Download Energy Community hopes to boost regional markets

Energy Community hopes to boost regional markets
The energy markets in the western Balkan countries are small and fragmented, too vulnerable
and outdated to attract international investors.
But the Energy Community, which was established in 2006 between the EU and several regional
countries to extend the Union's internal energy market to Southeast Europe, believes a regional
approach, backed by a harmonised legal framework, would substantially increase the chances of
luring investors.
The community's strategy focuses on the need for meeting the region's increasing energy needs
while reducing the carbon footprint of the member states, which include Albania, Bosnia and
Herzegovina (BiH), Croatia, Macedonia, Montenegro and Serbia.
Regional co-operation stands at the core of the community, promoting not only cross-border
trade, but also several regional-level measures to secure the energy supply, safeguard measures
and mutual assistance in times of sudden crises.
After the Russian-Ukrainian gas crisis in January 2009 that resulted in supply disruptions in
many European nations, with 18 countries reporting major drops in or complete cutoff of their
gas supplies transported through Ukraine from Russia, the EU sought a more co-ordinated
approach to provide stable and secure energy supply.
"There has been concrete action to increase gas storages facilities across the region. After the
January 2009 crisis, it was understood that the storage plays a vital role in guaranteeing security
of supply," Janez Kopac, the director of the Energy Community, told SETimes in an exclusive
interview.
There has been concrete action to increase gas storages facilities across the region," Janez
Kopac, the director of the Energy Community, told SETimes. [Linda Karadaku/SETimes]
The actions taken include a gas interconnector between Croatia and Hungary that became
operational in August 2011. It runs through Poland, Czech Republic, Slovakia and Hungary to
Croatia. It has an annual capacity of 6.5 billion cubic metres, and was co-financed by the EU as
part of the European Economic Recovery Plan.
"This is equally important for both countries from the point of view of economy and energy
security," Hungarian President János Áder said after a meeting on the project in November 2012.
The project was constructed to further integrate the EU gas market and provide gas transit
capacity from Hungary to Croatia, BiH and Italy of up to 7.5 Bcm/a, and in reverse mode, gas
transit capacity from Croatia to Hungary of up to 5.5 Bcm/a, according to Pipelines International.
Other cross-regional projects that will diversify gas supply in the region include a planned gas
interconnector between Serbia, Croatia and Republika Srpska.
Petar Skundric, energy advisor to Serbia's president, said that the country was also ready to start
talks with Albania on the construction of a gas pipeline to be linked to the South Stream pipeline.
Skundric said that Serbia plans to develop a number of projects utilising natural gas.
"This year we continue the construction of the second stage of Banatski Dvor underground
storage facility, whose capacity will be between 800 million and one billion cubic metres of gas,"
Skundric said, adding that there is also a plan to construct another underground gas storage in
Itebej, with similar capacity.
Skundric said that once the construction of these two storage facilities is completed, "the supply
of gas to Serbia and the region will be secured."
Another energy project is the 120 million-euro, 18-kilometre gas pipeline between Serbia and
Bulgaria -- the first interconnection between the two countries' gas transport systems. The project
is financed by the European Bank for Reconstruction and Development, and the pipeline is
expected to be operational by 2015.
Under their agreement, members of the community have a legal commitment to increase the
share of renewable energy in their energy mix by 2020.
The demand for energy is expected to rise significantly by 2020. [AFP]
"This is truly a big challenge for the region. The bulk of the region's power plants were built in
the 1960s and 1970s using standard Eastern European technology. Their age, the type of
technology, and their inadequate maintenance raise serious policy challenges at present," Kopac
told SETimes.
"This complex and costly transition will have to take place in time of an economic crisis when
the available public and private capital is limited and difficult to obtain," he said.
Kopac said that hydropower is the most commonly used type of renewable energy, which has
further growth potential across the entire region.
"But we believe that biomass and wind will play an important role in the future," Kopac said,
adding that the Western Balkans are mainly dependent on fossil fuels, which are predominantly
imported from the East.
"Serbia should seek ways to make up its energy deficit from renewable energy sources, because
it has great potential in biomass and hydropower potential," former Environment and Spatial
Planning Minister Oliver Dulic said.
He added that the environment ministry will oppose the use of nuclear energy until all renewable
energy sources are exhausted.
The Energy Community energy strategy, endorsed in October 2012, documents the significance
of the domestic coal/lignite in the region's energy mix. The share of coal/lignite of the national
energy supply amounts to 52 percent in Serbia, 50 percent in Macedonia, 48 percent in Kosovo
and Montenegro and to 33 percent in BiH.
"Apart from coal, no significant fossil fuel reserves have been explored in the Western Balkans,"
Kopac said.
The Energy Community is inviting project promoters in the area of electricity, gas or oil to
submit candidate projects to be assessed. The key conditions are that the project is located in at
least one member state, and, that it will impact at least two members, or a member and an EU
member state.
Source: SE Times
Date: Jan 2013