Western Balkans can transition to a clean energy system at a 15% less cost with renewables including 37.5 GW solar PV up to 2045 supported by energy storage, vis-à-vis replacing aging lignite power plants with new coal or fossil gas, according to a new study by think tank Agora Energiewende.
The war in Ukraine has made Europe realize the vulnerability of natural gas supply and the ever greater need to move to renewables to secure energy sovereignty for which it needs to navigate decarbonization objectives.
The enervis energy advisors study titled Powering the Future of the Western Balkans with Renewables, commissioned by Agora, builds a case for the Western Balkans to become fully decarbonized by 2045 for €43 billion over 30 years, €12 billion more than the fossil baseline. Any excess investment can be largely financed from market revenues for renewables, analysts argue.
"If the Western Balkan countries invest in hydrogen-ready infrastructure and storage technologies instead, they can reduce cumulative fossil gas demand by 50% up to 2045 while cutting overall costs by 12% compared to a strategy that bets on fossil gas to replace aging lignite," suggest the report writers.
For this study, the focus is on 6 countries namely Albania, Bosnia & Herzegovina, Montenegro, North Macedonia, Serbia and Kosovo.
Analysts explore the potential of renewables in the region under 3 core scenarios namely baseline, gas lock-in (decarbonization of the power sector up to 2045 while relying on natural gas for the transition), and smart transition (decarbonization of the power sector up to 2045 but natural gas is substituted with energy storage to the greatest extent possible). Under all scenarios, security of supply (SoS) is assured.
Currently, Western Balkans relies heavily on hydro power that accounts for around 9.3 GW or 40% of the region's installed generation capacity in 2022. Going forward, it is renewables that can provide assurance of sustainable power supply. Out of all renewable energy technologies, the authors term solar PV as 'the most easily scalable'.
It is under smart transition scenario that the analysts see potential for solar PV capacity rising to 37.5 GW by 2045, up from 12.7 GW under baseline and 16.1 GW in gas lock-in scenario.
In the smart transition scenario, pumped hydro potential is fully utilized at 5.1 GW, with an additional 6.7 GW of li-on batteries.
Storage lowers the need for hydrogen power plants that will replace gas plants and greater energy storage capacity will enable the rapid growth in PV. Nonetheless, the report writers visualize the need for 5 GW of green hydrogen plants covering 7% of demand in 2045.
By 2035, the renewable energy share in the national electricity mix can grow to 85% in both gas lock-in and smart transition scenarios, compared to 63% in the baseline, scaling up to 100% in 2045.
"A smart transition in the Western Balkans region builds on a mix of renewables, energy storage and green hydrogen to minimize costs and maximize energy security, while entering a path towards climate neutrality by 2050," said Europe Director of Agora Energiewende, Matthias Buck.
The study precedes the Western Balkans expected to submit their draft National Energy and Climate Plans (NECP) by June 2023, with an eye of reaching climate neutrality by 2050.