On 24 February 2022, Europe got a wake-up call. Russia’s war of aggression against Ukraine made it clear that Europe needs to speed up its energy transition and it needs to do it immediately. Not only is it necessary to urgently phase out coal to save the planet, but we need to move away from imported fossil fuels to ensure the security of supply. And the only way to do it is to deploy cheap, clean, widely available renewable energy.
Energy Community Contracting Parties – Albania, Bosnia and Herzegovina, Kosovo*, North Macedonia, Georgia, Moldova, Montenegro, Serbia and Ukraine were heavily affected in the previous year. Ukraine held the presidency of the Energy Community in 2022 despite the war and its energy facilities subject to targeted bombing almost on a daily basis. This year’s Presidency is Albania and the country has already announced that it plans to focus on accelerating renewables uptake. With Albania at the helm of the Energy Community and the implementation of key enabling policies near finalisation, 2023 may be a ground-breaking year for renewables.
The good news is that the Energy Community Contracting Parties have massive untapped potential when it comes to renewable energy, in particular wind and solar PV. According to IRENA, the cost-effective potential in the Energy Community which can be utilised by 2030 for onshore wind is almost 13 gigawatts (GW), while it is more than 24 GW for solar PV (excluding Georgia). Utilising this potential would mean increasing currently installed renewables capacities by more than ten times. But for this to happen, a number of conditions need to be fulfilled.
First, an enabling framework needs to be set. 2023 will be dedicated to finalising the transposition and implementation of Renewable Energy Directive II (EU) 2018/2001 (the so-called REDII), adopted by the Energy Community Ministerial Council in November 2021 as part of the Clean Energy Package. The formal deadline for the transposition and implementation of the Directive expired at the end of 2022. So far, most of the Contracting Parties are making slow but steady progress.
At the December 2022 Ministerial Council, 2030 targets were adopted on the national and Energy Community level for renewable energy, energy efficiency and greenhouse gas emissions reduction. But targets and laws alone are not enough. To truly boost renewables uptake, we need robust policies and measures. These will come by way of draft National Energy and Climate Plans (NECPs), to be submitted by the Contracting Parties to the Energy Community Secretariat by mid-2023.
Effective de-risking mechanisms in the form of reliable support schemes which are needed to mitigate the high capital costs of renewables in the region and boost investment are yet to take shape. The reform process to switch from administratively set feed-in tariffs (FiTs) to market-based support schemes is ongoing in all Contracting Parties, with Albania and North Macedonia being the only two Contracting Parties to have held auctions so far.
Lengthy permitting procedures are another major obstacle to the acceleration of renewables. Following the work done at the EU level, the Energy Community Renewable Energy Coordination Group, which brings together representatives of the Contracting Parties and relevant stakeholders to work to accelerate renewables deployment, will focus in 2023 on identifying the gaps, barriers and bottlenecks to the uptake of renewables and provide guidelines and recommendations on simplifying their permitting procedures. The guidelines will include options and best practices for introducing the one-stop-shop concept to permitting in the Contracting Parties and a specific methodology for planning and programming of energy projects zoning on a national and regional level.
Recognising that guarantees of origin help encourage investments in renewable energy generation, the Energy Community Secretariat conducted a regional project which resulted in electronic registries for guarantees of origin in line with EU requirements and standards being created for Albania, two entities in Bosnia and Herzegovina, Georgia, Kosovo, North Macedonia, Moldova, Montenegro and Ukraine. All nine registries are ready to go live following the signing of direct agreements between the Contracting Parties’ issuing bodies and the service provider Grexel. In December 2022, the Georgian State Electrosystem became the first issuing body to sign such an agreement. After two or more Contracting Parties sign the agreement, they will be able to trade guarantees of origin through the regional system established by the service provider.
Speeding up the implementation of renewable self-consumption schemes should be a priority in 2023. It can protect consumers from rising energy prices and ensure a reliable energy supply. All Contracting Parties have already put in place, at least partially, an enabling legal framework for renewable self-consumption and interest from households and businesses is rising thanks to declining costs of renewable energy technologies, especially solar photovoltaic. Nevertheless, many obstacles, such as the permit granting process, modernisation of network tariffs and provisions on tax revenue, remain. These will also be tackled by the Energy Community Renewable Energy Coordination Group.
Finally, when discussing renewable energy and the achievement of the targets, the focus is mostly on the electricity sector. But two other sectors – heating and cooling and transport, which produce the majority of emissions and should contribute to two-thirds of the renewables target, are neglected. Transformation towards renewables has not started in the transport sector and the situation is not much better in heating and cooling either. Biomass is the dominant source of energy in heating in the Energy Community but it comes with serious concerns about the level of sustainability of forest management in the region. The RED II introduces sustainability criteria for biomass and only those fuels meeting the criteria will be counted towards the achievement of the 2030 target.
While addressing the challenges listed above and putting in place all the actions on the 2023 to-do list will be no small feat, there has never been a better time for renewables to take off in the Energy Community. Renewables have never been more attractive for policy-makers, companies and consumers looking for alternatives to the high energy bills for imported fossil fuels. Actions must be taken now to meet the 2050 target of a carbon-neutral European continent and ensure a cleaner, safer and better future for all of us.