Bosnia: Impact of new power generation projects on energy system and regional position

16. September 2015. / SEE Energy News

The construction of several new power plant projects is underway in Bosnia and Hercegovina. BiH is currently an electricity export country. Existing power generation facilities are in most cases outdated but local governments are trying to start new coal fired power plant projects with international lenders and private investors in order to use the coal reserves and overcome the question of decommissioning of the old plants.

The majority of energy production is conducted in outdated power plants and based on fossil fuels, resulting in environment pollution. New major investments The Stanari Thermal plant (300 MW) and the investment in Block 7 (450 MW) at the Thermal Plant Tuzla are again also focused on fossil fuels. The power sector is also highly dependent on the hydrology as 54% of current capacities are based on large hydro power.

Based on the foreseen demand for year 2020 several power plants construction and hydrology using the EnergyPlan tool scenarios have been modelled to cover a range of possibilities that may occur. This includes export orientation of Stanari plant, impact of wet, dry and average year, delayed construction of Tuzla Block 7, constrained construction of hydro power plants, and retirement of thermal units. Scenarios were developed and presented in Sarajevo technical sciences workshops supported by USAID energy reform program.

Energy system can be significantly affected by delayed investments but in order to comply with renewables targets Bosnia and Herzegovina will need to explore the power production from other renewable energy sources as well.

Energy sector of Bosnia and Herzegovina (B&H) is considered as the sector with the strongest long term development potential based on the proven resources of hydropower and coal and strong potentials of other renewables. The present supply of electricity is above the current demand and in 2013 net export was 3,695 GWh . The majority of electricity comes from thermal plants. From the total 15.7 TWh in 2013, in thermal plants has been produced 55.6% and remaining 44.4% in hydro plants. Good hydrological conditions have enabled hydro production to be 83.1% higher than in 2012 resulting in total 28.4% more electricity produced than in year 2012. But hydrology is not always so favourable. The production from hydro sources was just 31.3% of the total in 2011 and represented only 55% of the hydro electricity produced in 2010. Additional illustration of impact of hydrology is a fact that lower hydro production rate resulted that B&H had negative balance for two months in 2009, 4 months in 2010 and 7 months in 2011.

Power transformation leads to high losses due to largely outdated or aging equipment and technologies and B&H is an energy intensive country. According to the IEA energy intensity of B&H is estimated at 0.54 toe of primary energy per thousand USD (2005) of Gross Domestic Product (GDP) meaning that B&H needs almost five times more energy than the average in EU (0.11) to produce the same living. Reliance on fossil fuels means increased CO2 emissions. In 2011 the result was 22.81 Mt of CO2. The highest share in this emission comes from the energy sector, accounting for 92% of the total. Carbon intensity of 1.76 kg CO2/GDP is seven times higher than the average in EU (0.24). B&H has no specific targets for energy from renewable energy sources (RES) but as a member of Energy Community the targets for the share of renewable energy in Gross Final Energy Consumption (GFEC) in 2020 is set to 40%. The basis for calculation was year 2009 when reference RES share was 34%. These targets have been transferred into local Action plans for use of RES. The Federation B&H plans increase share of RES in GFEC from 36% (in 2009) to 41% up to 2020 . Action plan of RS is based on the increase from 42% (in 2009) to 48%.

Energy system of B&H is not planned by a specific level state energy policy or strategy. Energy Sector Study of B&H gives projections of the sector development under different scenarios until 2025. Strategic Plan of Federation B&H up to year 2020 and Energy Strategy of Republika Srpska up to year 2030 envision significant changes in the power system in terms of commissioning new generation capacities and closure of some of the existing thermal facilities.

Several papers have been focused on energy system planning in the Western Balkans. Serbia has been taken as a case study for planning an energy system dominated with lignite thermal plants.

As B&H is exporter of electricity experts raise the question is there is a need to invest in new facilities in order to satisfy expected demand up to year 2020. Opinions vary from three different hydrology cases – ‘wet’, ‘average’ and ‘dry’ year.

The study aims to answer on question how the B&H energy system would be affected by delays or lack of investments into new electricity generating facilities, or if some of them are producing only for export.

Scenarios for the Energy System 2020

Based on the data and hourly distribution curves scenarios for the year 2020 have been created by expanding the 2011 scenario and including some of the assumptions and energy balances made in the Energy Sector Study. The register of new capacities includes several thermal plants, 46 hydro power plants (2,221 MW) and 48 wind power plants (2,804 MW). These plans are ambitious but obviously unrealistic and dynamics highly questionable, as the level of technical documentation is low in most cases. The only plant that will cease its work by 2020 is TP Tuzla G3 (100 MW).

