Decarbonisation full by MACEF

Macedonian Centre for Energy Efficiency â&#x20AC;&#x201C; MACEF

DECARBONIZATION OF THE ELECTRICITY GENERATION VISION 2050 September, 2016

DECARBONIZATION OF THE ELECTRICITY GENERATION VISION

Could the Republic of Macedonia make full switch in its electricity generation process from fossil fuels to renewables by 2050?

September, 2016

DECARBONIZATION OF THE ELECTRICITY GENERATION

This document was prepared with the financial assistance of the European Climate Foundation. In the preparation of the document were involved employees and members of MACEF as follows: Prof. Dr. Konstantin Dimitrov MSc Robert Sharlamanov (until 06.01.2016 - for swiching to another duty) MSc Ognen Dimitrov MSc Sache Panevski Jasminka Dimitrova Kapac, BSC Zarko Ilievski, BSC Daniela Trpkovska, BSC Bojan Kalimanov, BSC Victoria Popovska, BSC The integral part of this document are the precious suggestions received during workshops, academic discussions and remarks received from respectable participants from the sector of electrical energy production. The main objective of this program is to promote in the public the need for a different approach to preparation of strategic documents, especially among those responsible for implementation of energy policies, in addition to strengthening the analytical capabilities of the participants.

This scenario should encourage greater engagement of all levels to begin the transition to a society where the use of fossil fuels will be excluded or reduced to the lowest level.

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The development of this vision through dialogue in society, have to show that in the Republic of Macedonia there is real potential to replace fossil fuels by renewable sources in the electricity sector. The anticipated scenario should not be understood as detailed predictions or as end response for optimal preferred design of the future electric power system. Nor scenario includes specific recommendations as to which is the necessary instruments for its realization.

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Is this vision, elusive utopian idea, or task that is worth to strive, to struggle and to achieve?

“Will we look into the eyes of our children and confess that we had the opportunity, but lacked the courage? that we had the technology, but lacked the vision?”

“For some in the EU, energy policy is the fight against climate change, for others it is about energy security. It is both. ” JERZY BUZEK PRESIDENT OF THE EUROPEAN PARLIAMENT

WE AIM TO THE STARS IF WE DO NOT REACH THEM, WE WILL BE ON THE RIGHT TRACK!

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DECLARATION

Confronted not only with an economic downturn, but in particular with the challenges posed by climate change, an increasing fuel import dependency and rising fossil fuel prices, Europe urgently needs to develop solutions for a future sustainable energy system entirely based on renewable energy sources. The answers to today’s challenges do not lie beyond our reach – they are in the palm of our hands. By promoting energy efficiency and renewable energy technologies, we will be able to tackle both security of energy supply and climate change, while creating a future oriented sustainable economy with high quality green jobs. We therefore commit ourselves to promote an economy based on energy efficiency and renewable energy and call on local, regional, national and European leaders to support and advocate a truly sustainable 2050 vision.

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A joint initiative by: EREC- European Renewable Energy Council, GREENPEACE and EUFORES – The European Forum for Renewable Energy Sources

DECARBONIZATION OF THE ELECTRICITY GENERATION

CONTENTS

INTRODUCTION AND GOALS ......................................................................... 7

Energy and Ecology Development Policy by Year 2050 .............................. 13

Defining the Energy Needs .......................................................................... 17

Identification of the electricity requirements ............................................. 25

Renewable Energy Sources Potential.......................................................... 29

6. Barriers - Gains from the Development of the Renewable Energy Resourcesâ&#x20AC;&#x2122; Electricity Generation ....................................................................... 43 7.

Environmental Influences ........................................................................... 51

Investments ................................................................................................. 53

SWOT ANALYZE ........................................................................................... 57

10.

Conclusion AND NEXT TASKS................................................................... 59

References........................................................................................................... 62

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1. INTRODUCTION AND GOALS  Is it possible the total energy production from fossil fuels in Republic of Macedonia be replaced with renewable energy sources until 2050?  Is there a reason why such vision should be realized?  Does Republic of Macedonia have enough renewable energy sources potential to meet its goal?  Which difficulties should be overcome in order to realize this vision? Implementation of this Vision is based on the concurrent realization of the following two basic preconditions: A. Maximal implementation of energy efficiency and energy saving measures in all social sectors, and B. Maximizing the power plants building dynamics that uses renewable energy sources. In order to implement this Vision in the Republic of Macedonia, the electricity production from fossil fuels should be fully replaced with renewable energy sources, or, in other words with energy sources which does not produce such pollutants that influence the environment. This “specific” enriched definition is applicable for two potential energy sources that fulfill the previous conditions. These are:  

Biomass and Nuclear energy.

In practice, many experts refuse to include the nuclear energy in the group of renewable energy sources. Regarding the working principle of nuclear power plants, where there are no emissions of greenhouse gases (such as carbon dioxide

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While transforming into electrical energy, the biomass produce CO2. However, in practice biomass is considered as renewable energy source which does not produce excess amounts of CO2 because during its lifespan it absorbs identic amount of carbon C which is necessary for creating its mass, mainly cellulose.

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and methane), others consider that nuclear energy production should also be assessed in the group of energy sources that contribute into reaching the set targets – which are to hold the air temperature increase to 1.5°C in the following period of time and therefore stop the climate changes that have catastrophic consequences. In the begging, the process shall involve few enthusiasts with analytical skills. Later on, the process will require involvement and contribution from a relatively wider expert audience through organisation of round tables. It could be also adopted and embedded, by a certain political party in its platform on the future development of Macedonia? Through such transparent process, the Vision preparation will be shaped as a representative document which shall be further used as starting point for future activities such as preparation of scenarios and development of models for decarbonisation of the electricity sector until 2050 as well as the whole energy sector i.e. the economy in general.

Is there a reason to commit to preparation of such a vision? There are many reasons that lead to serious approach towards the initiation of this process in our society. By doing this, Macedonia would intensify its involvement, according to its possibilities, in the worldwide process to ‘Save the planet from the influence of the climate changes’. Despite that our contribution in mitigating the climate changes would be incomparably minor against the potential of the high industrialized countries, it is more important to participate in the process coupled with the expected influence on local level. However, the basic reason to approach the fossil fuels usage cuts (decarbonisation process) is above all initiated by domestic, personal needs. Macedonia is a country dependent on imports when it comes to the fuel supply. The fuels’ import (liquid and gaseous fuels, quality coal) is averaging 48%, or almost one half of the total supply. Macedonia is import dependent and has also limited reserves of coal that today and in future, according to the strategic documents of Macedonia, is representing the basic fuel for electricity generation by 2035. What will happen afterwards?

DECARBONIZATION OF THE ELECTRICITY GENERATION That means that we do not have enough domestic supplies to meet our individual needs and in addition we import 50% of the required fuels. Is this a JUSTIFIED REASON to start thinking and PREPARING for what we shall be facing in the period after year 2050? We have succeeded to satisfy a part of the electrical power needs given the limited resources, said that about 30% of the electricity is being imported. The domestic generation of electrical power is meeting the needs of 95% of the low voltage user’s grid where the households represent the majority of the consumers. However, in accordance with the conditions prevailing the liberal electricity market, the industry meets its energy needs through imports! If this is only the current situation, what will happen tomorrow, or after year 2035? This is a reason more too seriously approach to a more favourable environment in the society for moving towards society free of carbon fuels usage! If Macedonia enables production of electricity from renewable sources, it will be free of fuel imports required for its production, as well as free of electricity imports, which is planned to be imported in the energy sector related strategic documents. Could this represent an act of opportunistic goal or economic and even political necessity?

