Investors eye Balkans for new wind power projects

April 15, 2013 by  
Filed under Green Energy News

Steady winds from the Adriatic and Western Balkan mountains are drawing investors to the region in search of new pastures for wind projects, which have stalled elsewhere in Europe due to subsidy cuts and struggling economies.

The windy weather in the region, generated by different temperature and air pressure levels between the Adriatic sea and mainland and between mountainous areas, is attracting new investors, such as Continental Wind Serbia.

The subsidiary of US-based Continental Wind Partners plans to invest €450 million ($591 million) over the next four years in two wind parks in Serbia with a capacity of up to 300 megawatt (MW), enough to meet around 7 per cent of the country’s annual power demand.

“There is huge potential for wind energy (in the Balkans) … but more stable policies and better support mechanisms are needed to ensure steady growth,” the European Wind Energy Association (EWEA) said in a report that tipped Serbia as the most promising market.

The region is also attracting investors as its prospects for economic growth are expected to outpace that of eurozone.

Croatia, which boasts 1,777 kilometres of Adriatic coast and is set to join the bloc in July, has plans to add 1,200 MW in wind capacity by 2020, although just 200 MW is online so far due in part to a lengthy permitting process and grid limitations.

“In general there is a big disparity between the targets and available capacity,” said Josip Dolic, the head of Bosnia’s Independent System Operator (NOS).

“Altogether, it takes five to seven years to develop a project, which is unacceptably long. If it stays so, Croatia will not meet the EU targets and might face penalties,” said Edo Jerkic, an industry analyst at vjetroelektrane.com.

Avoid mistakes

The challenge for Balkan nations eager to attract investment is convincing developers they are ready to lay out a clear regulatory framework and strengthen power grids to handle a crush of renewable generation.

Serbia, Croatia, Bosnia and Macedonia – the main focus of investors – will also have to avoid the mistakes of nations that initially offered too generous subsidies before slashing them to assuage consumers angry over increases in power bills.

In March, Romania’s government said it would cut its support scheme for renewable energy projects to avoid over-compensating investors who have built Europe’s biggest wind farm in the country.

Elsewhere in the European Union, countries such as Spain, Germany, Britain and the Czech Republic have either cut or are considering cutting incentives for renewables after years of strong government support.

Balkan governments are trying to balance the need to offer generous subsidies to attract investors with a desire to keep a lid on retail power bills, which take a big bite out of monthly household budgets.

This concern was reflected in a recent Serbian government decision to cut tariffs for the wind sector to €0.092 per kilowatt-hour (KWh) from €0.095 and reduce quotas available for support to 300 MW from 400 MW by 2015 and an additional 200 MW by 2020.

The move angered developers who said it threatened more than $1.3 billion in planned investments into about 20 wind projects, or 3,000 MW in new capacity.

The government responded by pledging to index the tariff to the eurozone annual inflation each year.

“Having low quotas for wind integration means developers already working on projects for several years might not be able to build new turbines,” warned Ana Brnabic, project manager at Continental Wind Serbia and head of the Serbian Wind Energy Association (SEWEA).

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