Renewable Energy Prospects for Central and South-Eastern Europe Energy Connectivity (CESEC)

RENEWABLE ENERGY DEPLOYMENT BY SOURCE AND APPLICATION IN 2030

In 2015, the base year for this analysis, solid biomass and hydro power accounted for the bulk of all the renewable energy consumption in the CESEC region. More than half of the renewable consumption was used for heating and cooling applications in buildings and industry. Renewable power accounted for 43% of total renewable use. Biofuels in the transport sector
accounted for just 5% of total renewable consumption in the region.

 Breakdown of gross final renewable energy consumption in the CESEC area by source and application in
2015 and 2030 (PJ) (Reference Case vs REmap)

REMAP POTENTIAL BY CESEC MEMBER The CESEC region is diverse in terms of the maturity of each of the different domestic renewable markets, as well as the overall penetration of
renewable energy deployment. In 2015, the base year for this analysis, the renewable share in final energy consumption ranged from about 4% in Ukraine to about 40% in Montenegro.

 Share of renewables in gross final energy consumption by CESEC member (%)

The CESEC area has excellent resource conditions to scale up renewable power. The region has vast untapped potential for solar PV and onshore wind, two key technologies for the transformation of the power sector. Previous analysis for the region (IRENA, 2017d) has estimated the current cost-competitive potential for renewable power in South-East Europe18 at about 130 GW. The costcompetitive potential for renewable generation will grow substantially towards 2030, driven by further reductions in technology costs. A conservative
estimate of the technical potential in the broader CESEC region results in at least ~845 GW and ~402 GW for onshore wind and solar PV, respectively.19 While only a fraction of the technical
potential can be realistically deployed within the next decade, these figures illustrate that resource availability is not a limiting factor to accelerate the deployment of renewable technologies in the region. For comparison, the total installed capacity of all generation technologies in the CESEC region in 2015 was 274 GW.

Key power sector options for the CESEC region up to 2030

The switch from a fuel to electricity as a carrier for heat and transport makes the penetration of renewables easier overall – as today there are already cost-effective renewable options for power generation.Furthermore, the elimination of the need for fuel mitigates the adverse effect of local air pollution related to direct combustion of the fuel and improves energy security, as natural gas and oil are mostly imported in the CESEC region.

Energy security
Ensuring security of the energy supply has been an issue of concern shared by all Central and
South-East European countries. CESEC members are highly dependent on fossil fuel imports, and the region has been exposed to disruptions in gas imports in the past. Oil and natural gas accounted for about 58% of the primary energy supply in the region in 2017. About 90% of the oil and 75% of the natural gas used in the CESEC area are imported from outside the region.

 Demand for natural gas (above) and oil (below) by CESEC member: Reference 2030 and REmap 2030 (PJ)

Climate change mitigation
In November 2018, the EC set out its vision for a climate-neutral EU by 2050. This objective is in line with the commitment to global climate action under the Paris Agreement.22 The Contracting Parties of the Energy Community, as aspirants to EU accession, also face the challenge of energy system decarbonisation.

Cumulative investments in energy systems in the CESEC region over the period 2015-2030:
Reference Case vs REmap (EUR million)

In annual terms, the REmap scenario requires additional investments beyond those in the
Reference Case estimated at between EUR 5 billion and EUR 7 billion per year until 2030, equivalent to approximately 0.16-0.21% of the expected average annual gross domestic product (GDP) of the region over the next decade.

RENEWABLES IN ENERGY SUPPLY

POWER GENERATION
Recent trends in the region
Over the last decade, the total installed renewable capacity in the CESEC region has grown from 73 GW in 2010 to 127 GW in 2019 (IRENA, 2020d). shows the historic evolution of renewable capacity in the region. Solar PV and onshore wind account for the bulk of the capacity additions over this period. One decade ago, hydro accounted for almost three-quarters of the total renewable capacity. Today, it accounts for less than half.

Historic evolution of renewable capacity (GW)

Prospects to 2030
Electricity demand is expected to increase substantially in the CESEC region over the coming
decade (by about 15%, compared to 2015 levels). About three-quarters of this increase is expected in the eight Contracting Parties of the Energy Community.

