Prepared by
Published in cooperation with
Incentives and barriers for the development
of renewable energy sources
Bosnia and Herzegovina: country analysis
Admir Malkočević
December 2006
Contents
1. Summary ................................................................................................................................................................. 3
2. Current utilisation, targets, potentials................................................................................................................... 4
2.1. Current utilisation .......................................................................................................................................... 4
2.2. Targets ........................................................................................................................................................... 4
2.3. Potentials for RES .......................................................................................................................................... 4
3. Renewable energy sources for electricity production .......................................................................................... 6
4. RES for heat production ......................................................................................................................................... 7
5. Nature and landscape impact assement procedures ......................................................................................... 7
6. Policy recommendations ........................................................................................................................................ 8
References:.................................................................................................................................................................. 9
Annex: Energy background of Bosnia and Herzegovina ........................................................................................ 10
1. Electricity production ....................................................................................................................................... 10
2. Heat production................................................................................................................................................ 11
1. Summary
Bosnia and Herzegovina has a very good potential in renewable energy sources, especially in biomass and hydro. But the number of these resources being used effectively is very low because B&H does not have specific
laws about renewable energy sources (RES) or their exploitation. The only document connected with the usage
of renewable energy sources is the “Decision about Methodology for the Determination of Purchase Prices from
Renewable Sources with an Installed Power up to 5 MW”, and a feed-in tariff system from that decision is the
only supporting mechanism for renewable energy sources.
Although preferential prices for RES exist in B&H through this system, they are ensured only for the current year,
without any sort of motivational guarantee for initial investors that they will receive the same preferential price
for an extended period of years in the initial phases of operation. Also B&H doesn’t have any body to control the
production, consumption and distribution of thermal energy at the state level, and because of that it doesn’t
have information available at that level. Furthermore the use of some resources (like biomass) is actually beyond
control.
Problems exist and only with the cooperative efforts of authorities, NGOs and citizens can they be solved. European standards and help through foreign investment is also an important factor which will help increase the
usage of RES.
Bosnia and Herzegovina: country analysis - 3
2. Current utilisation, targets, potentials
2.1. Current utilisation
From a total energy supply of 12,743GWh produced in B&H in 2005, about 98% was from thermal and large
hydro power plants, and only about 2% from renewable energy sources. The biggest part of electricity produced
from RES is from small power plants up to 5 MW (in B&H the large hydro power plants are not reported in statistics as renewable energy source). Hydro power plants are more than 30 years old and there are 13 hydro plants
with a capacity in excess of 10 MW.
2.2. Targets
The Treaty signed in Athens on October 25, 2005 provides for the creation of the biggest internal market in the
world for electricity and gas, with the effective participation of 34 parties: 25 members of the European Union,
Croatia, Bosnia and Herzegovina, Serbia, Montenegro, Albania, Macedonia, Romania, Bulgaria, and UNMIK Kosovo. Negotiations with Turkey are still in progress, while Moldova, Ukraine and Norway are in the process of joining, and now have observer status.
According to this treaty, B&H has to reach some specific goals:
• implementation of Directive 2001/77/EC of the European Parliament and of the Council meeting on September 27, 2001, on the promotion of electricity generated by using renewable sources in the internal market,
• and implementation of Directive 2003/30/EC of the European Parliament and of the Council of May 8, 2003
on the promotion of using bio-fuels or other renewable fuels for transport.
The Energy Community members shall prepare a plan for implementation of acquis on renewable energy sources
within one year after the entry into force of the Treaty, which entered into force and established “Energy Community” by 1 July 2006.1
The main aim of the NGO sector is in making an impact on the authorities and producers of electricity and heat
to use modern technologies in the production process because all industrialised cities in B&H have very poor air
quality. This problem can be solved through cooperative action from NGOs, authorities and producers by writing new laws about energy production and the use of renewable energy sources. This can be considered a local
objective, but at the national and international levels, NGOs must start with campaigns for signing the Kyoto
Protocol and enforcing its mandates.
The third aim is protecting the nature of B&H from the construction of big hydro power plants which would
change some untouched parts of B&H’s natural sites.
