This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 2/26/2019

Overview

Energy is potentially an attractive sector for U.S. and foreign investment.  Kosovo is currently unable to meet its domestic energy consumption needs, and demand for energy is rising locally and regionally.  Electricity consumption and peak demand in Kosovo grew more than 90 percent between 2000 and 2010, and peak demand in 2017 was around 1200 MWh.  Kosovo’s strategic location in southeastern Europe and substantial lignite resources (5th largest in the world) provide opportunities for an independent power producer to service Kosovo and the region.  The Law on Mines and Minerals allows for private entities to request exploration and mining licenses for lignite.

There is a vital need for stable, base-load power generation in Kosovo that can meet consumer demand.  Power shortages and outages have grown less frequent, but can still occur when generation and import capacity do not meet demand or when there is a service failure at one of Kosovo’s power plants.

The vast majority of electricity in Kosovo is produced by two lignite-fired thermal power plants, known as Kosovo A and Kosovo B, which use 1960s and 1970s technology respectively.  The rest of the energy is produced mainly by small hydropower plants (HPP), the biggest of which is located in the north of the country.  The two thermal power plants are currently capable of producing up to 880 MW, and the HPPs produces an additional 77 MW.  

The Kosovo power system was designed in different circumstances, when power generation, transmission, and distribution elements were part of a larger integrated Yugoslav power system.  The ability to fully cover local demand, regulate output in accordance with demand, and provide self-sufficient ancillary services of that subsystem were not considered relevant criteria in its initial design.  Kosovo continues to rely on its two Yugoslav-era power plants and imports, which are not able to provide reliable power supply.  Kosovo has not built new generation facilities in decades and needs to establish new sources of electricity before it can decommission the aging, inefficient, and polluting Kosovo A power station.

Kosovo’s energy strategy for 2017 – 2026, after consultation with the European Commission, World Bank, and U.S. government, was approved by the Assembly in 2018.  The strategy includes four priority measures for the development of the energy sector:

  1. Build new and sustainable power generation capacities;
  2. Establish an open and competitive energy market;
  3. Decrease energy consumption through energy efficiency measures; and
  4. Rational development and use of renewable energy sources.
Owners of the Kosovo Energy Distribution Services (KEDS), a Turkish consortium, have invested heavily to improve and expand the distribution network, increase collections, reduce electricity losses, and improve the security of supply and overall service quality.  In January 2015, KEDS unbundled its operations, separating supply from distribution and created KESCO, the public electricity-supply provider.  In March 2017, the Energy Regulatory Office (ERO) took the first steps towards energy market liberalization, following amendments of the energy legislative package in 2016 and EU directives.

In December 2017, GoK reached a commercial close agreement with the American company ContourGlobal for the construction of a 500 MW € lignite thermal power plant.  ContourGlobal launched the initial selection process in June for applicants to provide the Turnkey Engineering, Procurement and Construction (EPC) Contract for the project, which will follow World Bank Procurement Guidelines.  The financial agreement for the €1.5 billion investment in the plant is expected to conclude by early 2019.

Renewable energy sources (RES) are an important aspect of Kosovo’s energy future and have been underutilized to date.  To encourage the use of RES, Kosovo has established the necessary legal framework, as well as a support program with feed-in tariffs for hydropower, wind energy, photovoltaic energy, and biomass.  As a member of the Energy Community, Kosovo has committed to meet mandatory RES targets for 2020, which were defined and approved by the Energy Community Ministerial Council in 2012.  For Kosovo, the commitment is to reach a 25 percent RES share of final gross energy consumption by 2020.  A Turkish company Guris, is currently developing a wind farm, using General Electric turbines that will produce a little over 30 MW of electricity.  The Government of Kosovo has committed to a target of 29.89 percent RES as a share of total gross consumption by 2020.  As of 2015, renewables comprised 19.7 percent of final gross consumption in Kosovo.  Beginning with a baseline of 77 MW of RES installed in 2017, Kosovo’s energy strategy projects the country will reach 401-470 MW by 2026, depending on the development scenario. 

In April 2017, Kosovo implemented a new tariff structure, which removes seasonal tariffs for all consumers, removes block tariffs, and decreases the fixed fee to €1.8 for households.
 201520162017 2018 (Estimated)
Total Local Production5,600 GWh
 		5,835GWh 5,300.3 GWh 5,542.8 GWh
Total Exports601 GWh  1,121GWh 880 GWh 1,382.1 GWh
Total Imports668 GWh
 		534GWh  1,242 GWh
 		700.1 GWh
 
Imports from the US0 GWh
 		0 GWh
 		0 GWh
 		0 GWh
 
Total Market Size5,667 GWh   5,248 GWh 5,662 GWh 4, 860.8 GWh















Unit: Gigawatt hour (GWh)
Total market size = (total local production + imports) - exports
Data Source: ERO measured and estimated data
 
End-use energy-efficiency improvements will become increasingly attractive once collection discipline is complete and full-cost tariffs provide proper incentives.  Several donors are already beginning to develop programs in this area.  Increased base-load conventional generation will be needed as a back-up to any new renewable energy generation.
Leading Sub-Sectors
  • Turbines
  • Generators
  • Mining equipment
  • Power system spare parts
  • Power operation and maintenance services
  • Legal and consulting services
 
Opportunities
  • Engineering and construction of a new power plant
  • Providing equipment for wind farms  
  • Renewable energy
  • Energy efficiency, especially in residential dwellings

 
Web Resources
Kosovo Energy Corporation
Kosovo Energy Distribution Service
Kosovo Energy Supply Company 
Kosovo Energy Regulatory Office 
Kosovo Transmission, System, and Market Operator (KOSTT)
Ministry of Economic Development  
World Bank Kosovo Office


 

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