CEEP Report (Q2): RES development in Central and Eastern Europe

The deployment of renewable energy sources (RES) is of paramount importance for a successful energy transition, comprising a decreased dependency on import of fossil fuels and emission of greenhouse gases. RES are becoming more performing and mature on the market, and the cost of technology significantly decreased in recent years. On the other hand, within the EU, it still exists enormous differences concerning, for example, the costs of capital. Considering that RES are one of the main issues discussed in the EU, the following CEEP Report will present different views and will tackle various topicsof the renewable energy sources development in the EU, having it focus on Central Europe.

Commissioner for Climate Action and Energy Miguel Arias Cañete, highlights in his address that by 2030, at least 50% of the electricity produced in the European Union will come from renewables, fact that will make a huge contribution to achieving the EU commitments under the Paris Agreement. At the same time, Commissioner Cañete underpins that Central and South-Eastern Europe has extraordinary resources and potential for renewable energy. However, Commissioner highlights that the barriers for a stronger renewables deployment include support schemes, administrative obstacles, the high cost of capital as well as the lack of sufficient grid infrastructure.

On the national perspective, Paweł Sadowski, specialist from PSE, indicates that strategic goal of Polish TSO is to create a meshed grid based on a 400 kV network capable of accommodating planned development scenarios of the Polish power system, especially focusing on the generation sector, including renewable energy sources. For achieving the company goals, one of which it is to accommodate more RES, PSE prepares periodically a Transmission Network Development Plan.

Considering biomass as an important fuel for district heating and cogeneration, Rolandas Zukas, General Director of EPSO–G and member of the Board of Director of CEEP, illustrates the recorded successes by Lithuania’s BALTPOOL exchange that has redesigned the country‘s once opaque biomass market, set clear trading rules and product standards, and scaled down heating prices by a third over the past five years.

In the same line of ideas, according to Dawid Klimczyk, CEO of ENEA Trading, biomass is key for realising climate goals and implementing elements of the circular economy. There is no better way of using organic industrial and agricultural residuals than as fuel for biomass combustion systems.

Recognizing hydropower as a stable and sustainable source of energy, HEP expert discusses operational challenges regarding the current RES and hydro deployment in Croatia and the surrounding region. Furthermore, he suggests several potential recommendations for further sustainable development.

Taking into account that offshore has recently become one of the most interesting topics in the energy sector, and that recently many companies have announced their interest in developing offshore projects in Poland, Paweł Malarz, from PGE Polska Grupa Energetyczna S.A., presented the relevant issues regarding specificity of projects that will be developed in Poland.

Moving to South-Eastern Europe, Romania and Bulgaria achieved already in 2014 their 2020 target for RES. According to Eugenia Gusilov, Director of Romanian Energy Center, initially, both countries faced the difficulty of not having a sustainable RES support scheme. However, after the initially designed form was changed, these countries faced out a green investment boom, but at the same time ultra-fast RES deployment triggered justified sustainability and affordability concerns.

Analysing the RES development in Hungary, it should be underpinned that although the share of renewable energy sources in the state energy mix skyrocketed during the early 2000s, the future does not seem so bright. Due to the planned extension of the country’s nuclear power plant, the huge amount of imported fossil fuels, the lack of ambitious policies on environment-friendly energy production, the RES renaissance is less likely to gain ground, despite the fact that Hungary developed in the last period solar and biomass projects.

Grupa Lotos presented the main aim of the Hestor Project that was to investigate the possibilities of storing the energy coming from renewable energy sources as hydrogen gas, in salt caverns and the possibility of using hydrogen for processes in refinery. The performed analyses indicate that under the current conditions, the project is unprofitable and burdened with many conditions.

The International Renewable Energy Agency - IRENA - study indicates a large renewable energy potential of 740 GW out of which, already today, 130 GW could be cost-effectively implemented in the South Eastern Europe. In comparison, the region’s current installed capacity is around 120 GW with around 36 GW of renewables. However, 75% of this volume is attributed to the old hydropower capacities, predominantly constructed several decades ago.

Renewable energy technologies have undergone strong cost reductions over the last years, essentially making them competitive with fossil fuel sources for the development of new generation capacity. These cost reductions represent a unique opportunity to advance energy transition in Central and South-Eastern Europe in a cost-effectively manner. However, as Agora Energiewende pointed out, for benefiting from low-cost renewables, it is important to understand the conditions for low cost financing for renewable energy projects, in particular the need for robust and reliable renewable energy policy frameworks.