Energy Community urges Kosovo* to commit in its NECP to phasing out coal by 2050

The Energy Community Secretariat doesn’t have any major objections to Kosovo’s draft National Energy and Climate Plan. However, it called on the contracting party to commit to phasing out coal and achieving climate neutrality by 2050.

The Ministry of Economy and the Ministry of Environment, Spatial Planning and Infrastructure of Kosovo* submitted their draft National Energy and Climate Plan (NECP) to the secretariat on July 10, 2023, for a review.

“The draft is structured in line with the Governance Regulation requirements and includes a comprehensive list of current and planned measures. The targets outlined in the draft NECP are in line with the 2030 targets for Kosovo* adopted by the Energy Community Ministerial Council in 2022,” the secretariat said.

Of note, in November it issued the recommendations for Serbia’s NECP, after which it published the ones for Bosnia and Herzegovina’s draft late last month, at the same time as for Kosovo*. Here are the main takeaways from the recommendations.

Decarbonization – no measure addresses the just transition issue

The secretariat asked Kosovo* to incorporate the commitment to phase out coal and achieve climate neutrality by 2050 to ensure consistency with its energy strategy.

It pointed out there is no target date indicated for the coal phaseout either in electricity generation or overall and that the document doesn’t include an objective to achieve climate neutrality by 2050.

There is no plan in the draft NECP for the coal phaseout and achieving climate neutrality in general by 2050.

The share of lignite is foreseen to steadily increase in district heating

Greenhouse gas emissions from lignite are still projected to constitute over half of the emissions in 2030 and the installed electricity generation capacities from lignite – due to capacity expansion as a result of the refurbishment projects – slightly increases until 2028. Moreover, the share of lignite in district heating is foreseen to steadily increase until 2040 in both scenarios.

Regarding policies and measures, a study on the effects of CBAM and the rollout of carbon pricing is planned to be conducted, but no information on its timing and content is indicated.

Kosovo* intends to rehabilitate coal power plants Kosovo A and Kosovo B

The contracting party intends to rehabilitate thermal power plant (TPP) Kosovo B, which consists of two units, and at least one of the three units of TPP Kosovo A.

The works for the rehabilitation of TPP Kosovo B units are expected to take place in two stages, at the end of 2025 and 2026, and one or more units in TPP Kosovo A would be placed in strategic reserve from 2028.

The projections in both the WEM (with existing measures) and WAM (with additional measures) scenarios show a gradual decrease in lignite in electricity generation from 84% in 2021 to 32% and 27% in 2040, respectively.

It is not clear which additional measures would result in the decrease of lignite use

Considering Kosovo’s plans for a fossil fuel phaseout by 2050, it is not clear from the draft NECP what regulatory or other measures, for example carbon pricing, would trigger a decrease in coal-fired electricity use, and at the same time make investments in renewable energy more economically feasible, according to the recommendations.

Domestic lignite production is projected to decrease by 38% in the WEM scenario and by 48% in the WAM scenario by 2030. As of 2040, the reduction would reach 56% and 68% from the levels measured in 2021.

According to the secretariat, the foreseen changes warrant careful and detailed planning for how the affected regions will be supported and which measures will be implemented.

But Kosovo* didn’t outline any measure for a fair and just transition or support for the impacted communities.

There are no details of how the existing combustion plants would meet the Industrial Emissions Directive’s emission limit values

There are also no details of how the existing combustion plants – including the rehabilitated unit or units of TPP Kosovo A in strategic reserve – would meet the Industrial Emissions Directive’s emission limit values from January 2028.

There are also no plans for how to achieve significant reductions in pollution from the two coal facilities under the Large Combustion Plants Directive, where Kosovo* persistently fails to implement its National Emissions Reduction Plan (NERP).

In 20240 the share of lignite in installed electricity generation capacities is expected at 23%, making it the third pillar of installed capacity, after solar (33%) and wind power (31%).

Renewables – 2030 target is set at 1,400 MW

The share of renewable energy in final electricity consumption is projected to reach 45% in 2030 and 72% in 2040.

The sectoral targets for 2030 regarding the share of renewable energy in the transport (3.6%) and heating and cooling sectors (49.6%) are below the levels foreseen by the Renewables Directive, notably mandating 7% and 62.4%, respectively.

The feasibility of reaching the target will depend on merchant investments or private public partnership

Considering that the total installed capacity of renewable energy sources in 2022 was 280 MW, the secretariat said aiming for 1,400 MW by 2030 appears to be an ambitious goal.

The feed-in premium scheme envisions at least 100 MW of new capacities by 2025 without specifying any additional timeline. So the feasibility of reaching the 1,400 MW renewables capacity target by 2030 will depend on merchant investments or private public partnerships.

The proposal to achieve a target of 100 MW in capacity installed by prosumers by 2031 is a positive development, however the draft NECP lacks measures to promote and facilitate the development of renewable energy communities.

Energy security – the draft falls short of addressing key aspects

The draft NECP falls short of addressing key aspects of energy security, the secretariat said.

It outlines only five measures related to energy security, overlooking critical issues such as Kosovo’s struggle to cover peak loads, the high unavailability rate of its thermal units, and the scarcity of flexibility resources.

Furthermore, the document highlights affordability concerns, as compensating for system balancing through interconnections is tied to wholesale electricity prices, posing financial challenges for Kosovo*.

The rehabilitation of at least one unit of TPP Kosovo A aims to serve energy security objectives

Reducing the share of coal and replacing it with intermittent renewable energy in the electricity mix is perceived to intensify current challenges, requiring the implementation of flexibility resources. However, various options for activating them are not taken into consideration.

The plan to rehabilitate at least one unit of TPP Kosovo A and put it into strategic reserve aims to serve energy security objectives. The secretariat said it would be important to indicate the results of a cost-benefit analysis that was carried out to underpin such a policy decision.

To accurately model the potential advantages of energy security measures, such as the rehabilitation of units in TPP Kosovo A, and to formulate efficient crisis mitigation and prevention strategies, it is crucial to establish a risk preparedness plan, the secretariat stressed.

Internal energy market –  the Electricity Integration Package is poorly addressed

The draft NECP falls short of fully reflecting the requirements under the Electricity Integration Package. Instead, it only briefly addresses a limited number of its elements.

Currently, there is no definition of energy poverty and no clear methodology or implemented indicators to measure energy poverty.

The policies and measures related to energy poverty lack detailed information on the implementation timeline and the funding sources, the secretariat stressed in its recommendations on Kosovo’s draft NECP.