There have been no specific targets for the share of renewable energy sources in electricity production or primary
energy consumption formulated yet.
2.3. Potentials for RES
In Bosnia and Herzegovina there are two major renewable energy sources: hydropower for electricity production
and biomass for heat production.
Hydro energy
The theoretical potential of hydropower in B&H is stated as being 8,000 MW, with the technical potential at
6,800 MW and the economic potential at 5,600 MW. With an installed capacity of 1,919 MW (49.5% of total
installed capacity for electricity generation), hydropower is highly significant in B&H, although its potential is still
far from being fully exploited (only 34% of the economic potential).
Regarding small hydro power plants, B&H has a potential of 2,500 GWh. Proposed plans include the installation of ten small hydro plants every year, with an average capacity of 1.5 MW each, but there are no official or
1
“Ratification and deposit of the instrument has been executed by the European Union as well as the following Member States from the
South East Europe: Republic of Albania, Republic of Bulgaria, former Yugoslav Republic of Macedonia and UNMIK, Republic of Romania,
Republic of Croatia.” (news from www.energy-community.org).
4 - Incentives and barriers for the development of renewable energy sources
concrete targets. In addition, a study by the Federation of Bosnia and Herzegovina lists a further 42 locations for
small-scale hydropower plants with a total capacity of 51 MW which could be built on existing weirs.
Biomass
There is considerable potential for the use of biomass for energy generation in the forestry sector (roughly 50%
of the land area of B&H is wooded) and in agriculture. According to a study conducted by Innotech HT GmbH,
Berlin, in 2003 on behalf of the GTZ (Deutsche Gesellschaft für Technische Zusammenarbeit), there is an unexploited potential of approximately 1 million m³/a of residual wood, wood waste, etc. which could be used to
provide heat to 130,000 residences or 300,000 inhabitants.
Wind energy
In a preliminary study carried out on behalf of the GTZ it was established that there is an economic potential
of approximately 600 MW that could be developed by 2010, on the assumption that an appropriate incentive
system to build wind power installations is set up. There are promising wind values shown by measurements
taken before the war for the region of Trebinje through Mostar to Bugojno, and more up-to-date measurements in
Kupresu and Podvelezje, with an average speed of 10 m/s.
Solar energy
When it comes to solar potential, B&H can be counted among the more favorable locations in Europe with solar
irradiation figures in the north of the country of 1,240 kWh/m² and up to 1,600 kWh/m² in the south. The thermal exploitation of solar energy with flat plate collectors is practiced only to a limited extent for the production of
energy for hot water.
Geothermal energy
B&H has a geothermal potential of 33 MWt. It must be said, though, that the temperature at three known locations in Bosanski Samac (85 ºC), Kakanj (54ºC), and Sarajevo (58ºC) is too low for electricity generation, which
is why the reserves are currently only under consideration for thermal exploitation.
Bosnia and Herzegovina: country analysis - 5
3. Renewable energy sources for electricity production
The only legislative act related to renewable energy is the “Decision about Methodology for the Determination of
Purchase Prices from Renewable Sources with an Installed Power up to 5 MW” (“OG of FBiH” 32/2002, “OG of
RS” 71/ 2003).
According to this Decision, all three power utility companies that are operating distribution grids in different parts
of B&H’s territory are obliged to buy electricity from renewable sources.
The table shows feed-in tariffs for electricity produced in 2004 from RES (up to MW installed
capacity)
Correction coefficient
Feed-in tariff
(eurocent/kWh)
Small-scale hydropower plants
0.80
3.96
Landfill-gas and biogas plants
0.77
3.81
Wind and geothermal power plants
1.00
4.95
Photovoltaic installation
1.10
5.45
Energy source
Source: Energy policy Framework Conditions for Electricity Market and Renewable Energies, GTZ, June 2004.
Note: The correction coefficient refers to the level of feed-in tariff for each RES and is related to the current price
of electricity.
Although preferential prices for RES are guaranteed in B&H through this system, they are ensured only for the
current year, without any sort of motivational guarantee for investors that they will receive the same preferential
price for an extended period of years that would be needed to ensure that the investment costs are paid back.
