Power to the people: How distribution grid improvements can speed up energy transformation in the Western Balkans

The transformation of the energy sector in the Western Balkans is progressing at different speeds. Much of the system still relies on outdated fossil fuel plants and large-scale hydropower production. However, all countries in the region have started to see an influx of intermittent renewable energy. While there are exceptions, this new capacity generally consists of utility-scaleinstallations directly connected to the transmission or distribution grids, functioning as additions to the existing centralised system.  

Yet the system can only absorb so much intermittent production at present. Transmission system operators in Western Balkan countries typically estimate that around a third of grid connection requests can be accommodated without compromising the stability or security of supply. They also identify the connection of multiple utility-scale photovoltaic plants to the distribution grid as a cause of excessive voltage variations and increased power losses. 

While power transmission systems have their own issues to resolve, investment in the distribution grid needed to speed up the transition is lagging behind. Most of the infrastructure was built in the last century and has hardly been upgraded, despite legally binding obligations.  

Distribution grid losses are significantly higher in most Western Balkan countries than in EU Member States. Bosnia and Herzegovina is the only country in the region with losses below 10%. However, losses in Montenegro, North Macedonia and Serbia are around 11 to 14%, in Albania almost 20%, and in Kosovo above 20%. Part of the issue lies with the non-technical lossescaused by outdated energy consumption metering and billing systems.  

The current situation does not allow for sufficient capacity to enable more prosumers and energy communities to connect. To achieve this, the grid needs to be flexible and capable enough to redistribute electricity in real time from many small producers to wherever it is needed most at that moment.  

Enabling households and small and medium-sized enterprises to actively participate in the energy system by generation as well as consuming electricity is a necessary step in the energy transformation. This will motivate them to invest more in energy efficiency and to proactively contribute to policy development.  

The benefits will be shared by everyone. The more prosumers and energy communities that join the system, the lower electricity prices will be. Lower losses and modern metering and billing systems will benefit the system operators. And finally, more stable national systems will lead to stability in the regional and European electricity markets.  

This is why financiers, such as development banks and the EU, must prioritise investment not only in electricity generation, but also in improving the distribution grid. This is the only way the system can move away from large-scale, climate-damaging, centralised power plants and truly embrace an energy-efficient and renewable future for all.