Republika e Kosovs

RepublikaKosova-RepublicofKosovo
Qeveria Vlada-Government

MINISTRY OF ECONOMIC DEVELOPMENT

MINISTARSTVO EKONOMSKOG RAZVOJA
MINISTRY OF ECONOMIC DEVELOPMENT

Draft

ENERGY STRATEGY OF THE REPUBLIC OF

KOSOVO 2013 2022

Prishtina, 2013

Ministers foreword

Abbreviation
KEEA
EU
CG
RES
ED
EE
SEE
ENTSO/E
PES
GWh
HPP
EC
KEK
kg
kJ
KEDS
km
KOSTT
ICMM
KfW
kVh
Ktoe
MF
MEI
MESP
MLSW
MTI
MWh
MED
DH
DSO
TSO
MO
PPP
KEEAP
GoK
ECS
TAP
TPP
ENCT
AI
SPO-OPM

Kosovo Energy Efficiency Agency

European Union
Cogeneration
Renewable Energy Sources
European Directives
Energy Efficiency
South-East Europe
European Network of Transmission System Operators for Electricity
Public Electricity Supplier
Giga-Watt hour
Hydro Power Plant
European Commission
Energy Corporation of Kosovo
Kilogram
Kilojoules
Kosovo Electricity Distribution and Supply Company
Kilometer
Kosovo Transmission System and Market Operator
Independent Commission for Mines and Minerals
Reconstruction Bank (KreditanstaltfrWiederaufbau)
Kilovolt hour
Kiloton oil equivalent
Ministry of Finance
Ministry of European Integration
Ministry of Environment and Spatial Planning
Ministry of Labor and Social Welfare
Ministry of Trade and Industry
Megawatt hour
Ministry of Economic Development
District Heating
Distribution System Operator
Transmission System Operator
Market Operator
Public Private Partnership
Kosovo Energy Efficiency Action Plan
Government of Kosovo
Energy Community Secretariat y
Trans Adriatic Pipeline
Thermal Power Plant
Energy Community Treaty
Administrative Instruction
Strategic Planning Office Office of the Prime Minister

TABLE OF CONTENTS

Contents
I.

EXECUTIVE SUMMARY................................................................................................................................6

II.

INTRODUCTION..............................................................................................................................................8

III.

METHODOLOGY.............................................................................................................................................9

IV.

LEGAL AND INSTITUTIONAL FRAMEWORK ......................................................................................11

IV.1. ENERGY SECTOR INSTITUTIONS AND ENTERPRISES .........................................................................................11

IV.1.1 Energy sector enterprises ........................................................................................................................11
IV.2. LEGAL FRAMEWORK .......................................................................................................................................11
V.

CURRENT STATE OF THE ENERGY SECTOR.......................................................................................12

V.1. ELECTRICITY GENERATION ..............................................................................................................................12
V.1.1 Lignite used for electricity generation ......................................................................................................13

ARTICLE I. ...............................................................................................................................................................13
V.2. ELECTRICITY TRANSMISSION ...........................................................................................................................14
V.3. ELECTRICITY DISTRIBUTION AND SUPPLY ........................................................................................................15
V.4. DISTRICT HEATING ...........................................................................................................................................16
V.5. NATURAL GAS ..................................................................................................................................................16
V.6 LIQUID FUELS ....................................................................................................................................................17
V.7. RENEWABLE ENERGY SOURCES ........................................................................................................................18
V.8. ENERGY EFFICIENCY ........................................................................................................................................19
V.9. ENVIRONMENTAL PROTECTION ........................................................................................................................19
V.10. KOSOVA E RE PROJECT ..................................................................................................................................20
V.11 ENERGY SECTOR RESTRUCTURING ..................................................................................................................20
V.12 ENERGY COMMUNITY TREATY .......................................................................................................................20
V.13 REGIONAL COOPERATION ................................................................................................................................21
VI.
VII.

SWOT ANALYSIS ..........................................................................................................................................22

ENERGY DEMAND FORECAST FOR THE PERIOD 2013-2022.......................................................24

VII.1. ELECTRICITY DEMAND FORECAST .................................................................................................................24

VIII.

VIII. ELECTRICITY SUPPLY OPTIONS ..............................................................................................26

IX. POLICIES, OBJECTIVES AND MEASURES FOR THE DEVELOPMENT OF THE ENERGY
SECTOR.....................................................................................................................................................................30
PILLAR I. SECURITY OF SUSTAINABLE AND QUALITY SUPPLY OF ENERGY ................................................................30
Objective I.1. Security of electricity supply........................................................................................................30
Objective I.2. Security of thermal energy for heating ........................................................................................33
Objective I.3. Development of the natural gas infrastructure ............................................................................33
Objective I.4. Establishment of the obligatory petroleum reserve .....................................................................34
Objective I.5. Promotion of renewable energy sources .....................................................................................34
Objective I.6. Increasing energy efficiency ........................................................................................................35
Objective I.7. Review and amendments to the primary and secondary legislation ............................................36
PILLAR II. RESTRUCTURING OF THE ENERGY SECTOR ..............................................................................................36
Objective II.1. Enhancement of energy sector competitiveness, through sector restructuring ..........................36
Objective II.2. Establishment of a competitive electricity market ......................................................................36
Objective II.3. Common Kosovo-Albania market ..............................................................................................37
Objective II.4 Tariff reforms ..............................................................................................................................38
PILLAR III. ENVIRONMENT PROTECTION AND SOCIAL ISSUES ..................................................................................39

Objective III.1. Implementation of environmental and social norms and standards in use of energy sources,
construction and operation of energy infrastructure .........................................................................................39
Objective III.2. Addressing social issues ...........................................................................................................39
Objective III.3. Decommissioning of TPP Kosova A .........................................................................................40
X.

ENERGY STRATEGY IMPLEMENTATION PROCESS .........................................................................41

I.

Executive summary

Energy Strategy of the Republic of Kosovo for the period 2013-2022 provides guidelines
forrelevant policies for energy sector development. This strategy aims to provide prerequisites
for stable energy supply and provision of qualitative and affordable services for Kosovo citizens,
and to identify key policies and measures to be undertaken to further enhance sector reform and
to attract private investments, ensure environmental preservation, and to achieve prompter
integration of Kosovos energy system in regional and European systems.
The main objective of this strategy is to ensure sustainable and qualitative energy supply at
affordable prices for the customers, with due consideration of environmental protection.
Security and quality of power supply represent a particular focus of this strategy, which
envisages the construction of new electricity generation capacities and rehabilitation of TPP
Kosova B, and development of RES and EE projects, all aiming to ensure a balanced supply with
energy generated from available energy sources.
Also, this strategy addresses the supply of thermal energy for heating, considering that heating
plays a key role in the overall energy balance. The extension and expansion of district heating
systems would relieve the electricity consumption load used for heating purposesduring winter
season.
Increasing the diversity of primary energy sources is considered a very important component for
the overall security and quality of power supply. In this regard, connection into regional gas
pipelines is considered a realistic opportunity for the supply of natural gas in the country.
Efforts to fulfill obligations deriving from the Energy Community Treaty represent another
important dimension of this Strategy. To this end, a series of measures are envisaged to complete
the energy sector reconstruction and reformation process, in line with EC directives and
applicable domestic legislation, to attract private investments and to ensure a significant
contribution to an accelerated and sustainable economic and social development of the country.
Increased energy efficiency and use of renewable energy sources are considered important
elements of this Strategy. Clear policies and measures applicable for these two important
segments are delineated below.
The Strategy aims to supplement further the comprehensive legal and regulatory infrastructure,
which will create an enabling environment for attraction of private investments in the energy
sector, while assisting in the promotion of investments in other sectors as well. This strategy
reviews three options for security of electricity supply.
Option 1
This option envisages maximal utilization of the country's main energy resource lignite.
According to this option, all existing capacities will be operational and new lignite-based energy
generation capacities will be constructed, to fulfillthe domestic demands, and export an amount
of electricity to fulfill event regional market demands. In addition to lignite capacities, renewable
energy sources are also planned to be developed.

Option 2
Under this option, electricity supply is planned to be provided by TPP Kosova B, TPP Kosova e
Re, while TPP Kosova A shall be decommissioned within the timeline planned in line with
EnCT requirements. Electricity gap as a result of increased demand shall be mainly covered by
imports and potential RES capacities.
Option 3
This option envisages electricity supply from TPP Kosova B, TPP Kosova A (until the
commissioning of TPP Kosova e Re), TPP Kosova e Re and RES. Electricity gap and required
reserves shall be covered through the optimization of two electricity systems of Kosovo and
Albania.
This strategy is founded on three fundamental pillars. These pillars comprise the framework for
the compilation of policies and action plans on future energy sector development.
First pillar:Security of sustainable and qualitypower supply
Provision of uninterrupted, quality and affordable supply of electricity for customers is the
fundamental principle of this pillar.
To ensure qualitative and quantitativesupply of power to consumers, new energy generation
capacities must be developed. Necessary investments in transmission and distribution network,
as well as in increasing energy efficiency, will also be ensured.
Second pillar:Restructuring of the energy sector
Kosovo will continue its energy sector restructuring endeavors, in order to ensure competition in
the energy market, in line with general principles of open competition, non-discrimination,
transparency, equality and respEnCTfor consumer protection.
Third pillar:Due consideration of environment protection and social issues
In accordance with ECT, Kosovo is committed to implement the AcquisCommunautaireon
environment and social issues, in terms of exploitation energy resources, construction and
operation of the energy infrastructure.
The abovementioned pillars are further broken down into policies, objectives and measures to be
implemented towards for the development of the energy sector.

