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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.

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
Pippa Gallop, Bankwatch Research Co-ordinator


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