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South East European countries are now faced with the prospect of rethinking their energy strategy. Options ahead are many but cooperation is essential, argues Julian Popov. The SEE region is rich in a wide variety of renewables. Wikimedia commons [CC BY 2. In its Energy Union Communication published on 25 th Februarythe European Commission has recognised the Central and South East Europe as a vulnerable region with significant renewables and energy efficiency resources which needs urgent action to speed up its energy integration and increase cross-border trust.

This is a welcomed position that highlights a complex set of issue that are not easy to untangle and solve. Recently, South East Europe came to the political spotlight mainly through the cancelling of the building of the controversial South Stream gas pipeline, following the firm request by the European Commission for the project to comply with the EU competition rules.

The need to optimise the regional gas infrastructure, through building inter-connectors between the national gas grids and upgrading the one-directional flow pipelines, was an obvious first policy conclusion. However, the options for strengthening the energy security of South East Europe go much beyond improvement of the gas infrastructure. The reasons are at least three. From left to right: First, for most of the countries in the region with high gas import dependency on Russia, gas constitutes a relatively small proportion of the energy mix.

For most of the Western Balkan, gas plays a negligible role. Second, gas is not a competitive heating fuel in the region. The cost of gas is approximately two times higher energy trading central and southeastern europe 2016 biomass, fuel that is energy trading central and southeastern europe 2016 used for heating in the Balkans. Third, the cost of renewables has largely converged with the conventional energy sources.

Low labour cost, abundance of biomass, high solar irradiation, growing prices of conventional electricity and the pressing needs for refurbishing old power plants contribute to bringing cost of renewables into the same cost band as conventional power generation.

The countries in South East Europe are now facing the need to rethink their energy security policies and at the same time to reposition its energy sector into the changing energy context of Europe and the world. At a first glance, South East Europe is ideally positioned to play a key part in the new European energy policy that is placing strong emphasis on renewable energy and energy efficiency.

The region is rich in a wide variety of renewables — high solar irradiation, excellent wind, abundant biomass and geothermal resources. It is also the only European region with still significantly underdeveloped hydro energy trading central and southeastern europe 2016 and power storage potential.

Improving energy efficiency could offer economically attractive solution for reducing energy dependency and bringing in a number of benefits associated with reduced energy use — from lower energy bills and cleaner air to development of local small and medium enterprises and higher employment.

Energy trading central and southeastern europe 2016 this might look obvious but several key barriers remain. The first one is the high fragmentation and low regional cooperation in the region.

Some countries are part of the EU, others are not. Some countries are contracting parties of the Energy Community, others are not. Currently, there is not a common political platform that could easily facilitate closer energy cooperation across the region. And energy trading central and southeastern europe 2016 is essential when it comes to energy policies and building infrastructure. Most of the countries in the region are small, but they tend to try to solve their energy supply security issues by themselves or on bilateral basis.

The risk of development of generation overcapacity, and of building up energy capacity that could end up in the category of stranded assets, is high.

Through better coordination and aggregation of demand needs and by complementing supply and storage capacity, the countries in the region could release significant value and develop adequate energy strategies based on sharing resources and attracting strategic investors in the region. This is not yet happening. Energy projects are often politically driven by short term interests and supply side pressure rather than economic logic and adequate long-term demand projections.

Energy trade is not properly liberalised and most of the large energy companies are still state-controlled. A regional energy market that could provide the right signals on adequate power generation and gas infrastructure is also absent. However, not everything in the region is bleak. Cross border power grid interconnections are relatively well developed.

Bilateral electricity trade is also active. But it remains bilateral. The renewable energy resources mix is also excellent and offers a good potential for both economic and well-balanced expansion. Their wide variety offers a good opportunity for balancing the intermittent power generation of single technology renewable sources. The already well developed hydro power sector could play a key role not only in balancing the internal intermittent power generation but also provide storage for excess generation of neighbouring countries with ambitious renewables development — such as Italy and Germany.

All ingredients for energy trading central and southeastern europe 2016 the South East Europe into a clean energy generation and storage powerhouse of Europe are there. Political will in and outside the region is the catalyst that is needed. Julian is the author of two books and writes regularly on current affairs and climate and energy policy. Your email address will not be published. Notify energy trading central and southeastern europe 2016 of follow-up comments by email.

Notify me of new posts by email. Enter your email address to subscribe to the LSEE blog and receive notifications of new posts by email. Corruption and anti-corruption in Romania. Finally turning the corner? Mar 26 South East Europe has the ingredients to become the energy generation and storage powerhouse of Europe Posted on March 26, by Blog Admin. One Response to South East Europe has the ingredients to become the energy generation energy trading central and southeastern europe 2016 storage powerhouse of Europe Pingback:

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