II.

Introduction

Energy Strategy of the Republic of Kosovo 2013-2022 is the main document outlining energy
policies and development objectives of the energy sector, in line with international standards on
sustainable development, environmental protection and social wellbeing, which aims to
maximize profits from the use of the countrys energy resources.
The review of the Energy Strategy of the Republic of Kosovo 2009-2018 is conducted in
accordance with the Law on Energy No. 03/L-184, and based on a series of documents, studies
and relevant analyses, paying particular attention to its compatibility with the EU Acquis, as an
equal member of the Energy Community Treaty.
The Energy Strategy aims to establish effective mechanisms for the implementation of
requirements set in this strategy, taking into account the effective management of existing energy
resources and environmental protection. It focuses on enhancing the security of supply in line
with European standards and diversification of energy sources. This strategy aims to encourage
rational use of energy and increased energy efficiency, utilization of renewable energy sources,
introduction of new technologies, while respecting international standards of environmental
protection and community care.
This strategy covers a 10-year period. Policies, strategic objectives and measures identified in
this document for each subsector are also aimed at creating a guideline basis to draft the
Implementation Program of the Energy Strategy for the period 2013-2016.
The Energy Strategy of the Republic of Kosovo 2013-2022, after its adoption by the Government
and approval by the Assembly of the Republic of Kosovo, will be implemented by all relevant
stakeholders of the energy sector.
The authority responsiblefor coordination and supervision of the implementation of this Energy
Strategy is the Ministry of Economic Development.

III.

Methodology

Pursuant to legal requirements set forth in Law No. 03/L-184 on Energy, respectively Article 3
thereof, the Ministry of Economic Development initiated the review of the Energy Strategy of
the Republic of Kosovo 2009-2018. A working group has been established for this purpose,
comprising representation from MED, SPO-OPM, MF, MESP, MTI, MEI,ERO, ICMM, KEK
J.S.C., KOSTT J.S.C.,DH Termokos, and University of Prishtina'sFaculty of Electrical
Engineering and the Faculty of Mechanical Engineering. During this period, the working group
held working meetings to prepare the draft Energy Strategy 2013-2022. The main actor in all
activities undertaken during the drafting process, including reviewing comments and suggestions
of working group members and technical processing of documents throughout the strategy
drafting process was the Division for Sectorial Strategies of MED.
For purposes of harmonization and all-inclusiveness, strategic documents approved by the
Government, MED and other relevant actors in the energy sector have been reviewed in drafting
the Energy Strategy, including, Program of the Government of the Republic of Kosovo 20112014, Declaration of Priority Mid-Term Policies 2014-2016, ERO Annual Report 2012, Mining
Strategy of the Republic of Kosovo 2012-2025, Annual Energy Balance of the Republic of
Kosovo 2012, Long-Term Energy Balance of the Republic of Kosovo Republic of Kosovo 20132022, Report of the Study on the security of power supply in Kosovo, and Energy Strategy of the
Energy Community.
This document depicts the current state of the energy sector and covers the legal and institutional
framework, energy generation capacities and ancillary infrastructure. It also provides a SWOT
analysis of the sector, energy forecasts, and analyzes three options for electricity supply.
Three pillars are also presented based on the analysis of the current situation, while strategic
objectives are shown for each pillar separately, accompanied with measures envisaged for their
realization. The realization of short-term objectives will be setin the Energy Strategy
Implementation Program, which will serve as a mechanism for monitoring the implementation of
this Energy Strategy.
In addition, based on the legal requirements of Article 3 of the Law on Energy, and ensuring the
protection of confidentiality of relevant information, the Ministry has issued the draft Strategy
for public consultation for a period 60 days. After reviewing all comments, suggestions, and
proposals and after incorporation of all relevant additions,the Ministry will submit the draft of
the Energy Strategy to the Government of the Republic of Kosovofor review and adoption, and
then to the Assembly of the Republic of Kosovo for approval.

Vision and Mission

Vision
Development of the energy sector in a sustainable and environmentally-sensitive manner, with
the aim of ensuring secure, efficient, qualitative and affordable energy supply for all consumers.
Mission
To provide conditions for a sustainable security of power supply, development of energy
generation capacities, development of energy infrastructure, efficient use of energy, and
promotion of the use of renewable energy sources, and environment and community protection
from energy activities, attracting investments in the energy sector.

10

IV.

Legal and institutional framework

Policy development, organization, regulation and management of the energy sector in the
Republic of Kosova are based on a set of laws that ensure overall compliance with the European
Union (EU) Acquis on energy. Energy sector institutions include government and regulatory
institutions, and energy enterprises.

IV.1.Energy sector institutions and enterprises

Key energy sector institutions are:
Ministry of Economic Development (MED);
Energy Regulatory Office (ERO);
Independent Commission for Mines and Minerals (ICMM).
Other Government authorities, such as the Ministry of Environment and Spatial Planning
(MESP), Ministry of Labor and Social Welfare (MLSW), Ministry of Trade and Industry (MTI),
Ministry of Finance (MF), and the Kosovo Competition Commission, also play an important role
in monitoring social, economic and environmental responsibilities in the energy sector.
IV.1.1 Energy sector enterprises
Main enterprises operating in the energy sector of Kosova are:

Energy Corporation of Kosovo (KEK J.S.C.);

Kosovo Transmission System and Market Operator of Kosovo (KOSTT J.S.C.);
Kosovo Electricity Distribution and Supply Company (KEDS);
District Heating Companies(TermokosJ.S.C., Prishtina, DH GjakovJ.S.C., Mitrovicaand
Zvean);
Hydro Power Plants (HPP): Ujman, Lumbardh,Radac,Dikanc and Burim.

IV.2. Legal framework

The following laws comprise the basic legal framework for the organization and management of
the energy sector, which are in line with the European Directives and requirements of the Energy
Community Treaty (ECT).
Law No. 03/L-184 on Energy;
Law No. 03/L-185 on the Energy Regulator;
Law No. 03/L-201 on Electricity;
Law No.04/L-016on Energy Efficiency;
Law No. 03-L-133 on Natural Gas;
Law No. 03/L-116 on District Heating;
Law No. 03/L-163 on Mines and Minerals:
11

V.

Current state of the energy sector

V.1. Electricity generation

Electricity generation in the country is mainly provided by the Kosovo Energy Corporation,
operating through its two Thermal Power Plants Kosova A and KosovaB, supplied by open
cast coal mines (Sibovc Southwest and Sitnica sectors) and in smaller amounts from hydro
power plants (Ujman, Lumbardh, Radac, Dikanc and Burim).Installed capacity of thermal power
plants is 1478 MW; however, due to their age, their current operational capacity is around 915
MW. Gross generation of electricity from existing power plants in 2012 was 5,383.981GWh.
Installed hydro capacities amount to 45.84 MW, which have generated in 2012 a total of
95.582GWh.
Table 1 shows installed generation capacities by type and year of commissioning.
Table 1: Installed electricity generation capacities3

HPPUjmani
HPPLumbardhi
HPPDikanci 1
HPPRadavci
HPPBurimi
Total HPP
Wind energy

Capacity of units (MW)

Installed
Net
Min/max
Thermal Power Plants
65
Not in operation
125
Not in operation
200
182
100-130
200
182
100-130
210
187
135
800
551
339
310
180-260
339
310
180-260
678
620
1478
1171
Hydro Power Plants
35.00
32.00
8.80
8.00
1.00
0.94
0.90
0.84
0.86
0.80
46.56
42.58
1.35

Total

1,525.91

Generation
units
A1
A2
A3
A4
A5
TPPKososva A
B1
B2
TPPKososva B
Total TPP

Commissioning
1962
1964
1970
1971
1975
1983
1984

1983
1957 (2006)
1957 (2010)
1934 (2010)
1948 (2011)
2010

1,213.58

Source: Annual Energy Balance of the Republic of Kosovo 2012

Source: Annual Energy Balance of the Republic of Kosovo 2012
3Source: Annual Report 2012, ERO,
2

12

V.1.1 Lignite used for electricitygeneration

Coal (lignite), is the most important energy resource in Kosovo, and provides for around 97% of
the total electricity generation. It is considered to be the lowest-cost method of electrical energy
production4.
Most important lignite basins in Kosova Are:
- Kosova Basin;
- Dukagjini Basin; and
- Drenica Basin
Figure 1 below indicates lignite basins in the Republic of Kosovo.

