Renewable energy use for electricity generation in transition economies

1 RENEWABLE ENERGY USE FOR ELECTRICITY GENERATION IN TRANSITION ECONOMIES María P. Pablo-Romero, Antonio Sánchez-Braza* and Anna Galyan María P. Pablo-Romero Department of Economic Analysis and Political Economy Faculty of Economics and Business Sciences University of Seville - Universidad de Sevilla Ramón y Cajal 1, 41018 Seville, Spain Tel.: +34 954 557 611. Fax: +34 954 557 629 [email protected] Antonio Sánchez-Braza (*corresponding author) Department of Economic Analysis and Political Economy Faculty of Economics and Business Sciences University of Seville - Universidad de Sevilla Ramón y Cajal 1, 41018 Seville, Spain Tel.: +34 954 557 529. Fax: +34 954 557 629 [email protected] Anna Galyan Department of Economic Analysis and Political Economy Faculty of Economics and Business Sciences University of Seville - Universidad de Sevilla Ramón y Cajal 1, 41018 Seville, Spain [email protected] Abstract This paper analyses the renewable energy policies established to promote renewable energy use for electricity generation in 17 transition economies, which are signatory parties to the Paris Agreement. The results show that the average share of renewable energy in electricity generation decreased, although electricity consumption and production increased over the 1995–2016 period. Hydropower generated the largest share of electricity, while the participation of non-conventional renewable energy remained quite low. However, it was solar PV and associated technologies that had grown fastest since 2015. All countries, except Turkmenistan and Uzbekistan, have at least one renewable energy support policy. The feed-in tariff is the mechanism most used to 2 promote renewable energy, followed by net metering. Tendering is also spreading rapidly in the region. The results show that transition economies are on the way to implementing appropriate measures for renewable energy deployment to diversify their energy mix. Highlights We revised renewable energy policies adopted to promote electricity generation 17 transition economies signatories to the Paris Agreement have been considered. Results show average share of renewable energy in electricity generation decreased. Feed-in tariff and net metering are the most used, while tendering is spreading. These countries are implementing appropriate measures to diversify their energy mix. Keywords CO2 emissions; renewable energy; electricity generation; transition economies; renewable energy policy Word Count (excluding title, author names and affiliations, highlights, keywords, abbreviations, tables and figures, acknowledgments and references): 6.723 1. Introduction In December 2015, the Paris Agreement [1] was adopted at the 21st Conference of Parties (COP21) within the United Nations Framework Convention on Climate Change. It entered into force on 4 November 2016 and replaced the Kyoto Protocol, an earlier international agreement on curbing the release of greenhouse gases (GHG). Its main objective is to reinforce the applied measures to combat climate change avoiding the global temperature to rise by 2ºC above pre-industrial levels (Art. 2a, Paris Agreement). In order to achieve this long-term temperature goal, it is necessary to reach a global peak of GHG emissions as soon as possible (Art. 4, Paris Agreement). 3 As Table 1 shows, to limit global warming to 1.5°C, global net anthropogenic CO2 emissions must decline by 40-60% by 2030 and reach net zero by 2050 (maximum 2055). On the other hand, to limit global warming to below 2°C, CO2 emissions must decline by about 25% by 2030, and reach net zero by 2075 (no later than 2085). In terms of the remaining carbon budget, the total amount of future net global CO2 emissions, including emissions from 2018, should not exceed 420 GtCO2, to limit global warming to 1.5°C, while in the 2°C scenario, it should not exceed 1178 Gt CO2. Table 1 Global warming scenarios and targets of reduction of CO2 emissions. Reduction of CO2 emissions by 2030, % Reaching net zero emissions deadline Remaining carbon budget, including 2018, GtCO2 1.5°C scenario 40-60 2050 (2055) 420 2°C scenario 25 2075 (2085) 1178 Source: Own elaboration from IPCC [2] In this sense, for a radical reduction of emissions, joint efforts are needed on a global scale and that is why 195 countries of the world signed the Paris Agreement. Among them, there are 17 countries of South-Eastern Europe and the Commonwealth of Independent States (CIS) considered to be transition economies, according to the classification of the United Nations [3]. To fulfil the obligations under the Paris Agreement, the signatory parties were required to submit the so-called Intended Nationally Determined Contributions (INDCs), with the respective targets, with regard to mitigating climate change. As can be observed in Table 2, these targets are generally expressed in percentage of reduction of GHG or CO2 emissions, and include different measures that should be adopted, in order to achieve them. Furthermore, several countries established more than one target of unconditional and conditional (additional) reduction of emissions. Table 2 Main targets in the INDCs: Transition economies. 