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European development bank money at work in Macedonia

The EBRD is increasingly active across the whole of Southeast Europe, which remains highly reliant on coal, to move it to cleaner energy sources

Skopje, capital of the Republic of Macedonia, is one of the most polluted cities in the world. The European Bank for Reconstruction and Development (EBRD) is supporting the construction of the country’s first large-scale solar power plant to start reducing reliance on ageing lignite-fired infrastructure, improve air quality and bring down emissions

BAD PRESS
Central and Eastern European countries generally lag behind their counterparts in the West when it comes to climate action. The European Bank for Reconstruction and Development is trying to turn this situation around and kickstart the region’s clean energy transition

PROJECT SUPPORT
The EBRD offers financial and technical assistance across Southeast Europe, with nearly 50% of its total investment in the region going to green projects in 2019

KEY QUOTE
An important aspect of these projects is to make sure potential renewable energy solutions will not increase heating costs for citizens or spending on utility services by local governments Air pollution causes more than 1300 premature deaths a year in the Macedonian capital of Skopje, according to official figures, with particle pollution in the city (PM) reaching levels more than ten times higher than EU legal limits during the winter because of industrial emissions, smoke from wood-burning stoves and exhaust fumes from old cars. The majority of the country’s electricity production comes from fossil fuels, in particular coal, which accounts for over 70% of total energy demand, with just over 20% of its electricity coming from renewables. The EBRD, founded in 1991 to support the development of the private sector and market economies in central and eastern Europe, is hoping it can help initiate change and kickstart a clean energy transition in Macedonia by funding the first large-scale solar power plant in the country. The bank is lending €5.9 million to ESM, the state-owned electricity company, to build a solar facility on the site of a former lignite coal mine. ESM is to provide the remainder of the total cost, estimated at €8.7 million. Once operational, the 10 MW solar plant will produce nearly 15 gigawatt hours of electricity a year, displacing 12,177 tonnes of carbon dioxide annually. The output is equivalent to only 0.2% of the country’s electricity needs and the production capacity of the facility is less than a tenth of the coal-fired plant. The project may sound like a drop in the ocean, but it is indicative of wider changes and ESM has plans for the solar plant to grow in the coming years. We are evaluating scenarios to expand the solar plant to reach the 125 megawatts (MW) of the previous thermal power plant,” says Dimitar Grchev, an engineer with ESM. We are taking a modular approach. The initial project of 10 MW is important because it is the country’s first large-scale solar plant. It can then be cloned and multiplied to fulfill our strategy down the line. It is a pilot project for the future.” The EBRD is also offering technical assistance to help North Macedonia design competitive renewable tenders for 200 MW of solar and 150 MW of wind power capacity, while Italy will provide almost €75,000 for technical due diligence. REGIONAL PRESENCE The bank says it is increasingly active across the whole of Southeast Europe, which remains highly reliant on coal, to move it to cleaner energy sources. Since 2006, the EBRD has invested more than €3 billion in greening the region and increased investments in clean economy transition projects, such as smart grid, smart metering and energy efficiency projects in small and medium-sized businesses. Such projects made up 46% of the bank’s total portfolio in 2019, up from 26% in 2015. In Kosovo, the bank has funded two wind farms, Kitka and Bajgora, to address both the pollution caused by two lignite-coal fired power stations and the challenge of power cuts. It has also funded wind farms in Montenegro and Serbia and is backing the refurbishment of a 40-year old landfill site in Vinca, Belgrade to become a waste-to-energy facility in line with EU standards. The bank sees an update of the region’s district heating systems as an important part of the clean energy puzzle. It is examining how countries can convert these systems, usually powered by natural gas, to run on renewable energy. Solar power is an obvious choice, says the EBRD, given that the entire region has a decent amount of sun and the technology has become relatively low cost. The share of solar thermal, heat pump and geothermal technology in some district heating systems in the region can reach up to 50% and can substitute fossil fuels, significantly reduce emissions and particulate matter, and improve air quality in urban areas,” says Bojan Bogdanovic, a fund manager for renewable district energy with the EBRD. An important aspect of these projects is to make sure proposed renewable energy solutions do not increase heating costs for citizens or local governments spending,” he adds. Renewable district heating can bring down costs compared to fossil fuels, he argues. In addition to funding, the bank is helping national governments reform legal frameworks to make them better suited for energy efficiency and renewable energy projects and bring them in line with EU rules, says the bank’s Zsuzsanna Hargitai.

TEXT Philippa Nuttall Jones

This video by the EBRD, is a story about a biogas power plant in Serbia which was developed with financing from the EU-supported Regional Energy Efficiency Programme.