And last but not least, we have to additionally emphasize the need of our society to seriously commit to the local pollution reduction. One of the elements of the “greenhouse” effect and the climate changes is the carbon dioxide emission. The impact of climate change is evident here, but locally we could not contribute a lot to protect against drought, torrential rains, and strong winds. However, we could reduce the local pollution that directly affects the health of employees and, even more children. Try to estimate the improvements in the health protection, if we eliminate thousands of tons of ash discharged into the atmosphere from the coal run thermal power plants. Whereas of one of the dominant sectors that contributes most to greenhouse gas emissions is the electricity production sector having in mind that the main greenhouse gases are released in the process of fossil fuels combustion, especially those involving coal and liquid fuels. Could we neglect the emissions of sulphur dioxide, which together with the nitrogen oxides

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The drops in the fuel and electricity imports, would result into Macedonia's sovereignty rise to a higher level, meaning that there would be no opportunity for political pressure on the basis of imported energy (in all its forms) dependency.

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contribute to the "acid rain" and ’photo pollution’? What about their influence on the soil and the people’s health? Yet, this is one more reason for the Macedonian society to approach with great seriousness towards the development of society model free (with reduced) of fossil fuels utilization.

Is this idea/vision a utopia or it is well grounded? Are there enough renewable resources potential in Macedonia for electricity generation?

YES!

Is it technically feasible to generate electricity in Macedonia solely from renewable resources?

YES!

Will the process positively influence on Macedonia to stop the fuel and electricity imports?

YES!

Will the environmental pollution be reduced?

YES!

Will this mean that Macedonia would join the Program for climate changes reduction to protect the Earth from the global warming?

YES!

Is this goal an easy one to accomplish?

NO!

Are significant financial investments required?

YES!

Are the results accomplishable in a short period of time?

NO!

Which are the necessary requirements to reach the desired goal? Besides the numerous technical and administrative requirements, there is a need for the following:  Political will of decision makers!  Bringing together the intellectual potential!  Operational institutional connectedness!  Focused joint activities of the academic institutions, scientific and research institutions, production organizations!  Financial resources!

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Starting assumptions In order to obtain acceptable results and directions for implementing this vision, several starting assumptions are made. These are:  Construction of power plants as well as implementation of the measures suggested within the Strategic documents of Macedonia – above all the Energy Strategy, Strategy for Renewable Energy Sources and Energy Efficiency Strategy;  Starting point for upgrade is the present condition of the electroenergy system (power plants, transmission and distribution grid);  Performances of the energy equipment are on the present level of technical development;  Prices of the equipment are on the present level. Key elements that influence the process of development of the vision for eliminating the fossil fuels from the energy sector are3:   

Expected economic growth. Stagnation of energy consumption (EE, decrease of energy intensity in the industry). Significant investments in the renewable energy sources.

Expected benefits: Decrease in fossil fuels import dependency (oil, natural gas, coal). Exemption of electricity import dependency. Reducing the emissions of CO2.

Of special interest is the historically significant stagnation/ decrease of electricity consumption worldwide, which is also evident in Macedonia (Figure 1.1).

Global Energy Trends – 2016 Edition, Paris, Enerdata

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  

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Figure 1.1

Electricity consumption trends in G20 countries and Macedonia

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2. ENERGY AND ECOLOGY DEVELOPMENT POLICY BY YEAR 2050

At the end of 2015, the humanity bravely and ambitiously stepped to the energy era of the 21st century, adopting by consensus a balanced agreement to stop climate change and maintain the rise in average global temperature below 2 degrees Celsius compared to the temperature in pre-industrial times. As one of the potential signatories of future agreements, Macedonia faces many challenges but also threats and opportunities. The current strategic plans to use its own resources, especially the renewable energy resources, did not realize entirely because of the large number of obstacles that these projects and initiatives faced.

Energy Union Choices4,5 reflects on the multi-layered complexity of the energy transition into integrated energy systems. Moreover, the initiative points out to the importance of the shared assumptions and the shared understanding of the challenges that would enable us make the right choices as well as to accelerate the transition path in an acceptable, sustainable and safe manner - the geopolitics of energy transition. This group advocates unification of different 4

Energy Union Choices is an initiative of the European Climate Foundation, in close partnership with E3G, Cambridge Institute for Sustainable Leadership, Agora Energiewende, Regulatory Assistance Project (RAP) and WWF, as well as other partners in the network ECF 5http://www.energyunionchoices.eu/

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The barriers could be of economic, technical, environmental, legislative and social character. Some of them occur as result of poorly organized public consultations related to the topics the public should have been informed about and to which it must have adapted. In part this is requirement closely connected to our goal for joining the European Union, and partly due to the progress and development of technology and last but not least for the sake of the climate change mitigation.

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views on the challenges and the solutions in a transparent, inclusive and nonconfrontational manner. Ultimately, only a common understanding of the context, the challenges and the solutions would support Europe on its way to progress. “The climate change represents an urgent and potentially irreversible threat to human societies and the planet and that is the reason for broad cooperation among all of the countries and their participation in an effective and immediate reaction at international level to be able to rapidly reduce the global emissions of the greenhouse gases. In addition, we should recognize the fact for significant reduction of the global emissions aiming to achieve the ultimate objective of the Convention while emphasizing the need for urgency in tackling climate changes issues.”6 Besides the documents emerging from the Paris Convention, there are numerous analyses prepared and presented by IRENA (International Renewable Energy Agency), especially the publication “Renewable Energy Benefits: Measuring the Economics”.7 The gains from the utilization of the renewable resources offer dual purpose solution i.e. to enable economic growth as well as to decarbonize the economy across the world. The increased dissemination of renewable energy sources will stimulate the economic growth, create new employment opportunities, improve the welfare of people and contribute to the safe climate conditions in future. The technological advancements in the area of the renewable energy sources and the increased financial competitiveness would strengthen the business sector that is in tightly connected to the renewable energy sources. It could also provide new opportunities to the countries that are facing transformation of their energy systems. There is evidence that the gains from increased utilization of renewable energy exceed the cost competitiveness. The increase in construction of renewable infrastructure could meet the energy needs of the constantly growing population, stimulate the development and the welfare given the proportional greenhouse gases emissions reduction as well as increase the productivity of the natural resources. It also provides empirical evidence that the economic growth and the environmental protection are fully

United Nations FCCC/CP/2015/L.9 Distr.: Limited 12 December 2015 Pariz, Adoption

Of The Paris Agreement 7

IRENA (2016), ‘Renewable Energy Benefits: Measuring The Economics’. IRENA, Abu Dhabi

DECARBONIZATION OF THE ELECTRICITY GENERATION compatible. Along the way, the traditional view that compromises between the two are possible shall be abandoned as outdated and wrong. In our society there is a fear that the transition to electricity production from renewable sources, will lose many jobs in large power producers (such as in ELEM), particularly in the mining and power stations. Studies of the European Climate Foundation show the opposite. By investing in energy efficiency measures and electricity from renewable energy sources increases the number of new "green" jobs (Figure 2.1).

Figure 2.1

Expected ratio of new jobs created and lost work positions

Working places created through decarbonization; energy efficiency and fuel switch; lost jobs due to reduction of fossil fuel

In Macedonia, according to the forecasts presented in the Energy Strategy8, the energy sector development, especially the electricity production, relies to the domestic resources of low-quality coal and in part on the natural gas import.

Also the forecast for the average annual increase in electricity consumption until 2035 is being compromised; with 0.72% in the scenario with implementation of Energy Efficiency measures (EE), compared to the 1.2% annually in the basic scenario (without implementing energy efficiency measures).

Energy Strategy of the Republic of Macedonia for a period up to 2035, MANU, 2015

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It is predicted very conservative increase in the share of RES for electricity production so that the final effect for the analyzed period is insignificant.

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3. DEFINING THE ENERGY NEEDS The main features of the energy sector are defining the most important issues that Macedonia faces in this area. And those are the unfavourable raw materials availability which is based on lignite characterized by low energy value, the high dependence on imported energy fuels (50%), and the relatively outdated equipment and technology for electricity generation which causes low efficient production coupled by high energy intensity. The mentioned problems are burdened by the need for electrical power imports targeting the entities that purchase the electricity on the free trade market because it was not produced in Macedonia. Because of the unfavourable relationship between the price of electricity on the free trade market and the price of energy fuels used in the electricity generation process (light oil and natural gas), the Thermal Power Plant Negotino with installed capacity of 210 MW (heavy oil fuel) is not in function nor the Te-To Skopje (245 MW) and KOGEL Sever (30 MW) due to the unfavourable price of the natural gas, although both are modern technology plants with a high degree of efficiency.

