North Macedonia’s incentives for small hydropower plants are not in line with EU rules

Small hydropower plants in North Macedonia are causing damage to the environment and hinder people’s access to water while the main motive for investors is the incentives. This is not in line with the European Union’s rules, according to an analysis done by the Center for Economic Analysis (CEA) and Eko-svest.

The two organizations have asked the Government of North Macedonia to abolish feed-in tariffs and introduce auction premiums for small hydropower plants (SHPPs). They have also submitted a complaint to the Energy Community regarding the country’s regulations, arguing that they favour SHPPs over the other renewable energy technologies.

The share of the 96 SHPPs in the country’s total electricity production ranges from 5% to 7%, according to the analysis

From 2007, when feed-in tariffs were introduced, investors constructed 96 SHPPs with an installed capacity of 87 MW, while another 25 are in the pipeline. Their combined capacity should be 28 MW. From 2015 to 2020, SHPPs’ share in the country’s overall electricity output was 5% to 7%, according to the analysis.

Their total average production is around 329 GWh per year.

Support for renewables should be shifted from fixed feed-in tariffs to auctioned premiums

Vesna Garvanlieva from the Center for Economic Analysis said that, according to the European Union’s state aid regulations, support for renewables should be almost entirely shifted from fixed feed-in tariffs to auctioned premiums.

Premiums expose renewable energy sources to market signals as some renewable energy technologies, such as small hydropower plants, have reached a stage of maturity that requires their integration into the market, she explained.

Out of the EUR 42 million paid to the 203 privileged producers in 2020, 96 SHPPs have received EUR 16 million in feed-in tariffs, the analysis reads.

The authors said EU legislation regulates the transition from feed-in tariffs to premiums.

The national legislation is not fully aligned with the EU with regard to state aid for the production of electricity from renewable energy sources, they underlined.

The country continues to support mature and competitive technologies with subsidies

Davor Pehčevski from Eko-svest said the current set of domestic regulations favors SHPPs. He added North Macedonia continues to support mature and competitive technologies with subsidies and stressed that the EU forbids the practice.

The government must enable the transition of all technologies from tariffs to premiums as soon as possible to enable real liberalization of the energy market, but also maximum protection of nature from harmful projects, Pehčevski said.

Ana Čolović Lešoska, director of Eko-svest, pointed to cases of SHPPs that were built in protected areas.

Many projects are violating environmental protection rules, and block people’s access to water, which raises the questions whether they are eligible to receive state aid, she said.