KOSOVO ENERGY CORPORATION: Sustainable, Reliable and Affordable Energy Future

Incorporated in 2005, KEK is vertically integrated and, as part of the power system of the Former Yugoslavia, previously focussed primarily on the production of energy from coal, with power supplied by plants outside of Kosovo. By the late 1990s, the core business of the Corporation had switched to the production of coal and energy in Kosovo itself, through two open-cast coal mines – the Mirash mine and Bardh mine – and two power plants, Kosovo A and Kosovo B, which cover the territory.

Electricity consumption and peak demand in Kosovo grew more than 90% between 2000 and 2010, plateauing from 2011 to 2018 before adding a further 20% between 2018 and 2021. There is a vital need of stable, base-load power generation in Kosovo that can meet demand, and seeking to boost supplies of affordable, reliable and sustainable energy and so engender economic growth and development, the Government of Kosovo has prioritised the modernisation and improvement of the country’s energy sector.

Kosovo has huge lignite reserves – estimated to stand as the world’s fifth largest at up to 14 billion tonnes – but its two thermal power plants are outdated and constantly in need of repair. Energy security has for some time been a concern in Kosovo and the challenges faced mirror those experienced at present on a global scale. While securing supplies is a priority, the country faces pressure to be greener too, in line with the goals of the European Union, which Kosovo one day wants to join, and as such the government aims now to set forth on a path to sustainability.

SUSTAINABLE STRATEGY

A comprehensive strategy has been compiled to include increased energy efficiency, development of renewable sources of energy, and support for a new power generation. The surge in energy prices in Europe in late 2021 and 2022 has only increased the urgency to invest in sustainable domestic energy generation and reduce dependence on expensive imports.

Not only necessary in order for growth, poverty reduction, and shared prosperity to occur, in turn, it is anticipated that such improvements will prompt greater investment from foreign and domestic firms into Kosovo and create valuable jobs. Progress in developing renewable energy was somewhat hampered for a number of years by plans for a new 500 MW lignite power plan, which meant that efforts and resources were subsequently diverted away from the development of more sustainable forms of energy.

With the project being officially cancelled in early 2020 and no other coal-fired power plant slated for construction, a goal of 1.4 GW in renewable energy capacity has now been set as part of Kosovo’s strategy for the period until 2031. In 2019 Kosovo reached a 25.69% share of energy from renewable sources, measured in terms of its gross final energy consumption and exceeding its target of 25% for 2020; the government now targets 50% by mid-century.

Perfectly aligned with this, KEK has reiterated its commitment to developing infrastructure for the production of green energy, with a solar power plant of 100 MW set to be built at what is now an ash dump for the Kosova A coal-fired thermal power plant leading the way. Minister of Economy Artane Rizvanolli said that the first renewable energy auction in Kosovo would be launched by the end of the year as a pilot for solar power, with the European Bank for Reconstruction and development assisting the government in preparing the procedure and rules.

“Many investors are interested and many wind and solar projects are coming, with licenses issued based on competitive and transparent processes, securing the lowest price for consumers,” she announced after the inauguration of the Selac wind park, and according to CEO Përparim Kabashi, KEK also has plans afoot to produce a similar feasibility study for wind power, to join Kosovo’s Kitka wind farm.

Kosovo Prime Minister Albin Kurti stated that the government-controlled power utility, “must be proactive and innovative in the diversification of energy sources,” by including renewables, adding that the Government of Kosovo foresees a central role for KEK in leading the way in this pursuit. “The green agenda is one of our government’s priorities, not only because it includes an important aspect of our EU integration process, but especially because we need to phase out coal, while maintaining our energy independence,” Kurti briefed at the inauguration ceremony.

Rizvanolli has also vowed to make the energy transition fair for both KEK and its employees. The company said it is also working on an EU-backed project for five water and wastewater treatment plants for Kosova B which should enable a 15% cut in water consumption as water would be reused. 

MCC AGREEMENT

In July 2022, US foreign assistance agency Millennium Challenge Corporation (MCC), created in 2004 with the objective to reduce global poverty through economic growth, signed a new $202 million agreement with the Government of Kosovo for a grant programme specifically targeting further improvements with the country’s rapidly developing energy sector.

Including an additional $34 million contribution from Kosovo’s government, the grant will support one project for energy storage and another for just and equitable transition acceleration in Kosovo. It will also fund a project aimed at promoting private investments in Kosovo’s energy sector, to be conducted in collaboration with the U.S. International Development Finance Corporation.

“The focus of the energy strategy for 2022-2031 will be to increase the share of renewable energy sources and decarbonise the energy sector,” Melik Krasniqi, senior public relations officer at the Kosovo Ministry of Economy, told BIRN, with the MCC project set to enable a monumental energy transition.  

“The Kosovo Compact will support three projects focused on addressing Kosovo’s unreliable supply of electricity and will assist Kosovo in transitioning towards an energy future that is more sustainable, inclusive, reliable and affordable,” MCC summarised. “The Program is expected to enter into force in April 2024, starting the 5-year implementation period and allows access to full program funding for procurements.”