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There are four sectors in Macedonia that are considered dominant energy consumers: the industry, the transportation sector, the households and other sectors (tertiary sector) while the agricultural sector and the final non-energy consumption is within the boundaries of statistical error. The final energy consumption share of different sector is identified in Figure 3.1.

DECARBONIZATION OF THE ELECTRICITY GENERATION

Figure 3.1. Final energy consumption by sectors Strategy for Energy Development in the Republic of Macedonia until 2035 identifies and develops three scenarios for the defining energy needs. In particular, the Business as Usual Scenario (BaU), Scenario with energy efficiency measures (ЕЕ) and Scenario with energy efficiency measures and renewable (ЕЕ & RES). It is projected (with the defined scenarios) that the final energy consumption in the analysed period will increase at an average annual rate of 2.2%, 1.7% and 1.7%. The total energy needs will increase at an average annual rate of 1.1%, 0.6% and 0.5%, respectively, in the three scenarios. The Strategy plans that Mining Energy Complex Bitola will remain a major producer of electricity during the lifespan of the equipment and the exhaustion of coal mines. The final energy consumption in 2035 is expected to be 3135 ktoe (BAU). With the expected implementation of energy efficiency measures, the projected final energy consumption is at level of 2786 ktoe (EE) i.e. its 11% less than in the baseline scenario. The Figure 3.2. Identifies the projections for final energy consumption by year 2035 in accordance with the mentioned Strategy. The shares of the renewable energy sources (biomass, solar and geothermal) in meeting the total energy needs without the share of the hydropower potential that is part of the electricity production are as follows (Figure 3.3.).

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Figure 3.3. Shares of biomass, solar and geothermal energy in final energy consumption

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Figure 3.2. Projections for final energy consumption tendencies

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In cases when the researcher seeks to project a tendency it is much easier to do it for a period of few decades. However, it is very difficult to do a fairly good projection, which will coincide with the likely reality for a period stretching over 3 to 5 years. In these cases, we proceed with proven conservative approach including the following elements: analysis of the neighbouring countriesâ&#x20AC;&#x2122; projections, history of the consumption tendencies in previous years, take into account the trends stipulated in the strategic documents for the period of up to 2035 and other indicators that are available through the Statistical Office. Three scenarios were projected and the results are shown in graphical representation of Figure 3.4. These scenarios are fully compliant with the projections set forth in the Strategy for Energy Development until 2035, marked along as "BaU" - Business as usual, "EE" - scenario with energy efficiency measures and "VIS" - scenario with a vision that in 2050 energy consumption will be equal to the consumption recorded in 2015.

Figure 3.4. Projections of final energy consumption by 2050 Taking into consideration the assumptions adopted in the Strategy, the forecasts of energy consumption under the baseline scenario indicate drop in the energy consumption in comparison to the consumption trend by year 2035. The Strategy stipulates that all plants planned for construction will become operational in the periods as defined in the document. The main conclusion is that the share of renewable energy sources though increased by higher share because of the low

DECARBONIZATION OF THE ELECTRICITY GENERATION initial absolute values, and even with doubled values, would results in low impact of 10%, while the hydropower has been excluded from the calculations. Considerably higher interventions were made in the "EE" scenario, which has foreseen that in 2050 the same of level of consumption will be achieved as projected in 2035. However, the vision of energy consumption as projected in the scenario "VIS", stipulates that in 2050 the final consumption of energy will reach the same level of consumption as in 2015. Under this scenario, the implementation of the energy efficiency measures is foreseen; higher volume of the personal energy needs to be met by the dispersed small production capacities with emphasis on the industry needs as well the continuously increasing share of the households.

  



Increase in the GDP of Macedonia is projected. Increase in the living standard of the population is foreseen. In the years to 2030 the energy consumption will increase due to the higher living standard and the need to improve the living conditions of all residents i.e. to achieve conditions for heating of all rooms of a household and not just of one or couple of rooms. At the same time the market will evidence appearance of new appliances that will considerably reduce the consumption of electricity. The price of electricity will increase. The new buildings will not burden the energy consumption of the country if they operate according to the EU Directives for energy performance of buildings, especially given the requirement of the buildings to be built as "nearly zero" energy consumption buildings after 2020. There will be more installations such as heat pumps which consume 1 kilowatt of energy, and provide 4 to 5 kilowatts in the space which is conditioned. The situation of energy consumption in the industrial sector will dramatically change towards decreased consumption due to the shutdown of certain smelters as result of outdated equipment, lack of raw materials, etc. Purchase of modern technological equipment with low specific energy consumption per product and above all with little effect on the environmental pollution. Taxes for the pollutants. Changing the habits of the consumers.

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Is the realistic approach or utopia? There are few indicators that contribute to this conclusion, as follows:

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

Centralized production of transformed energy for satisfying the users' need under very high efficiency levels and little environmental pollution.

If you "look around" what is happening or what is expected to occur in the environment, it can be concluded that the presented projections are not over visionary but very conservative, pragmatic or said in simple words "scared” projection. The Figure 3.5.9 Shows the projections for expected developments in the final production.

Figure 3.5. Final energy consumption trend forecast for the period up to 2050 10

From this graphically represented forecast (the literature offers more scenarios) shows that the energy consumption will stagnate (blue scenario), will decrease (green scenario), and will only increase (brown scenario). By the year of 2030 the expected decrease of electricity consumption is predicted to 27%. If we compare the expected consumption in 2050 with that in 1990 and the projected in 2020 we could come to the following conclusions: 1. Тhe final consumption is expected to reach a value of 3768 ktoe, if no additional investment measures are made in energy efficiency and renewable energy sources (scenario BaU). 2. Тhe final energy consumption will reach a value of 2744 ktoe, by taking intensive measures in the energy efficiency sector (scenario EE), which is

Evaluating EU energy efficiency policies and future policy options up to 2020 and beyond, DG ENER, EnerFuture 10 Source: Evaluating EU energy efficiency policies and future policy options up to 2020 and beyond, DG ENER, EnerFuture

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in fact a decreased consumption for 27% - a level which is expected to be achieved in Europe by 2030! 3. It is foreseen a 29% and 48% energy consumption decrease compared to EE and BaU scenarios, respectively, with the VIS scenario. 4. VIS scenario predicts that the energy consumption in 2050 will be equal to the consumption in 2015. It is not foreseen a decrease in the total energy consumption, since this is the main objective of EU member states.

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4. IDENTIFICATION OF THE ELECTRICITY REQUIREMENTS The basic electricity needs are met by the individual electricity generation from the thermal power plants (dominantly utilizing coal) and partial generation of the cogeneration plants (with reduced generation trend), hydro power plants (big and small) whose power generation depends on the hydrological conditions as well as electricity imports, that continuously increases. (Figure 4.1.).

Type of power plant

Capacity (MW)

Thermal Power Plants (coal, light liquid fuel, gas)

1314

Hydro Power Plants (small and big) Wind Power Plants Photovoltaic Systems Biogas Total Installed Capacity

636 36.8 16.7 7 2010.5

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Figure 4.1. Meeting the needs for electricity from personal production and import This production capacity is provided by the following production capacities:

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The consumption trend of the available electrical power at the consumer level, where the losses of transmission and distribution are calculated and identified at Figure 4.2. 650 634

630 620

ktoe

640

610

602

600 590

585

583

578

580

570

570 560 550 2010

2011

2012

2013

2014

2015

Figure 4.2. Available electrical energy for final consumption The basic electricity consumption is monitored in three sectors: industry, households and other sectors (commercial and public buildings, tertiary sector). The electricity consumption by sectors is identified on Figure 4.3.