Figure 1:Lignite basins in Kosovo

Estimated Kosovo lignite resources5are presented in Table 2.
Table 2: Lignite reserves in the Republic of Kosovo6
Lignite basins
Kosovo
Dukagjini
Drenica (f. Skenderaj)
Total

Geological
10, 091, 000,000
2, 244, 830,000
106, 631,000
12,442,461,000

RESERVES (t)
Balance7
8,772,000,000
2,047,700,000
73,188,000
10,892,888,000

Non-balance8
1,319,000,000
197,130,000
33,443,000
1,549,573,000

The Government will continuously and with great care monitor the Carbon Trading trends, when it comes to the
energy production by conventional methods.
5
Revising clause No. 152, University of Prishtina, 2008, on Study for the assessment of research and geological
reserves of coal in Kosovo, Prishtina, 2007, p. 81. Institute INKOS
6
Source: Mining Strategy of the Republic of Kosovo for the period 2012-2025.
7
Balance reserves are those where the calorific value of coal is over 5.450 kJ/kg.
8
Out of balance reserves are those where the calorific value of coal is under 5.450 kJ/kg.

13

Besides its use for electricity production, the government encourages the coal to be used for
other needs, such as gasification, drying, export, etc.

V.2. Electricity transmission

The transmission system is managed by the Kosovo Transmission, System and Market Operator
(KOSTT J.S.C.). The transmission system is interconnected with all neighboring systems at the
400 kV level with the exception of Albania, where the connection is only at the 220 kV level.
Activities on initiating works for the construction of a new 400 kV interconnection with Albania
have been undertaken and the construction of this line is expected to start in 2014.
Development of the high voltage 400kV interconnection line between Kosovo and Albania will
increase transmission capacities between both countries and in the region in general, while
increasing safety and reliability of electricity systems of Kosovo and Albania, and will optimize
the operation of both systems.
The overall length of transmission lines (400 kV, 220 kV and 110 kV) is 1,187 km.
In the recent years, considerable investments have been made and have had an impact in
increasing transmission capacities, enhancing their security and reliability, and in diminishment
of losses in the transmission system.
Hence electricity losses in transmission, in relation to the overall consumption, are expected to
decrease from 109.028 GWh in 2012 to 107.3 GWh in 20179, thus diminishing by 1.8%.
In 2013 and 2014 politic, economic and technical prerequisites will be provided for KOSTT's
membership in international (European) electricity-related organizations/mechanisms, starting
from its membership in ENTSO-E, be it as an independent system or as a sole control area with
Albania.

Figure 2: Connection of the transmission system of Kosovo with neighboring countries

Source: Seventh Electricity Tariff Review (2013-2017).

14

V.3. Electricity distribution and supply

The distribution network owns 625 km of the 35 kV network. 10(20) kV network has a length of
959 km, 10 kV a length of around 5915 km, 6 kV around 50 km and the 0.4 kV network has a
length of around 11.905 km. In addition, the distribution network also owns 7708transformer
stations of the 35/10 kV to 6/0.4 kV level and 7840 substations from 35/10 kV to 6/0.4 kV.
Recently, significant investments have been made in the distribution network, which have had an
impact in reducing losses. The trend of diminished losses will continue in the future, based on
planned investments to be made. Hence, electricity losses in distribution, in relation to the
overall consumption, are expected to decrease from 1539.50 GWh or 33.77% in 2012 to 778.27
GWh or 16.9%10in 2017. Diminishment of technical losses will be a result of investments to be
made in the distribution grid from KEDS, while commercial losses will decrease due to
increased commitment by KEDS and support provided by the Government.
In 2013 and 2014 power boundaries (interconnection) shall be defined, and on their basis full
control of electricity consumption throughout Kosovo territory will be established after the clear
delineation of the distribution grid.
Billing and collection
Billing and collection of electricity has improved as a result of commitment of KEK J.S.C., as
well as due support provided by the Government, which is expected to continue in the future.
The increased level of billed and collected energy is presented in the following table.
Table 3: Energy billed and collected from 2008-201211
Year
2008
2009
2010
2011
2012

Load
MWh
4,035,076
4,428,053
4,559,037
4,682,250
4,768,383

Metered
energy
MWh
2,093,372
2,532,626
2,679,713
2,890,172
3,018,863

Billing

Collection

(000) Euro
165,351
178,295
174,747
188,399
207,878

(000) Euro
118,845
142,110
151,805
168,952
184,541

Collection/billing
ratio
%
71.87
79.70
86.87
89.68
88.77

Electricity demand in 2012 was covered by domestic generation, exchanges and import.
Electricity imported in 2012 was 571,89712MWh.
As part of the unbundling process of vertically integrated enterprises, the Government of
Kosovo, through Decisions No.04/36 and 03/38, ordered the legal unbundling of KEK J.S.C.,
whereby a new entity, KEDS J.S.C., was established, and subsequently privatized by LimakCalikconsortium.

10

Source: Seventh Electricity Tariff Review (2013-2017)

Annual Report 2010,2011 and 2012, ERO,
12Source: Annual Report 2012, ERO.
11Source:

15

V.4. District heating

District heating systems exist only in Prishtina, Gjakova, Mitrovica and Zvean. These systems
meet only 3% of total heating demand.
Table 4: Capacity of district heating companies in Kosovo13
Enterprise
(city)

Installed
capacityMWt

DHTermokos

135.62

DHGjakova
DHMitrovic
DHZvean

38.6
16.9
1.6

Operational
capacity
MWt
135.62

Length of the
distribution
network in km
70

20

23.5
4.5
0.8

No. of
substations
312
275
20

Termomit in Mitrovicaand ZvecanDistrict Heating Companies, due to widely known

circumstances, do not comply with ERO's licensing/regulation and monitoring requirements,
thus the provision of updated relevant data is not possible.
In the period 2009-2012 several investments have been implemented, including the rehabilitation
of generation equipment, replacement of the old network of thermal-conductors; expansion of
the heating network; and expansion of heated areas. Despite positive developments, these
companies are yet to operate as profitable and self-sustainable businesses, due to the high level
of bad debts and losses. Therefore these companies remain dependent on subsidies from the
Kosova Budget, or the respective municipalities.
In order to ensure security of heating supply in Prishtina, a cogeneration projectis being
developed between TPP Kosova Band TermokosJ.S.C., funded by the European Commission,
German Government through KfW, Government of Luxembourg, Government of Sweden and
the Municipality of Prishtina. This projectwill aim to increase security and efficiency of supply,
and to substitute heavy duty oil as the fuel used in the heating process.
With the aim of identifying possible heating options and to enable diversification of heating
energy sources, in 2012 a study was conducted on the feasibility of district heating facilities in
Peja, Prizren, Gjilan and Ferizaj.

V.5. Natural gas

Currently, no natural gas facilities are present in Kosovo, and there is no gas pipeline
infrastructure, with the exception of an old and destroyed network of the artificial lignite gas,
which has a total length of 254 km,as an underground pipeline that supplied the Skopje
ironmongery, Ferronikel, Trepca, Lamkosand Termokoswith gas from lignite gasification
processes in the former Kosovo Electro-Economy. According to the ESTAP I study, the repair of
existing lines is not cost-effective; therefore it is recommended that a new pipelineis developed
with other operational parameters. However, a positive development is that the Government has

13

Source: TermokosJ.S.C./Division of energy balances, MED.

16

ownership rights of the line Hani i Elezit Mitrovica, which shall be taken into account when
reviewing the use of this asset.
Another fact to be considered is that the gas pipeline included developments that will hinder the
implementation of a projectthat completely follows the existing pipeline trajectory14.
In 2007, the "Regional Gasification Study - Kosovo Market Report" study was published,
commissioned by the World Bank (WB) and German Development Bank (KfW). This study was
prepared by the Economic Consulting Associates from England.
Kosovo will continue to closely follow all regional projects related to natural gas utilization, and
will strive to become part of projects like TAP and IAP. To this end, it is necessary to conduct
studies that would provide recommendations on specific activities to be undertaken.

V.6 Liquid fuels

The petroleum market is regulated by Law No. 03/L-138 amending and supplementing Law No.
2004/05 on trade in petroleum and petroleum products, adopted in 2005. This law regulates
wholesale and retail trading, transport, storage, processing, and emergency reserves of petroleum
and petroleum products. The Ministry of Trade and Industry is responsible for administrative
regulation and trade of liquid fuels. Wholesale and retail trade prices are regulated by the
respective markets.
The Law obliges all retail points of sale and storages of petroleum and petroleum products to
keep in their stocks at least 5% of their total storage capacities for emergency reserve purposes.
Current capacity of licensed storages is 80,000 m3, while the storage capacities of wholesale and
retail points of sale amounts to around 40,000 m3. Therefore, the amount of emergency reserves
of petroleum products is currently around 6,000m3or 5,000 tons, which would suffice to cover
for merely 3-4 days of net annual average imports. Additional 50.0000m3in storage capacities are
currently available in Kosovo, but these capacities are not currently in use and not licensed.
Kosovo is an importer of petroleum products. There are two factories for the production of heavy
oil for heating purposes, which cover around one quarter of the market for this product. Raw
materials used include other petroleum products but not crude oil.
With the aim of transposing Directive 2009/119/EC on the obligation of establishing reserves of
petroleum and/or petroleum products is drafted a new law for the market for oil and oil products.
Liquid Petroleum Gas, (LPG), as an efficient and environmentally friendly energy source, also
participates in the overall energy consumption in the domestic market, used in various sectors.
There is a relatively good market supply from the private sector with an increasing trend. The
increased use LPG serves the diversification of energy sources available to consumers. This
would create conditions for a significant reduction in the use of energy for heating, cooking and
other services, and this would potentially reduce electricity imports (as in heating periods is
usually costs more).

