Sharing the gains from EU–Western Balkan renewable electricity cooperation

Abstract

The EU directive on renewable energy sources enables EU Member States to import renewable electricity from non-EU countries and count these imports towards their renewable energy targets. This article investigates whether such cooperation can be beneficial for selected Western Balkan countries and help them to increase their domestic renewable electricity supply: could wind power exports to the EU from Bosnia and Herzegovina, Serbia, Albania and the Former Yugoslav Republic (FYR) of Macedonia enable additional investments in domestic generation, without ‘selling out’ the exporter countries’ best generation sites? Or would exports rather conflict with the Western Balkans countries’ domestic efforts to reach their renewable energy targets and increase the domestic electricity supply? For this, a model was developed in Visual Basic to optimize, from the exporters’ perspective, the optimal export level to trigger investments but maximize the wind power supply for domestic use. The analysis takes into account the wind potential, support and price levels in the EU and Western Balkans, investor requirements and financing conditions in the investigated countries. The article shows that cooperation offers a way both for EU Member States and some Western Balkan countries to expand renewable electricity supply and reach their renewable energy targets in a cost-effective way. Partial exports of wind power would allow Serbia, Albania and the FYR of Macedonia to reach their 2020 wind targets. This would not be possible under their existing support schemes or electricity prices. The results indicate that Bosnia and Herzegovina lacks cost-efficient potentials and cannot achieve its wind target in the base case, with or without exports. Climate policy relevance The results show that wind power cooperation between the EU and Western Balkan countries may simultaneously increase the renewable electricity generation available for the domestic markets in the host countries and help EU Member States to achieve their renewable energy and decarbonization targets. Hence, wind power exports are a way for both the EU and the Western Balkans to provide more carbon-neutral electricity in a cost-effective manner and thus support the achievement of renewable energy and climate targets.