4 Country Targets Albania Reduction of CO2 emissions by 11.5% below BAU in 2030 (708 kt CO2 reduction in 2030). Armenia Cap emissions at 633 million tons of carbon dioxide equivalent between 2015 and 2050. Azerbaijan GHG emissions reduction: 35% below its 1990 level, by 2030. Belarus GHG emissions reduction: 28% below its 1990 level, by 2030. Bosnia and Herzegovina Unconditional reduction of GHG emissions by 2% below BAU in 2030 (18% increase compared to 1990 level). Conditional reduction by 23% below BAU (3% below compared to 1990 level) is claimed in case of international support availability. Georgia Unconditional GHG emissions reduction by 15% below BAU in 2030. GHD emissions possible reduction by 25% below BAU (40% below the 1990 level) is claimed in case of international cooperation and financial support. Kazakhstan GHG emissions unconditional reduction of by 15% below the 1990 level by 2030. Conditional reduction of GHG emissions by 25% below the 1990 level by 2030 is claimed in case of international cooperation and financial support. Kyrgyz Republic Reduction of GHG emissions by up to 13.75% and 15.69% below BAU in 2030 and 2050, respectively. Conditional reduction by up to 30.89% and 36.75% below BAU in 2030 and 2050, in case of international support. Macedonia, FYR Reduction of CO2 emissions from fossil fuels by 30%-36% below BAU in 2030. Republic of Moldova Unconditional reduction of GHG emissions by 64-67% below its 1990 level by 2030. Possible reduction by 78% in case of financial assistance and technical support. Montenegro Reduction of GHG emissions by 30% below the 1990 levels by 2030. Russia Reduction of GHG emissions by 25-30% from 1990 levels by 2030. Serbia Reduction of GHG emissions by 9.8% below the 1990 levels by 2030. Tajikistan Reduction of GHG emissions by 10-20% below the 1990 level by 2030. Possible reduction by 25-35% below the 1990 level by 2030 in case of international funding and technical support. Turkmenistan Unconditional target: lower growth rate of GHG emission compared to the country’s GDP growth rate between 2015 and 2030. 5 Conditional target if financial and technological support is provided: zero growth, or even a reduction of emissions, between 2015 and 2030. Ukraine Not to exceed 60% of the 1990 GHG emissions level in 2030. Uzbekistan Reduction of specific GHG emissions per unit GDP by 10% below the 2010 level by 2030. Source: Own elaboration from UNFCCC [1] In addition, at the point of ratification, the INDCs become the Nationally Determined Contributions (NDCs). To date, 15 of the 17 transition economies have already ratified the Paris Agreement. Ratification is only pending in Russia and Kyrgyzstan. In Russia, the ratification of the Paris Agreement was postponed twice, once in 2016 and again in 2018 [4-5]. The Russian government insists the decision will be made after a comprehensive analysis of the consequences of its implementation. Currently, this is expected to happen in 2019-2020. While the ratification of the Paris Agreement is a significant decision for Russia, due to the reliance of its current economic model on energy revenues, for Kyrgyzstan it is more a matter of time and bureaucratic issues. In fact, the draft law on The Kyrgyz Republic’s Ratification has only been submitted recently for public discussion. The main contributors to increasing atmospheric CO2 are fossil fuel combustion and land use change, accounting for about 70% of total emissions [6]. An analysis of the current situation in the energy sectors of transition economies is of particular interest, as the primary energy supply of most transition economies is geared heavily towards fossil fuels, due to their sizable deposits in the region. In order to meet the INDCs objectives, transition economies have to promote the use of clean energy that is not associated with GHG emissions, thus diversifying the energy mix. Renewable energy (RE) deployment is also relevant in the context of meeting increasing power supply needs. Electricity is one the main forms of energy used in the industrial and residential sectors, as well as in the commercial and public service sectors. In 2016, electricity accounted for 19% of world total energy final consumption and it is the fastest-growing source of final energy demand. In the New Policies Scenario, the worldwide share reaches 24% in 2040 [7]. In line with this trend, the share of electricity in final energy consumption in transition economies is also increasing and had already reached 15% in 2016. 