West Balkans energy balance: Coal dependency in SEE countries, electricity coming from coal, the report

26. May 2014. / News Serbia Energy

At the European level, the use of green energy for producing electricity amounts to 16 percent only, including hydro power plants, whereas the major part is still generated from fossil fuels. Therefore, the countries that are richer and more developed than those within the region will face strong challenges in terms of how to achieve the projected goals.

It is a fundamental fact of the Serbian energy sector that two thirds of electricity come from coal, whereas the participation of energy from renewable resources in the total consumption amounts to slightly more than 20 percent. This ratio will be adjusted to a lesser extent within the next few years, as the planned investments into green energy within the period until the year 2020 envisage that the participation of renewable resources in electricity generation should be increased from the present 29 to 37 percent, but coal will still remain a dominant energy source. Without large hydro power plants, which fall into the category of renewable energy sources (RES) according to the regulations of the European Union, but which are not acceptable from the environmental point of view, the participation of RES would be very small.

The signatories to the Treaty Establishing Energy Community have undertaken to implement the directives of the European Union within the field of RES. The directive from this field obliges EU members that renewable energy should represent 20 percent of the total consumption by the year 2020. This practically means that every country must increase the participation of renewable energy with respect to the state existing in 2005, with the ratio of total increase of five percent and considering GDP, so that richer countries also have more demanding goals. At the European level, the use of green energy for producing electricity amounts to 16 percent only, including hydro power plants, whereas the major part is still generated from fossil fuels. Therefore, the countries that are richer and more developed than those within the region will face strong challenges in terms of how to achieve the projected goals.

Along with the investments into renewable energy sources, in the countries within the region, preparations for the implementation of the Large Combustion Plant Directive are under way, which is essential for the members of the Energy Community. This directive prescribes limit emissions of certain pollutants in the air from large combustion plants. In accordance with the decisions of the Ministerial Council of the Energy Community, the closing down of thermal power plants which do not comply with the high environmental standards has been postponed until 2027. The transition period has been agreed at the suggestion of the Serbian delegation, with the explanation that by closing down the TPP “Nikola Tesla” and the mine “Коlubara”, Serbia would be left without 50 percent of electricity. If the previous decision on the directive implementation until 2018 had remained in force, the reduction of electricity production from thermal power plants would have been a serious threat to the energy system stability, since the projects aimed towards the reduction of sulphur and nitrogen oxides are very demanding, both financially and technically, but also in terms of time. The projects implemented by EPS with the aim of enabling the reduction of particles emission are worth 625 million euros. The most expensive element is desulphurization in the thermal power plants in Obrenovac and Kostolac, with the total value of 426 million euros.

Coal represents a significant support to the energy systems of the countries within the region, too. According to the data of the European Association for Coal and Lignite EUROCOAL, in Bosnia and Herzegovina, the participation of coal as a primary energy source amounts to 67 percent. In 2012, 6.3 million tons of lignite as well as 6.3 million tons of brown coal were produced in this country. With the proven reserves of around 1.272 million tons, lignite will remain a dominant energy source in the following period, too. The total capacity for electricity production amounts to 3.800 MW. Of this, thermal power plants provide 46 percent аnd hydro power plants the rest.

Coal exploitation in BiH is beset with numerous problems – primarily unfavourable geological conditions and a lack of maintenance and investments in the plants. By attracting investments, the government is planning to implement new projects such as the brown coal power plant “Banovići” and the power plant near Tomislavgrad, which will be supplied with lignite from the new basin “Kongora”. In addition, there are many potential mines and power plants: the mine “Коteži” which would supply a new power plant with the capacity of 350 MW near Bugojno; a new plant with the capacity of 350 MW near the existing mine „Stanari”; the expansion of capacity of the power plants “Ugljevik” and “Kakanj”; a new block оf 450 MW near Tuzla and two blocks with the capacity of 450 MW near the mine “Kamengrad”. BiH is already a net exporter of electricity into the neighbouring countries, and this export would increase significantly if these projects were implemented.
The newest member of the European Union, Croatia, does not produce coal, but during 2012, it imported 1.3 million tons. According to the data of HEP “Supply” (HEP “Opskrba” in Croatian), during the last year, 43 percent of electricity was generated in hydro power plants; thermal power plants cover 21%, the nuclear power plant Krško 13%, whereas 19 percent was provided from imports. New renewable energy sources – solar and wind power plants have the smallest participation of only 3.6 percent.