Therefore the support scheme in its current form does not ensure sufficient economic stability in the sector of
RES.
Local government and the state do not give any additional support like subsidies or loans to the development of
RES. Nor does the EBRD have any investment presence in B&H for RES. Instead they invest their money in roads,
the power transmission network, etc. because that is their priority currently.
Except for the above-mentioned governmental decision, B&H does not have any other specific document covering rights for connecting to the grid and the capability of the grid to integrate energy from RES.
B&H does not have any specific or big administrative barriers when it comes to permits for building small hydro
power plants. In some cases companies or persons can get a building permit in six months, which is not the
practice for some EU countries – for example in Greece, where companies wait about two years for getting such
a building permit.
6 - Incentives and barriers for the development of renewable energy sources
4. RES for heat production
The production and distribution of thermal energy is defined by a law about communal works. However this law
does not take in to consideration the production and distribution of thermal energy from RES.
B&H does not have any legislative framework that supports the production of thermal energy from RES. Nor does
B&H have any clear strategy for the promotion of thermal energy from solar energy, biomass, or geothermal energy, though it has very good potentials in each.
It is very hard to get data about the production of thermal energy because no body for the control of production,
consumption and distribution of thermal energy exists at the state level.
5. Nature and landscape impact assement procedures
Anyone who is planning to build something connected with energy production or distribution in B&H must have
a Building Permit and Environmental Permit. The Environmental Permit is intended to reach a higher level of
environmental protection. If someone is planning to build something of this sort, they have to make a request for
an Environmental Permit. The content of the request must include some specific information about the location
of construction and the environmental impact(s), like the quantity of pollutant emissions from the construction.
A request is lodged with the Ministry for Environmental Protection, and this Ministry takes the decision on granting an Environmental Permit with a team of experts. The Ministry grants a permit 120 days after receiving the
request if they conclude that the documentation is adequate and the request is justifiable.
Bosnia and Herzegovina: country analysis - 7
6. Policy recommendations
Ensuring the financial feasibility of RES projects
The legislation in B&H for supporting RES should take into acount the successful experiences of some EU countries and follow the feed-in tariff model.
The main recommendations are:
• RES should be guaranteed priority access to the grid and the electricity produced should be purchased for
long-term guaranteed fixed feed-in tariff. This is the key measure that gives confidence to investors and brings
capital to the sector.
• Energy produced from RES should be paid for differently taking into account technological differences, i. e.
different prices for energy from wind than from hydro. But investment in different geographical regions and
those areas with poor financial situations should be encouraged too. So both technological and geographical
differences should be taken into account.
The financing of RES installations (especially for heat production, small scale and pilot demonstration projects)
in B&H should be further implemented through an appropriate operational framework program of the Ministry
of Energy and Industry. A new department at the Ministry that would be responsible for such a program should
be created.
Priorities for the suggested program should include:
• the diversification of energy sources and reduced dependence on imported energy sources
• a decrease in operating costs in the industrial and public services sectors
• environmental protection via the reduction of fuel consumption and local and regional air pollution (NOx, SOx,
fine particles, etc)
• a solid reduction of carbon dioxide emissions and the preparation of the economy for the adoption of international climate-protection committments.
The main measures to be implemented with the support of the program should be:
• informational and expert support for the local development of RES installations in order to create local job
opportunities
• information dissemination to the general public and support and media promotion of RES
• planning for the expansion of technical infrastructure for the incorporation of RES
• financial incentives for household investments to RES such as solar collectors or biomass heaters
• direct investment to RES in the public sector, like school buildings, hospitals etc.
Connection to the electricity grid
Rules for connection to the grid need to be simplified so that the non-discriminatory entry of independent and
renewable energy producers can be ensured.
Licensing procedures
The licensing procedures for RES installations in B&H should be more transparent and easy-to-follow, bearing in
mind the decision making on the following levels:
• each canton (in the Federation of Bosnia and Herzegovina − FB&H)2 or municipality (in the Republic of Srpska
− RS) gives the necessary permits for installing RES in its territory (only for those RES that will be included
into the electricity network)
• the regulatory Authority for Energy (Federal Energy Regulatory Commission) approves or denies the investment plan and gives permits to the Ministry of Energy and Iindustry for final signing
• the Ministry signs authorisations.