6 The purpose of this paper is to review the RE policies and targets in transition economies, and to analyse the measures established in order to promote the development of RE and its use in electricity generation. A comparable analysis has been carried out by the United Nations Economic Commission for Europe (UNECE), in collaboration with the Renewable Energy Policy Network for the 21st Century (REN21), on the status of RE in 17 transition economies in 2017 [8]. The REN21 (2017) report provides an overview of the RE market, energy access and energy efficiency, and covers the policy landscape and investment flows in RE, mostly for 2015 and 2016. Similar reviewing studies have been carried out for other economies. For instance, Washburn and Pablo-Romero [9] assess the RE measures adopted in the 18 Latin American countries signing the Paris Agreement to promote electricity generation. Polzin et al. [10] explore the influence of energy policies to promote investments on the use of renewable energy for generating electricity across OECD countries. In the context of EU countries, Cansino et al. [11] summarise the main fiscal incentives applied in order to support green electricity, and Del Río et al. [12] evaluate pathways of a harmonised European renewable electricity supporting policy framework on a long-term horizon. Pablo-Romero et al. [13] provide a comprehensive review of feed-in tariffs (FITs), premiums and tenders measures to encourage the use of biogas for electricity. Following the previous papers, this study concentrates specifically on the electricity sector, including a comprehensive analysis of the evolution of electricity production and consumption in the 1995-2016 period. In addition, the paper details the RE policies adopted for the sector in 17 transition economies reviewed up to 2018, by that updating the REN21 [8] report. This update is important since it takes into consideration the RE policies introduced under new laws that entered into force in recent years. Moreover, the study makes an in-depth analysis of some of the measures introduced, such as FITs, net metering, auction systems and tax incentives. This study is organised as follows: Section 2 presents the electricity consumption trend along with the participation of RE in electricity generation; Section 3 analyses the main RE targets and policies introduced to promote the development of RE and its use in electricity generation; Discussions of the renewable policies and measures are contained in Section 4; and, finally, Section 5 concludes and presents some policy implications. 7 2. Electricity consumption, production and the use of renewable energy in transition economies 2.1. Electricity consumption and production trends in transition economies The total final energy consumption (TFC) in transition economies accounted for 663,899 Ktoe in 2016, which is 6.95% of the world total consumption of energy. This significant share makes an analysis of the TFC trend in the region, relevant. Table 3 shows the evolution of the TFC per capita and the share of electricity in the TFC in transition economies. The last row presents the average values of the previously mentioned data across all 17 countries. Thus, it can be observed that the average TFC per capita increased in 2016, compared to 1995, with the growth rate being equal to almost 11%. Among the countries with the highest growth rate are Bosnia and Herzegovina, Georgia, Albania, Armenia, Serbia, Kyrgyzstan and Turkmenistan, while several countries, such as Ukraine, Uzbekistan, Azerbaijan, Kazakhstan, Tajikistan, Moldova and Montenegro, had negative growth rates. Although Russia did not have a significant increase in TFC per capita, its absolute value of 3.25 tonnes of oil equivalent remained the highest in the region, followed by Turkmenistan and Kazakhstan. In addition, the share of electricity in TFC in the region increased by 19%, during this period, and accounted for 14.64% in 2016. Azerbaijan, Ukraine and Uzbekistan had the highest growth rates, while several counties, such as Armenia, Georgia, Kyrgyzstan, Moldova, Montenegro, Serbia and Tajikistan, had negative growth rates. It is also worth highlighting that Tajikistan