14

Source: MEM 2010 Report - Clarification on the trajectory of the existing gas pipeline grid in Kosovo.

17

V.7. Renewable energy sources

Renewable energy sources (RES) represent an important portioof the Energy Strategy.
Renewable energy sources represent the most significant energy source, which provide for
reliability and diversity of energy products, continuous economic development and
environmental improvements.In implementing this energy policy, necessary legal and regulatory
has has been developed for RES. In addition, incentive measures have been undertaken, such as
feed-in tariffs for a number of renewable energy sources, development of rules for the certificate
of origin for electricity generated from renewable sources, support mechanisms for electricity for
which a Certificate of Origin has been issued, and procedures for admission in the support
scheme.In addition, the Ministry of Economic Developmenthas adopted an Administrative
Instruction on RES Targets by 2020. These targets are in line with the Decision of the Ministerial
Councils decision of the Energy Community (2012), and in line with the Administrative
Instruction for Renewable Energy Sources, which aims to implement Directive 2009/28/EU.
These objectives shall be part of the National Action Plan for Renewable Energy Sources (20112022), drafted in accordance with the uniform methodology of the Energy Community. This plan
also envisages all activities to be conducted and the timeline for their implementation, types of
RES, their share in the overall consumption, related costs and financial sources.
In terms of the development of renewable energy sources from water, a study has been
implemented to identify small hydro power plant capacities, and 77 locations have been
identified with a capacity of 128.197 MW. In addition, with the financial support of WB, an
update of the existing Feasibility Study has been made for the construction of Hydro Power Plant
Zhur; however, additional studies and information are required to effectively implement this
project, as a good opportunity for the future.
Energy potential from biomass (wood) comprises a significant share of the energy consumption
of Kosovo. It is estimated that for energy purposes (wood is mainly used for heating households
and services sector schools, small businesses, etc.) around 1.6 million m3/year of firewood are
consumed, equivalent of around 244.45 ktoe/year.
No specific study was implemented on wind potentials in the Republic of Kosovo. The German
Government, through KfW,has committed to developing a wind atlas for Kosovo, and
incorporate the solar energy component.
Solar energy can be used considerably for heating of sanitary water and photovoltaic energy
generation. Solar radiation in Kosovo is estimated to be between 1500 and 1650 kWh/m2 per
year.
There are some indicative data on geothermal energy potentials. There is a need to implement a
detailed study on the potential of this energy source.
In regard to the use of waste for energy generation purposes, a detailed study is necessary on the
feasibility of such use.

18

V.8. Energy efficiency

An important aspEnCTof the relevant energy policies of Republic of Kosovo, as reflected in its
Program, is the promotion of energy efficiency (EE), implementation of EE measures in relevant
sectors in line with KEEAP 2010 to 2018 and cogeneration (CG). This promotional and
incentive policy willaffEnCTEconomic Development, energy savings, increased security of
energy supply and environmental protection.
In the period between 2009-2012 a series of important programmatic, legal and institutional steps
have been undertaken to promote EE, including a draft of the Kosovo Energy Efficiency Action
Plan (KEEAP) 2010-2018, the first draft mid-term Kosovo Energy Efficiency Action Plan
(KEEAP) 2010-2012, and the second draft mid-term National Energy Efficiency Action Plan
(NEEAP) 2013-2015. With the help of KEEA, the representatives at the municipal level will
develop municipal energy efficiency plans.
A number of projects in the field of energy efficiency have been implemented, mainly those that
provide concrete measures such as: energy auditing of public buildings and implementation of
audit measures, public lighting in cities, installation of solar panels in the University Clinical
Center, the Student Dormitories and governmental buildings. The Progress Report on KEEAP
2010-2012 shows that the indicative energy saving target of 3% is accomplished.
NEEAP 2010-2018, respectively the second mid-term KEEAP 2013-2015, presents all activities
to be developed, the timeline for their implementation, funding sources and responsible
institutions. To achieve the targets defined in this plan (9% or 92ktoeof energy savings) concrete
projects are being continuously drafted in EE measures in both the central and local government
facilities.
Reconstruction of buildings and modernization of heating and cooling systems provide a vast
energy saving potential (increased energy efficiency). Also, more rational utilization of energy in
municipalities would greatly contribute to the accomplishment of envisaged targets (especially in
public lighting).

V.9. Environmental protection

Environmental protection falls under the mandate of the Ministry of Environment and Spatial
Planning (MESP). However, this Strategy needs to address environmental aspects from the
energy sector perspective. Energy sector remains one of the largest pollutants in Kosovo,
especially Prishtina region. Gas emissions from thermal power plants, with large concentrations
of acidic matter, dust/ash and lignite self-combustion, are the largest contributors to such
pollution. Evidently, the energy sector is also the largest contributor to greenhouse gas emission
in Kosovo. Another strong pollutant is the household sector, due to its use of coal or other fuels
for heating purposes.
Recently, several measures have been undertaken to improve the environmental situation from
energy activities. These activities include further replacement of electrostatic precipitators in
three TPP A units, and the implementation of the hydraulic ash transportation is ongoing, from
TPP Kosova A to the Mirash mine, and the industrial water processing, removal of phenols and
phenol waters is also ongoing.
19

V.10.Kosova e Re Project
Thermal Power Plant Kosova e Re is one of the main projects in the energy sector, which
supports all pillars of the Energy Strategy of the Republic of Kosovo. This thermal power plant
is envisaged to have to units of around 300 MW per unit, and will be built with the Best
Available Technology (BAT).The aim of the projectis to reach security of supply in the most
environmentally-friendly manner, while optimizing the exploitation of available natural
resources. Thermal Power Plant Kosova e Re will be developed while integrating all
requirements of the Industrial Emissions Directive, which stipulates the highest European
environmental standards. The implementation of this standards means that this thermal power
plant will generate electricity while emitting quantities that are acceptable for new thermal power
plants in Europe. Simultaneously, the development of this thermal power plant will enable the
closure of Thermal Power Plant Kosova A, which is one of the main pollutants in the Republic of
Kosovo. The TPP Kosova e Re projectwill be managedandledwhilerespectingKosovolawsand the
higheststandardsoftransparencyandcompetition. Throughoutitsdevelopment, the projecthas
suffered
a
numberofstructuralchanges,
basedoninvestors'
preferences.
Thesestructuralchangescame
as
a
resultof
the
aim
to
ensure
the
widestparticipationofinterestedinvestors,
in
order
to
usecompetition
to
providethatelectricitypricesresultingfromthisprojectare affordable for Kosovo citizens.The
Government of Kosovowillremainengaged in order to ensurethat the procedure
forselectionofinvestorsanddevelopersand
the
projectstructureencouragegreatercompetition,
which,
in
turn,
willprovidefor
the
mostaffordablepricesforenergygeneratedfromthisthermalpowerplant.

V.11 Energy sector restructuring

In 2006, the Kosovo Electricity Transmission, System and Market Operator (KOSTT J.S.C.) was
established, in line with provisions regulating the unbundling/restructuring of the electricity
sector, Law on Electricity and terms set in the Energy Community Treaty.
Towards achieving full unbundling of the energy sector, the Government of the Republic of
Kosovo ordered legal unbundling of KEK J.S.C., in its Decisions No.04/36 and 03/38, which
resulted in the establishment of a new legal entity - KEDS J.S.C. and subsequently with its
privatization.
Kosovo needs to continue its reforms in the energy industry sector, in order to ensure energy
market competition, in accordance with the general provisions of open competitiveness, nondiscrimination, equality, consumer protection and sustainable economic development.

V.12 Energy Community Treaty

Kosovo is a signatory party of the Treaty on the establishment of the Energy Community Treaty
(EnCT) for Southeast Europe, which entered into force on 1 July 2006. In this context, the
Government of Kosovo remains substantially engaged in the development of the energy sector,
in line with EnCT requirements. This Treaty mandates the implementation of EU
AcquisCommunautaire by each signatory party, and in line with the calendar envisaged for the
implementation of required reforms.
20

It is worth to mention that the Kosovo transmission system represents an important nod for
electricity transmission and interaction with other electricity systems of countries of the region,
as well as for electricity traders. To this end, the Government remains committed to attaining
certain functions from EnCT or EC, towards operationalization of the electricity market in
Kosovo.

