The energy sector in Macedonia
Macedonia relies predominantly on fossil fuels (low-grade lignite and oil) and hydropower, and is dependent on electricity imports. The total annual production of electricity in 2016 was 5,303 GWh, and another 2,191 GWh was imported to satisfy the total domestic electricity demand.
The electric power generation capacity in Macedonia consists of two thermal power plants with a total of 800 MW installed capacity, eight large and several small hydropower plants with 650 MW installed capacity. The smaller thermal power plant REK Oslomej is not currently in operation and talks about “urgent need of modernization of the obsolete equipment” have been going on for over two years.
There are two open cast lignite mines (Oslomej and Suvodol) with a total capacity of 7 million tonnes/year and estimated deposits for the next 15 years. Despite some investments in modernization, domestic production of electricity decreased by about 25 percent in the last ten years, and electricity imports have risen to 34 percent of total consumption.
Studies about the availability of lignite in the Pelagonia basin, which hosts the three Bitola power plant units, lead to the conclusion that even if two new lignite mines were opened in the region, Macedonia would still need to start importing coal from 2025 onwards. Imports of coal would contribute to more than half of the country’s total electricity production beyond 2030. It is also important to note that the two new mines would involve underground operations, with which the country has no experience to date. Also, an increase in the price of such locally-sourced lignite is anticipated due to the higher cost of coal production in the new mines and transport over longer distances and on rough terrain.
Natural gas is imported from Russia through a single entry point at the Bulgarian border. Gas is mainly consumed by industrial customers, while households have an almost negligible share of total consumption due to the very limited spread of distribution networks.
Under Energy Community commitments to increase the share of renewable energy in its mix, Macedonia has a target of 28% in gross final energy consumption in 2020.
In April 2017 Macedonia amended its National Renewable Energy Action Plan submitted to the Energy Community in 2012, to take into account lower biomass baseline data (17.2% compared to the 21.2% originally). In spite of this, the NREAP is not designed to achieve the country’s legally binding renewable energy target of 28%, instead only a 24% target in 2020 is foreseen. The NREAP sets out the trajectory for meeting the country’s 28% target only in 2030.
In spite of the incomplete legal framework for renewables, several renewable energy projects have become operational in recent years contributing to an increasing share of energy from renewable sources in the energy mix each year.
Macedonia has a 36.8 MW wind farm at Bogdanci and has been reported to be moving forward with expanding it. It was the first country in the Western Balkan region to put into operation a sizeable wind facility. Solar PV capacity is also the highest compared to neighbouring countries, but the potential is hardly tapped.
Like other countries in the region, Macedonia has big plans for hydropower but also for new lignite capacity.
As well as renovating the Bitola power plant, ELEM, the state-owned energy company, plans to rehabilitate and slightly increase the capacity of Oslomej power plant, extend its lifetime and run it on imported coal, as domestic sources are scarce. The EIA approval for Oslomej’s rehabilitation is being challenged in the administrative court by NGOs in Macedonia. Plans to build a 300 MW plant at Mariovo have also been around, however they do not seem likely to materialise anywhere in the near future, as the draft version of the new energy strategy for Macedonia, discussed in early 2015, postpones the opening of the power plant until 2033.
Regarding hydropower, a Bankwatch study has identified at least 64 plants that have gone online since 2005, and the hydropower boom is very much ongoing. In 2015 and 2016, 24 and 25 concessions were awarded respectively. 83 plants are still actively planned, 26 of them in protected areas. What is characteristic for Macedonia is that it still features the largest number of greenfield plants financed by the EBRD in the Western Balkans (20 plants, 15 directly and five through intermediaries).
Macedonia has plenty of room for energy efficiency improvements. Electricity losses in 2016 were 14.7 percent of the gross national electricity consumption, and practices such as heating on electricity have contributed to increasing energy costs for many households.