The South East Europe is facing as the rest of the Europe significant changes in energy sector and challenges in shaping its energy future considering the fact that is still heavily dependent on fossil fuels and vulnerable in terms of energy security. However, decarbonisation, new energy mix with greater share of renewables, capacity building, credible climate change policy, better regional connectivity and exchange in the field of electricity is the path toward more sustainable energy supply, participants of the 10th SEE Energy Dialogue agreed.
The two-day event, organized by the Institute of Energy of South East Europe (IENE), was an opportunity for various stakeholders from the region and beyond to share their views and discuss the challenges in energy sector. Experts, representatives of leading companies and officials addressed many topics, including international and regional perspective, electricity market priorities and regional integration, issues facing RES and energy efficiency, Europe’s natural gas market developments, energy investments and opportunities but also energy poverty in SEE.
At the conference in Belgrade the IENE’s SEE energy outlook 2016/2017 was also presented. The conference, which is traditionally organized in Thessaloniki, was held in Belgrade on June 13 and 14, under the auspices of the Ministry of Mining and Energy of Serbia.
However, Ministry’s officials canceled their presence at the opening of the conference which, as Costis Stambolis, IENE’s Deputy Chairman and Executive Director, has put it, was most regrettable but not unusual, not just for the Serbian ministry but for the majority of the ministries in the region. He said that representatives of states must realize that their presence at such gatherings is mandatory because they are stakeholders and because it would be also beneficial for them to get firsthand information from the market.
John Chadjivassiliadis, IENE Chairman, said that the Europe is facing significant changes, including emission reduction. He estimated that credible climate change policy should be adopted addressing new challenges. He also sees the way forward through energy efficiency, appropriate energy mix, greater share of renewables in power generation, improvement of efficiency of existing thermal power plants, introduction of new concept and innovative technologies and more flexibility in electrical system.
Region still heavily dependent on fossil fuels
Presenting the SEE Energy Outlook 2016/2017, Stambolis said that the region is still heavily dependent on oil and gas and that there were no big changes in the energy use in 2015 comparing to 2005. The only important change has happened in the oil sector which has diminished because of the growth in gas and solid fuels us while the renewables were also getting the bigger share.
SEE is also more vulnerable in terms of energy security than the rest of the Europe, and its hydrocarbon dependence is still very high. The region lacks in adequate electricity capacities and interconnections, gas supply balance, and the coal will be relevant fuel for sometime. SEE’ s path towards decarbonisation is difficult and uncertain while nuclear energy remains viable option and some countries, like Romania, shows interest in that.
Once strong growth of RES has stopped for several reasons, including high feed in tariffs, crisis, repeated policy failures and electricity grid constraints, the report showed.
Decarbonisation will increase demand in electricity
Manolis Panagiotakis, Chairman and CEO of Greek Public Power Corporation (PPC), said that due to decarbonisation the demand for electricity will increase since there will be more used in transport, heath and cooling sectors. He gave advice to Serbian colleagues not to ignore the EU policies and prepare on time for changes.
“We think that if we create one or two power station on lignite with the state of the art technologies we will reach all the EU targets,” he said adding that the European Emissions trading system (ETS) sectors would have to cut emissions by 43% by 2030 compared to 2005 level.
Branko Kovačević, president of Supervisory Board of Elektroprivreda Srbije (EPS), said that Serbia can count on lignite for 30 to 40 years more, estimating that after that it will have to change strategy and see how to use other resources apart of hydro potential, including wind, biomass, solar and geothermal water.
On the second day of the conference, participants discussed about electricity market and regional integration, and representatives of EPS, PPC, Serbian power exchange SEEPEX, the Coordinated Auction Office in SEE, but also companies like Statkraft, presented their priorities and plans.
Representative of International Finance Corporation, member of World Bank, Nick Frydas and Marijan Rančić also spoke at the conference about IFC’s activities in the region focusing on electricity and RES sectors.
Moving towards auctions in RES sector
The RES policy should be based on economic analysis, sustainable and very clear in the matter of cost, Rančić said. He said that flexibility and the ability to achieve commercial price is one of the key benefits of the auctions which are becoming more and more attractive and important.
Serbian energy expert Maja Turković of the Association for Sustainable Development ASOR, said that Serbia has to align its Energy law (adopted in 2014) with the Energy Community new Guidelines on State aid for environmental protection and energy which means that among other things, it will have to introduce tendering or auctioning process to determine the beneficiaries of the support scheme.
The energy efficiency was also singled out as important element of sustainable development in the energy sector and Antonela Solujić, head of the energy efficiency unit in the Serbian Ministry of Mining and Energy, said that Serbia has started to implement the EU directive in this field and that its target is to achieve energy savings of 9 percent by 2018 comparing to 2008 level. Until know 4.7 percent has been achieved, while the major effects are expected in the building sector.
“Heat or Eat”
The group of SEE energy experts have recognized the existence of a significant “growing” energy poverty problem in Europe.
Since there is no explicit or universal definition of Energy poverty (or Fuel poverty) among the European countries, Energy poverty can be defined as a situation in which households are not able to obtain dignified living conditions and energy services at an affordable cost or to adequately heat their homes.
There is a strong evidence relating to specific health impacts below certain temperature thresholds and also high correlation between the percentage of the population at risk of poverty and the percentage of the population with debt per utility bills.
Mihailo Mihailović, energy expert from Serbia, said that energy efficiency should be the first step in any system to combat energy poverty along with relevant statistical database. The lack of finance therefore is confirmed as a key barrier to an effective implementation of energy efficiency policies.
Regional cooperation on addressing the energy poverty and protection of energy consumers will be helpful and beneficial for the people in SEE.