REPCONS 2.0: BiH, Serbia, Montenegro not ready for successful energy transition

Bosnia and Herzegovina (BiH), Montenegro, and Serbia are not prepared to conduct the energy transition successfully and are facing a “perfect storm,” a chaotic situation where transition processes are unmanageable, with unforeseeable socio-economic consequences, according to the Barometer of Sustainable Energy Transition report, titled Perfect Storm – an uncontrolled decarbonization of the Western Balkans’ power sector.

The Barometer of Sustainable Energy Transition provides an overview of the situation in BiH, Serbia, and Montenegro based on a survey of 126 representatives of governments, ministries, regulators, and state power utilities as well as private companies, the academic community, and non-governmental organizations.

The survey was conducted during 2021 by think-tanks NERDA, ASOR, and CLEAR as part of REPCONS 2.0, an extension of the REPCONS project. The authors of the report are Professor Mirza Kušljugić of the Faculty of Electrical Engineering at the University of Tuzla, Professor Nikola Rajaković of the Faculty of Electrical Engineering at Belgrade University, Damir Miljević, an energy transition consultant from BiH, and Miroslav Vujnović, a financial consultant from Serbia.

In light of the findings of the survey, the key recommendation to BiH, Serbia, and Montenegro is to open public consultations on the energy transition as soon as possible in order to resolve any ambiguities. The authors chose the Latin phrase “Periculum in mora” (danger in delay) as the message of Barometer 2021 as they intend to compile a report every year for each of the six Energy Community Contracting Parties.

The three countries don’t see the energy transition as part of the Third Industrial Revolution

The restructuring of coal regions and care for miners should begin without delay (photo: Tyna Janoch from Pixabay)

Mirza Kušljugić, one of the authors of the report, says that the three countries have accepted the energy transition in principle, but that they do not see it as a matter of urgency and keep delaying it.

This, according to him, is because they are failing to spot the opportunities that come with the energy transition, a key element of “green growth” and the Third Industrial Revolution. At the same time, decarbonization is viewed as an obligation imposed by European Union (EU) institutions, he adds.

If the state fails to manage the energy transition, it will be run by market forces and external political interests

However, there is no time to waste given that the key processes in this transition will take place over the next ten years, he warns. To make these processes sustainable and carry out a successful energy transition, says Kušljugić, the state must take the reins of the energy sector decrabonization to ensure the security of supply and avert major social disturbances.

This can only be achieved through a broad social consensus about the vision and roadmap of decarbonization and by engaging all stakeholders across society to help implement this “complex psychological transformation.”

If the transition is not managed in a sustainable way, says Kušljugić, it will be uncontrolled, influenced by the market and external political pressures, which in turn could lead to an uncontrolled transformation of the economy and society that may result in the “perfect storm” scenario. Each country needs to create its own roadmap, according to him.

Public consultations must be launched promptly to resolve ambiguities and uncertainties

This is why the authors of the report recommend that all countries promptly launch public consultations on the energy transition process, both among experts and the wider public, as there are many ambiguities and uncertainties that come with such a radical transformation.

However, there are also opportunities to set a course of the energy sector development that would be in line with sustainable development principles, according to him. There are proven solutions currently available to enable the launch of the energy transition, at least with “no-regret” measures, according to him.

It is vital, he says, to turn the challenges facing coal regions into development opportunities. Kušljugić’s recommendation is to launch without delay the economic restructuring of coal regions, along with steps to ensure the welfare of those employed in the fading industries – coal mines and thermal power plants.

Of course, according to him, the EU and international financial institutions should provide not only technical assistance but also appropriate financial support.

More green energy is fine, but without reducing production at thermal power plants

The survey shows that an increased use of renewable energy sources, especially wind farms, large-scale solar power plants, and hydropower plants, enjoys support in the three countries, but again only in principle.

Kušljugić notes that a majority of the respondents understand the power sector decarbonization as increasing the use of renewables in electricity generation but not phasing out coal.

State institutions and power utilities are the main culprits for thwarted reforms

More than two-thirds of the respondents in BiH and Serbia, and over a third in Montenegro, believe a coal phaseout will not take place before 2050.

The main culprits for the current situation are state institutions and power utilities, according to the respondents. They, according to the report, are currently the chief opponents and obstructers of the reform processes because they do not view the energy transition as the Third Industrial Revolution, because they do not have enough qualified personnel, because their decision-making process is not transparent, and because they lack adequate restructuring plans.

How to tackle the key challenges of the energy transition

The report covers five key challenges of the energy transition:

1. Power sector decarbonization and coal phaseout;
2. Preparedness to manage the energy transition process;
3. Barriers, opponents, and key drivers of the energy transition;
4. Increased use and the integration of renewables;
5. The economics of the energy transition and the power market.