Home >> Our Work >> Projects >> Kosova e Re lignite power plant, Kosovo

Kosova e Re lignite power plant, Kosovo


The Kosovo A power plant near Prishtina (Original image by Andreas Welch - Creative Commons)

Plans to build a new coal plant close to capital Pristina have been around for over a decade, starting out as a planned 2000 MW unit that would turn the country into the leading energy exporter for the Balkans. Yet, lack of investors and resistance to a massive lignite project in a country that already has the highest single point-source of carbon emissions in Europe have gradually diminished ambitions.

Today, Kosova e Re is planned to have a capacity of 600 MW, costing around USD 2 billion, and it is being heavily promoted by the World Bank and by the United States. Since Kosovo became a member of the EBRD in December 2012 the bank has also indicated its interest in the project. In 2013 both banks committed to virtually halt financing for coal and it remains to be seen how they can justify treating Kosovo as an exception.

Civil society groups in Kosovo, led by the Kosovo Civil Society Consortium for Sustainable Development (KOSID) oppose the construction of a new power plant for the following reasons:

1. It is unnecessary. Reducing electricity losses and investing in efficiency and alternatives are cheaper and create more jobs.

While the plant is being depicted as necessary to ensure the country’s energy security, 35 percent of electricity is lost in distribution (of which around 17 percent are technical and a result of an old grid and the other are commercial losses, i.e. theft), and much more is lost as a result of lack of energy efficiency measures in buildings.

Daniel Kammen, Professor at the University of California in Berkeley and former World Bank 'Clean Energy Czar' has shown (pdf) that a range of alternatives exists to meet present supply constraints all at a lower cost than constructing a proposed 600 MW coal plant. The options include energy efficiency measures, combinations of solar PV, wind, hydropower and biomass, and the introduction of natural gas.

While some of the options shown may be more acceptable than others from an environmental or geopolitical point of view, the study illustrates the fact that alternatives have not been adequately studied by the Kosovo government and World Bank.

2. High costs

Building Kosova e Re would require Kosovo consumers (or the government) to service over a billion euro in debt (Source (pdf)) at a time when they are also servicing debt for improvements in the Sibovc mine, Kosovo’s wasteful transmission and distribution systems, and refurbishment of Kosovo B.

at a time when they are also servicing debt for improvements in the Sibovc mine, covering the cost of Kosovo’s energy wastage, and paying for the refurbishment of Kosovo B.

Concerns about costs have been heightened by the Kosova e Re project only receiving a single bid, which diminishes the likelihood of the Government getting good value for money.

Indeed, local media reports suggest that the bidder, ContourGlobal, is asking for an internal rate of return of 25 percent, which is a very high profit indeed. This would be delivered through a long-term power purchase agreement, which would oblige the Kosovo Electricity Corporation to buy some or all of the electricity generated, and would limit its freedom to buy electricity from other sources, potentially raising prices even more than necessary for customers.

The long-term power purchase agreement is also likely to conflict with Energy Community Treaty rules, which oblige Kosovo to follow EU state aid legislation.

3. Damage to health

Kosovo currently has 835 early deaths per year and estimated direct costs of around EUR 100 million annually due to air pollution, of which the lignite plants are responsible for a substantial proportion. (Source: World Bank (pdf))

However, far from solving this problem, a new lignite plant would perpetuate the health risks from coal for several more decades. Due to the location where the Kosovo e Re plant would be built, it is likely that emissions will exceed EU ambient air quality standards, even if Kosovo B and Kosova e Re meet EU emission standards. No reliable air quality monitoring is taking place, so it is difficult to prove that air quality would be acceptable with a new plant.

4. Kosovo needs to increase renewables and energy efficiency and decrease CO2 emissions

By 2020, Kosovo has committed through the Energy Community to source 25 percent of overall energy from renewable sources and improve energy efficiency by 9 percent. And as the country is aiming to join the EU, it will have to adhere to ever stricter CO2 reduction targets (likely to be 80-95 percent for the EU as a whole by 2050). This one coal power plant alone will likely swallow up most of the country's carbon budget by 2050, leaving a choice between closing the plant earlier than planned or paying penalties.