DISTRICT HEAT GENERATION
District heating systems deliver about 13% of the overall heat demand in the CESEC region. This figure is comparable to the combined total energy demand of Hungary and Slovakia. The importance of distributed heat varies widely across CESEC members, from no role or a negligible role in some countries to a critical role in others. In terms of volume, Ukraine, Italy, Austria and Romania are the largest consumers, but distributed heat networks play an important role in multiple other CESEC members like Serbia, Bulgaria, Republic of Moldova, Slovakia or Hungary.

Distributed heat generation in 2017 by source (PJ) (left axis) and distributed heat share in total
heat demand (%) (right axis)

systems. Accumulated experience shows that with appropriate frameworks in place, solid biomass residues from forests and farms can be mobilised to serve district heating systems effectively (IRENA, 2019f). Several CESEC members with high shares of district heat in their supply mix also have large untapped solid biomass resource potential33 that could be mobilised to accelerate the transformation of the sector.

RENEWABLES IN END-USE SECTORS

TRANSPORT Recent trends in the region
Transport is the sector with the lowest renewable share in CESEC member countries. The contribution of renewables to deliver transport services across the region remains very low (at 3.8% of the final energy consumption of the sector in 2017 – the most recent year with available statistics for all CESEC members).

Biofuel consumption (PJ/year) and shares (%) by CESEC country in 2017

Prospects to 2030 By 2030, demand for energy in the transport sector is expected to grow slightly in the CESEC region (about 4%) compared to 2015 levels. Growth is driven by the eight Energy Community Contracting Parties, while consumption in the EU part of CESEC is expected to decrease slightly.36 In the Reference Case, the role of renewables in the sector is expected to remain very modest by 2030, representing only about 7% of final energy consumption.

BUILDINGS AND INDUSTRY Recent trends Heat accounts for about half of the total final energy demand in the CESEC region. The bulk of this heat (about 87%) is directly produced in equipment installed in residential and commercial buildings, and in industry.

Breakdown of final energy consumption of energy carriers (excluding electricity) in 2017 for heat in
buildings (left) and industry (right)

In residential and commercial buildings, the share of renewables is expected to increase from 27% in 2015 to 33% in 2030. This growth is almost exclusively driven by the higher share of renewable electricity – and to a lesser extent, renewable district heat – expected in the mix. Besides the use of higher shares of renewable power and district heat, the mix of energy carriers directly consumed in buildings is expected to remain almost unaltered. In industry, renewables are expected to grow from 6% in 2015 to 15% in 2030, driven by higher shares
of renewable power and district heat as well as a substantial increase in the use of solid biomass for heat production.

MOVING FORWARD

A REGIONAL ENERGY TRANSITION TO ADDRESS COMMON CHALLENGES IN THE CESEC REGION
Over the next decade, CESEC members face a multifaceted challenge. They will need to
modernise aging energy systems while maintaining a secure, healthy and affordable energy supply and complying with international environmental commitments. A shift towards renewables can help CESEC members to realise all these objectives effectively. CESEC members will have to scale up energy investments significantly in the coming years, regardless of the choice of technology mix. Renewables provide a cost-effective opportunity to modernise the CESEC region’s energy systems while improving energy security, reducing pollution and aligning the region with long-term international decarbonisation goals.

CESEC MEMBERS WILL BENEFIT FROM EMBRACING THE ONGOING GLOBAL ENERGY TRANSFORMATION
Driven by disruptive innovation and deep cost reductions in key technologies such as solar, wind power and electricity storage, the global energy sector is undergoing a profound transformation. The world’s energy sector is transitioning at an accelerated pace towards more decentralised, more digitalised and more integrated energy systems, with increasingly cheap renewable electricity at the core.

ANNEX A METHODOLOGY

THE REMAP APPROACH
REmap is IRENA’s renewable energy roadmap that focuses on identifying the realistic potential of renewable energy to the year 2030 and beyond, in all sectors of the energy system. It assesses renewable energy in terms of its costs and investments, as well as its contribution to climate and environmental objectives. The REmap analysis generates renewable energy alternatives for decision makers to consider. It is an analysis of technology options that quantifies the renewable energy potential by sector and by country. REmap follows a bottom-up approach, where each country contributes to achieve higher renewable energy uptake at the regional or global.

Key REmap options, approach and sources for analysis

Each REmap Option is characterised by its renewable energy contribution and its costs
and is used to substitute an equivalent amount of energy (and related capacity).

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