Big solar for Western Balkans disused coal mine

The European Bank for Reconstruction and Development (EBRD) is in close contact with the governments in the Western Balkans to show the opportunities stemming from the energy transition, offering technical and financial support to decrease the region’s reliance on coal, which still represents 70% of final energy consumption, or about 8 GW of the region’s installed capacity. To date, the EBRD has already provided over €2 billion for energy sector projects in the Western Balkans, mostly for renewables.

The London-based bank is well aware of local concerns which see, in large PV installations, a threat to agricultural land. It is working on alternative solutions. In North Macedonia, the EBRD is supporting the government for a 100 MW tender on disused mines.

“These will be two lots in the southwest of the country. Private investors will offer a share of revenues with the owners of the mines,” Francesco Corbo, regional head of energy for the Western Balkans and Croatia at the EBRD, told pv magazine. He added that each country in the region will be able to have PV systems, for at least 200-300 MW of total capacity on disused coal mines.

“Putting the panels on [disused] mines makes sense, also because public companies owning coal mines [might] invest in rehabilitating them. Instead, they can attract private investors to have solar panels and generate renewable electricity,” said Corbo. Another advantage is that these areas often have energy infrastructure. “Mines already have the needed [grid] connection points and related substations,” said Corbo.

Earlier this month, the EBRD signed a €9.1 million loan for a 12.9 MW floating solar photovoltaic farm at a reservoir-based hydropower plant in Albania for state utility KESH sh.p.

“We think that floating PV is a good option because it can solve climate change effects like increased evaporation and successfully address land scarcity for ground-mounted solar. Our project in Albania was the first medium-size, fully commercial floating PV [installation] in the region. The solar electricity will be sold during peak [periods] with the hydropower plant acting as a battery,” Corbo further explained. “This integration is important and we hope to replicate this model with other state-owned utilities in the region. We demonstrated that, despite [the] higher costs of the floating technology – compared to ground-mounted [facilities] – these projects have significant benefits and fit the needs of the region.”

The EBRD is also supporting Serbia with the first regional project for large scale solar-thermal district heating. “We are carrying out a feasibility study to demonstrate the competitiveness of renewable, solar-based generated heat plus large scale seasonal heat storage projects vis-a-vis heating from fossil fuels,” Corbo added. “It could cut costs and emissions at the same time.” Nonetheless, the time is not yet ripe for other storage solutions. “Storage will definitely come but at a later stage,” he said.

“Enhancing renewables penetration is, for us, the [means] to decarbonize the region’s energy sector,” Corbo stated. Coal has to be fully substituted by renewables by 2050. “That’s an imperative not only in view of the Paris Agreement, but also [because coal] is not, any more, economically competitive, especially if we account [for] the upcoming EU carbon border tax adjustment,” he also said.

According to a recent report published by the European Commission, coal generation in Serbia and Bosnia and Herzegovina rose by 4% and 8%, respectively, in 2020. The EBRD is currently providing support for renewables auctions in Albania, North Macedonia, Serbia, and Kosovo.

“In Albania, the country we started [in] first (together with North Macedonia), we have been providing, so far, support for two rounds of solar auctions. The first one, for 140 MWp, was won by French investor Voltalia with a very low price (€24.89/MWh). A second auction, for 100 MWp, was won by the same French company last month, for €29.89/MWh. These are record prices for the region, but they should not be considered as references valid for the region,” said Corbo, explaining that the auction’s prices were due to solar radiation, as Albania has the best in the region, the characteristics of the local energy market, and the structure of the auctions.

“This auction was structured in a way that 50% of generation is contracted to the state-owned off-taker, while the rest will be sold in the unregulated market at a price expected to be at least double [that of] the auction price,” said Corbo.

According to the EBRD, good signals are also coming from the political process in the region. “When you’ve regulatory framework, you attract more investors, also for what concerns PPAs. Going forward, I would expect that the first 30-40% of capacity will come from a support scheme, like auctions, and eventually PPA’s with state-owned utilities. The rest won’t be supported by the governments, as … is slowly happening in Spain and Italy,” he concluded.