Figure 4.3. Electricity consumption by sectors

The first and foremost conclusion is that the electrical power consumption in Macedonia since 2011 HAS REDUCED! Few reasons contribute to this falling tendency such as the price of the electricity, higher awareness for energy

DECARBONIZATION OF THE ELECTRICITY GENERATION management among the population (elimination of wasteful electricity consumption â&#x20AC;&#x201C; habit change) as well as the utilization of energy efficiency measures resulting in increased use of solar thermal collectors instead of electrical boilers. This document will not provide further deeper analysis of the matter as this is not the objective of this document. According to the strategic documents, the assumptions for the share of the renewable energy sources in the electrical power generation are the following (Figure 4.4.):

Figure 4.4. Share of the renewable energy resources in the electrical power generation according to the Strategy (MASA and IPA) and the Action Plan for RES

It is noticeable that there is a big portion of the hydro energy (big hydropower plants) participation in electricity production while that on the photovoltaic power systems is low.

Figure 4.5. Projections for electrical power needs by 2035

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The Strategy stipulates an ongoing increase in the electricity consumption in the period up to the year 2035, and especially in the sector of industry (Figure 4.5.), reaching the energy needs among users in 2035 by 786 ktoe according to the Business as usual - BaU scenario or by 710 ktoe according to the scenario with implementation of energy efficiency measures.

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In relation to the discussion of the above mentioned point 3, where we have defined the total energy needs by 2050, a similar assumption was developed related to the expected increase of the energy consumption by 2050, (Figure 4.6), which is still anticipated reduction of energy consumption in the period after 2035.

Figure 4.6. Projection for electrical energy needs at the final consumers by 2050

The baseline scenario envisages delayed increase in the consumption of electricity, but with full respect for the basic trend that is identified in the Strategy. The part which refers to the scenario with increased energy efficiency measures has retained the proportion as projected in the Strategy except for the initial year (2015) when used data from the State Statistical Office. Table 4.1 Dynamics of change of the annual electricity consumption at the level in periods of 5 years 2015-20

2025

2030

2035

2040

2045

2050

BaU scenario

-0.19%

1.82%

1.12%

1.89%

0.51%

0.10%

-0.50%

Đ&#x2022;Đ&#x2022; scenario

-0.6%

0.6%

0.9%

1.8%

0.6%

0.02%

-0.6%

VIS scenario

-0.11%

0.11%

0.19%

0.36%

0.12%

0.00%

-0.12%

The scenario VIS uses data provided in the Strategy up to year 2030, however it further projects greater reduction in electricity consumption in proportion with expectations for the total reduction in the energy consumption across all sectors in the society. The extent, to which this projection is visionary, is yet to be identified, although we consider it as quite conservative i.e. realistic. In the following period of 35 years (from 2015 till 2050) we expect that the electricity consumption will remain at the same level as in 2015.

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5. RENEWABLE ENERGY SOURCES POTENTIAL In defining the potential of a particular fuel type there are several criteria and those are: theoretically possible, technically available and economically feasible. Thus the limits of available technical and economically justifiable potential of any type of fuel are of elastic boundaries, which over time may change. New technologies are being innovated, new materials are being used and what was not feasible ten years ago today turns into routine. The same applies to the cost of the equipment, which is economically justifiable when compared to the cost of the required power, the political influence and the environmental protection. For this reason, we take into consideration an available technical potential according to today's level of technological development. In other words, the economic category or the value of the investment is of secondary interest. There is a need to answer the question - whether Macedonia has the available technical potential of renewable energy sources, which will fully meet the electricity needs by 2050 and later on (or on parallel) the total energy needs of the society. As it was stipulated in the beginning, the answer is positive.

Attention is retained to the three major renewable energy sources, in particular the hydro energy at large and small hydropower plants, wind power, solar energy and biomass. The geothermal energy is expected only to serve as support to the energy system for production of electricity.

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YES, Macedonia has enough available potential to meet its needs for electricity from renewable energy resources.

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Based on past research activities, Macedonia has a low temperature geothermal energy (hot water at temperature of 78°C) with a capacity of 390 GWh. The research was conducted at shallow dwellings (350-450 meters), but there are assumptions that the wells above 2,500 meters would have a geothermal potential for production of electricity. At today's level of technical development, economically justified are the investments in ORC power plants for electricity production that operate on geothermal water with a temperature of over 120°C. It can be expected that in the future certain technologies would be develop to enable the plants’ operation on fluids that would allow transformation of the heat into electricity at lower temperatures than 100oC. In the process of defining the elements of this vision, the use of nuclear energy for electricity production is not taken into account. This in part corresponds to the Energy Strategy of Macedonia for the period up to 2035, where this opportunity is only mentioned, but it is not considered as an option, I cite: “Certainly, one of the possible options is the use of nuclear energy. ELEM AD Skopje in collaboration with scientific – research institutions in Macedonia, supported by the International Atomic Energy Agency from Vienna, is working on evaluation of this option. Strategic objectives in terms of nuclear energy will be adopted as soon as all activities are finished and which also include the public opinion. However, there is no real possibility for constructing a nuclear power plant in Macedonia in the analyzed period up to 2035.”11 Respecting the analysis of the world energy agencies, it is undoubtfully shown that in the 30 years period (2010 – 2040) the biggest increase in the energy mix of primary energy (green scenario) is noted for renewable energy (from 13 to 38%) Figure 5.1, followed by nuclear energy (from 6 to 13%) Figure 5.2.

Energy Strategy of Republic of Macedonia for a period up to 2035, MANU, 2015

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Figure 5.1

Expected dynamic of RES capacity enlargement

(EnerFuture, Ener-Blue Scenario, Understanding our Energy Future -2016 Edition)

Thus, nuclear power is a serious potential that should be given special attention in the period from 2035 to 2050.

Figure 5.2 Expected installed capacity of nuclear power plants (EnerFuture, Ener-Blue Scenario, Understanding our Energy Future -2016 Edition)

Dominant is the hydro potential of the Vardar basin with available potential of about 4270 GWh, followed by the potential of the basin of the river Black Drim of about 880 GWh, and finally the summed up potential of the small basins estimated at about 440 GWh. Thus the hydro potential is ranging from 5500-5600 GWh.

Large hydro power plants

Installed capacity MW 960

Generated energy GWh ktoe 5524 475

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The hydro potential in Macedonia is identified by the following parameters:

DECARBONIZATION OF THE ELECTRICITY GENERATION

Small hydro power plants Total

175

1030

5699

490

On the territory of Macedonia are prepared many research materials related to construction of large hydro power plants, which are mainly projects, conceptual projects and feasibility studies. Total installed capacity of these already built power plants as well as of those that are planned to be built is more than 1550 MW, as shown in the following table: Power Plant

GWh/a

36.4 80 21 172 12.8 84

76 172 53 390 45 302

42 30 116 9.6 13.8 68.2

213 41 184 40 17 117.5

5.2

109

347 193.5 93.1

840 264 310

HPP BABUNA HPP ZGROPOlCI HPP GRADSKO HPP KUKURECHANI HPP KRIVOLAK

55.2 17.3 16.9 16.9 16.9 16.9

252 52 52 78 78 78

HPP DUBROVO HPP D.KAPIJA

16.9 24.4

78 112

HPP Sveta Petka HPP Kozjak HPP Raven HPP Vrutok HPP Vrben HPP Shpilje HPP Globochica HPP Globochica - 2 HPP Tikvesh HPP Matka HPP Kalimanci HPP Boshkov Most HPP Crn Kamen (also with increased flow in Mavrovo) HPP Chebren HPP Galishte HPP Veles HPP Gradec

DECARBONIZATION OF THE ELECTRICITY GENERATION HPP MILETKOVO HPP GJAVATO HPP GEVGELIJA

16.7 16.7 16.7

Channel Tetovo-Kozjak Total

84.1 84.1 84.1 110

1556

4316

It is prepared a study that considers the potential of small watercourses, in which are taken into account a total of 404 potential locations for building a small hydro power plant, with more than 310 MW of installed capacity. Expected dynamics of building the new large and small hydro power plants, their capacity as well as the electricity production is shown on Figure 5.3:

New era of using the wind energy in Macedonia has begun with the construction of the first wind park in Bogdanci, with total installed capacity of 36.8 MW. According to the preliminary research studies, an atlas12 of wind energy has 12