V.13 Regional cooperation

The Government considers that regional cooperation is of key importance for Kosovo. Such
cooperation is especially significant in the energy sector, as it is geared towards the integration of
energy markets and increased understanding and exchange of energy services, which are of great
importance for increasing security of energy supply, in conditions when energy infrastructure in
the countries of the region is not sufficiently developed to enable unhindered energy exchanges.
Regional cooperation also aims to exchange experiences, unify approaches and practices on
relevant issues, as well as for the treatment of the issue of water use for energy purposes. To this
end, discussions will be waged with Albania as soon as possible in an effort to reach a new
agreement on use of waters.
The Government of the Republic of Kosovo will also engage in advancing cooperation relations
in the energy sector with other countries of the region.

21

VI.

SWOT Analysis

The SWOT analysis represents a useful instrument for the identification of external and internal
factorsinfluencing the overall development of the energy sector.
The following table represents internal factors (strengths and weaknesses) and external factors
(opportunities and threats). SWOT analysis is developed after a review of materials, studies and
exchange of ideas with experts and representatives of relevant institutions of the energy sector.

Strengths:

Sufficient lignite reserves with wide opportunities

for electricity generation with competitive prices

Sufficient transmission interconnection capacities
to provide for cross-boundary trade;
Industry experience in production and
exploitation of the lignite in Kosovo
Sufficient human resources for recruitment and
development of skilled staff which may cover the
needs of the sector
Legislative framework in accordance with EU
standards
Republic of Kosovo is a party to the Treaty
establishing the SEE Energy Community
Adequate institutional mechanisms for the
functioning of the energy sector, in particular
independent
regulatory
authorities
and
independent transmission system and market
operator;
Relatively favorable RES potentials, which
enables the diversity of energy sources;
Development of a common Kosovo-Albania
electricity market.

Weaknesses:
Degradation and de-investment in the energy
systems during 1990-1999, which has resulted in a
decline in generation and degradation of the
distribution network;
Current generation capacities are old;
High level of technical and commercial losses in the
distribution system;
Lack of access to manage the energy sector in the
northern part of Kosovo;
Limited access for self-financing of investments;
Delays in investments in modernizing and
developing generation and distribution capacities;
Irregular supply with electrical and thermal energy;
Low share of RES in electricity generation;

Dependence on imports of certain energy resources

Dependency on imports of some primary sources of

energy (oil, crude oil, petroleum); and high
dependency on electricity imports.
Low efficiency in the generation process and energy
use;
Environment pollution from lignite mines and
energy generation;
Lack of national reserves of liquid fuels;
Use of electricity for heating;
Lack of awareness and education of younger
generations on the institutional treatment for the
development of profiles in the sector.

22

Opportunities:

Increased demand for electricity in Kosovo and

the region with opportunities for fast sector
development
Restructuring and full reforms of the energy
sector in line with EU Directives
Liberalization of the market regionally and the
development of the sector with the private capital
Potentials for attracting strategic investors
Construction of new lignite-based generation
capacities
Construction of district heating systems in larger
cities
Reduction of technical losses and increased
investments in distribution
Increased EE in energy generation and efficient
use of energy by end-consumers
Development of renewable of energy resources
with private capital
Kosovos access to international financial
mechanisms for increased EE. .

Threats:
Unexpected increase in prices of liquid fuels
imported and unexpected interruption of supply with
imported oil products
Possible global financial crisis, with negative
impacts in foreign investments
Continued obstructions by Serbia in the energy
sector
Increased prices of electricity and increased demand
for imports, until the development of new
generation capacities
Lack of electricity available in the region
Non-functioning of open and competitive electricity
market in the region
Non-fulfillment of strategic objectives in the right
time, particularly in reference to sufficient capacities
for electricity supply.

23

VII.

Energy demand forecast for the period 2013-2022

If we analyze the energy consumption in previous energy balances of all sectors, we see that in
2011 the largest consumer of energy in Kosovo was the household sector, followed by the
transport and industry sectors.
The demand for final energy consumption in 2022 is expected to reach 1701.84 ktoe. Measures
for the rehabilitation and construction of the electricity system of and the construction of the
Power Plant Kosova e Re will have their impact on the energy demand in the industry,
services, agriculture and transport sectors, as well as in reducing the increased trend of electricity
demand in the household sector.
The industrial sector will have an intensive increase of electricity demand. An overview of
energy consumption in all sectors is shown in Table 5.
Table 5: Overview of the energy consumption forecast in ktoe for all sectors 15
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Industry

356.20

376.20

389.37

398.19

398.87

399.93

410.89

420.75

431.71

442.37

Households

503.93

525.84

541.7

555.6

574.25

589.63

607.57

623.32

641.82

658.35

Services

114.51

120.88

125.74

130.54

136.66

142.03

148.11

153.59

159.20

163.95

21.18

21.98

23.18

23.77

24.51

25.16

25.89

26.56

27.29

28.02

342.36

349.21

356.19

363.31

370.58

377.99

385.55

393.26

401.13

409.15

1338.19

1394.12

1436.18

1471.40

1504.87

1534.74

1578.01

1617.48

1661.16

1701.84

Agriculture
Transportation
Total

VII.1.Electricity demand forecast

In forecasting electricity demand, a number of corrective factors were considered, which may
have a considerable impact on all three various demand growth scenarios:
Implementation of the Kosovo Energy Efficiency Action Plan;
Diminished commercial losses (decreased consumption as a result of efficient billing
and more effective metering and control procedures);
Impact of GDP forecasts in consumption development;
Forecast of technical losses in transmission and distribution networks.
The following tables indicate the forecast of gross electricity demandand the forecast of maximal
load by 2022.

15

Source: Long-term energy balance of the Republic of Kosovo 2013-2022

24

Table 6:Three gross demand forecast scenarios16

KOSOVO GROSS
DEMAND [GWh]

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Average
increase

HIGH SCENARIO

5421

5594

5725

5856

6053

6205

6546

6815

7077

7253

7489

7668

7892

8096

3.20%

BASIC SCENARIO

5421

5594

5725

5742

5821

5966

6176

6311

6552

6716

6934

7100

7307

7496

2.48%

LOW SCENARIO

5421

5594

5725

5720

5704

5757

5805

5932

6028

6179

6379

6532

6722

6897

1.71%

Table 7: Three maximum load forecast scenarios17

KOSOVO
MAXIMAL
LOAD [MW]

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Average
growth

PEAK (BASE)

1072

1158

1150

1170

1220

1250

1283

1310

1340

1365

1390

1410

1452

1494

2.41%

PEAK (HIGH)

1072

1158

1150

1182

1244

1275

1321

1349

1394

1420

1446

1466

1539

1584

2.96%

PEAK (LOW)

1072

1158

1150

1158

1208

1238

1257

1284

1300

1324

1334

1354

1365

1404

1.84%

16

Source: Long-term energy balance of the Republic of Kosovo 2013-2022;

Source: Long-term energy balance of the Republic of Kosovo 2013-2022.

17

25

VIII. Electricity supply options

For a safe and sustainable electricity supply, several options have been reviewed and addressed,
taking into account the current economic and social situation, Kosovos energy potentials, its
obligations to ECT, regional developments and studies implemented thus far. Three options have
been analyzed, all with the security of supply component.
Option I
Development of lignite-based electricity generation capacities to meet the local demand and for
exports

It is known that Kosovo has large capacities of lignite reserves in three locations. Exploitation of
this resource, based on studies, is easy and with low costs compared to other resources. Also,
based on information from the region, energy generation based in Kosovo has advantages over
generation possibilities of other sources in the region because of its low cost.
There is a good experience in exploitation and use of lignite for electricity generation. The price
of electricity is relatively affordable for consumers.
Construction of such capacities will meet the local demand and will ensure a security of supply
as a prerequisite to support the overall economic development of the country.
This option considers that power supply is mainly based on the lignite-based electricity
generation capacities, without excluding generation from RES:

Operation of three units A3, A4 and A5 of TPP Kosova A. These units will be revitalized
and their lifetime usability will be extended;
Operation of TPP Kosova B its revitalization shall be implemented for normal
operation of its units;
Construction of TPPKosovae Re and other new lignite-based capacities new capacities
will meet the local electricity demand and will export an amount of electricity in the
regional market. These capacities will fulfill all needs of security of power supply;
Existing HPPs and other RES. Their capacity shall be notably smaller compared to that of
lignite.