B&H needs to start construction of new power production facilities as soon as possible. B&H can satisfy future consumption demand in critical years only if thermal plants work extensive hours. Also, thermal plants need to work at peak capacity so often that in the case of dry hydrology average is close to maximum of rated capacity. Even in the case of more pessimistic, minimal increase of demand all thermal plants need to work only for domestic market to satisfy that demand. In the case that TP Stanari, as a merchant plant, exports electricity abroad, the capacity factor, defined as average power/ rated power, increases significantly. In the case of dry year the TPs work constantly across the year. The capacity factor goes up to almost 80% for demand of 16.3 TWh or even above 88% in the case of demand of 18.25 TWh. This is practically impossible in particular for an old energy system as it is one of B&H. And even if these capacities are used extensively the number of months with negative energy balance in worst case goes up to 9. Export potential exists only in the case of lower demand during wet or average hydrology.

The situation is slightly worsened during the dry season but even in the case that Stanari exports entire production the renewed energy system will be capable to satisfy local demand. In the case of Scenario E, which represents only construction of renewables plants in addition to Stanari plant, capacity factor understandably increases to 0.67 to compensate for lost capacity. In the case of dry hydrology this would be higher and indicates that this minimal renewables installation is not sufficient suggesting that the construction of a new power capacity as in TP Tuzla, Block 7 is necessary if B&H wants to ensure local electricity supply. As there are less thermal plants in the system renewables become more dominant and consequently RES share increases

RES share of primary energy ranges from 22.9% in the case of scenario A to 25.3% in the case of scenario E. Share of renewables in the electricity is correlated to hydrology in addition to installed capacities and ranges from 33.4% in the case of scenario D2 to 44.6% in scenario E. Action plan for use of RES resources in the Federation B&H envisions 4% increase in RES share in electricity and for example indicative goal for wind power plants is 230 MW. Similar situation is in Republika Srpska. Envisioned RES share increase in electricity is 12.1%. Obviously new investments do not increase share of RES in electricity.

Under previously mentioned assumptions, in some cases critical electricity excess production/export (CEEP) is observed meaning that the technical regulation strategy used for the balancing energy system is not sufficient and CEEP can occur. CEEP is the mismatch between supply and demand, and shows the inability of the energy system to absorb the extra electricity. This is actually minimal export potential for certain scenarios and it is highest 3.15 TWh in the case A when all planned plants are built.

Under average hydrology conditions, there is certain over capacity of thermal plants in B&H. This proves that in that case old plants may be decommissioned, in particular considering their efficiency and impact on CO2 emission . This also underlines assumption that some of these new facilities are planned for export. Under these conditions B&H can satisfy its needs even if TPP Stanari works for export only.

The impact of gas CHP plant Zenica on the energy system of B&H under this regulation strategy is minimal. The selected regulation strategy tries to balance heat and electricity demand, and takes into account current relatively low district heating demand in Zenica but also shows that this plant will not be engaged for so many hours as indicated in the planning document. Considering current high gas prices in Europe and low coal prices in the local market it is hard to believe that electricity produced in this plant will be competitive. If one of two planned thermal plants is not built or in the case of dry hydrology that plant should become more important but it is still questionable how many hours this plant will operate. Further analysis is needed to show does heating of Zenica alone without electricity production, or with limited electricity production can justify such an investment. The analysis should include other options as well such as use of waste heat from industry or use of TP Kakanj as a combined heat and power plant. It should not be surprise if the investors further postpone this investment under current conditions.

Despite current significant electricity export B&H needs to invest in new energy plants in particular if energy demand increases in the future. B&H can satisfy future consumption demand in critical years only if thermal plants work extensive hours. In the case of dry hydrology minimal investments in renewables installation, as currently envisioned, is not sufficient suggesting that the construction of a new power capacity as in TP Tuzla, Block 7 is necessary if B&H wants to ensure local electricity supply. It can be concluded that the security of energy is undermined by delays in investments and technological progress. But investment into thermal plants keeps the country on the level of 34- 35% of RES share in GFEC. Also, if the country wants to decrease CO2 emission and satisfy internationally binding emission requirements inefficient blocks of thermal plants need to be decommissioned as soon as possible. Environmentally most friendly solution for B&H, but still satisfying future needs, is to invest into renewables and only limited capacity of thermal plants which will replace old thermal blocks. And if new thermal plants solutions do not satisfy EU directives in power after 2018 B&H can face significant problems in its relations with the Energy Community and European Union.

Most of the planned investments are primarily export driven. Planned investments are not result of any strategic exercises, environmental obligations or priorities’ setting. They are primarily driven by investors’ whish or based on the coal potential. This is further emphasized by internal division where three public companies look at only their territories and not on the energy system as whole. This may lead to expansion of environmentally not so friendly energy capacities in the future. This leads to conclusion that B&H needs to start working on its new energy policy immediately that needs to integrate use of strong potential for renewable energy and energy efficiency, and strengthen local capacities for energy production, taking into account the climate, geographic and technological conditions. That is the only way B&H can meet internationally accepted obligations and satisfy future demand. If energy potential is developed in a timely manner considering all factors it can have significant positive impacts on the economic balance of the country otherwise B&H can be stack with fossil technologies for decades. , transmits

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