Wind Energy Resource Atlas and Site Screening of the R. of Macedonia, AWSTruewind, June 2005

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Figure 5.3 Expected dynamics of building the new large and small hydro power plants

DECARBONIZATION OF THE ELECTRICITY GENERATION

been prepared and 15 favorable locations are considered. Measurements are conducted in only 4 locations with 5 more to be realized. The Energy Strategy predicted that up to 2035 there will be installed wind turbines with total capacity of 300 MW, and with expected electricity production of more than 660 GWh. The technical potential of wind energy is estimated to be twice higher up to 2050: Expected Wind Power Plant Potential Wind power plants

Installed capacity MW 600

Generated energy GWh ktoe 1320 113

We are convinced that in the next decades the development of technical solutions for harnessing the wind energy will provide more efficient electricity production even if the wind speed is lower, less than one meter per second. This means that large number of locations suitable for placing wind turbines will be â&#x20AC;&#x153;createdâ&#x20AC;?, unlike today when we need a wind speed of minimum 3 m/s only to suppress the bearing losses. Regarding to this the researchers in China and Europe are working on the development of MAGLEV bearings (with magnetic levitation). Macedonian hydropower potential is dominated by a qualitative step towards the construction of wind power plants i.e. the Wind Park in Bogdanci. The ratio of electricity produced from renewable sources in 2015, by months, is shown in Figure 5.4.

Figure 5.4.

Electricity production from renewable energy sources in 2015

DECARBONIZATION OF THE ELECTRICITY GENERATION In the VIS scenario the following dynamics of wind power plants implementation is foreseen (Figure 5.5):

Figure 5.5 Dynamics of wind energy penetration

Biomass as fuel type has a 10 % share in energy mix of Macedonia. The rationale is obvious since on the average 70% of households in Macedonia meet their heating needs with firewood, which is currently the cheapest fuel type used against this purpose (Figure 5.6). Moreover, the strategic documents do not anticipate broad biomass planting intended for the electricity production. However, this does not mean that there is no potential in future to increase the production of electricity by increasing the use of digesters that would run on agricultural waste, or construct production plants to use synthetic gas from the process of biomass pyrolysis.

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Figure 5.6. Biomass consumption history

DECARBONIZATION OF THE ELECTRICITY GENERATION

The following volumes are technically available potential for energy production by utilization of biomass (but here we mainly refer to the transformation in the form of thermal energy)13: Biomass origin Energy [GWh] Biomass from agriculture 355 Biomass from stockbreeding 190 Biomass from forests 2362 Municipal waste 250 From the total amount of biomass available on annual basis, from today’s level of technology, more than 95 ktoe can be transformed into electricity. The current situation in Macedonia allows installation of 7MW plants that utilize biogas from bio digesters at a preferential tariff. The available quota is already taken by the installed plants of Veze Shari and the Agricultural Association Pelagonija. There is yet quota for installation of 10 MW plants for the production of electricity from biomass by utilization of the process of pyrolysis (or other process such as cogeneration), which is a subject of limitation that fire firewood is unsuitable fuel. But in the future, as the households decrease the quantity of wood used for heating (because of another forms of heating, energy efficient homes and so on), these saved quantities of biomass will be relocated for electricity production, together with the purpose-made forests. Dynamics, power plants capacities and electricity produced from the plants that will use biomass is shown od Figure 5.7:

Figure 5.7

Dynamics of biomass power plants penetration

Istraživanje i analiza tržišta za razvoj projekata obnovljivih izvora energije u zemljama regije jugoistočne Europe, Republika Makedonija, Energetski institut Hrvoje Požar; Centar za energetska efikasnost na Makedonija - MACEF , Skopje; svibanj 2015.

DECARBONIZATION OF THE ELECTRICITY GENERATION The operation of these plans contributes to an annual range of 70 to 90 GWh electricity production.

Solar Energy Potential In determining the potential for solar energy, two elements are important: energy gained from the solar radiation from a flat surface under the local conditions in Macedonia and the availability of surfaces for this purpose. It is recognized that in Macedonia, due to its geographical position, there are good conditions for utilization of the solar energy. The potential of solar energy throughout one calendar year, measured at two different locations is shown below (Figure 5.8).

Figure 5.8. Average global solar radiation at flat surface

Total surface

Agricultural

Forests

Road and railroads

Water and other surfaces

Technically feasible

25713

3342

9888

488

11896

Installation capacity for solar collectors Energy produced from solar collectors

33 MW/km2 46.71 GWh/km2 year 4.02 ktoe/km2 year

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The potential surface [km2] that is â&#x20AC;&#x153;availableâ&#x20AC;&#x153; for installation of solar collectors is identified in the table below:

DECARBONIZATION OF THE ELECTRICITY GENERATION

Technically feasible surface Total available solar energy

11 896 km2 47 797 ktoe/ at 11 896 km2 an

The realistic potentially available energy could be estimated by the following approach. Above all, the surfaces in Macedonia are divided into two parts, in particular urban and rural14: Type of settlement

Total area [km2]

Urban Rural

15 660 9 253

If we adopt average coefficient of constructed urban settlements of 0.07% and 0.02% rural, we estimate that the percentage of constructed areas in Macedonia is 1 281 km2. Thus if we assume that only 20% of the constructed area could be used to mount solar installations, we come to an area of 256 km 2 which can be used to estimate the cost-effective potential. Required dynamics for building photovoltaic solar systems for electricity production is shown on Figure 5.9:

Figure 5.9

Dynamics of construction of solar power plants

In accordance to the data it is clear that the solar energy has major part in defining the energy potential, while the energy from biomass has lowest share -

State Statistical Office

DECARBONIZATION OF THE ELECTRICITY GENERATION although this value can be considerably changed by creating special plantations. (Figure 5.10).

100,000 10,000

ktoe

1,000

47,797

100 113

490

Solar energy Figure 5.10

Wind energy

Hydro energy

Biomas

Technical potential for electricity production

Based on these data, a broader picture of the dynamics of renewable energy sources penetration in the energy sector is available. For that purpose, the same diagram on Figure 5.11 shows the expected electricity consumption up to 2050, as well as the dynamics of the possible electricity production from renewable energy sources.

Required electricity from renewable energy resources

In order to achieve these forecasts the first assumption is that Macedonia will construct all hydropower plants as projected in the Strategy for Development of the Energy Sector until 2035. The same applies to the other power plants related to the sector of renewable energy sources.

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Figure 5.11

DECARBONIZATION OF THE ELECTRICITY GENERATION

However, it is expected that in the upcoming period by 2035 project documentation will be developed while enabling favourable environment for intensive infrastructure investments of the large hydropower plants , with special attention to the construction of reversible hydro-storage facilities. In order to meet the expected electricity demand of about 708 ktoe, the large hydro power plants have to produce 359 ktoe annually (which is half of the total needed electricity production), 82 ktoe from the small hydro power plants, 95 ktoe from wind power plants, 105 ktoe from solar plants and 61 ktoe from biomass power plants. Based on these data, we could derive a graphical representation of the the share and dynamics of penetration of renewable energy resources in the electricity production sector (Figure 5.12).

Figure 5.12

Expected electricity production from renewable energy resources

To ensure the required production of electricity from solar collectors, in particular amount of 105 ktoe in 2050, an installation of 860 MW solar collector plants that spread on area of 33 km2 are foreseen. This is also consistent with the Strategy, that the solar collectors will generate 1400 kWh/m2year. The share of different renewable energy resources in meeting the electricity needs in 2050 is graphically identified on Figure 5.13.

DECARBONIZATION OF THE ELECTRICITY GENERATION

Figure 5.13

Share of RES into the electrical energy production

Due to the different characteristics of each and every type of energy, in order to produce same quantity of energy, the installed capacity of different types of power plants varies depending to the number of operating hours. For that reason, for achieving the required production, the proposed numbers of operating hours for solar panels, wind turbines as well as the capacity of small hydro power plants and water quantity stored in the accumulations of the large hydro power plants are taken into account. The capacity ratio of the power plants which are intended to be built until 2050 in order to meet the electricity demand, is shown on Figure 5.14.