Over three thirds of the imported coal are used in the thermal power plant “Plomin”, with the production capacity of 335 MW, which is owned by the Croatian Electric Power Industry, аnd the block “B“ is co-owned with RWE. One of the priorities of the Croatian government is to build a third block with the capacity of 500 MW, which would replace the block А. Three consortiums have applied for the largest project in Croatia within the last thirty years, worth 800 million euros. Although the names of the bidders are officially kept a secret, Croatian media have reported the information that, in the recently concluded tender, bids were submitted by “Daewo” with partners, the consortium “Samsung” and “Edison” and, as the third bidder, “Marubeni” with “Alstom”. The Croatian government should select the most favourable bidder by September, аnd according to expectations, project implementation will begin in 2015.

The model according which HEP and the selected partner will establish a new company in which they will both have a 50 percent share, is a novelty for Croatia. HEP has undertaken to buy one half of the total quantity of generated electricity, whereas the other half will be sold on the free market. On the other hand, the partner provides guarantees for loans from which the power plant will be built. “Plomin C” will cover around 25 percent of Croatian electricity needs. HEP is satisfied with the project, because it will reduce Croatian dependence on electricity import in addition to providing new workplaces.

Macedonia is a significant lignite producer. According to the data of EUROCОAL, in 2012, 7.5 million tons were produced in the open pit mines “Brod Gneotino”, “Oslomej-West” (“Oslomej-Zapad” in Macedonian) and other smaller privately owned open pit mines. Lignite reserves amount to 332 million tons in the basins “Pelagonija” and “Kičevo”, with an additional potential in the basins “Mariovo” and “Тikveš”. Lignite thermal power plants “Bitola” and “Oslomej” produce around 77 percent of the total quantity of electricity in Macedonia. The Macedonian Government is planning to build a new thermal power plant in Мariovo, with the production power of 300 MW.

According to the results of the previous studies, coal represents the most significant non-renewable energy source in Montenegro and it will maintain this role within the next few decades. The reserves of brown-lignite coal within the wider area of Pljevlje, according to the Energy Development Strategy of Montenegro by 2025, have been estimated at 200 million tons, whereas the probable reserves of brown coal within the area of the municipality of Berane amount to 18.5 million tons, with several times higher off-balance reserves. Montenegro produced two million tons of lignite during 2012. The majority of the lignite is used in thermal power plants, since one half of electricity comes from coal.

According to expectations, in Montenegro, coal will be used dominantly for consummation in thermal power plants for producing electricity and possibly heat. The current state of the coal exploitation company can be described as problematic, which is a consequence of economic restructuring and the disappearance of large coal consumers. Therefore, efforts are made to ensure long-term stable operation of mines through privatization processes.

Modern energy systems respond to the problems of climate changes, increasing global pollution and depletion of fossil fuel reserves by turning to renewable energy sources and modern technologies, aimed at reducing greenhouse gases. The erection of plants for new renewable sources is a long-lasting and expensive process characterized by a large number of unknown issues. The complexity of investment procedures, the high level of initial investments and the (in)stability of energy supply, especially when it comes to the energy of the Sun and wind, are among the burning issues concerning the RES implementation. The energy inefficient use of biomass and the consequently unsustainable deforestation, the increasing reduction of stable electricity sources and insufficient investments into conventional power plants, which are losing the market game due to the generous subsidies for RES, are some of the problems coming onto the agenda. Accordingly, even with the activation of all available green capacities, in the energy systems of numerous countries, Serbia among them, it is expected that coal will remain an irreplaceable energy source. This is also supported by the recent recommendations of the European Commission that the expensive subsidies for RES should be terminated. Although non-binding, these guidelines should ensure the much needed investments into conventional power plants.

Energy Community
By signing the Treaty Establishing Energy Community in 2006, Albania, Bulgaria, Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Serbia and the UN Interim Administration Mission in Kosovo undertook the obligation to implement the European Union legislation within the four related areas: energy, environmental protection, competition and renewable energy sources. The main idea of the Energy Community is to create a common energy market of the Southeast Europe, which would integrate with the EU market.

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