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INTERVIEW - EBRD to back competitive auctions for wind, solar capacity in W. Balkans

INTERVIEW - EBRD to back competitive auctions for wind, solar capacity in W. Balkans Matteo Colangeli; Source: EBRD

TIRANA (Albania), May 23 (SeeNews) - The European Bank for Reconstruction and Development (EBRD) will be helping the Western Balkan countries hold competitive auctions for renewable energy capacity as they strive to cut their dependency on coal and gas, the bank's director for the region, Matteo Colangeli, told SeeNews.

"For us this is a top priority," Colangeli told SeeNews in an interview on the sidelines of the bank's annual meeting in Marrakech, Morocco earlier this month. "We will not only be financing projects, but also helping countries devise mechanisms to allocate capacity for renewables in a competitive and efficient manner so that they attract quality investors and get good value for money by achieving competitive prices from those wind and solar projects."

"The model that we are promoting is the one which so far we succeeded in delivering in Albania and it is a model based on competitive auctions to allocate capacity for utility-scale renewable energy projects," he explained.

In 2021, the EBRD provided technical assistance to a tender held by Albania's energy ministry for the construction and operation of a 100 MW solar plant in Spitalle, in the coastal municipality of Durres. With a bid of 29.89 euro per MWh, French renewables company Voltalia won the tender. A year earlier, Voltalia won a tender supported by the EBRD to build and operate a 140 MW solar plant in Albania, at the coastal site of Karavasta.

This model can be repeated in other countries, Colangeli said, adding that he hopes Serbia too will hold its first auction by the end of the year.

"We are working towards that objective in Serbia. We have been working with the [energy] ministry for a long time to prepare the first wind auction. We hope one of the first priorities of the new government that should take office in the coming months will be to launch the auction. This would be an important signal for investors and set an important example for the region," he said.

In Albania, the international lender is also supporting the construction of a 12.9 MW floating photovoltaic plant, the first one of this size in Albania and the Western Balkans. Elsewhere in the Western Balkans, the EBRD is advising North Macedonia's state-owned electricity producer ESM on a project for a 20 MW PV plant which will be installed next to an existing coal-fired TPP. In Kosovo, the bank is preparing an innovative project to introduce solar power in Pristina’s district heating system.

"If we are talking now about the impact of the war on Ukraine [...], energy is clearly where this materialized in the Western Balkans. The region is highly dependent on gas from Russia, many countries are net energy importers and they need to adjust to the new energy prices. Energy efficiency will clearly be a key priority in the years ahead" Colangeli noted.

"One of the consequences of the current situation may be an acceleration of the switch from coal directly to renewables. I think the role of gas as a transition fuel which many foresaw as inevitable in many countries that are currently heavily dependent on lignite may be somehow smaller or diminished as a result of the high cost of gas and issues related also to supply. So for some countries this may create a rationale to go directly from coal to renewables," Colangeli said. "Kosovo is one example of a country that may decide to do away with introducing gas as a transition fuel and go directly to renewables," he added.

In electricity, the EBRD has been financing several major power interconnection projects in the past two decades, including a 50 million euro power link between North Macedonia and Albania.

"We have appetite to support projects for both high transmission lines between countries and for the domestic distribution networks which make it possible for renewables to be rolled out," Colangeli said.

With gas infrastructure projects, the EBRD is taking an increasingly selective approach. All projects have to be aligned with the Paris Agreement, which aims to hold the increase in the global average temperature to less than 2°C above pre-industrial levels, and with credible and ambitious national energy and climate plans that all countries in the region should commit to.

The energy transition is important not only on a systemic basis but also for individual local companies in view of the announced EU carbon border adjustment mechanism. When this mechanism comes into force, it will effectively penalize exporters to the EU from countries that do not share the same level of ambition when it comes to the green energy transition, the EBRD official stressed.

"This will be a powerful incentive for Western Balkans countries to decarbonise given that the EU is by far the dominant trading partner for the region."

The EBRD has been investing over a billion euro per year in the Western Balkan in the past years, more than anywhere else in its countries of operations by relation to GDP or population, and it has the ambition to expand its operations, Colangeli said.

"The Western Balkans are a priority region for the Bank and our work there is really demand-driven. The ambition is certainly to do more, and the main constraining factor is just the ability to find projects which are commercially and financially sound, which are in line with our strategy, and which are developed by counterparts willing to play by the high standards that are required to be financed by the EBRD."

Throughout the region, cross-cutting issues pertaining to business climate and competitiveness are the rule of law, creating a level playing field for foreign and local investors, more efficient public administrations, and investing in young people and skills, Colangeli went on to say.

"Digitalisation is obviously an important element to strengthen the competitiveness of SMEs in the Western Balkans and help them integrate in global value chains," he added.

The EBRD director for the Western Balkans pointed to corporate governance and succession planning as another area of support for SMEs that the EBRD will be looking at in the region.

"Many companies are owned and managed by first generation entrepreneurs [...]. This is an area where we will certainly work on an advisory programme to try and ensure an efficient transition to the next generation, promoting professional management and a more structured governance for companies in the region," he said.

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