Implementation of this option also introduces other (positive + and negative -)impacts which are
listed below:

Security of electricity supply;

Improvement of the export balance;
Electricity generation with affordable costs to local consumers;
Unsustainable use of lignite;
Negative impact in the local environment, and beyond;
Social impact Population relocation from zones to be used for lignite
exploitation and for the construction of new capacities;
Development is not fully in line with Kosovos commitment under ECT;
Negative impacts in the development of other sectors (agriculture, water sector).
26

Environment protection, social impacts and diversification of energy sources restrict our
country's focus in this option. Hence, the implementation of this option will not be considered in
this Strategy.
Option II
Security of electricity supplyfrom local capacities and import
Kosovo is a signatory party to EnCT, and has committed to fully adhere to ENCT requirements
on the energy sector development, including the electricity sector.
Current capacities for electricity generation are mainly old, particularly TPP Kosova A, which
doesnt fulfill environment protection requirements. To revitalize this thermal power plant and
bring it in line with environmental requirements considerable finances, which Kosovo lacks, are
needed. Hence, it is forced to decommission this plant. As a result of the decommissioning of
this thermal power plant, there will be an electricity shortage. To fill this shortage, new
capacities must be constructed, specifically TPP Kosova e Re. In addition, necessary
revitalizations activities are needed to ensure normal operations in TPP Kosova B, and to also
extend its operational lifetime and meet environment requirements.
One share of electricity shall continue to be generated from existing HPPs, new HPPs and other
RES plants. It is not planned for these capacities to fulfill domestic increasing demand for
electricity, thus the electricity shortage shall be covered from imports. Therefore, Kosovo will
need to import electricity for its consumption purposes, to ensure secondary and tertiary reserves,
and to provide for security of supply.
The quantity of electricity to be imported shall be even greater if TPP Kosova A is
decommissioned prior to the commissioning of TPP Kosova e Re units. Consequently, imports
will be significantly higher if there are delays in the construction of TPP Kosova e Re.
The region has a shortage of electricity, and coupled with the increasing regional electricity
demand, this shortage shall only be higher. This will also have an impact in the prices of imports
(a price which is on average more than twice the amount of local generated electricity) and
without a security of power supply, which would have visible consequences in the country's
economic development and social wellbeing.
According to this option, the security of power supply shall be ensured through the following:

Operation of TPP Kosova A, as per the timeline envisaged by EnCT;

Operation of TPP Kosova B an overhaul shall be conducted to ensure normal
operation of its units;
Construction of TPP Kosova e Re;
Operation of existing HPPs, construction of new small Hydro Power Plants, and other
electricity generation capacities from RES (wind, biomass and solar);
Imports.

Implementation of this option entails other (positive + and negative -) impacts which are listed
below:
Imported energy doesnt cause additional pollution in Kosovo;
27

Unsustainable supply, depending on the developments of the unstable regional

market;
Kosovo will face serious instability as a result of high electricity prices in the
market;
High imports need secure transmission pathways, thus entailing uncertainties as a
result of transmission congestion;
To maintain the security of supply, we need to buy all auxiliary services in the
external markets (secondary and tertiary reserves) which is not in line with the
system operation as per ENTSO-E;

According to this analysis, security of supply under this option carries significant uncertainties
and high costs of electricity supply.
Option III

Electricity supply through the optimization of domestic sources

Provision of security of electricity supply in this option will be ensured through the existing
generation capacities and capacities to be developed on the basis of domestically available
sources, always bearing in mind adequate coverage of the electricity demand. According to this
option, electricity supply will be provided from existing capacities, TPP Kosova A and TPP
Kosova B, TPP Kosova e Re and other new thermal power plants, HPP Zhur, existing and new
hydro power plants and RES plants, as required by the increased demand, thus maintaining a
balance between generation and consumption.
This option also treats the component of the establishment of a common Kosovo-Albania
electricity market, which makes the realization of this option the most favorable option in
economic and environmental sense, and increases the security of electricity supply.
A common electricity market for Kosovo and Albania provides for exploiting the advantages of
both countries, on the one hand the large amount of coal reserves, and on the other the big
potential of generating electricity from water. Analysis and review of this option is based on a
study conducted by Vettenfall,on the security of supply in Kosovo. The study envisaged the
construction of new capacities for electricity generation from both coal and water.
To ensure the necessary quantities of electricity, both countries must create sufficient capacities
for electricity supply from local natural sources.
This includes electricity generation from coal to cover the basic supply and also electricity from
water to cover the supply for peak periods.Development of RES in Kosovo and trading of CO2
certificates could be supported from Albanias existing Hydro Power Plants. Generation costs are
lower for Kosovo in the event the common market with Albania is established and functional.
According to this option, electricity supply shall be performed in the following manner:
a) Through local thermal capacities:

Operation of TPP Kosova A, until the entry into operation of TPP Kosova e Re units;
Operation of TPP Kosova B its overhaul shall be conducted for ensuring normal
operation of its units;

28

Construction of new generation capacities in the future, depending on the prevalent

electricity demand;
Operation of existing HPPs, construction of HPP Zhur, and new small hydropower
plants, and other electricity generation capacities from RES (wind, biomass and solar);

b) Renewable energy sources:

Operation of existing HPPs;

Development of HPP Zhur;
Development of new small hydro power plants;
Development of new renewable energy generation capacities (wind, biomass and
solar);

c) Through the common electricity market for Kosovo and Albania

The implementation of this option also introduces the positive impacts (+) listed below:

Security of supply;
Diminished need for the development of reserve energy capacities;
Lower supply price;
Balancing of the electricity system;
Respecting environmental norms;
Development of the electricity market;
Higher regional cooperation.

Based on studies and analyses performed, this is considered to be the best option from the
security of electricity supply perspective. This option provides for optimal and efficient
utilization of energy sources, balancing reserves and transmission grid, while providing
appropriate conditions for electricity supply, lower costs of supply, and increasing the reliability
and efficiency of operational reserves. This option will be used as the basic option of this
strategy regarding electricity supply.

29

VIII.Policies, objectives and measures for the development of

the energy sector
Accelerated and sustainable economic development of Kosovo will largely depend on the
implementation of adequate economic and structural policies and reforms which will ensure
rational utilization of natural and human resources in Kosovo. Government of Kosovo (GoK) has
designated the energy sector as one of the key standing pillars of sustainable economic and social
development of the country.
To achieve its strategic objectives, the Government of Kosovo among others will attempt to
consider incentive-facilities in fiscal policy regarding investments in renewable energy sources,
but also for generators that are aimed at ensuring the security of supply with electricity,
environmental protection and achieving targets, by always taking into account the affordability
of prices for its end consumers.
Strategic objectives are shown for each pillar, including policies and measures, creating a clear
picture of the sustainable development of the sector, leading to economic development and
environment-friendly approach.
Policies, objectives and measures for the development of the energy sector are established based
on:

Analysis of the current situation of the energy sector;

SWOT analysis;
Energy demand analysis;
Available energy sources;
Legal and institutional framework;
Government Program of the Republic of Kosovo; and
Kosovos engagement in the development of the energy sector, in conformity with
international environmental protection standards.

Pillar I. Security of sustainable and quality supply of energy

Objective I.1.Security of electricity supply
Electricity generation
The basis forcovering the electricity demand according to the criteria of security of supply will
be provided by lignite,which is an abundant resource in the country. The use of domestic sources
protects the country from fluctuations in the prices of gas and petroleum. Conventional capacities
for energy generation will be accompanied by the development of renewable energy capacities in
line with available potentials, requirements arising from EU directives and affordability
requirements.Regardingcoalpowerplants, the governmentwill make sure thatthey are in
harmonywith Industrial EmissionsDirective (IED) of the EU. In addition, the
governmentiscommitted
to
ensuringthatforthcomingTCs
be
readyfor
the
carboncaptureandstorage (CCS ready).
30

Three options are addressed in reviewing the security of supply. The best option, which will
meet all requirements in terms of security of supply and with the lowest cost of supply, is option
three, namely the option envisaging the coverage of the electricity supply through domestic
capacities.
Building capacities for electricity generation will be done mainly by private investment and in
certain cases the through Public and Private Partnerships (PPP).
Measures to be undertaken
Maintenance and normal operation of the existing generation capacities

Electricity generationfrom TPP Kosova A, operating in accordance with the indicative

target until the entry into operation of TPP Kosova e RE units;
Electricity generationin TPP Kosova B, with the operation of units B1 and B2.
Revitalization is projected for TPP Kosova B units, which will meet technical and
environmental demands;
Electricity generationin Hydro Power Plant of Ujmani;
Electricity generationfrom distribution hydropower plants (Lumbardhi, Dikanci,
RadaciandBurimi).

Development of new generation capacities

Construction of Thermal Power Plant Kosova e Re and other new generation

capacities in subsequent years, depending on electricity demand. The plants will
fulfill all EU environmental requirements, use advanced technologies which are
proven and currently in commercial use.
Construction of HPP Zhur and new small HPPs;
Construction ofnew generation capacities of electricity from other renewable sources
(wind, biomass and solar).