2
For details about the administrative dividing of B&H see Annex: energy background.
8 - Incentives and barriers for the development of renewable energy sources
References:
[1]
State electricity regulatory commission of Bosnia and Herzegovina – www.derk.ba
[2]
State Electricity Regulatory Commission, “SERC 2005 Report on Activities”.
[3]
Federal Electricity Regulatory Commission – www.ferk.ba
[4]
Republika Srpska Electricity Regulatory Commission – www.reers.ba
[5]
Dakić, Miodrag, “1. Bosnia and Herzegovina”, as found in Arrested Development: Energy Efficiency and
Renewable Energy in the Balkans, Stability Pact Watch Group, May 2005.
[6]
Austrian Energy Agency- www.eva.ac.at
[7]
FB&H Ministry of Energy, Mining and Industry, “Plan – Balance of Energy Uses in FB&H in 2006”.
[8]
RS Ministry of Economy, Energy and Development, “Energy Balance for 2004”, February 2005.
[9]
Virtual Balkan Power Centre for Advance of Renewable Energy Sources in Western Balkans, Reports from
the Workshops www.vbpc-res.org
[10]
Okanović, Amira, letter in response to an information request from EPBiH, September 7, 2006.
[11]
External Market Council of B&H www.komorabih.ba/privredabih/privreda-bih.html ,
[12]
Decision about a Methodology for the Determination of Purchase Prices for Electricity from Renewable
Sources with Installed Power up to 5 MW („OG of FB&H“ 32/2002, „OG of RS“ 71/2003)
[13]
Communal Works Law („OG of Tuzla canton 11/05“).
[14]
Law for Environmental Protection („OG of FB&H 33/03”).
[15]
www.energy-community.org
Bosnia and Herzegovina: country analysis - 9
Annex: Energy background of Bosnia and Herzegovina
Bosnia and Herzegovina has a complex structure consisting of two entities: the Federation of Bosnia and Herzegovina (FB&H) and the Republic of Srpska (RS), plus the special Brčko District. These complexities are reflected
in the problematic issues of energy legislation. The Law on Waters passed in the year 2000 presented the first
step in creating a necessary strategy of energy development for B&H. Two years later, the FB&H government
passed the Electricity Law, which defines and regulates the electric-power system and all the issues connected
to power system operation, control, planning, and market activities.
Another important piece of legislation, the Law on Concessions, establishes the subject, manner and conditions
under which domestic and foreign legal bodies could be awarded with concessions for providing the infrastructure, services and exploitation of natural resources. The aim of this Law is to create a transparent, non-discriminatory and clear legal framework for those conditions in FB&H, as well as encouraging investment of foreign
capital in the appropriate fields. This law also foresees the establishment of a committee for concessions of
FB&H as an independent regulatory body.
In parallel with the activities of the FB&H government, almost all cantons made similar laws which define this
field. Energy generation capacities up to 5 MW are within the responsibility of cantons’ governments.
Before the 1992-1995 war, investments in the energy sector went to large-scale projects and the development
of generation capacities. The largest part of B&H’s energy sources comes from the 1970s when, thanks to huge
loans, the state invested heavily into thermo-electric and hydro power plants.
The table shows primary energy consumption in 2003 in B&H:
PJ
%
Primary energy consumption
176.1
100
solid fuels
103.3
58.7
7.6
4.3
oil (crude + oil products)
43.8
24.9
gas
5.5
3.1
hydro
19.2
10.9
electricity
-3.3
-1.9
biomass
Source: Austrian energy agency (www.energyagency.at)
1. Electricity production
B&H produced in 2005 about 12,743 GWh. About 6,625 GWh of electricity was produced in thermal power
plants, 5,979 GWh was produced in large hydro power plants and 139 GWh in small hydro plants up to 5
MW.3
B&H uses coal mostly for its electricity and heat production. FB&H produced 5,726,000 tons of coal and consumed 5,655,000 tons in 2005. Oil products are used for transport, with a small part going for heating. In 2005,
FB&H imported 619,638 tons of oil products and consumed about 628,984 tons. The amount consumed is bigger because part of the oil products is imported illegally across the border. Natural gas is mostly used for heat
production and FB&H consumed 198,828,000 m3 of natural gas in 2005.4
3
The State Electricity Regulatory Commission of Bosnia and Herzegovina (SERC). Report on Activities 2005.