had the largest electricity share (45%), while Belarus, Russia and Moldova had electricity share below the average value. Similarly, Turkmenistan had the lowest share, about 6%. Table 3 TFC per capita and share of electricity in TFC in transition economies, 1995 and 2016. TFC per capita 1995, (toe/pc) TFC per capita 2016, (toe/pc) Growth rate, (%) Share of electricity in TFC 1995, (%) Share of electricity in TFC 2016, (%) Growth rate, (%) Albania 0.31 0.69 126.43 17.79 23.67 33.06 8 Armenia 0.36 0.72 103.14 22.82 21.60 -5.34 Azerbaijan 1.24 0.92 -25.70 11.58 16.85 45.48 Belarus 1.79 1.94 8.22 11.86 13.70 15.49 Bosnia and Herzegovina 0.32 1.05 224.10 25.00 25.92 3.67 Georgia 0.47 1.17 145.55 25.29 20.82 -17.68 Kazakhstan 2.55 2.12 -17.03 11.00 15.05 36.76 Kyrgyz Republic 0.39 0.57 46.32 44.36 25.16 -43.28 Macedonia, FYR 0.75 0.95 27.01 28.83 27.00 -6.35 Moldova 0.85 0.79 -7.42 19.86 13.34 -32.84 Montenegro 1.25 1.16 -7.36 42.41 31.94 -24.67 Russia 3.09 3.25 5.35 11.60 13.63 17.51 Serbia 0.81 1.28 58.00 35.07 25.96 -25.99 Tajikistan 0.34 0.28 -15.31 61.51 45.15 -26.59 Turkmenistan 2.12 3.17 49.92 4.83 5.97 23.57 Ukraine 1.80 1.15 -36.26 13.30 19.55 46.97 Uzbekistan 1.44 0.84 -41.59 9.93 15.07 51.76 All 17 countries 1.17 1.30 10.97 12.28 14.64 19.23 Source: Own elaboration from IEA [14] In the context of the increasing energy demand, the notable differences in the energy situation of transition economies must be taken into consideration. The main difference is that there are energy importers, as well as energy exporters, in the region. Figure 1 shows net energy imports as a percentage of energy use in 2016. It is estimated as the primary energy before transformation to other end-use fuels, less production, and a negative value indicates that the country is a net exporter. According to this data, there are five net exporters in the region: Azerbaijan, Kazakhstan, Russia, Turkmenistan and Uzbekistan, all of them with significant oil and gas deposits. 9 Fig. 1. Energy imports, net (% of energy use), 2016 Source: Own elaboration from IEA [14] The remaining countries are net energy importers to a greater or lesser degree. Thus, Serbia has the lowest degree of energy import dependency at 13%, whereas the imports of Belarus and Moldova exceed 80%. In addition, net imports of three countries, Armenia, Kyrgyzstan and Macedonia, constitute more than a half of their energy use, while in Bosnia and Herzegovina, Montenegro, Serbia, Tajikistan and Ukraine, net imports account for about 30% of energy use, still constituting an energy challenge. In this sense, energy security can be considered as a driver for RE deployment, as countries aim to reduce their energy import dependency by making greater use of local clean energy sources [8]. Since the demand for electricity is expected to keep growing, an analysis of the electricity sector, and the RE share in electricity generation, is crucial. Table 4 shows the evolution of the electricity consumption, generation and the use of RE in the electricity generation in transition economies. -350% -300% -250% -200% -150% -100% -50% 0% 50% 100% 150% ALB ARM AZE BLR BIH GEO KAZ KGZ MKD MDA MNE RUS SRB TJK TKM UKR UZB 16 Solar PV Fig. 4. Renewable energy installed capacities in 2015 and 2016-2018 additions Source: Own elaboration from IRENA [16] Secondly, it is worth highlighting that Serbia added 364 MW, or about 40% of total added wind capacity, and became the second country in the region with the largest wind installed capacity, after Ukraine. Montenegro and Russia also added sizable wind capacity in 2016-2018, followed by Belarus, Azerbaijan, Bosnia and Herzegovina and Kazakhstan. Thirdly, Ukraine became the absolute leader in terms of solar energy in the region by adding 1.2 GW, or about 58% of total added solar PV capacity, followed by Russia, Kazakhstan and Belarus. Finally, Ukraine, the Russian Federation and Serbia are the countries that added more than 70% (about 2.2 GW) of their RE capacities from nonhydropower resources. 