Sharing the gains from EU–Western Balkan renewable electricity cooperation

Abstract

The EU directive on renewable energy sources enables EU Member States to import renewable electricity from non-EU countries and count these imports towards their renewable energy targets. This article investigates whether such cooperation can be beneficial for selected Western Balkan countries and help them to increase their domestic renewable electricity supply: could wind power exports to the EU from Bosnia and Herzegovina, Serbia, Albania and the Former Yugoslav Republic (FYR) of Macedonia enable additional investments in domestic generation, without 'selling out' the exporter countries' best generation sites? Or would exports rather conflict with the Western Balkans countries' domestic efforts to reach their renewable energy targets and increase the domestic electricity supply? For this, a model was developed in Visual Basic to optimize, from the exporters' perspective, the optimal export level to trigger investments but maximize the wind power supply for domestic use. The analysis takes into account the wind potential, support and price levels in the EU and Western Balkans, investor requirements and financing conditions in the investigated countries.The article shows that cooperation offers a way both for EU Member States and some Western Balkan countries to expand renewable electricity supply and reach their renewable energy targets in a cost-effective way. Partial exports of wind power would allow Serbia, Albania and the FYR of Macedonia to reach their 2020 wind targets. This would not be possible under their existing support schemes or electricity prices. The results indicate that Bosnia and Herzegovina lacks cost-efficient potentials and cannot achieve its wind target in the base case, with or without exports. Climate policy relevanceThe results show that wind power cooperation between the EU and Western Balkan countries may simultaneously increase the renewable electricity generation available for the domestic markets in the host countries and help EU Member States to achieve their renewable energy and decarbonization targets. Hence, wind power exports are a way for both the EU and the Western Balkans to provide more carbon-neutral electricity in a cost-effective manner and thus support the achievement of renewable energy and climate targets.

Understanding the absence of renewable electricity imports to the European Union

“…Many countries neighbouring Europe, especially around the Mediterranean, have rapidly increasing electricity demand (Worldbank, 2015). Securing new generation is a key policy priority, and exporting RE may have two seemingly contradictory effects (Frieden et al , 2016).…”

Renewable Cooperation Mechanisms in the EU: Lessons Learned and Future Perspectives

“…Although legal or administrative barriers may occasionally pose challenges when arranging and executing contracts, statistical transfers do not require the creation of elaborate frameworks. Due to the streamlined implementation process and the minimal administrative effort required, statistical transfers present a swift and efficient mechanism that can also be implemented ex-post [8]. Additionally, to make this process as smooth as possible, the European Commission has taken steps to facilitate the process of statistical transfers by creating the Union Renewable Development Platform (URDP), which provides a comprehensive overview of the surplus or excess of statistics for renewable energy across all 27 EU countries.…”

“…Joint projects with third-party countries were planned by Italy, and a few Member States, such as Germany, explored joint projects with North Africa. Italy planned to realize joint projects in Western Balkan countries [8] and signed a Memorandum of Understanding (MoU) with Serbia in 2011. Under the agreement, Italy would have provided a feedin tariff of EUR 155/MWh for a 15-year period for hydropower plants in Serbia [51].…”

“…Expanding on this, Frieden et al [8] concentrate on fair-sharing mechanisms, particularly within the framework of joint projects, whereas Tuerk et al (2014) outline different interests of host countries, seller countries, transit countries, and private investors that need to be considered when determining the transaction price [9]. Caldés et al [10] provide an insightful assessment of the factors influencing the implementation of cooperation mechanisms.…”