SOFIA (Bulgaria), June 15 (SeeNews) – The European Bank for Reconstruction and Development plans to invest over 350 million euro ($503.3 million) in renewable energy projects in Southeast Europe in 2011, a senior banker said.
There is substantial interest in renewable energy projects in Southeast Europe (SEE) with potential developments under discussion throughout the region, Ian Brown, senior adviser in the power and energy team at the European Bank for Reconstruction and Development (EBRD), told SeeNews in an emailed interview.
Recent projects financed by the EBRD in the region include hydro power plants in Bulgaria, Macedonia and Albania, and wind power projects in Bulgaria and Romania.
The EBRD has to date provided funding of 168 million euro for renewable energy projects in SEE with a combined project value of 491 million euro and a total capacity of more than 250 megawatts (MW).
The largest renewables projects that have reached the stage of preliminary management approval in the region include the 70 MW Boskov Most hydro power plant in Macedonia, the 68 MW Ombla hydro power plant in Croatia, and a package of small hydro power plants being refurbished and constructed by Serbia's power utility, EPS, as well as potential investment in biomass in Romania, the official said.
Wind energy project concepts reviewed by the multilateral lender include the Mozura wind farm in Montenegro, and a number of wind farms in Romania, including the 50 MW Smardan wind farm.
The EBRD is working on potential wind projects throughout the Western Balkans but the regulatory framework in these countries is still under development and so no projects are yet ready for construction and financing, Brown said.
An overview of the electricity market in SEE released in late 2010 by energy trading and investment group EFT indicates the region needs 12,100 MW of new thermal capacity, 3,000 MW of new hydro capacity and 1,400 MW of new capacity from renewable sources by 2020. The value of this investment, according to current prices, is about 33.8 billion euro, EFT said.
According to data from the pan-European electricity transmission operator, ENTSO-E, quoted by EFT, the SEE countries consumed 282.25 terawatthours of electricity in 2010. Of this amount, 55% was produced in thermal power plants, 27% in hydro power plants, 16% in nuclear plants and 1.0% from renewable sources.
Although the countries in the Western Balkans are not yet facing mandatory renewable energy targets as do European Union member states - though this may change in the near future if the Western Balkans countries adopt the EU's recent renewable directive, there is no doubt that in this part of SEE investment in renewable energy will need to increase since it is currently at a low level, Brown said.
The EBRD remains ready to back large-scale hydro power projects in the SEE, an area of project financing that is proving a tough challenge for the countries in the region, especially the former Yugoslav republics. These projects simply have to meet the relevant EBRD rules and, in particular, the environmental and social requirements, Brown said.
“These large projects are complex to fund for a number of reasons, including the environmental issues they raise, the need to acquire land and often build new access roads and the very large capital investment acquired.”
Although each project is specific, all large energy developments need a transparent predictable regulatory regime, a functioning regional market - where there is access to electricity transmission capacity, and cost reflective energy tariffs, the official said.
Overall, Brown singled out the lack of a fully-functioning regional energy market as the single biggest barrier to investment. “Such a marketplace would allow projects to access a much larger group of potential customers.”
Commenting on the significance for investment in renewables in SEE of the heavily-subsidised electricity pricing in the region, Brown said energy prices that are below full cost recovery levels act as a barrier to investment in both energy supply and in energy efficiency investments on the demand side.
“Specifically in relation to the renewables, the absence of fully cost-reflective tariffs increases the apparent price gap between existing conventional generation and new renewable generation.”
The EBRD has been and remains very active in policy dialogue with the corresponding governments and regulators throughout the SEE region to identify any regulatory or legal barriers to renewable energy use and development and to help them to remove these obstacles.
The bank has provided substantial technical cooperation funds for the governments, utility companies and regulators in the Western Balkans specifically to help them in addressing legal and regulatory issues in order to help develop renewable energy sector and improve energy efficiency, Brown said.
“An example of this has been the studies financed in Croatia, Serbia, Montenegro, and Bosnia, aimed at helping electricity transmission companies to establish how much wind energy they can safely accept onto their respective national systems, and how this could be increased in the future.”
Choose your newsletter by Renewables Now. Join for free!