Capacity ratio of the RE power plants

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Figure 5.14

DECARBONIZATION OF THE ELECTRICITY GENERATION

6. BARRIERS - GAINS FROM THE DEVELOPMENT OF THE RENEWABLE ENERGY RESOURCES’ ELECTRICITY GENERATION Accomplishing the vision to ensure the production of electricity from its own domestic energy sources (renewable), to stop the imports of electricity and the energy for its production and to improve the living environment of the citizens is not an easy and simple task. The obstacles that need to be overcome in making this vision come true, while representing a project and not a dream, are of different nature and above all are of:  Political nature - Political will of policy makers.  Change awareness particularly in the energy sector (resistance to the new one).  Need of significant funding.  Technical issues.  Implementation of the conclusions of the adopted strategic documents.

If the social consciousness "moves from ground zero" and civil society firmly supports this vision and its benefits, it will prevail over the short-sighted political (but pragmatic) programs. At that moment the vision turns into a development project, with a "right to live" equally along with the other short-term strategies and development programs.

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The obstacles of a political nature primarily relate to the interest of the political party in power, to invest efforts and resources towards a vision to be realized 3 or 4 decades in the future. The political parties are not familiar with such development programs and the major problem in promoting this vision is to change the mind-set of the governing structures in the coming decades.

DECARBONIZATION OF THE ELECTRICITY GENERATION

For this reason we believe that this is the first and main obstacle that must be overcome as soon as possible to continue focusing on the resolution of the other obstacles. And if there is a will, a solution will be inevitable. The problems of a financial nature are really tough, and one could give up the vision even before considering its realisation considering them unbearable. In the case of just long-term policy and investments in development programs at the academic institutions, aimed stimulating the creation of personal production organizations in sectors that expect long-term continuous investments, the level of the required investments may be reduced and on the parallel increase the employment possibilities, the profitability and the competitiveness of the organizations. The problems of a technical and organizational nature are not less simple and easy to resolve and them arising from the manner of electricity generation from renewable energy sources. Some of the main issues that need to be addressed are: 1) A stochastic energy production from solar and wind power plants, as well as from hydro energy from large and small hydro power plants that do not have water accumulations. 2) Accumulating / transforming the produced electricity that cannot be consumed in the moment of production (when there is no need of electricity). 3) Lack of electricity for final consumption because the electricity cannot be produced (no Sun, no wind, no running water). Main technical barrier in greater utilization of RES in the power system comes from its stochastic manner of production. One cannot plan the production in advance and there have to be standby electricity producers whose production is not dependent on the climate conditions. The small hydro power plants production depends on the hydrological conditions in the current year and is of rather seasonal character â&#x20AC;&#x201C; higher production in spring and lowest in late summer and over the winter time. The electricity production of the solar thermal collectors is also closely dependent on the outdoor climate conditions and itâ&#x20AC;&#x2122;s characterized by a 24 hour regime â&#x20AC;&#x201C; day and night, season related - summer and winter as well as climatic conditions such as clouds, fog or sunny days.

DECARBONIZATION OF THE ELECTRICITY GENERATION The wind energy even though is not closely dependent on the duration and the specific period of the day and night, it has some seasonal characteristics, and when possible, speaking from macro perspective, one could expect higher or lower electricity production. However, itâ&#x20AC;&#x2122;s always connected to the global climate changes and the local weather conditions on the top of those that seldom could be predicted with accuracy. The following table shows the percentage likelihood of wind, and thus the production of electricity for the site in Bogdanci:

Pinst=50 MW (50x1MW) Winter Spring Summer Autumn Total

GWh

29,80

32,87

19,49

21,50

16,97

18,73

24,39

26,90

90,65

100,00

The probability of the various types of renewable sources possibilities for electricity production is shown in Figure 5.4. (Production of electricity from renewable energy sources in 2015). Although that diagram applies only for one year period in time, it could be concluded that the wind energy is more likely to occur in autumn and winter while the solar energy during the summer. In some ways, the maximum electric energy generation is deployed in phases or does not occur in the same period. Moreover, the solar electricity production is dependent from the outdoor conditions and on daily basis (24 hours) â&#x20AC;&#x201C; day and night, than from the seasons: summer or winter, as well as from the local climate i.e. if it is cloudy, foggy or it is a sunny day.

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Solar electricity production is related to the problem of large electricity production in the summer period when usually the demand is low, and also in the day period when the demand is high. It is expected the installed capacity to be 860 MW and the maximum electricity production to reach the value of 104.7 ktoe. (See Figure 5.9 Dynamics of building solar power plants).

DECARBONIZATION OF THE ELECTRICITY GENERATION

Figure 6.1

Daily electricity consumption – summer period

Based on the daily electricity consumption diagrams (Figure 6.1) it is obvious that the power system can only partially receive the total produced energy (784 MW, compared to the total available of 860 MW)– depending to the daily climate conditions and electricity consumption. Overtaking of this increased electricity generation can be accomplished in several ways: o o o o

To be used as pumping energy for transporting the water into the reversible accumulations; Hydrogen production through electrolysis; Sell/ exchange with neighbor countries in the region or broader; Storing in batteries (EVs, industry, households etc.).

Satisfying the peak electricity demand (Figure 6.2) in conditions that are unfavorable for operation of RES power plants is the additional problem. Usually this is expected to happen in the winter period when the solar electricity generation is limited or impossible (clouds, fog). In the same time due to the snow blanket, the small hydro power plant production is considerably reduced. Most unfavorable scenario occurs when the wind turbines are also shut (periods of “scilence”).

DECARBONIZATION OF THE ELECTRICITY GENERATION

Figure 6.2

Daily electricity consumption â&#x20AC;&#x201C; winter period

Currently the peak electricity demand is on the level of 1310 MW. According to the planned development of hydro power plants, the overall installed capacity in the hydro accumulations would be 1072 MW. Although the rivers flow is notably lower during the winter, we can still expect that the large run-of-river hydro power plants on the rivers Vardar, Crna and Crn Drim will achieve at least 30% of their installed capacity of 150 MW. With significant use of biomass power plants (mainly in the process of cogeneration) we can anticipate to reach a capacity of 1330 MW. Also, the reserves stored through pumped storage facilities are available. This is due to increased water level by pumping, as result in excess electricity production during the summer period.

For this reason, there must be very careful management system of the production and consumption of electricity. The basic production regime anticipates the small hydropower plants and the flow hydropower plants as well as the maintenance of minimum water flows from the reservoirs. The total generated energy from the wind power and the solar power plants must be provided grid intake. The hydropower plants should be used to cover the variable loads of the grid and to cover the energy needs in the sunless and windless periods.

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The big accumulation hydro power plants, by far in this group, have the best performance. They could be activated in a short period of time when unexpected situations occur with the other types of electricity generation plants. Hence, the production capacity of the accumulation hydropower plants is limited.

DECARBONIZATION OF THE ELECTRICITY GENERATION

The utilization of accumulation devices/batteries for generated electricity storage of big capacities, at the current level of technical development, is still economically not completely feasible. It could be used for individual usage in single house, for smaller capacity mobile plants such as the automobiles or for the need of a certain production process. This problem could be mitigated or fully addressed by the construction of reversible hydropower plants, which use the excess generated electricity to pump in the water at a higher level back into the dam. The technical possibility for the generated electricity accumulation could be performed by water electrolysis and hydrogen production. The hydrogen could later be used for electricity generation in a common thermal power plant (as primary fuel) or in the contemporary power plant â&#x20AC;&#x201C; fuel cells, a process in which higher coefficients of energy transformation into electricity could be achieved. The problem of hydrogen transportation at greater distances (requirements for high pressure, low temperatures, penetration of the small hydrogen atoms into the crystal net of the piping/ tank material structure) could be partially solved with ammonia production instead. Its transportation is financially more feasible and safe (explosion wise) â&#x20AC;&#x201C; low pressure, common temperatures and bigger experience in usage of ammonia and etc. Furthermore, one of the main technical conditions for safe operation of the power system is the highly developed electro-transmission network, the interconnection with the neighbouring countries and the quality connectedness/ inclusion in the European power system. Set in this manner, the system will support electricity exports (imports) at times of excess electricity production, and at times of shortages in production at higher demand to intake electricity from the system. When society is considering switching the whole economy to decarbonisation, there are other possible technical solutions, such as the excess available electricity to be used for heating tanks of hot water, which would be later used for centralized space heating. Also, one shouldnâ&#x20AC;&#x2122;t oversee the possibility and potential for construction of nuclear power plant. Some of the primary risks such as the fear from nuclear crisis could be expected to be improved to minimum risk in the following decade. In the meanwhile, we could expect the new power plants to be offered on the market (following its experimental phase) that will be functioning on the principal

DECARBONIZATION OF THE ELECTRICITY GENERATION of fusion of light atomic nuclei. ТОКАМАК has been researched for a longer period of time in the laboratory/ semi-industrial environment in Russia while in Switzerland (CERN) has commenced experimenting with the largest reactor of this type already.

