Countries in the region, which remain significantly dependent on electricity imports and fossil fuels, must accelerate the development of domestic sources of solar, wind, and energy storage in the coming decade to reduce dependence and ensure long-term energy security.
This was stated at the second panel "5 years later: perspectives for the development of the energy sector in the region until 2030", which was organized by the Electric Power Company of Montenegro in Budva as part of the fifth EPCG NET energy symposium.
The General Director of the State Electric Power Company "Elektroprivreda Republika Srpska", Luka Petrović, said that the issue of energy security has become one of the key strategic issues in the region, especially in the context of plans for new gas terminals and energy infrastructure in the Adriatic.
Speaking about current energy trends, Petrović stated that there is increasing talk in Serbia and the region about the construction of LNG terminals, as well as the strengthening of the southern interconnection, with the presence of foreign, primarily American, interests in that sector. As he pointed out, such projects are already visible and, in his opinion, are part of a broader strategy for supplying the Adriatic coast with gas.
He warned that such a development could lead to energy dependence on gas in the region, unless its own resources and alternative energy sources are developed.
Petrović recalled that ideas about the development of gas-fired power plants had previously been considered, which would play the role of flexible capacities for balancing the electricity system, especially in conditions of an increased share of renewable sources such as solar and wind energy.
Commenting on the broader energy context, Petrović recalled the period of the energy crisis in 2022, when electricity prices reached up to 700 euros per megawatt-hour, which, he said, had a significant negative impact on the economy and gross domestic product.
"Those who do not have their own energy will be in trouble," said Petrović, emphasizing that it is therefore necessary to invest in domestic resources "at all costs" instead of relying on imported energy sources.
He cited global experiences as examples, including disruptions in the uranium market and the consequences of political events in Niger on France's energy stability, emphasizing that even large countries can be vulnerable if they depend on imported energy sources.
"If we don't use our own resources, we are creating a long-term problem for energy stability," said Petrović.
The President of the Board of Directors of CGES, Aleksandar Mijušković, announced that the Montenegrin transmission network is ready for new energy projects, stating that there is currently a large number of requests for connection to the system.
"We have about 7 gigawatts of requests, with about 2,8 gigawatts of contracts signed. Unfortunately, we do not have a large number of large projects that are being implemented and are being implemented, nor many large solar power plants," said Mijušković.
He stressed that CGES is ready to discuss network development and capacities, including previous dilemmas about the size and usefulness of network projects.
Mijušković believes that the Montenegrin power system is much more stable today, and the 400 kV transmission line was recently completed, which, as he stated, was a long-awaited project.
"We have completed the 400 kV transmission line to Pljevlja. Now there are still tests left and we expect it to be put under voltage by the end of June," said Mijušković, noting that the project has been implemented for a long time.
He also announced a shunt reactor project, which should contribute to system stability, especially in conditions of high voltage in the region.
"We are also working on a shunt reactor. In the region, but also in Europe, we have a problem with high voltage and we have to respond to that seriously," said Mijušković.
He pointed out that additional capacity increase projects are being planned in cooperation with neighboring systems, from Trebinje through Montenegro to Albania, emphasizing that the goal is to enable the connection of as many users as possible.
"We have the capacities and are working to enable everyone to join, and we have already discussed this in Banja Luka through special agreements," concluded Mijušković.
The General Director of the Electric Power Company of Serbia (EPS), Dušan Živković, assessed that the energy sector is in a period of pronounced uncertainty, which is further intensified by the recurrence of gas crises in Europe.
"2022 was a particularly difficult year, and now we have the current situation again. What I recognize is the uncertainty that will accompany the coming period," said Živković.
He emphasized that the decarbonization process must be aimed at strengthening the energy security of each country.
"Decarbonization must help raise the level of energy security of each individual country. It is not just replacing one resource with another, but a process that should contribute to the stability of the system," said Živković.
He also recalled warnings about global resource consumption, stating that humanity has already entered a period of "living on credit" when it comes to the planet's resources. As he said, on June 6 this year, the Earth's annual resources were consumed globally, while in Serbia this happened on May 15.
"In other words, we spend what we have and now we spend from the future," said Živković, adding that one of the key challenges is how to align consumption with available resources while preserving the existing standard.
He said that the goal is to ensure long-term security of supply through the diversification of resources and the strengthening of energy companies, both in Serbia and in the broader European context.