Common electricity market Kosovo - Albania (presented in Objective II.3)

Transmission system development
The main objective of this strategy, as far as the transmission system is concerned, is to establish
a sustainable infrastructure able to handle the increased domestic demand for electricity and
enhance Kosovos power exchange capability in the regional market.
Further upgrading and new investments are needed in the transmission network. Targeted
investments will improve the reliability of the transmission system, support the development of
new generation capacities and the development of a competitive and non-discriminatory market,
facilitate regional power exchanges, and help reduce technical losses.
The development of the transmission system should continue to maintain system security and
reliability as per required standards and it is a condition for non-discriminatory market
development in the country and the region.
31

Transmission system development should aim to preserve system security and sustainability, as
required by ENTSO/E, and to provide for a non-discriminatory market in the country and in the
region.
Funding of development projects of the transmission system will be provided by KOSTT's own
budget, through concessional loans (with low interest rates), and through contributions of
generators and industrial loads based on the connection charges methodology; or by potential
donors.
Measures to be undertaken
Continuous development of the network infrastructure and transmission system operation
in line with technical requirements as per the Grid Code and ENTSO/E Manual;
Regional cooperation;
Creation of a common regulatory zone of transmission systems between Kosovo and
Albania.
Signing of agreements with neighboring countries in line with developments and requests
for cooperation.
Continued modernization of support services of the transmission system operation (relay
protection, control/command);
Optimization of transmission system maintenance.
Development of the distribution network
Further upgrading and new investments are necessary in the distribution network to reduce
losses, increase distribution capacities, and improve the quality of supply to end-consumers.
Investments by the private company will improve the security and reliability of the distribution
system, and will help to reduce technical losses and improve the quality of services and
reliability.
KEDSmust increase the number of points of supply, and strengthen all outgoing lines
to110/35kV and 35/10kV substationsand interconnection lines. In addition, network
configuration is required, as well as the configuration of the network, supplier/distribution lines
and transformer stations.
In cooperation with KOSTT, KEDS will decide on new points of supply for 110/10(20)kV, and
shall define the transfer from current voltage level of operation 35 and 10kV to 20kV, and to
develop the medium and low voltage network and implement new technologies for monitoring
and control of network operation, including efficient control of electricity consumption by
consumers.

32

Measures to be undertaken
Necessary rehabilitations, strengthening and modernization of the network with the aim
of eliminating bottlenecks, reduction of technical losses and improvement of the security
of supply and quality of electricity for our end-consumers;
To define further needs for new substations and transfers from 20 kV to 10 and 35 kV;
To create conditions for connection in the distribution system of energy generation
capacities, based on renewable sources;
As requested by ERO, the new KEDS Company must draft a five-year action plan for the
reduction of technical and commercial losses, and for increased billing and collection to a
satisfactory and acceptable level.
Objective I.2.Security of thermal energy for heating
Use of thermal energy for heating is of special significance, due to the high participation and
impact it has in the country's energy balance, as well as its impact on national and municipal
budgets due to required subsidies for electricity and district heating purposes. The use of
electricity for heating purposes represents a great burden for electricity supply, therefore, the
development of district heating systems and improvement of the performance of existing district
heating facilities aims to diminish use of electricity for heating purposes.
For the implementation of measures for thermal energy, private, public investments and grants,
and co-financing are envisaged.
Measures to be undertaken
Reduction of electricity for heating, encouraging the development of district heating
systems;
Promotion and development of cogeneration of thermal energy and electricity in all
plants, where possible, including industrial;
Decrease of commercial losses and increased financial sustainability of existing district
heating enterprises;
Encourage the use excess (unused) thermal energy from the industrial sector;
Creating conditions for the use of alternative sources and RES for heating, with a positive
impact in the environment and sustainable development of the sector;
Encourage the use of efficient heating equipment, and increase thermal performance in
buildings.
Objective I.3.Development of the natural gas infrastructure
Government policy is to promote and support the inclusion of Kosovo in regional projects of gas
supply, such as Eastern Europe Ring Project.
To this end, depending on the development of regional gas projects in Eastern Europe under the
EnCT, the Government remains committed, throughout this period until finalization of regional
projects, to develop the legal and institutional infrastructure for the development of the gas with
private investments.

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The implementation of the following measures requires no large additional investments, unless
the development of gas infrastructure in Kosovo is initiated. These investments should be made
by private investors.
Measures to be undertaken
Cogeneration and active participation in regional gasification initiatives;
Promotion and support for regional gas pipeline projects Energy Community Gas
Ring;
Close follow-up of Projects of Energy Community Interest (PECI);
Development of necessary activities to EnCTKosovo with the gas TAP gaspipeline
Completion of the legal and regulatory framework for the gas sector in line with the
Acquiscommunautaire of SEE EnCT;
Creation ofinstitutional and legal mechanisms for the establishment of a gas transmission
system and distributor operator.
Objective I.4.Establishment of the obligatory petroleum reserve
This strategy also aims the establishment of obligatory petroleum reserves, in order to ensure
sufficient and sustainable supply of petroleum products, without being subject to extreme price
fluctuations in the local market. To this end, measures will be undertaken to prepare a long-term
approach to fuel reserve establishment, in line with the relevant EU Directives. MED will also
support MTI in implementing measures for the establishment of obligatory petroleum reserves,
in line with the relevant EU Directive.
This activity envisages the establishment of a respective mechanism within the Ministry of Trade
and Industry for the establishment and management of obligatory petroleum product reserves.
Measures to be undertaken
Preparationoflegislationforobligatoryreservesof petroleum products;
Preparation of the strategy on the establishment and management of obligatory reserves
of petroleum products;
Preparation of the national emergency action plan with obligatory on petroleum product
reserves;
Objective I.5. Promotionofrenewableenergysources
For the promotion of Renewable Energy Sources in the next decade, the goal of the Strategy is
the development of the necessary legal, regulatory and program infrastructure, which will enable
the fulfillment of the mandatory target of 25% RES share in the final gross consumption of
energy by 2020. Also, under this objective, the aim is to fulfill the higher nonbinding target of
29.47% RES by 2020, according to AI on RES targets. To achieve this goal, among other
measures, a simplification of authorization procedures for RES will be introduced, continuous
promotional media campaigns will be organized, and the basis for any calculation will be the
affordability of increased tariffs as a consequence of use of RES for electricity generation.
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Private investment and grants are planned to cover the implementation of measures related to
RES.
Measures to be undertaken
Completion of the relevant legislation to encourage RES investments;
Drafting and implementing the Kosovo RES action plan;
Defining RES targets;
Complete the definition of feed-in tariffs or other support schemes for all RES,
according to set targets.
Simplification of authorization procedures for the construction of energy capacities from
RES.
Objective I.6.Increasing energy efficiency
Increased Energy Efficiency will contribute to significant savings in overall energy consumption
in the Republic of Kosovo, and therefore the security of energy supply to the citizens of Kosovo.
In KEEAP 2010-2018, Kosovo has committed to meeting the savings target of 9% of overall
energy consumption, as set by the EU Directive. Therefore, Kosovo, through the implementation
of EE measures, will realize a saving of 91.89 ktoe, respectively 1068.68 GWhfor energy.
Increased EE requires investment by the private and public sector, and public donations.In order
for this to happen at a great scale, additional studies are necessary, which will show what
measures should be taken, what instruments and mechanisms should be used, including analysis
of the financial implications, to achieve satisfactory results in the field of energy efficiency.
Measures to be undertaken
Functioning of KEEA, with relevant staffing, in line with the Internal Regulation on
KEEA Organization;
Establishment of Municipal Energy Offices (MEO), which will enable the drafting of
municipal energy efficiency measures plans;
Promotion of EE measures through information and awareness-raising campaign;
Construction ofa monitoring system and verification of implementation measures,
according to Kosovos EE plans;
Creation of transparent institutional conditions for the establishment of a EE fund and to
attract domestic and international investments.
Auditing of public and private buildings (non-obligatory audits), by using green
loans/subsidies, obligatory audits for the industry, and measures for increasing efficiency
in the public and private transport sector.
The implementation of EE measures in SMEs, households, services, industry, transport
and agriculture.

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Objective I.7. Review and amendments to the primary and secondary legislation
Kosovo is engaged and committed to further develop primary and secondary legislation on
energy, amending it according to the Third EU Legislation Package.
Measures to be undertaken
Harmonization of primary and secondary legislation according to third energy directives
package.