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The conclusion is that there will be hindrances along the way but they are removable. The gains are expected huge and we shall commit to possibility of moving forward.

DECARBONIZATION OF THE ELECTRICITY GENERATION

7. ENVIRONMENTAL INFLUENCES The environmental protection is increasingly becoming a hot topic not only for the activist in the area but also itâ&#x20AC;&#x2122;s high on the agenda of the politicians from leading countries. Everybody become aware of the fact that the Earth is our common home and that all within their powers should care and keep the home safe for the generations to come.

The local pollution has considerably more serious and tangible consequences compared to global one. In addition, the main pollutants are the solid particles (ash and coke), the sulfur dioxide which is a cause for the acid rains and the degradation of the quality of soil and forests, as well as the nitrogen oxides. It should be communicated that the coal and the crude oil considerably contribute to the local pollution when comparing them to the natural gas. They affect the quality of the air causing a range of diseases to the respiratory organs and especially in children. It should be mentioned that their is also pollution coming from the land which has to be removed to reach coal, generated in the process of exploitation of

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The pollution caused by the energy processes employing combustion of fossil fuels has both global and local character. The global character refers to everybodyâ&#x20AC;&#x2122;s pollution anywhere and as consequence causing the climate change. The mechanism is evident - during the process of fossil fuels combustion carbon is released and it further binds with oxygen to form carbon dioxide CO2, which causes the greenhouse effect and the global warming on the planet.

DECARBONIZATION OF THE ELECTRICITY GENERATION

surface mines and large dumpsites of slag and ashes. Despite the fact that the levels of radioactivity in the waste are relatively low, a number of studies in Macedonia show that this must not be underestimated. What will it mean for Macedonia if no more coal is utilized to produce electricity? It would mean that on the average 7 million tons of coal will not be combusted on annual basis. And that will prevent emissions as in this case of REK Bitola15: Parameter

Dimension

Chimney А1 (medium/max)

Chimney А2

CO SO2 NOx CO2

t/year t/year t/year t/year

312/554 36,367/54,783 7,266/10,316 3,217,904/4,365,038

t/year

4,802/11,711

68/160 20,675/30,590 3,749/4,814 1,710,155/ 1,917,173 2,271/ 3,880

Dust

Total 380/741 57,042/85,373 11,015/15,130 4,928,059/6,282,211 7,073/15,591

In summary, RЕК Bitola and TPP Oslomej contribute to the environmental pollution by the following:  over 6.3 million tonnes CO2 each year  over 85 000 tones SO2  over 15 600 tones dust released in the air.

Although these figures, compared with the emission of the harmful substances by industrialized countries are small, they are very large for our local and immediate environment. If we take into account the potential the electrical powered cars offer, which could also recharge their batteries in periods when there is greater production of electricity from renewable energy sources; there would be significant pollution reduction in the urban areas that is caused by the fossil fuels combustion in the transport sector.

Application for acquiring А-License for association with the operational plan, ЕLЕМ- Subsidy RЕК Bitola, 2007

DECARBONIZATION OF THE ELECTRICITY GENERATION

8. INVESTMENTS Would the realization of this vision be cheap? No. Huge investments are required. Without going into details of the financial projection i.e. the "Business plan", a simple comparative technical-economic projections show that investing in electricity generation from renewable energy sources is economically justified, when we analyse the entire life cycle of the plant. A comparison between the total cost of the investment in a coal run power plant along with mine and a photovoltaic power plant has been prepared given equal annual electricity production. We underline - that the case features identical energy production, because the coal thermal power plant's standard operation equals 6,000 hours per year under the nominal installed capacity, while solar plant "operates" only 1400 hours per year under its installed nominal capacity. The comparison was done by comparing the following conditions:

Installed capacity of a coal thermal power plant Annual operation hours per installed capacity Generated electricity capacity Specific plant investment Total thermal power plant investment Fuel price (coal) Price of the coal energy values Thermal value of the coal Coal consumption per generated 1 kWh electricity Required coal quantity for electricity production Annual fuel costs Lifecycle of the plant Fuel costs for 40 years operations Total investment and fuel costs for 40 years of operation

200 MW 6000 h/year 1200 GWh/year 1800 €/kW 360 М € 20 €/t 9 €/MWh 8000 kJ/kg 1.35 kg/kWh 1620 k t/year 32 М€/year 40 year 1296 М€ 1656 М€

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Conventional Thermal Power Plant on Coal with a Mine

DECARBONIZATION OF THE ELECTRICITY GENERATION

Photovoltaic Collectors’ Solar Power Plant Rate of working hours for using the TEC/ PV Annual operation hours per installed capacity Required installed capacity of the PV plant Generated electricity capacity Specific plant investment Total solar power plant investment Fuel price Average space of the system Total space for construction of the solar power plant Lifecycle of the plant Total investment and fuel costs for 40 years of operation

4.29 1400h/year 857 MW 1200 GWh/year 1000 €/kW 857.14 М € 0 €/t 2.8ha/MW 24 km2 40 year 857М€

If it is accepted that the average selling price of electricity by the manufacturer is 40 € / MWh, total of 1920 M€ will be collected from the both facilities. There is an evident difference between these two projects: a 2.4 times higher investment is required at the beginning of the solar plant construction, but its financial gains are about 4 times larger given the operation period. The cost and profit trends at these initial conditions are shown in Figure 8.1 below.

Figure 8.1. Financial trends during the plant operation period

The number of employees needed to realize the production process or the investments in regular maintenance of the equipment are not subject of this analysis. If we take into account these elements, the economic viability of the utilization of renewable energy sources in electricity production will increase further on.

DECARBONIZATION OF THE ELECTRICITY GENERATION The ratio between the required investments for the construction of different types of plants is provided on the basis of the macroeconomic parameters. Also, depending on the average period of operation of the different types of renewable energy sources, the required installed capacity to produce identical amount of energy as in the fossil fuel plant has been estimated. This estimation is not suitable for the large accumulation hydropower plants, because were used the assumed prices for each special facility from the existing investment and technical documentation, which is in a wide range from 1.2 to 6.77 M € / MW. Indicator

Unit

TPP

Sun

Wind

SHPP

Biomass

200

857

545

456

200

М€/МW

1.8

1.5

2.2

The use of installed capacity

h/year

6000

1400

2200

2630

6000

Total Investment

M€ GWh/ year

360

857

817.5

1003.2

440

1200

0.300

0.714

0.681

0.836

0.367

Capacity Specific Investment

Annual generated power Ratio investment/ annual production

M€/GWh

Figure 8.2

Dynamics of investments in RES power plants

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It is clear that it takes several times higher investments to build power plants that use renewable energy sources. Moreover, it should be emphasised that once this facilities are constructed, there are no spending on fuel (liquid and gaseous fuels, quality coal), or costs of domestic mining of low-quality (lignite) coal. To comply with the assumed dynamics for this scenario significant financial means will be needed. According to the power plants construction dynamics, the dynamics of investments (only the “bare” investments are considered, without calculation of capital expenses) is shown on Figure 8.2:

DECARBONIZATION OF THE ELECTRICITY GENERATION

The true figure for the amount of the necessary investments to be transferred into Society without the use of fossil fuels for the production of electrical energy can be perceived through the image of the cumulative investment (Figure 8.3).

