IRENA: SEE region yet to realise full potential of energy transition

Energy transition in South-East Europe is slowly but steadily gaining momentum as costs of investment in solar PV and onshore wind projects are declining significantly. Electricity produced from renewables is on the verge of becoming less expensive than electricity produced from fossil fuels, and the region should embrace this opportunity, it was said at the regional workshop Renewable energy benefits: can SEE realise the full potential of the Energy Transition?, organized by IRENA and the Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina in Sarajevo last week.

South East Europe has never been at the forefront of energy transition and utilizing its renewable energy potential. Until now, regional governments have not perceived renewables as an opportunity, but rather an obligation imposed by the EU and the Energy Community.

“Renewable energy technologies are too expensive, and it is very difficult to balance the energy from renewables” is a narrative frequently repeated by decision makers across the region. This lack of political will and absence of vision have left the region lagging  a significant global trend towards sustainable energy solutions.

Moreover, switching from fossil fuels to greener energy solutions has been communicated as a threat to a large number of jobs in the sector.

However, a new study by IRENA, to be published later this year, and whose preliminary findings were presented at the regional workshop in Sarajevo and the ENERGA fair, offers a brighter and more encouraging socio-economic outlook for the region, should it turn more decisively to renewable energy.

By 2050, the energy transition driven by renewables could create around 50,000 additional jobs in the overall economy of Southeast Europe (the study included the following countries: Bulgaria, Croatia, Romania, Slovenia, Serbia, Albania, Bosnia and Herzegovina, Kosovo*, Montenegro, North Macedonia and Republic of Moldova) and lead to a GDP gain of around USD 500 billion between 2019 and 2050, compared to a business as usual scenario.

Renewables costs set to decline

According to IRENA, the global levelized cost of electricity decreased by 77% for solar PV and by 35% for onshore wind from 2010 to 2018. The costs of solar and wind power technologies, according to IRENA, are set to continue declining. IRENA also pointed that, with lower cost of capital onshore wind may offer less expensive electricity than the cheapest fossil fuel alternative.

IRENA: LCOE reduction for solar PV and wind power from 2010 to 2018 

This projection of cheap renewable electricity prices will open new opportunities for a renewable energy boom in the region, even more so if the emissions trading system is to be directly or indirectly imposed on SEE countries.

Bioenergy has a huge potential in theory

This two-day workshop offered an opportunity to conduct a stakeholders consultations to discuss further engagement of IRENA in the region, building on the outcomes of currently implemented IRENA’s South East Europe Regional Initiative.

The topic of modern bioenergy featured prominently in discussions among a wide range of stakeholders attending the workshop. Though the theoretical potential is huge and the share of bioenergy in direct or indirect jobs in the renewables sector in the EU-part of SEE in 2017 was at 82.5%, the potential from biomass is still underutilized.

There have been many studies conducted in the region, but there is still plenty of room for systematizing the data and overcoming numerous barriers, among which logistics and the sustainability of biomass are the most challenging.

The workshop participants also discussed the following opportunity areas: the improved use of bioenergy in the residential sector and in district heating, and biogas production from waste.

EnC contracting parties supported for preparations of NECPs

The topic of National Energy and Climate Plans (NECPs) has become very important among the EnC Contracting Parties and participants of the workshop agreed that international organizations should provide those countries with coordinated support.

Dubravka Bošnjak from GIZ  Open Regional Fund for SEE – Energy Efficiency (ORF-EE) said that ORF-EE continues to provide strong support to EnC Contracting Parties in developing and implementing NECPs.

Those NECPs have become obligatory not just for EU member states, but also for EnC Contracting parties following their international commitments. Although working groups for NECP development have been established and the EnC in cooperation with GIZ ORF-EE has published the guidance paper “Consolidation of climate planning processes in the Energy Community Contracting Parties,” there is still a long way for those countries to go in order to align climate and energy planning processes with new 2030 targets, introduce a legal framework and secure implementation.

Waste-to-Energy success story from Ljubljana  

Professor Andrej Gubina, Head of Laboratory of Energy Policy at the Faculty of Electrical Engineering, University of Ljubljana, presented a success story from Slovenia’s capital – a project of the Regional Centre for Waste Treatment and Recovery (RCERO), where energy is produced from municipal waste.

This WtE plant, one of the most advanced in Europe, has a capacity to process over 170,000 tonnes of waste annually and serves some 700,000 people in 43 municipalities in Slovenia. Having soaked an investment of EUR 155 million, this is the biggest environmental project in Slovenia. It consists of facilities for mechanical-biological treatment of municipal waste, and it annually produces 17,000 MWh of electricity and 36,000 MWh of heat from biogas.

RCERO Ljubljana – facts

This state-of-the-art facility represents a great example of circular economy making interlinkages between the waste management and energy sector, but also contributing to the overall waste management process of the city, which is the EU capital with the highest percentage of separately collected waste, ahead of Tallinn and Helsinki.

Hidden subsidies for fossil fuels still exist

If we want renewables to have a fair chance in the SEE region, it is essential to create a level playing field for renewables and fossil fuels. What does this mean? First and foremost, it means that we should speak openly about subsidies in the energy sector.

The issue of hidden subsidies was addressed at the workshop by Milka Mumović, an electricity and statistics expert at the Energy Community. Mumović said that the citizens of EnC Contracting Parties are not only subsidizing renewable energy, but also energy produced from coal, whereas the subsidies for coal are even higher than subsidies for renewables, with the exception of Montenegro and North Macedonia.

Energy Community: paid subsidies for renewables and coal in the end users prices in 2017

The citizens, according to Mumović, are aware of their direct contribution in subsidies for renewables since the cost is shown on electricity bills, while in the case of coal, citizens are not aware since the subsidies are granted directly from the budget.