources through Turkey instead of Bulgaria; this type of development can considerably alter energy relations between the Western Balkans and the EU.

Translated by Ionut Preda