Speaking about future challenges, Živković highlighted decarbonization as an inevitable process, but also the digitalization of the energy sector, including the development of data centers and the growth in electricity needs due to the application of artificial intelligence and digital technologies.
"Digitalization has two segments, the development of data centers and the needs of energy companies that will themselves require resources for digital processes and AI," said Živković.
He added that in conditions of instability, the financial stability of companies will also play a key role.
"We are burdened with the CO2 tax, we are uncompetitive. We now have a situation that has been going on for six months. There is no solution, or I don't see one, until the end of this year. It will cost us 250 million euros. That's a lot for any company in the world, and for a company in the region, it's an extremely large amount of money!" said Živković.
"This time of instability can only be overcome if you have sufficient financial resources," Živković pointed out.
He also emphasized the importance of ESG standards (environmental, social and corporate governance), especially in the context of environmental protection and social responsibility.
When it comes to energy resources, Živković stated that renewable sources such as sun and wind represent "free resources", but also that gas, especially from southern directions, can contribute to stability and lower costs in the future.
Speaking about projects in Serbia, he pointed out that the construction of a gas power plant in Niš is based on both existing infrastructure and a strategically favorable location for possible new gas supply routes.
"The existing infrastructure and location enable different gas supply and transit routes, which could change supply flows in the future," concluded Živković.
Executive Director of EPCG Zdravko Dragaš announced that the investment cycle in the energy sector continues, with new investments, especially in the field of solar power plants and prosumers, gaining additional importance through the development of large energy projects.
He stated that existing investments are proceeding according to plan, but that at the same time, space is being opened for new large projects.
"Investments that have begun, such as solar systems and prosumers, are continuing at their own pace. However, the continuation of all those investments is now taking on another dimension through investments in large solar power plants," said Dragaš.
Speaking about the implemented projects, Dragaš highlighted the completion of the first phase of an investment cycle with the support of the European Bank for Reconstruction and Development, emphasizing that all procedures for financing, design and selection of contractors were followed.
"That gave one good result with the release of Gvozda 2," Dragash said.
He assessed that the continuation of the Gvozd 2 project is showing positive financial effects already in the first months, with the expectation that the project financing will be properly repaid through the investment itself.
"It is already showing financial results in the first few months and we are certain that the project financing will be returned from that investment," said Dragaš.
As one of the important future projects, Dragash singled out the eighth generator A8, which he said represents an investment with a high degree of security and predictable return.
"A8 is a project that will provide a secure return, and confirmation of this is the willingness of banks to finance it as a project, because they do not want to enter into risky projects," said Dragaš.
He added that the implementation of the small Otilovići hydroelectric power plant, which is financed from its own funds, is continuing, with positive results expected.
"We are 100% sure that it will give a good result," said Dragaš.
He said that continuing investments in cooperation with strategic partners and major energy players is particularly important for the coming period.
Director for Europe at CWP Global CWP Global Maja Turković assessed that the energy sector is facing increasingly pronounced regulatory challenges that affect investments in renewable energy sources, especially in the context of European climate policies and market mechanisms.
She stated that some of the new regulations, including mechanisms such as CBAM, have in practice proven to be an additional burden on renewable energy projects, even though the original goal was to accelerate decarbonization.
"It's a regulatory paradox. Instead of helping renewables, some measures are currently negative for them," said Turković, adding that the problem is particularly pronounced due to the retroactive application of certain rules.
As she pointed out, retroactivity in regulations poses a serious problem for investments because it changes the rules of the game after projects have already been launched.
"Retroactivity kills investment," Turković stated.
She assessed that the consequences of such regulatory solutions are already being seen in the electricity market, including falling prices and increasing spreads between markets in the region and European countries.
As an example, she cited projects related to spot markets in Hungary, where, according to her, producers are faced with additional costs due to increased market differences.
Turković also warned of a decrease in cross-border electricity exchange and a decline in market liquidity, with traders and investors being more cautious.
"The volume of cross-border exchange has decreased, and liquidity has fallen," Turković stated.
Speaking about financing renewable energy projects, Turković pointed out that it is not as simple as it is often presented, because investors must ensure secure placement of the produced energy and long-term contracts.
"The worst are regulatory barriers. The market solves things best, while too much regulation can create additional problems," said Turković.
