Power to the people – how distribution grid improvements can speed up energy transformation in the Western Balkans

The energy sector transformation in the Western Balkan countries is going forward at varying paces. Much of the system is still reliant on outdated fossil fuel plants or large-scale hydropower production, however an influx of intermittent renewable energy has started in all the countries. There are exceptions, but this new capacity generally consists of utility-scaleinstallations directly connected to the transmission or distribution grids and functioning as additions to the existing, old, centralised system. 

There is a limit to how much this system can absorb intermittent production as it is now. Transmission system operators in the Western Balkan countries usually estimate that around athird of grid connection requests can be accommodated without compromising stability and security of supply. They also identify the connection of multiple utility-scale photovoltaic plants to the distribution grid as a cause of excessive variations in voltage and even increased power losses in the system. 

While power transmission systems have their own issues they need to resolve, distribution grids are most lagging in investments to speed up the transition. Most of the infrastructure was built in the last century and has been hardly upgraded, despite legally binding obligations. 

Losses in the distribution grid in most Western Balkan countries are significantly higher than in EU Member States. Bosnia and Herzegovina is the only country in the region that has losses lower than 10 per cent, but losses in Montenegro, North Macedonia and Serbia are around 11 to 14 per cent, Albania almost 20 per cent and in Kosovo even above 20 per cent.Part of the issue is the non-technical losses caused by outdated energy consumption metering and billing systems. 

This situation does not allow for sufficient capacity that enables more prosumers and energy communities to be connected. For this, the grid needs to be flexible and capable of real time redistribution of electricity from many small producers to where it is most needed at that moment. 

Enabling households and small and medium enterprises (SMEs) to be active participants in the energy system through generation – not just consumption – of electricity is a necessary step in the energy transformation. This will motivate them to increase their investments in energy efficiency, but also to actively participate in policy development. 

The benefits will be shared by everyone. The more prosumers and energy communities are in the system, the lower the prices for electricity will be. Lower losses, and modern metering and billing systems, will benefit the system operators. More stable national systems will translate into stability of the regional and European electricity markets. 

This is why financiers, such as development banks and the EU, must prioritise investments in distribution grid improvements – not just electricity generation. This is the only way for the system to move away from centralised, large-scale, climate-damaging power plants and truly embrace an energy-efficient and renewable future for everyone.