Republika Srpska signed a deal in 2011 with Italy’s company Seci Energia and Serbia’s utility EPS to join the construction of three hydro-power plants on the river Drina, bordering Serbia and Bosnia.
The construction of three plants on the Drina river, with an installed capacity of 320 MW, will cost an estimated 870 million euros, construction is still pending and expected to start in 2013.
Italy and Serbia plan to build more than a dozen hydro-power plants with a combined capacity of around 450 megawatts aimed at boosting a share of renewables in the energy output and alleviating shortages.
Under the deal, Serbian and Bosnian Serb state-run power utilities EPS and EPRS will set up a joint venture with Italian Seci in which it will hold 51 percent stake and EPS and EPRS the remainder.
Seci had pledged to secure Italian government incentives of 155 euros per megawatt-hour of energy produced in the future plants over a period of 15 years.
It also aims to link the project to a future 420 km interconnector mulled by Italy’s grid operator Terna , with a 390 km submarine part that would connect neighbouring Montenegro and Italy.
Terna expects the link to be on stream in 2015 with an initial capacity of 1,000 MW which can be extended to 2,000 MW at a later stage. Investment into the link is estimated at 820 million euros ($1.1 billion).
Bosnia and Serbia produce 40 percent and 30 percent of its energy respectively in hydro-power plants and the remainder in ageing communist-era coal-fired plants which need urgent upgrades to meet the growing demand and prevent future reliance on imports.
“Italian government incentives for green energy produced abroad will provide both to Serbia and Bosnia to use their hydro potential at best and achieve additional profit,” said Seci’s CEO Gaetano Maccaferri.