Figure 8.3

Cumulative investments for the period up to 2050

Total investments for electricity production capacities depending to the time period, according to the Energy Strategy, are estimated to 770 M€ + 350 M€ + 2000 M€ , or 3120 M€ until 2035. Clearly, the realization of this vision is linked with huge direct investments for building new power facilities. This is one of the major obstacles for proceed or suspend the realization for the longer period. Total estimated investment of 4168 million euros seems enormous. We must emphasize that this are not the only costs having in mind that an additional funds need to be invested in the power grid, electricity storing systems, auxiliary systems for balancing the power system etc. On the contrary, if this investment is evenly distributed over the next 30 years period (after 2020) then it is obvious that a sum of 139 million euros should be invested on annual basis for construction of new power plants. For sure this is not impossible given that the investment will not be funded from the state only. Core investments of 57.5% would be needed in the hydroelectricity sector, 16% in building wind parks, 20.2% for construction of photovoltaic solar plants and 5.5% for biomass power plants. Hydroelectricity should have an absolute priority. Answer to this can be find in the dual purpose of impoundment facilities where the water storage will have a great importance for survival of humankind. All of the previous assumptions are made based on present level of technology and equipment prices. From experience, we can expect that the specific price of the equipment will drop, especially the prices for solar power plants.

DECARBONIZATION OF THE ELECTRICITY GENERATION

For making a serious approach into realization of

this vision it is expected that the financing sector will allocate funds of at least 139 million euros per year in the next 30 years!

9. SWOT ANALYZE Promoting an idea should always begin with defining as well as analyzing the present predominant conditions, especially if this idea is expected to encounter on social resistance. First, we define the elements that support the idea (strengths) and those should be promoted and emphasized. Next we consider and elaborate the weaknesses as well as the methods for their suppression. Than a SWOT analysis can be made (Strengths – Weaknesses – Opportunities – Threats).

Weaknesses Complex and time consuming activities related to preparation of documents for investing into energy sector High energy consumption per unit of GDP Low efficiency of energy High electricity demand for heating Incomplete social policies for regulation of electricity prices Uncertainty of the energy statistics especially related to biomass

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Strenghts Available renewable sources potential Intensified activities in the sector of energy efficiency and renewable energy sources Power distribution grid in accordance with ENTSO – E normative Increased awareness for the environment issues On-going and done modernization and revitalization activities of hydroelectric power plants Insufficient capacities for electricity production Low usage of the hydro potential High electricity transmission and distribution losses

DECARBONIZATION OF THE ELECTRICITY GENERATION

Opportunities

Threats

Strict financing obligations on reducing the green house gases emission and high tax for their emission Improved reliability of power supply with domestic energy sources High prices of energy imported New technologies development

Prices of generating facilities can change unforeseeably Unstable electricity consumption Foreign investors will not be interested in investment into Macedonian energy sector Global or European economic crisis which will cause slow economic growth and inability to invest considerably into the energy sector Unreasonable actions of certain lobby groups

10. CONCLUSION AND NEXT TASKS The basic conclusion of the authors is that Macedonia has at its disposal sufficient renewable energy resources to fully meet the needs for electricity generation without utilization of fossil fuels. Technically it is possible to design several different variations of energy systems that comply with the vision of fossil fuel independence requirements. Technologies are already available although some of them need to develop further regarding to their prices, efficiency as well as their characteristics of performances. This vision is developed on the basis of the hydro energy as principal energy source for affording a secure energy supply. An efficient transition towards a society that has reduced fossil fuels consumption will be accomplished through a combination of building new RES power plants and gas turbines/engines power plants running on natural gas (characterized by high flexibility because of their short start-up time and low initial investment) as well as through making good interconnection with neighbor countries in the period up to 2050. Suggested VIS scenario should not be considered as the only possible solution for the future optimal and desired design of the energy system. Nor it contains specific recommendations for the means needed for implementation of this scenario. This vision enlightens the technical features available for creating the future of Macedonia although only as forecasts for the future electro energy sector. Moreover, some of the challenges for transition towards fossil fuel independent society are highlighted, including some essential parameters. This scenario, to a certain extent indicates when have to be enacted important decisions. The realization of this goal is possible but it is neither easy nor simple or cheap. However, the sooner this message gets to the consciousness of the decision makers the sooner society would do a step forward to a cleaner and energy secured future. The promotion of this possibility will allow serious approach to detailed development of an enabling environment for this vision to come true.

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This vision is not utopia! It is much needed to be developed into project, and sooner enough into strategic development documents of the Country. The construction of the new plants will require big capital investments but it will also create many new jobs. The period is sufficient to achieve a phase by phase training of a sufficient number of qualified staff as well as to retrain employees of the sectors that will slowly disappear. It is especially important that the State intentionally stimulates the development of organizations to produce the necessary equipment on their own. In the case of big orders when meeting large market needs, the final price of the equipment will become more acceptable. Here also belongs enabling of training and education of the workforce, as well as dedicated information and market-oriented stimulus campaigns. State should provide direct financial support and inviting offers so to attract foreign investors. This means allocation and direction of existing resources for research and development as well as for development of funds for sustainable energy priorities, such as energy efficiency and renewable energies. This will be a major challenge for the development of scientific research bodies, which will certainly join the production organizations as their consisting part. The fact that the societies will step forward to decarbonised world is a reality. Transition towards fossil fuel free society takes time so we need to make our decisions very soon. However, it depends on whether we will be among the first to create this social awareness or remain legging behind.

It is our own choice! We are making the choice on behalf of the next generations! These results should be accepted as initial guidance for the further research work. For that may have greater security to promote this vision addressing to the Society and to obtain a place in the strategic documents, it is necessary to undertake several measures to be developed more accurate results. With them will be forced responsible institutions for making the decisions seriously accede to these matters. The short presentation of the core tasks would be as follows:

1. It is necessary to provide funds for construction of the essential strategy for energy development that will be based on the maximum utilization of renewable energy. The preparation of this basic document we assume that cannot be shorter than two years and optimally is to last 3 years. 2. To form a team of researchers, uniting them from several institutions in the country and beyond, which will investigate certain types of energy sources - solar, large and small hydropower, wind energy, geothermal energy, using biomass. In addition, for each of these types of energy individually will need to determine which is optimal dynamics to enter the power system, which locations are optimal, how much financial resources should be provided for each. At the same time should be defined and to anticipate coverage of failures in work of each of these energy sources, especially because of their stochastic nature of work and impact on the capacity of the power system (minimum required and maximum possible energy intake depending on the season and day periods). 3. Development of a study on the needs, capacities, the guidelines for the connections of the power system with the region at the level of Europe and beyond. 4. Refresh the national action plans for energy efficiency with focus on synergies with renewable energy sources. 5. Analyse the feasibility and benefits in stabilizing the reliability of the system with the construction of small nuclear power plant of 300-500 MW. 6. Analysis of the feasibility of using previously built thermal power plants using natural gas, especially if cogeneration as systems need to ensure the security of the system in unexpected, unpredictable climatic conditions. 7. Justification and selecting locations for raising plantation crops for the production of biomass for energy purposes. Analysis of the feasibility of the construction of small cogeneration biomass plants that use waste from agriculture and animal husbandry. 8. Defining guidelines for the development of work occupations that are necessary to achieve this vision. Assessment of creating new "green" jobs with the realization of this vision, as well as jobs that are lost (coal mines). 9. Precisely defining the role of education (at all levels) and Science in implementing this vision. 10. Generalizing results of a previous study by defining research priorities and dynamics of investment. The assessment of the various scenarios will be implemented in parallel with several acceptable models for analysis (ะตnergyPLAN, LEAP, etc.). 11. Transparent inform the public about the results. Pressure on the government to accept this direction for transition into a fossil fuels free society.

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