She added that grid systems and infrastructure capacities often lag behind the development of renewable sources, because, as she stated, they are sized according to demand and connection requirements, and not in advance according to production capacities.
Turković assessed that, despite the large number of planned projects, the key factors for their implementation are energy demand and the ability to secure long-term placement, while regulatory uncertainty represents one of the greatest risks for investors.
Director of OIE Croatia Maja Pokrovac said that the countries of the region must use their energy potential more specifically and faster, especially in the areas of solar, wind and energy storage, in order to reduce dependence on imports and fossil fuels.
Speaking about Croatia's experiences in energy transition, Pokrovac stated that in the last five years, significant progress has been made in the development of solar power plants and flexible energy systems.
"In the last five years, we have created about 1 gigawatt of solar capacity, while previously we had about 200 megawatts. We have also developed about 500 megawatts in virtual power plants," Pokrovac said.
However, she pointed out that Croatia still lags behind in the European comparison in terms of the share of solar energy per capita, despite the growth in capacity.
Pokrovac stated that Croatia currently still imports around 16 percent of its electricity annually, while during the summer months imports can reach up to 32 percent, depending on consumption and production.
She assessed that for a successful energy transition, it is necessary to combine the development of renewable sources with energy storage, including battery systems and grid flexibility.
"If we talk about collocated batteries, we can talk about additional capacities in multiple locations, which is crucial for system stability," Pokrovac said.
Speaking about the potential, Pokrovac emphasized the importance of solar energy, wind, biomass and geothermal sources, as well as the need for better planning of locations for new projects in cooperation with the academic community.
She particularly emphasized the importance of harmonizing the energy and food sectors through the development of agro-solar projects.
"We must have both energy production and food production, without jeopardizing one or the other sector," said Pokrovac.
She also warned that despite capacity growth, countries in the region are still dependent on electricity imports and fossil fuels, stating that it will take more than a decade to change this trend.
"The most expensive energy is the one you don't have," said Pokrovac, adding that the potential of renewable sources in the region is still underutilized.
She assessed that the key challenge in the coming period is to accelerate the connection of new capacities to the grid, as well as the development of energy storage systems, in order to ensure the stability of the electricity system.
Executive Director, RUP Nemanja Laković said that the company has developed a plan for a just and energy transition, including business transformation and the development of new activities as part of preparations for a gradual exit from coal-fired energy production.
He stated that the thermal power complex in Pljevlja previously produced between 40 and 60 percent of total electricity in Montenegro, and that, on average, in the five years before the ecological reconstruction, it produced electricity with a market value of around 840 million euros.
He pointed out that the thermal power plant remains a key stable balancing source in the Montenegrin power system, despite plans for energy transition.
"That doesn't mean we're not fully committed to transition," Laković said.
Speaking about the transformation process, he stated that a plan has been prepared within the company for the formation of 12 new business units that, after the cessation of coal production, could operate independently.
According to him, three new activities have already been implemented: a construction company that employs around 100 workers and participates in the market and tenders, a factory for the production of HTZ equipment with around 20 employees, as well as an asphalt base in Pljevlja.
Laković stated that these activities have already included around 150 jobs through the transition process, while business plans have been developed for the remaining planned units and financial partners are being sought.
"The mine will not be able to finance this process on its own with its own resources," said Laković, adding that to this end, cooperation is being established with international organizations, including the UNDP United Nations Development Programme, as well as with the Government of Montenegro through mechanisms for just transition.
He pointed out that a solar power plant with a capacity of about 62 MW is also being prepared on land near the existing energy complex, as well as a small hydropower project "Dubatovići" on the Ćehotina River with a capacity of about 2,2 MW.
Laković assessed that the location of Pljevlja, due to its proximity to the existing energy system, represents a favorable area for connecting new production capacities.
Speaking about the future energy mix, Laković stated that it has not yet been defined which technologies will replace stable sources such as thermal power plants, and that gas, bioenergy and other forms of production are being considered, including potential projects with international partners.
He added that the possible construction of a gas terminal is also being discussed, as part of a broader plan to ensure energy security.
Finally, he said that transition is not only an obligation towards European policies, but also a development opportunity for the local community.
"We do not see this transition as an obligation, but as a new development opportunity for our city," concluded Laković.
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