4
FB&H Ministry of Energy, Mining and Industry. Plan – Balance of Energy Uses in FB&H in 2006.
10 - Incentives and barriers for the development of renewable energy sources
In 2004 Republika Srpska produced about 3,243,200 tons of coal and imported 295,774 tons of oil and
140,000,000 m3 of natural gas. The data for consumption is not available.5
The emission of pollutants like CO, CO2, SO2, NOx in B&H is greater due to old technologies and high energy intensity. None of the thermal power plants in B&H is desulphurised yet. Energy intensity is about 3.3 kWh/euro and
carbon dioxide production is about 4.8 million tons per year, but only from thermal power plants6.
B&H annually produces almost 50% of its electricity from big hydro power plants, as B&H has very good potential
for using this resource in electricity production. Many international companies are prepared to finance further big
hydro power plants projects, even though big hydro power plants cause environmental problems like increasing
river levels and flood damage downstream.
B&H has two main problems which are connected with energy production:
1. Loss of natural beauty on the Neretva and other largely untouched rivers in many parts of B&H – though
building one big power plant provides maybe 20 new long-term jobs, it also changes some natural areas forever
and leads to the extinction of many sorts of animals and plants as well.
2. Poor air quality is a big problem in the industrial cities, especially in the winter months.
2. Heat production
It is very hard to collect information about the current utilisation of thermal energy for all of B&H because we do
not have any institution that collects such information at the national level. So we can speak only about thermal
energy production from a single producer at the local level.
According to data from the Tuzla power plant for the year 2005, this power plant produced 430,854 MWh of total
thermal energy, which is used only for the heating of part of the towns of Tuzla and Lukavac.
5
RS Ministry of Economy, Energy and Development. “Energy Balance for 2004”. February 2005.
6
Data from the Faculty of Electrical Engineering at the University of Tuzla.
Bosnia and Herzegovina: country analysis - 11
The Center for Ecology and Energy Tuzla is a Bosnian-Herzegovinan non-governmental organization
that encourages sustainable development in the field of environmental protection, utilizing a combination
of educational and practical work with cooperation at all levels of society and investment in the people’s
resources.
Hnuti DUHA – Friends of the Earth Czech Republic campaigns for environmental solutions on a wide
range of issues, with priorities in energy and climate, forests, nature conservation, waste and resources
and agriculture, as well as on general environmental policy issues.
AGREE.NET is a unique network of environmental NGOs in Central and Eastern and South Eastern Europe
that works on the promotion of sustainable energy actions
Prepared by Admir Malkočević
Edited by Petr Holub, Martin Mikeska
Contacts
A › Hnutí DUHA, Bratislavská 31, 602 00 Brno, Czech Republic
T › 545 214 431
F › 545 214 429
E › info@hnutiduha.cz
www.hnutiduha.cz
A › Agree.net, Bratislavská 31, 602 00 Brno, Czech Republic
T › 545 214 431
F › 545 214 429
E › david.lobpreis@agreenet.info
www.agreenet.info
This paper is published by The Center for Ecology and Energy Tuzla within the framework of a project coordinated by Hnuti DUHA-Friends of the Earth Czech Republic that aims to assess incentives and barriers, and
give policy recommendations to/for the development of renewable energy sources in five Balkan countries.
The activity was made possible thanks to the cooperation of the organisations within Agree.net.
The regional summary for Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia and Romania is available
on www.agreenet.info/balkan_renewables.pdf.
Preparation of this paper was supported by the European Community: Operating Grant 2006 - AGREE.NET.
The sole responsibility lies with the author and the Commission is not responsible for any use that may be
made of the information contained therein.