Smart planning in energy transition – ESM was first in Western Balkans to build solar power plant at abandoned coal mine

Power utilities across the Western Balkans are faced with a string of major challenges, including the energy transition, which requires phasing out coal and moving towards cleaner energy. Some of them, such as Elektrani na Severna Makedonija (ESM), are also struggling with outdated thermal power plants and coal shortages. However, thanks to smart planning by the management and the government, and with the help from financial institutions, ESM has made its first successful steps in strategic transformation, becoming the first power utility in the region to start building solar power plants at abandoned coal mines. And it’s a promising start.

Building solar power plants at disused coal mines is one of the solutions for the energy transition, and ESM has been doing it for several years. Its pilot project – a 10 MW solar power plant built at the Oslomej coal mine – has just been connected to the grid for a test run. The success of the project has unlocked a wave of investments by ESM and inspired Balkan Green Energy News to present this particular power utility and this particular model of solar plant development as part of the series Energy transition champions in the Western Balkans.

We talked about this model of transition from coal to clean energy with Viktor Andonov, energy adviser to the prime minister of North Macedonia, and Blagoj Gajdardziski, director for capital investments at ESM. The government and ESM are the chief actors in this pioneering undertaking, not only for North Macedonia but the region as a whole.

Legislative support is vital for the power utility’s decarbonization

The prime minister’s energy adviser, Viktor Andonov, explained that plans to invest in solar power plants at coal mines were initiated with the adoption of the 2018 law on energy. The “first modern energy law in the Western Balkans,” as Andonov describes it, introduced legislation that supports and promotes investment in renewable energy.

Viktor Andonov, energy adviser to North Macedonia’s prime minister

“After that, in 2019, North Macedonia adopted the Energy Strategy, while joint work with the power utility on the Oslomej pilot project sent a positive signal to investors to come and invest in the country,” Andonov explained, adding that the goal was to fully harmonize the legislative framework for investments with international regulations and the European Green Deal.

Andonov also noted that North Macedonia lacks capacities for about 30% of electricity it consumes, or at least 2,000 GWh a year.

Overall potential for solar projects at coal mines is about 500 MW

In its drive to replace thermal power capacities with cleaner energy sources, ESM has prioritized its abandoned coal mines as locations for such projects given that land there is degraded and unfit for other purposes.

“Land that could not be used for agriculture can now help build a better energy future for North Macedonia,” according to Blagoj Gajdardziski, director for capital investments at ESM.

The key focus in planning new capacities, he says, is on leveraging uncultivable land at thermal power plants and coal mines, but also on the sites of existing hydropower plants. The land in question is mainly owned by ESM itself.

Several more projects will be implemented at ESM’s mining and power complexes REK Oslomej and REK Bitola in the next few years, according to him. For most of these projects, he explains, the company has already gone through procedures in the government and agreed financing with banks, and for some of them it has received grants.

ESM has already carried out feasibility studies and environmental impact assessments for the Oslomej 2 and the Bitola 1 project. The company has also obtained urban planning permits and approvals for infrastructure projects. The projects are in the final stage of development, and construction is expected to begin. The contractors will be known by mid-2023, “which means that the power plants will soon be in operation,” according to Gajdardziski.

REK Bitola has the potential for a further 200 MW of solar installations on the second pit, putting the combined potential of the two power plants’ coal mines at around 500 MW. Developing solar capacities will significantly increase the share of renewable sources in North Macedonia’s energy mix, according to him.

Solar power plant Oslomej 1 / Photo: Goran Sivacki

“We are certain that demand for electricity will increase going forward,” said Gajdardziski. In the transition from coal to 100% renewable energy, ESM will also use natural gas to produce electricity in a transitional period, because gas power plants are necessary to ensure system stability, according to him.

He added that a 250 MW gas power plant is planned to be built at REK Bitola, because a pipeline is already there.

Six projects at former coal mines

Investments at abandoned coal mines are examples of good practice which open up opportunities for North Macedonia’s energy transition, according to ESM. This also applies to other Western Balkan countries with a large share of coal in the energy mix.

• The Oslomej 1 pilot project was developed on 19 hectares of land. Its average annual output is projected at 17.6 GWh. The investment totaled EUR 8.7 million, with a EUR 1.5 million grant from the Western Balkans Investment Framework (WBIF), which is backed by the European Bank for Reconstruction and Development (EBRD).
• Oslomej 2 will be built on 15 hectares of land, with a planned annual production of about 18 GWh. The project is also financially backed by the EBRD.
• Oslomej 3, with a capacity of 50 MW plus 50 MW, is being implemented through public-private partnership with companies from Turkey and Bulgaria. Its annual production is projected at 80 GWh plus 80 GWh. The private partner will cover the investment and operational costs of the project, while ESM will assume full ownership of the power plant after 35 years.
• Bitola 1 is financed by the EBRD, under the same package as the Oslomej 2 power plant. It will span some 40 hectares and will be owned by ESM. The plant’s annual electricity output is estimated at 34 GWh. Both projects have received a grant of EUR 6.5 million from the European Union through the WBIF.
• Bitola 2, spanning 110 hectares, will have a capacity of 60 MW and average annual production of 96 GWh. The project will cut CO2 emissions by 67 million tons a year. A feasibility study and an environmental impact assessment for the project are under way, financed with a grant from the German development bank KfW.
• Bitola 3, with an installed capacity of 100 MW, is projected to generate 160 GWh of electricity a year. The site of the future power plant is in the vicinity of REK Bitola’s thermal power plant, on a portion of an exhausted coal mine.

Solar at disused coal mines can help carry out a just energy transition in all Balkan countries

There are a large number of abandoned coal mines throughout the Western Balkans, and all of them have the potential for solar power plants. The example of the Oslomej pilot project has demonstrated that abandoned coal mines can create new value, but also that it is possible to carry out a just transition,” says Andonov.

The Oslomej 2 project involves a reskilling training program for 450 workers, and a study on a just transition should be adopted by the end of first quarter of 2023. Although 10 MW is a rather small capacity, the investment will make it possible to develop an additional 110 MW in two to three years, Andonov noted, adding that the country’s ultimate goal is to have 1,500 MW of solar power plants.

This process is clearly not reserved for North Macedonia. Rather, it’s a transitional model that can be applied in other Western Balkan countries as well. All coal regions have similar problems, but also similar opportunities.

There are a plenty of useful elements that could be applied by any power utility in the region, and it is clear that North Macedonia is prepared and willing to share its experience with others.