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The future support system for renewables of Bosnia and Herzegovina needs to be fair and inclusive

Photo credits: M1key.me via VisualHunt.com / CC BY

The Energiewende has primarily been a German project, however due to its success in increasing electricity production from renewables, it’s being “exported” to other countries in the world including the least developed parts of Europe. Bosnia and Herzegovina belongs to this group and it aims at achieving a 40% share of renewable energy in gross final energy consumption in 2020, in comparison to 34% in 2009. The country has lots of big hydro power plants that were developed during the time of Yugoslavia, however it also hosts one of the dirtiest coal power plant fleets in the Western Balkans. Electricity is regarded as a social good and so the state owned power companies are keeping its price artificially low. Its electricity markets are not fully liberalised and a wholesale market does not exist. From the governance standpoint the country itself is said to be one of the most complex systems in the world due to its division into two entities - Republika Srpska (RS) and the Federation of Bosnia and Herzegovina (FBiH) - as well as Brčko District. In addition the FBiH is divided into ten cantons and each of them has its own ministries.

Under the Energy Community Treaty the country has to adopt the newest EU legislation on renewables and this includes liberalising its support system and the electricity market itself. This would include creating a system like the one in Germany, where only smaller projects still receive a feed in tariff while larger ones are subject to market premiums and auctioning. The reasons for adopting such a policy are very clear. Renewable energy auctions lower the support costs through inducing competition among investors. Pressured by the need to win an auctioning round they outbid themselves, and lower the price at which they are willing to sell the produced electricity. This system favours large players because they can achieve lower prices, due to economics of scale. Large projects enable costs reductions along the entire supply chain. However auctioning disadvantages smaller investors such as citizens and energy cooperatives because they cannot compete in price with the larger players.

The new support system for renewables in Bosnia and Herzegovina needs to make sure that smaller investors are favoured, and in particular the citizens that live in the vicinity of the future renewable energy plants. Citizen inclusion will be crucial in any future support system in BiH, simply because the locals there have a history of protest against any foreign intrusion into their communities, especially when local rivers are concerned. Several cases in Municipality of Oštra Luka, Vitez and Jajce have shown how citizens can turn against investors in small hydro power plants if they are completely left out of the process.

A system that would guarantee that the locals have a larger share of the benefits is needed; because without it they will see the money they pay in form of levies for renewables, flow out of their country. In my view this would amount to a form of neo-colonialism, with resources such as wind, sun, the woodlands and rivers being the new gold and diamonds. Any future support system in BiH needs to be fair and inclusive.

Starting with the smallest projects, the country should develop solar PV net billing systems, where individual households could consume the electricity they produce and feed the excess into the grid thus becoming prosumers. The costs of utility scale solar PV systems have on average decreased 50% from 2010 to 2015, making them cost competitive with fossil fuel generation technologies. Secondly such smaller systems would not have to be part of the feed in premium system and auctioning. For instance in Germany projects up to 100 kW are still eligible for the feed in tariffs that guarantee producers a fixed electricity price. Therefore this would enable easier access to renewables for smaller investors. Furthermore more favourable auctioning conditions for citizen-based projects could also enable a level playing field between unprofessional investors and large project developers. In the case of onshore wind energy auction in Germany this has been dealt with by providing smaller project of up to 18 MW easier permitting requirements, smaller bid bonds, longer project development times etc. Such projects also have to consist of at least 10 individuals that live in close vicinity to the planned wind energy plant. Finally they should also be provided with easier access to financing. For instance in Denmark the government stimulates the creation of citizen energy projects by providing them with 70.000 EUR of project development costs. I am not saying the BiH government should do the same but if it does a 10th of this it will already spur many small investments. With the help of development aid I am convinced that this could be done.

The energy infrastructure in Bosnia and Herzegovina is still centralised and dominated by large power plants. However the economics and policies of power systems have changed in favour of smaller and decentralised renewable technologies. This is an energy transition that everyone should profit from and so it needs to be fair and inclusive.

*** These conclusions are part of the findings from a join workshop that we co-organised with Joanneum Research - LIFE from Graz and in collaboration with Preda Prijedor and CIDEA, the energy agencies of the cities of Prijedor and Banja Luka in Republika Srpska. The action was financed by the BACID fund, that is implemented by the Austrian Association of Cities and Towns and funded by the Austrian Development Agency.

*** The views expressed in this article are solely of the authors and not of any of the above named organisations.


Mak Dukan is the founder of Starfish Energy, a consultancy company for energy and climate policies and low carbon development in South East Europe. He is a Croatian from Zagreb who is living in Berlin, where he is active in the renewable energy and energy policy fields.

Nihad Harbas (MSc) is a consultant on energy and climate change in Sarajevo, Bosnia and Herzegovina (BiH). He is an expert on renewable energy and energy efficiency both nationally/regionally and internationally working for IFIs & local institutions.

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