The Energy Crisis in North Macedonia

Тhe autumn of 2021 has been a tumultuous period for North Macedonia for several reasons. The main topic has been the ongoing energy crisis that the Macedonian Government announced on the 9^th of November, with an initial period of 30 days. Before that, the local elections in October brought drastic changes in local governance in more than half of the country’s municipalities. The shift also brought changes in the councils, with the opposition gaining not just more mayoral seats, but also local council representatives. As a result of the election loss in favor of the opposition, the Prime Minister Zoran Zaev announced his resignation both as the head of the Government and as the party leader of SDSM. The country entered a period of political turmoil, with efforts to overthrow or reconstruct the current government. In November, the political situation worsened with the discovery that the country had been illegally taking out electricity from the European market, without approval, resulting in multimillion euros worth of fines. This will have a huge impact on the domestic electricity prices in the upcoming months, right at the start of the winter heating season. At the beginning of November, representatives of the European Energy Community urgently consulted the Macedonian Government over the situation, and the state of energy crisis was declared.

While finally celebrating the penetration of the independent lists for local council representatives that managed to gain seats in several municipalities, mostly over their green agendas, the Macedonian public was taken by surprise by the energy crisis. Immediately, the air pollution and the announcement for banning of plastic bags nationwide fell in second. A large part of the public started criticizing the focus on environmental issues, when clearly the energy crisis should be a priority according to this portion of the public. But, things should and can be resolved simultaneously. Introducing additional air pollution measures, having environmental activists in the local councils, banning of production and selling of plastic bags nationwide, are victories to the battles fought over the years. Even if they come in a period of an ongoing energy crisis, when rightfully so the question is now posed of how really successful the energy transition is. Reactions remain divided on what should be a priority now. As the new mayors take over the leadership in the biggest cities, including Skopje, Tetovo, Bitola and Ohrid, among other, the air pollution picked up again towards the end of the month of November, especially in Tetovo and Skopje. To add to it, the municipalities, most notably Tetovo, continue to struggle both with air pollution and issues with waste management. This is why the coming victories, such as the ban of plastic bags, should still be celebrated, even if the situation seems to point that the only focus should be placed on the energy crisis. The public continues to wonder where things went wrong in the last period. Especially considering the praise North Macedonia has been receiving in recent time, as a regional leader in energy transition and measures for environmental protection.

The National Energy Strategy proposes 3 scenarios for the national energy transition until 2040. Those are the reference one, a moderate transition scenario and a green transition scenario, with various models for solutions to reduce the dependency on electricity imports. The strategy is in line with the EU policies for sustainable development, aiming towards investments in renewable energy capacities and measures for increasing energy efficiency. The concerned public and the specialists in the area look and review again the different scenarios from the national energy strategy. Some critics are calling out the government for not including an option for nuclear energy in any of the scenarios for the sake of securing electricity production, even though it would require a serious commitment and would have caused strong public division. Looking back at the 3 different scenarios, they all stipulate a decrease of electricity imports by 2040. According to the reference scenario of the national energy strategy, the national electricity production should increase to 9.4 TW/h by 2040, mostly from renewable energy sources, reaching 71% of the total electricity produced. With this scenario, the dependency on electricity imports should be reduced to 14% by 2040. The moderate transition scenario, on the other hand, projects that the electricity production capacities would go up to 4 GW by 2040, with 87% of it coming from renewables. The much talked about and decided upon green transition scenario assumes quick and large investments in renewables that should reduce electricity imports by 12%, a better integration into the European system, and would allow for closing off the thermal capacities by 2025. However, today, in 2021 - when 2025 seems close, North Macedonia is trying to import as much coal as possible to keep the thermal plants running. Rightfully so, this brings criticism from many sides and mistrust in the government and the strategy, in spite of the ongoing renewable energy investments. Nevertheless, experts reaffirm that the green scenario remains the most economically viable, and with the lowest environmental impact and lowest carbon emissions.

Still though, a large portion of the public wonders if the policy-makers have perhaps overestimated the country’s capacity for a fast green energy transition, criticizing the bad management of the still operational thermal power plants and the national companies for production and transmission of electricity. Additional criticism goes towards the lack of new developments for the project for constructing the hydropower plant Chebren, in the central part of the country. For over a decade, various governments and ministries have been trying to push for construction, which is still not happening. The latest news in this regard say that this planned large hydropower plant would bring a degree of security of supply, also allowing for storage through a state-of-the-art technology. While the nation waits to see this project, and several more realized, the country has become heavily dependent on electricity imports, accounting for about 30% of the total market needs. With the ongoing energy crisis, perhaps that percentage might increase even more, as the new solar and wind capacities are in the process of planning or construction and not yet commissioned. The officials say the imports are bound to gradually decline in the coming years. The main precondition for that would be the completion of the ongoing projects and further increase of the production of electricity from domestic sources, with a focus on renewables.

The general public reactions to the ongoing debates and discussions between officials, policy-makers, experts and energy specialists has been mostly negative, especially if one follows social media. The people have been tired of news announcing increases of the cost of living through rising prices of basic products, petrol, and now the energy crisis bring fear that, in a matter of few months, many would not be able to afford paying the increased electricity bills. The current debt of the country for illegally importing electricity into the national system is still being analyzed, but initial estimates say that the Macedonian government will have to pay around 15 million euros. The representatives from the national electricity companies were justifying the decision to import quickly by saying that it has been a practice from before. This is why then the public reacted positively when several managing directors were removed from their positions, including the one from the thermal power plant REK “Bitola”. At the end, will the taxpayers pay the price? In solidarity with the state of energy crisis, all of the banks in the country decided to turn off all of their banners and ads using electricity, prompting similar actions from other Macedonian enterprises. The decisions to turn off the flashing ads would last as long as the energy crisis. The public is saluting these actions, and there is a level of relief that no restrictions of electricity have been introduced yet. To maintain the flow of electricity uninterrupted, national energy companies and all the production capacities are now receiving additional budget funds to keep their liquidity. Strategies are being made on how to survive the winter, and the citizens worry every time they hear about extra payouts, on top of the multimillion euros debt.

Hopes are that the energy crisis will not be prolonged; otherwise, North Macedonia will face a rocky process of energy transition and an increase of energy poverty. Several solutions exist to the problem. The first and most immediate one would be the adoption of a social plan for subsidizing and covering the difference in electricity prices, not just from the end of the production, but also at the end of the consumers, by finding ways to assist payments of electricity bills. Such a solution would protect the energy vulnerable consumers and maintain the standard of life to a status quo. Another solution would be acceleration of the construction of new capacities, without closing off any of the thermal power plants that are still the backbone to the national electricity production, at least not until other sources are secured. Lastly, a solution tied to the previous one, would be immediate facilitation and changes in the existing legal framework to allow for fast development of citizen energy and formation of energy communities. The country is rich with solar and wind potential and the best way to fully take advantage of it, while securing electricity supply and preventing another severe energy crisis, is to create prosumers (producers and consumers at the same time) out of as many citizens as possible.