L'avenir énergétique du Kosovo : souverain, propre, sûr et abordable

Transition to clean energy does not come without challenges. It requires determination, political leadership, technological know-how and financial resources. The cost of inaction by far exceeds the cost of action

The German-Kosovar Economic Forum at the end of last month was a tremendous success. It brought together over 600 participants from Kosovo and Germany. Many of them represented companies eager to start doing business in Kosovo or to step up their engagement. Kosovo is positioned well to further deepen its economic ties with Germany. The country’s skilled and energetic people, its favorable tax system for companies, its proximity to EU markets, the Euro and close personal ties make Kosovo stand out as a partner for investment and trade. I was amazed by the positive spirit I sensed during the Forum.

Yet, it struck me that one major concern appeared time and again throughout the presentations, panel discussions and frequent chats over coffees: The security and affordability of energy supply in Kosovo. 

But Kosovo’s energy supply is not only top of mind of the economic community. It is the bedrock of national resilience, public health and European integration. Kosovo stands currently at a crossroads from which it can choose among various pathways to its energy future.  

Few decisions will shape the daily lives of its citizens and the strength of its economy as profoundly as how the country generates, secures and consumes energy. Kosovo’s citizens and companies have been relying on lignite for electricity generation for decades. Today, Kosovo’s coal still accounts for around 90 % of electricity production, generated by two ageing thermal power plants. In other words: The country’s economic engine is still running on a heartbeat designed in the 1960s and 1980s. Together with volatile global energy prices and environmental degradation, this poses substantial risks to economic growth, national security and public health.

There is broad consensus that Kosovo’s electricity supply needs to be expanded, modernized, diversified and cleaned. At the same time, it needs to remain affordable and become more stable and regionally integrated. Kosovo has set itself ambitious targets: it’s the national energy strategy aims to increase the share of clean electricity to 35 % – up from 6 % in 2021 – and by 2050, the economy shall be fully decarbonized. 

Let me share four reasons why I believe this effort is worthwhile, why the path towards clean and sustainable energy is the right one for Kosovo and how Germany can cooperate in this transition.

Clean Energy is affordable

Modern renewables – solar, wind, geothermal – now cost less over their investment lifespan than new coal or gas plants. This is true even in Kosovo, where lignite is abundant and this is one reason why plans to build a new coal-based power plant (“Kosova C”) were never realized.

Whereas new coal or gas investments are often financed by the state, modern renewables can create attractive business cases for private investors, if the right conditions in place.

I see this as a tremendous economic opportunity, including for Kosovo’s small and medium businesses. The country’s first competitive solar and wind energy auctions have been recent milestones. They showed that international and local investors are ready to deploy capital when rules are clear, transparent and enforced. Such investments keep electricity affordable and create jobs.

Also, a lot of energy is still lost by poorly insulated buildings in Kosovo. Therefore, investments in energy efficiency usually pay off rapidly - for households and businesses alike.

It does not need the current global oil price crisis to understand that the trend is crystal clear: Further advances in solar, wind, geothermal and battery technology will make renewable energy sources increasingly affordable. Renewables, in combination with improved energy efficiency, will thus provide a route to affordable energy for Kosovo’s companies and citizens in the future.

Clean Energy is resilient and secure

Real energy security means uninterrupted, affordable power for every household and business. Even before Russia’s war of aggression against Ukraine, we knew that energy grids, pipelines and critical water systems could become targets for hybrid attacks. Protecting critical infrastructure is today a matter of national security.

Power generation that is decentralized, diversified and regionally connected is also more resilient. Replacing vulnerable, centralized power plants with solar and wind farms, geothermal energy, battery energy storage systems, (pumped-storage) hydropower, and modernized and expanded transmission lines will make Kosovo’s energy system more resilient and harder to disrupt. During the transition to a decarbonized energy system, base load capacities from non-renewables can be gradually reduced.

Clean Energy improves Public Health

For decades, air pollution from coal and inefficient heating has taken a heavy toll on the health of Kosovo’s citizens. It has caused high rates of respiratory and heart diseases, especially among children and the elderly. Hundreds of people die every year due to air pollution caused by Kosovo’s coal power plants. Just think about the heavy winter smog in Pristina and what these emissions mean for children suffering from asthma. Moving away from fossil fuels saves lives. And it pays off by lowering the costs for healthcare, lost workdays and – quite simply - a better and healthier life for Kosovo’s people.

Clean Energy paves the way for European Integration

Kosovo’s path towards EU membership requires it to adopt the Union’s legislation for its energy sector, too. The country has signed the Energy Community Treaty, committing to align its climate policy with the EU’s, including the goal of carbon neutrality by 2050. Kosovo has already adopted Paris-Agreement-style climate targets and signed up to the Green Agenda for the Western Balkans. 
This year, the EU’s Carbon Border Adjustments Mechanism (CBAM), which is the Union’s instrument to combine climate and trade policy goals, came into effect for Kosovo. Kosovo now already pays a surcharge for the export of fossil energy and energy-intensive products to the EU. And if, for example, Albania will join the EU before Kosovo, trading Kosovo’s electricity with Albania will become much more expensive for Kosovo due to the high carbon footprint of Kosovo’s current electricity production. Therefore, the faster Kosovo decarbonises, the lower the costs will be for Kosovo’s companies and taxpayers and the easier Kosovo’s access to European investments in the energy sector will become.
If Kosovo links its relatively small power grid to the wider regional and European network, it will have more trading options and a steadier supply of electricity. Somewhere in Europe, the wind is always blowing and the sun is shining. An inter-connected grid will bring the energy from these sources to Kosovo at an affordable price.

Kosovo and Germany: A Strong Partnership for Clean Energy

Transition to clean energy does not come without challenges. It requires determination, political leadership, technological know-how and financial resources. The cost of inaction by far exceeds the cost of action.

Kosovo possesses abundant clean energy resources: wind, sun, water and heat from the earth. The country has the entrepreneurial spirit to drive the green transition. It has ambitious policies in place. All this positions Kosovo well to accelerate its journey towards secure, affordable and clean energy.
Germany will continue to support Kosovo in this endeavor — as a partner for sustainable development, as an investor and as a European neighbor.

For over two decades, Germany has supported the development and the European integration of Kosovo’s energy sector. At present, Germany’s Federal Government is funding nine bilateral cooperation projects in support of Kosovo’s energy transition in areas such as climate and energy policy, grid modernization, photovoltaic energy, solar-thermal district heating, and energy efficiency. Germany is providing over €250 million through KfW and GIZ for these ongoing projects with our Kosovar partners. 

These projects form the building blocks of our Climate Partnership with Kosovo and the Western Balkans, launched in 2023. This partnership combines political dialogue, support for effective policies and building of strong institutions with sustainable investments that make a real difference – as for example the 100MW solar park to be built on the ash dumps of Kosova A or solarthermal district heating for Pristina’s citizens.

Accelerating the green transition is an opportunity Kosovo cannot afford to miss. It is an investment in its people, its businesses and its future.

(The author is the Ambassador of the Federal Republic of Germany to Kosovo)