5. Water shortage

Kosovo is already water-stressed and its water polluted, and a new plant would add to the problem. A paper by Bank Information Center and KOSID shows that the water modelling for the project miss out several factors including water use by the expanded open pit coal mining operations and conveyance of coal from the mine to the power plant, as well as the impact of a new plant on water pollution.

6. Resettlement and agricultural land shortages

A new power plant would require a new mine, and this will require resettlement of at least 7000 people. This is complicated by the fact that many of the people are farmers and need to be provided with adequate land to compensate for their lost livelihoods, and agricultural land is in very short supply in Kosovo.

This raises further questions about whether it is better to use scarce land for opening a new mine or feeding people. The resettlement that has occurred so far for mine expansion has been in breach of any known international standards for resettlement and an analysis by resettlement expert Ted Downing has shown that the new resettlement plans have already breached World Bank rules in their early design stages.


For more information contact

Visar Azemi, KOSID Co-ordinator
or
Pippa Gallop, Bankwatch Research Co-ordinator

Share:

Latest developments


 

Blog entry | March 16, 2016

While the Energy Community yesterday failed to consider more stringent air pollution rules for the Western Balkans, a new report quantifies the health costs of the region’s coal burning both within the region itself as well as in the neighbouring European Union.

Blog entry | January 12, 2016

No-one will 'freeze to death' if the planned lignite-fired power plant in Kosovo does not receive support from multilateral development banks, but if it does, low-income households may well end up choosing between electricity and food. How can an institution, whose very mission is to end poverty, justify this project?

Press release | October 16, 2015

Tirana, Albania - A group of CSOs from South East Europe (SEE) delivered over 16 000 petition signatures to Miguel Arias Cañete, EU Commissioner for Energy and Climate Action and Co-Chair of the Ministerial Council of the Energy Community today before its meeting in Tirana, Albania.

Blog entry | September 7, 2015

By now regular readers of the Bankwatch blog will know that the energy system in southeast Europe is corrupt, dirty and inefficient. But we now have an opportunity to change it.

Press release | June 8, 2015

Prague - New investments in coal mines and power plants could cost the Western Balkans and Ukraine dearly if they fail to take into account binding rules on subsidies (State aid), according to a new briefing released today by CEE Bankwatch Network.

Publications

Briefing | June 8, 2015

By signing the Energy Community Treaty in 2005, countries in the Western Balkans, Ukraine and Moldova agreed to abide by the European Union's competition rules. But a number of energy sector investments are being planned that may not so far have taken adequate account of state aid rules. This briefing includes case studies of projects from Bosnia-Herzegovina, Kosovo, Montenegro, Serbia, and Ukraine.

See related materials including a more detail briefing, a press release and a slideshow at:

Study | June 8, 2015

By signing the Energy Community Treaty in 2005, countries in the Western Balkans, Ukraine and Moldova agreed that the European Union's competition rules are to be applied also within their territory. A number of energy sector investments are being planned that may not so far have taken adequate account of State aid rules. This briefing therefore provides a summary to draw attention to relevant requirements of EU law and highlight the risks of failure to take them into account when planning investments. The account when planning investments.

Bankwatch Mail | May 14, 2015

Western Balkan countries have ambitious plans to increase their electricity generation over the next years. But what will happen if they all become a regional energy hub? Will there be a demand for all the available electricity?

Study | March 19, 2015

Country chapters available for Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro, Serbia.

For other languages, see here.

Analysing the estimated energy demand and production capacities in Western Balkan countries, this study shows that if countries realise their planned capacity expansions, the region will have a 56 per cent electricity surplus in 2024, led by Bosnia and Herzegovina and Serbia. Nearly all governments in the region aspire to become electricity exporters, but the study argues that if governments fail to take into account the regional perspective, they could end up with power plants becoming simply uneconomic to operate.

Bankwatch Mail | March 20, 2014

The EU-backed Energy Community Treaty, signed in 2005 and comprising the western Balkan countries, Ukraine and Moldova, has been widely hailed as encouraging regional co-operation. It also sets a legislative framework for the signatories (also known as the contracting parties) that should contribute, along with the EU accession process, to addressing the environmental and social impacts of the energy sector. Indeed, examples of the Energy Community's added value are its adoption of renewable energy targets in October 2012, as well as a requirement for power plants to comply with EU emissions limits.