THE REPUBLIC OF BELARUS
RENEWABLES READINESS ASSESSMENT
The Renewables Readiness Assessment (RRA) is a tool developed by the International Renewable Energy Agency (IRENA) to comprehensively evaluate the conditions for accelerated renewable energy deployment in a country. It is a country-led, multi-stakeholder consultative process that allows for the identification of existing challenges for renewable energy deployment and recommends short to medium-term actions to guide decision makers and other stakeholders in addressing these challenges.
The RRA for Belarus was initiated by the State Committee for Standardisation of the Republic of Belarus (Gosstandart) in technical cooperation with IRENA. It has greatly benefitted from stakeholders’ inputs. Stakeholders in the RRA process included officials from ministries, utilities, power project developers, development partners, financial institutions, civil society and academia. As a first step of the RRA process, a background report on the energy sector in Belarus was developed that provided an overview and preliminary analysis of the energy sector context in Belarus. Thereafter, various interviews were held with institutional energy sector stakeholders in the country, supplemented with a set of detailed questionnaires aimed at further assessing the energy sector and determining the main barriers for renewable energy deployment. Based on desktop research, bilateral interviews and the
questionnaires, an issue paper was developed highlighting some of the challenges for renewable energy deployment in the country.
The Republic of Belarus is a landlocked country located in Eastern Europe bordered by the Russian Federation, Ukraine, Poland, Lithuania and Latvia. Its capital city is Minsk, located in the centre-west of the country. Belarus covers an area of 207600 square kilometres (km2 ), spanning about 650 km from east to west and 560 km from north to south. The topography of Belarus is mainly flat and lowlying. More than half of the country’s surface area is below 200 m of altitude, with the highest point of elevation at 346 m above sea level at Dzyarzhynskaya Hara in the vicinity of Minsk (Encyclopedia Britannica, 2020). Over 90% of the country is covered by natural vegetation, and about 40% of it is forested. The north of the country is predominantly characterised by gently sloping hills with many lakes, while the south is predominantly low-lying and mainly marshland. The largest and most significant river is the Dnieper, flowing through the east of the country, but other notable rivers include the Dvinar, Neman and Pripyat.
The population of Belarus numbered almost 9.5 million in 2019, with a decrease in population of 32 900 from the previous year. The population is largely urban: 78.4% of the population lives in urban settings, and over a fifth of the population, just under 2 million people, live in the capital city. More than half (57%) of the population is of working age (i.e., between the ages of 15 and 65 years) (BELSTAT, 2020a). The unemployment rate has been declining over the past few years and stood at 4.2% in 2019 (BELSTAT, 2020b). The country has a universal literacy rate, a 99% effective transition rate of students
from primary to secondary education, and 87.4% gross enrolment in tertiary education (UNESCO Institute of Statistics, 2020).
After the dissolution of the Union of Soviet Socialist Republics (USSR) in 1991, Belarus experienced an economic downfall. In 1994, gross domestic product (GDP) declined by as much as 11.7%.1 As shown in Figure 3, soon thereafter, the economy started to grow due to an increase in labour productivity, favourable trading terms (mainly with the Russian Federation and the European Union [EU]), further development of the services and manufacturing industries, and an increase in exports. The largest contributor to the country’s GDP is the services sector (49%), followed by manufacturing (22%), agriculture (7%), construction (6%), and, lastly, supply of energy and mining (BELSTAT, 2020d).
Within the services sector, wholesale and retail trade, motor vehicle repairs, transpiration, storage, information and communication, and real estate activities are some of the largest contributors to GDP. The country’s manufacturing industry includes machinery, minerals and metals, chemical products, textiles, and foodstuffs.
The supply3 of electricity, gas, steam and hot water contributes only 3% of GDP (BYR 3.95 billion, USD 1.9 billion) (BELSTAT, 2020d). This is largely due to very low domestic production of energy and an overreliance on energy imports. This in turn contributes to the seemingly weak correlation between total primary energy supply (TPES) and GDP as shown in Figure 4. Belarus imports most of its energy, particularly natural gas, from the Russian Federation at inexpensive prices. This has over time resulted
in the high use of gas in both electricity and heat generation. Crude oil is also imported and refined into petroleum products for domestic use and for exports, mainly to Ukraine. In 2019, gross energy imports amounted to USD 9.9 billion and the net energy import balance was USD 3.6 billion (BELSTAT, 2020c), which significantly contributed to the country’s trade deficit. Although energy supply is not significantly correlated to GDP, the energy intensity of the economy (i.e., the ratio of gross inland energy consumption to GDP) is high in relative comparison to EU countries, which signals a continued need for energy efficiency measures. As is shown in Figure 5, the energy intensity by power purchasing parity of Belarus is much higher than the EU average.
