June 1, 2022 - It’s going to be a long winter in several Western Balkan countries as old coal-fired power plants have become unreliable and lignite is scarce. A series of breakdowns have weakened the electric power systems in Serbia, North Macedonia and Kosovo*.
Expensive imports of coal and electricity are straining state-owned power utilities in Western Balkan countries and drying up funds required for the energy transition but also for maintaining the existing facilities.
Serbia’s Elektroprivreda Srbije, EPS, has just reached a deal with the Banovi?i coal mine in Bosnia and Herzegovina to buy 100,000 tons this year. Earlier it signed a contract with Montenegro’s Pljevlja coal mine for the delivery of the first 40,000 tons of the agreed package for 300,000 tons through 2023.
But EPS actually needs at least four million tons in total in the period. In addition to being chronically late in developing lignite deposits, a giant excavator that deposits mine tailings in the Kolubara coal mining basin was heavily damaged in a fire in January.
The company has been delaying and shelving key investments over the lack of funds. Deputy Prime Minister and Minister of Mining and Energy Zorana Mihajlovi? has revealed that EPS paid EUR 507.7 million for 2.23 TWh in electricity that it imported between December 12 and April 20. On the other hand, the government is still pushing the ?erdap 3 pumped storage hydropower project.
Both coal-fired plants in Kosovo* to be reconstructed
After initially postponing some of the projects, Kosovo Energy Corporation (KEK) revealed it would conduct the necessary overhauls at its two coal plants from July to the end of November.
There are three units in Kosova A, with a 550 MW connection to the grid, and two in Kosova B – 520 MW in total. However, they normally work with a much smaller capacity because of technical issues.
Minister of Economy of Kosovo* Artane Rizvanolli says both facilities would be reconstructed. One unit in Kosova A will be revitalized by 2024 and another one after that, at EUR 120 million per unit, she estimated. The plan is to then switch them to reserve and shut down the third active unit, according to the minister.
Rizvanolli pointed out that the reconstruction of Kosova B would cost “a little less,” adding the facility’s lifespan would be prolonged to 2040. The project includes the installation of electrostatic precipitators by 2025.
Last winter, Kosovo* imposed rolling outages to keep the electric power system together. After several outages, the instability due to the urgent need for imports in both Kosovo* and Serbia caused European-wide disturbances in transmission. Decision makers in Serbia are still debating how much to raise prices and Kosovo’s courts have blocked a decision to boost tariffs.
In both cases, the issue remains whether they can get loans and find contractors for thermal power plant reconstruction, given that investment in coal is frowned upon among international banks and engineering companies and on the international stage overall.
If coal plants in Western Balkan countries aren’t modernized in the coming years, they will all need to be closed, which would leave the region with an unbearable power deficit.
North Macedonia working to replace coal with renewables, gas
North Macedonia’s Elektrani na Severna Makedonija (ESM) has also suffered damage in a fire last winter. The company turned to emergency imports of oil and coal for its obsolete thermal power plants to prevent the need to purchase expensive electricity abroad as the energy crisis isn’t letting down.
On the planning front, the country has come a long way in Western Balkan standards. North Macedonia intends to replace two coal plants and an oil-fired power plant with photovoltaics and gas facilities. The government has pushed back its coal phaseout deadline to 2030.
A month ago, Montenegro has started the ecological reconstruction of its only coal plant – Pljevlja. The project was at least one and a half years late, so the country is in breach of Energy Community rules.
Most of the delay was caused by prolonged negotiations with the contractors, who eventually managed to get EUR 15 million more in compensation. TPP Pljevlja is operated by state-owned Elektroprivreda Crne Gore (EPCG). During the modernization project, the plant will need to be switched off for several months at a time when power imports are extremely expensive.
BiH still planning to build three coal plants
As for the rest of the region, Albania has no coal plants while Bosnia and Herzegovina remains a net exporter of electricity, profiting from a jump in energy prices. The latter has been warned by the Energy Community Secretariat against prolonging the operation of two coal plants.
Moreover, there are still three active projects for the construction of coal-fired facilities in BiH, of which two are being developed by government-controlled utility Elektroprivreda Bosne i Hercegovine (EPBiH). The plans have been dragging on for many years.
Jasmina Trhulj from the Energy Community Secretariat said energy companies in the Western Balkans would suffer serious consequences because they imported electricity at prices that were several times higher than those at which they sold power to end-users.
Europe bracing for Russian gas supply cut
European Union member states are also canceling the closure of coal-fired power plants and getting open-cast mines back to business to prevent a collapse in the energy system if Russia decides to stop supplying them with gas. After halting deliveries to Finland, Poland and Bulgaria, Gazprom cut the Netherlands off today and Denmark could be next.
Of note, Turkey is continuing to search for domestic coal deposits. General Manager of Turkish Coal Operations Authority (TK?) Hasan Hüseyin Erdo?an said the amount of confirmed reserves more than doubled since 2004 to 19.32 billion tons, Türkiye Newspaper reported.
The state-owned enterprise produced 7.4 million tons in the first quarter and sold 8.6 million, he revealed, compared to 26.7 million and 29.8 million, respectively, for the entire last year.
Through government programs to combat energy poverty, TK? distributed 33 million tons of coal to two million households for free every year since 2003, and an additional 300,000 tons to schools and other educational institutions since 2021, Erdo?an said.