Pillar II. Restructuring of the energy sector

Objective II.1.Enhancement of energy sector competitiveness, through sector restructuring
Energy Community Treaty and the European integration process is an important dimension of
the Energy Strategy. To fulfill the obligations of the Treaty, measures must be implemented to
complete the restructuring and reforms of the energy sector, which is in accordance with the
national applicable legislation. This makes the sector become financially stable and attractive for
private investments, contributing to economic and social development of the country.
Measures to be undertaken
Encouragement of full unbundling of all activities of the electricity sector, including
mining, generation, distribution, supply, in line with the third legislative package. This
implies the establishment of entities with separate economic and financial accounts,
separate for distribution, supply, mining and generation activities, and establishment of
commercial relations between them in an open market.
Objective II.2. Establishment of a competitive electricity market
The government is committed to implement all obligations of the Energy Community Treaty
(EnCT), where the establishment of an open and competitive market is a key obligation.
Establishment of the energy market is also required under Kosovo laws, which are in line with
EnCT requirements. According to the Law on Electricity, on 01 January 2015, all consumers will
be eligible consumers.
Taking into account the lack of sufficient generation capacities, technical state of the distribution
network, and challenges in energy exchange in sufficient amounts with other countries, as well
as high import prices, the development of a competitive local market for electricity is practically
difficult for the short term.
However, given that the electricity generation potential in Albania mainly relies on hydro
reservoirs of substantial capacities and Kosovo on large lignite resources for production in
thermal power plants, which represent the most desired diversity for optimal utilization of these
two energy potentials, the aim will be to create a common market that will bring benefits to
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consumers of both countries by enabling efficiency, lower prices of electricity supply and better
social welfare for both countries.
Measures to be undertaken
Establishment of a common electricity market with Albania;
Opening the electricity market for all consumers:
Creation of conditions conducive for the entry of new electricity suppliers;
Creation and facilitation of conditions for the entry of new generators, including
from RES.
Creation of conditions for cooperation in the regional market.
Objective II.3.Common Kosovo-Albania market
Kosovo and Albania are characterized as countries with small electricity markets, lack of variety
of generation capacities, insufficiently developed electricity industries (old assets, lack of
investments), lack of sufficient generation capacities to cover electricity consumption
requirements, dependency from electricity imports from regional non-liquid and non-transparent
markets, and high non-technical losses in the distribution grid.
Both countries lack generation capacities to ensure a safe and reliable electricity supply
throughout the year. For this reason, in certain periods, balancing between consumption and
generation is performed through disconnection of supply for certain consumers. Generation
capacities in Kosovo comprise non-flexible thermal generators (98% in lignite-fired thermal
power plants), which are not a preferred option for covering variable electricity loads. Kosovo
lacks reserve capacities for balancing purposes, respectively for secondary and tertiary regulation
in the electricity system, whereas renewable energy sources are limited and there is no natural
gas pipeline which could be used for import purposes. In Albania, 95% of the electricity is
generated from hydro power plants and reliability of electricity supply is closely related to
precipitation and drought prevalent in different periods of the year.
From the electricity market aspect, both countries are dependent on electricity imports.
Electricity supply companies have long-term supply contracts with state-owned generation
companies. The wholesale market in both countries is dominated by state-owned electricity
generation enterprises and with small competition in the cross-state market, which is dependent
on availability of interconnection capacities and on appropriate conduct of the congestion
management process.
Bearing in mind that the main purpose of both governments is security of supply, and
considering the characteristics of both systems noted above, the establishment of a competitive
and functional market comprises a challenge for both countries, the materialization of which
would send positive signals for investments in the transmission system. Characteristics of
Kosovo and Albania markets suggest that a common market would provide for optimal and
efficient utilization of energy generation sources, balance reserves and transmission grids, would
provide better electricity supply conditions and thus be beneficial for consumers of both
countries. Noteworthy, bearing in mind current capacities, a common market would result in
lower costs for both separate markets.

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The establishment of a common functional market requires great work in harmonizing the legal,
regulatory, trading and operational frameworks of Kosovo and Albania. The establishment of the
common market as a sole trade area for all organizational timelines shall be in harmony with
EC's target model, which also represents an objective of the Energy Community. In the process
of merging the markets with the wider regional market, a common Kosovo-Albania market
would join other trade zones as a sole trade zone in the day-ahead market and in the intraday
market. Cross-boundary capacities of this area would be allocated along with those from other
areas, in harmony with the Forward Network Code, currently being developed by ENTSO-E.
The common market will result in decreased requirements for installation of generation
capacities, as the peak demand in the common market would be significantly lower than the sum
of peaks in both markets separately. The common market will increase reliability and ensure
more efficient use of operational reserves.
Measures to be implemented
Execution of the Memorandum of Understanding between the Governments of Kosovo and
Albania on the establishment of the common market;
Implementation of a feasibility study on the establishment of a common market;
Determination of forms on organization and functioning of:
o Bilateral market
o Day ahead market and power exchange
o Balancing market and ancillary services
Signature of the intergovernmental agreement on the establishment of the common market,
in line with recommendations from the feasibility study;
Establishment of a task force of transmission system and market operators and regulatory
authorities of both countries for the preparation of the legal and regulatory framework that
would enable the establishment of a common electricity market, or the establishment of an
interim entity to oversee full implementation of the common electricity market, with a clear
mandate granted by both governments. The main tasks of this group would be:
o Harmonization of the legal framework in both countries in order to provide for the
establishment of a common market;
o Identification of options and proposal of the regulatory structure of the common market;
o Proposal of the common market design and Market Rules.
Preparation of the implementation plan for the establishment of a common market;
Approval of the implementation plan by governments of both countries;
Establishment of a Common Market Operator for electricity market operation.
Objective II.4 Tariff reforms
Tariff reforms should be made in terms of creating an enabling environment for investments in
the energy sector, but in a balanced manner so as not to be an unbearable burden for consumers.
Under this activity, measures should be undertaken by the Government as well as ERO.
Measures to be undertaken
Review ofelectricity and thermal energy-related tax policies;
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 Encouragement of consumption-based billing of thermal energy;

Review ofbloc tariffs for electricity;
Definition of maximal allowed revenues for licensees for a multi-annual period.

Pillar III.Environment protection and social issues

Objective III.1.Implementation of environmental and social norms and standards in use of
energy sources, construction and operation of energy infrastructure
Kosovo is committed to further develop its legal and regulatory framework on environmental
and social protection, in complete accordance with the aquison environment and other European
standards. Implementation of this legal and regulatory framework comprises one of the greatest
challenges for the future.
Measures to be undertaken
Completion and harmonization of the legislation with the EU aqcuis;
Development of activities for implementing the Large Combustion Plant Directive;
Improvement of the environmental component in TPP Kosova A and B and the
surrounding area
Objective III.2.Addressing social issues
Reforms of social issues, which will be made in the energy sector, shall be addressed with
caution. Particular attention will be paid to employees in energy companies, who are affected by
the process of privatization and decommissioning. The government will continue to support
customers in need with subsidies with certain amounts of electricity, while considering costreflective tariffs and RES energy costs.
Kosovo shall develop highest possible levels of social protection of consumers, in accordance
with a stable and competitive market of energy services and, when needed, to implement
safeguards that limit the impact of social and economic changes in specific parts of society, in
accordance with the obligations of the Energy Community Treaty.
Measures to be undertaken
Evaluation of social impacts from energy sector reforms, particularly from the
privatization of energy sector enterprises;
Preparation of a plan/program for supporting consumers in need in the energy sector;
Continued subsidies with electricity for consumers in need;
Addressing social issues with employees during the decommissioning and shutdown
of TPP Kosova A and other facilities in this location;
Treatment of social issues of the community that will be affected by the activities of
the energy sector.

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Objective III.3. Decommissioning of TPP Kosova A

The Government of Kosovo is committed to decommission TPP 'Kosova A', due to its age and
environmental pollution, but also for the fact that Kosovo is a party to the ENCT and must
comply with European Directive 2001/80/EC, on the limitation of emissions of certain pollutants
into the air from large combustion plants.
In relation to this activity, the Government of the Republic of Kosovo issued its Decision No.
22/109, which establishes three working groups for the preparation for decommissioning of TPP
Kosova A and other facilities at its location.
Activities related to the decommissioning of TPP KosovaA are planned in two phases:
First phase - includes preparatory activities necessary for the decommissioning of active units of
TPP Kosova A (A3, A4 and A5). Throughout this period, ongoing preparations will continue in
the legal, organizational, examination and detailed planning aspects, along with the demounting
of other facilities such as the gasification and fertilizer plants, heating plant and other facilities
that dont hinder normal operation of active units. This activity will be performed in line with
Government Decision No. 04/156.
Second phase - includes all activities that have to be undertaken after all units are closed. This
phase is the TPP Kosova A demounting phase.
Time of decommissioning of TPP KosovaA is closely linked with the entry into operation of
TPP Kosova e Re, in order not to create a shortage of electricity in local capacities. It should also
be noted that the dismantling of all units of TPP Kosova A will start immediately after the
decommissioning of its active units.
Measures to be undertaken
Completion of legal and regulatory infrastructure completion of legislation in
environment and dismantling of large industrial facilities;
Implementation of required studies on the decommissioning and dismantling of
TPP A and other facilities at the location;
Addressing environmental issues related to deposition of residues, unnecessary
equipment, dismantled machines, and contaminated soil;
Addressing economic and financial issue.

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IX.

Energy Strategy implementation process

The implementation of the Strategy requires the drafting of an Implementation Program of the
Energy Strategy for the period 2013-2016. This program shall include all necessary mechanisms
for MED to detail polices, allocate duties, undertake specific actions, and monitor the progress of
the implementation of the Energy Strategy.
Implementation Program shall group activities under each pillar/objective, indicating the time of
implementation, responsible and supporting institution for the implementation of the activity,
cost of implementation of the activity, and the general cost estimated of the period, and source of
financing.
Monitoring of the implementation of the program shall be conducted by MED, through the
preparation of regular annual reports.

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