Greenhouse gas emissions
As shown in Figure 6, and according to the latest greenhouse gas (GHG) inventory, GHG emissions decreased by 32.5% in 2017 (93.96 megatonnes of carbon dioxide equivalent [MtCO2-eq]) from their 1990 levels (139.27 MtCO2-eq) excluding the land use, land use change and forestry sector (LULUCF). This fall can mainly be attributed to a decrease in emissions from the energy sector. The energy sector, which includes transport fuels, is the largest contributor to GHG emissions, contributing 61% of the total national emissions in 2017. However, when compared to 1990 emissions levels, the energy sector’s
GHG emissions have decreased by 41%, owing to reduced energy consumption, the implementation of energy efficiency policies, and a change in fuel consumption structure with the decreased use of highly GHG-emitting coal and oil products in the industrial and services sectors. The agricultural sector is the second-largest contributor to GHG emissions (26%; 24.04 MtCO2-eq) but has decreased by 25% compared to 1990 levels owing to a decrease in agricultural production. Emissions from industrial processes and waste each contribute a further 6.5% of total GHG emissions (UNFCCC, 2019).
The corporate tax rate stands at 18% and at 25% for banks, insurance companies and foreign exchange companies. A flat tax rate of 13% is imposed on personal incomes, and the standard rate of value added tax (VAT) is 20% on most supplied products, services and imports, rising to 25% for telecommunications (Deloitte, 2021). According to the World Banks’ Ease of Doing Business ranking, Belarus is ranked 49th globally (out of 190) and 11th (out of 24) in the European and Central Asian region (World Bank, 2020a). The highest ranking category is “getting electricity”, for which Belarus ranks third in the European and Central Asian region. This is due to minimal administrative procedures for electricity connection, the costs for each procedure, and the reliability of electricity supply and transparent communication on tariffs and tariff changes. There are only three administrative procedures for obtaining an electricity connection, which take approximately 105 calendar days to complete. The cost for electricity connection is 84.4% of the average monthly income per capita, which is considered relatively low in comparison to the region (World Bank, 2020a). Moreover, the reliability of electricity supply is high, with a system average interruption duration index5 of 0.5, owing to the country’s automated tools for monitoring outages and restoring services efficiently. Effective tariffs are readily available online and customers are notified of tariff changes well ahead of billing cycles.
ENERGY SECTOR CONTEXT
Total primary energy supply The energy mix of Belarus is overwhelmingly fossil-fuel based. In 2019, Belarus’s TPES amounted to 26 607 ktoe, of which the largest share was natural gas at 62% of TPES,
followed by oil at 28%, and biofuel and waste at 6%. The total share of renewables in the TPES was 7.1% (BELSTAT, 2020e).
Energy exports and imports
Belarus is highly dependent on energy imports, mainly from the Russian Federation, and is one of the world’s leading energy import-dependent countries. The country’s energy sufficiency, or the ratio of energy produced nationally compared to TPES, is valued at only 16.5%. The bulk of the energy supply is covered by energy imports, which amount to 84.8% of the TPES (BELSTAT, 2020c). Figure 8 compares domestic energy production and supply of energy by fuel. The largest fuel import dependency is natural gas. Only 2% of natural gas supplied is produced locally, which makes Belarus one of the countries most dependent on natural gas imports in the world. Crude oil is imported in similar quantities, but is refined and exported in significant amounts to Ukraine.
Final energy consumption
The final energy consumption is 70% of the TPES (i.e., 18 505 ktoe), with transformation, distribution and non-energy use losses accounting for 15%, 4% and 12%, respectively. As is shown in Figure 9, heat6 is the largest share of final energy consumption (30%), followed by transport fuel (26%), natural and liquid petroleum gas (21%), electricity (15%), and lastly by biomass, coal and peat (BELSTAT, 2020e).
The production of electricity has significantly increased in recent years with increased installed capacities. Since 2005, when electricity production stood at 31 terawatt hours (TWh), production has increased by over 30%. In 2019, production amounted to 40.5 TWh. Figure 12 shows the steady increase in electricity production over recent years and a very slight increase in the renewable energy share. Electricity is largely produced by thermal power plants (98.3% of total electricity production), which are predominantly fuelled by natural gas. Hydropower, solar PV and wind power account
for 0.9%, 0.5% and 0.4% of electricity production, respectively (BELSTAT, 2020h).
Belarus has a vast district heating network serving about 70% of the population (Euroheat & Power, 2017). Heat is largely produced by combined heat and power (CHP) plants fuelled by natural gas, while renewables account for 10.6% of the total heat production. The renewable share in heat production is almost entirely based on biomass, and negligible amounts (0.02%) of geothermal and solar thermal heat production. In 2019, the total heat production amounted to 59 269 tera calorie (Tcal). Heat distribution losses accounted for 7.3% of production, which rendered final heat consumption 54 971 Tcal (BELSTAT, 2020i).
At the end of 2019, installed power generation capacities in Belarus amounted to 10297 megawatts (MW), of which 391.8 MW were renewable energy power plants. Solar PV was the largest renewable energy installed capacity (154.3 MW), followed by wind (106.1 MW) and hydropower (95.7 MW). Over 86% of installed capacities were owned by BelEnergo, while the rest were owned privately or by local districts. BelEnergo’s power plants included 42 thermal power plants, 25 hydroelectric power plants and 1 wind power plant. In November 2020, Belarus commissioned its first 1.11 GW nuclear power plant.
RENEWABLE ENERGY SECTOR DEVELOPMENT
Renewable energy is in a nascent stage in the Belarusian energy sector. The share of primary energy supply from renewables has been steadily increasing over the past decade and in 2019 stood at 7.1%. This share largely comprises biofuels and, to a lesser extent, solar PV and wind. Nonetheless, the country is well endowed with renewable energy resource potential that presents a viable and sustainable pathway for the development of the energy sector. Biomass Biomass is the most abundant renewable energy resource in the country. Much biomass potential lies in wood resources, including residues, given the vast expanses of forests11 covering approximately 40% of the country’s surface area. Waste wood resources that can be used for bioenergy production are estimated at 1.5 billion cubic meters (bcm) with an annual growth of 0.03 bcm (IEA, 2016). According to the National Programme on Local and Renewable Energy Development for 2011-15, solid biomass potential is valued at 2.2 million tonnes of oil equivalent (Mtoe)/year, while a further 1.7 Mtoe/year is estimated from agricultural waste (crop residues and straw). Currently, solid biomass is utilised for heat production in heat and cogeneration power plants and boilers, and 8.9 MW is installed for power production (Ministry of Economy, 2018).
The potential for biogas production is significant in Belarus, owing to the large quantities of manure available from cattle and poultry farming, residues from crop farming, waste from the food industry, municipal waste and sewage from treatment facilities. Resource assessment studies for biogas potential from these waste sources have not been extensively undertaken; however, several approximations have been made. Namely, these potentials include 2.3 Mtoe/year of biogas production from animal manure and 0.3 Mtoe/year from municipal solid waste. In 2019, the installed capacity of biogas power plants was 26.8 MW (Ministry of Economy, 2018).
The potential for geothermal is inadequately assessed to date, with studies carried out on only a few regions. In 2018, the first geothermal atlas of Belarus was published, consisting of around 50 detailed maps of the Pripyat Trough showing the most promising geothermal wells at depths between 100 m and 4 km. The atlas includes geothermal gradients, heat flow density and geothermal resources. Although some estimates show that temperatures of 150°C to 180°C are available within the crystalline basement of up to 6 km depths, they are not economically feasible for exploitation. As such, Belarus’s geothermal resources are not deemed significant enough for power generation (Dubanevich and Zui, 2019).
The presidential decree also obligates renewable energy generators to produce only according to schedules set by the dispatch control centre to offset potential instability on the grid system. According to the tax code of the Republic of Belarus, renewable energy equipment, components and spare parts for renewable energy generation are exempted from VAT upon import and may further be exempted from custom duties. Land tax is also waived for renewable energy facilities and plants. Furthermore, to promote electric mobility uptake, VAT for electric vehicle imports is waived. If the vehicles are purchased inland, the buyer is eligible for a VAT rebate. Further incentives for electric car owners include free public parking and free public road usage tax (Export.by, 2020).
RATIONALE FOR RENEWABLE ENERGY DEVELOPMENT
FALLING COSTS OF RENEWABLE ENERGY TECHNOLOGIES
Over the past two decades, global renewable power generation capacity has drastically increased, from 754 GW in 2000 to 2 799 GW in 2020. In fact, in 2020, renewables accounted for a record share (82%) of all new power generation capacities. In view of the COVID-19 global pandemic and the consequent adverse economic effects, it is clear that global renewable energy supply chains proved to be resilient and adaptable in dire crises. The increasing pace of renewable power capacity additions was facilitated by falling renewable energy technology costs due to technological advancements, economies of scale and competitive supply chains. In the past decade (i.e., between 2010 and 2020), the costs of power production from utility-scale solar PV, concentrated solar power and onshore wind have decreased by 85%, 68% and 56%, respectively. A shown in Figure 24, the global weighted-average levelised cost of energy (LCOE) of solar PV fell from USD 0.381/kWh in 2010 to USD 0.057/kWh in 2020, and for onshore wind from USD 0.089/kWh in 2010 to USD 0.039/kWh in 2020. This not only indicates that renewables are able to compete with the cheapest fossil fuels, but that they are able to surpass them in terms of cost and new installed capacities. This trend is firmly expected to continue in the coming years. As an example, based on data from IRENA’s Renewable Auction and PPA Database, utility-scale solar PV projects that have won recent competitive procurement processes and that are expected to be commissioned by 2022 could have an average price of USD 0.04/kWh, which is 27% less than the cheapest fossil fuel competitor, namely coal-fired plants.
INCREASED ENERGY SECURITY
The Belarusian energy sector is heavily based on fossil fuels and highly dependent on energy imports. The current energy demand is insufficiently met by locally available resources and, as a result, the energy sector relies to a great extent on imports of oil and gas. With energy imports amounting to 84.8% of the TPES, Belarus is one of the world’s most energy importdependent countries. The highest fuel import dependency is on natural gas, of which only 2% of demand is produced domestically. Furthermore, most of the energy imports are from a single source supplier, which additionally jeopardises the country’s energy security. Belarus imports most of its energy from the Russian Federation. Traditionally, such imports of natural gas and oil from the Russian Federation have benefitted from favourable import prices that are only a fraction of the prices charged to other European
countries. Nevertheless, because of Belarus’s overreliance on energy imports, high energy insecurity and extreme vulnerability to price changes, any increases in import prices have always been met with strong opposition. Figure 25 shows the strong fluctuations in import prices of fossil fuels between 2012 and 2019.
CONTRIBUTION TO ECONOMIC GROWTH
Belarus relies heavily on energy imports to meet its national energy demand. In 2019, gross energy imports amounted to USD 9.9 billion while the net energy import balance was USD 3.6 billion (BELSTAT, 2020c). In relative terms, the net energy import balance equates to approximately 5.5% of the country’s GDP, contributing significantly to the country’s trade deficit. Also, given this high reliance on energy imports and the fact that the primary energy supply is not predominately domestically sourced, the energy sector is not a significant direct contributor to the country’s GDP. In fact, the supply12 of electricity, gas, steam and hot water contributes to only 3% of the national GDP (BYR 3.95 billion, USD 1.9 billion) (BELSTAT, 2020d).
CHALLENGES AND RECOMMENDATIONS
POLICY AND REGULATORY FRAMEWORKS
Scaling up the deployment of renewables requires ambitious supporting policies and conducive regulatory frameworks. Although Belarus has over the years put in place various frameworks and incentives for the development of renewables, they are still in an early stage, and the pace of their deployment has not taken advantage of the abundance of their resource potential. Some of the policy and regulatory reasons for this slow uptake have included unambitious and incoherent renewable energy targets. Furthermore, the deployment of renewables in power generation has been facilitated through yearly quota allocations that have been prone to revisions, reductions and low pricing of FiTs, which
have consequently deterred investments. To allow for a more conducive environment for renewable energy deployment, recommended actions include increasing the ambitiousness of renewable energy targets, improving the quota allocations and their pricing methodology, as well as introducing renewable energy auctions for pricing that is more market-based, especially for large-scale investments.
RENEWABLES IN END USES
Heat accounts for the largest share (30%) of final energy consumption in Belarus, and given that it is overwhelmingly fossil-fuelled, its decarbonisation is imperative for ensuring a sustainable and energy-secure development future for Belarus. Currently, the heat sector does not have a dedicated law governing its development, decarbonisation and subsidisation. This has subsequently led to the slow uptake of renewables in heating and an over-subsidisation of the otherwise fossil-fuelled sector. Although the country plans for more integration of biomass in heating, sustainable biomass resource
potentials are insufficiently assessed, and the methodologies for the estimation of their energy content are outdated. Furthermore, alternative renewable energy technologies – such as geothermal and solar thermal, which would allow for a more diversified and decarbonised heat supply – are insufficiently accounted for in planning, despite their potential. It is therefore recommended that a law governing the broader energy sector, and heat supply specifically, be developed that would make provisions for decarbonisation and appropriately allocated subsidies that are more conducive to renewables. Finally, the development of heat supply in Belarus should be diversified and based on the integration of modern, technically and economically feasible energyefficient technologies harnessing the country’s renewable energy potential.
The Republic of Belarus is a landlocked country in eastern Europe with a population of approximately 9.5 million people. After the dissolution of the Union of Soviet Socialist Republics (USSR) in 1991, the economy of Belarus contracted, but it soon resumed growth due to an increase in labour productivity, favourable trading terms – mainly with the Russian Federation and the European Union (EU) – and further development of the manufacturing industry and exports. The Belarusian economy is highly energy intensive, and the country’s energy sector is overwhelmingly fossil-fuelled and import dependent. The country’s total primary energy supply (TPES) in 2019 was composed of 62% natural gas and 28% oil, with the remainder comprising mainly biomass, waste, coal and peat. Energy imports are mainly from the Russian Federation, and amount to about 85% of all energy supplied in the country. The largest fuel import dependency is on natural gas, of which only 2% supplied is produced domestically. This makes Belarus one of the world’s most energy import-dependent countries and dramatically compromises the country’s energy security.