3. Targets and measures to promote renewable energy for electricity generation in transition economies 3.1. Targets on renewable energy related to electricity in transition economies Renewable energy policies and targets are crucial, not only to promote the use of RE, but also to increase energy efficiency, as was previously agreed in the COP21 in Paris. Transition economies are still in the process of introducing policies and adopting 00000103117 11 431 141 152 484 1162 0 200 400 600 800 1000 1200 1400 1600 1800 2000 GEO KGZ TJK TKM ALB MDAMNE UZB SRB ARM BIH MKD AZE BLR KAZ RUS UKR 2015 2016-2018 17 measures for RE in order to remove barriers for its further development and to increase the flexibility of power systems [8]. Table 6 presents the overview of the framework for RE in the selected countries. Table 6 Overview of RE policies in transition economies. Renewable Energy Target National strategy/Law on Renewable Energy National Renewable Energy Action Plan Albania    Armenia   Azerbaijan   Belarus   Bosnia and Herzegovina    Georgia Kazakhstan   Kyrgyz Republic   Macedonia, FYR    Republic of Moldova    Montenegro    Russia   Serbia    Tajikistan   Turkmenistan Ukraine    Uzbekistan   Source: Own elaboration from IEA [14] and Climatescope [17] It may be observed that all selected countries, apart from Georgia and Turkmenistan, have strategic documents such as a national strategy or law on RE, outlining their RE target. In Turkmenistan, clean energy remains a low priority, due to cheap and heavily subsidised natural gas which accounts for nearly all of the country's electricity mix, signifying that there has been no regulation or policy enacted to support these technologies [17]. In the case of Georgia, the adoption of the RE law by its government, as well as the implementation of a National Renewable Energy Action Plan (NREAP), is still pending. The country does not have an RE target to 2020, due to its late accession to the Energy Community, an international organization founded to extend the EU internal 18 energy market rules to its neighbours, and beyond. To date, eight countries of the region, Albania, Bosnia and Herzegovina, Georgia (day of accession: 1 July 2017), Macedonia, Moldova, Montenegro, Serbia and Ukraine are Contracting Parties of the Energy Community Treaty. Armenia is an Observer and Belarus applied for Observer status in October 2016. Generally, in South-Eastern Europe, NREAPs and commitments within the Energy Community tend to accelerate legislative changes in RE, whereas in Eastern Europe, the Caucasus and Central Asia, the adoption of such legislation is happening at a slower pace [8]. In addition, Table 7 details the RE targets in transition economies. Table 7 Overview of RE targets in transition economies by sector. Country Sector Renewable Energy Target Albania Energy 38% of GFC by 2020. Armenia Electricity 21% of RES in total power generation by 2020; 26% of RES in total power generation by 2025. Azerbaijan Energy energy consumption from RES: 9,7% by 2020; 2 GW of cumulative power capacity by 2020. Electricity Electricity consumption from RES: 20% by 2020. Belarus Energy 6% of RES in the total energy supply by 2020; 7% by 2025; 8% by 2030 and 9% by 2035. Bosnia and Herzegovina Energy 40% of RES in GFC by 2020. Georgia No target yet. Kazakhstan Electricity Solar and wind: not less than 3% by 2020; 30% of alternative sources (solar, wind, hydro, nuclear) by 2030 and 50% by 2050. Kyrgyz Republic Electricity 10% of RES in electricity generation by 2021 161 MW of small hydro. Macedonia, FYR Energy 21% RES in GFC by 2020. Republic of Moldova Energy 20% of GFC by 2020. Electricity 10% of final gross electricity consumption by 2020. Montenegro Energy RES in GFC: 33% by 2020. Electricity RES in GFC: 51.4% by 2020. 19 Russia Electricity 4.5% of power generation by 2024, excluding large hydro, 5.9 GW by 2024. Serbia Energy 27% of GFC by 2020. Electricity 36,6% of GFC by 2020. Tajikistan Electricity 10% share of RES in total electricity balance by 2030. 103.6 MW of small hydro. Turkmenistan No target yet. Ukraine Energy 11% of RES in GFC by 2020. Electricity 11% of RES in GFC by 2020. Uzbekistan Electricity 19.7% of share of RES, including 15.8% of hydro, 2.3% of solar and 1.6% of wind energy in the generation by 2025. Source: Own elaboration from IEA [14] and Climatescope [17] The RE targets are set mostly for the RE share in electricity generation, however, the overall share of energy from RE sources in gross final consumption of energy (GFC) is also commonly used. Among the countries with the highest RE targets can be found Bosnia and Herzegovina, Albania, Montenegro and Serbia, while Belarus and Russia have the lowest targets in the region. It is also worth highlighting that most of the countries, except Belarus and Kazakhstan, established short-term targets, until 2020 or 2025. 3.2. Policies to promote the renewable energy use for electricity generation in transition economies 3.2.1. Feed-in tariff The feed-in tariff (FIT) is the most widely spread policy to promote RE in transition economies, however, it has recently been being replaced with an auction system. Thus, in Kazakhstan, the FIT system, introduced in 2014, was used for wind, solar, hydropower and biogas. A fixed tariff and 15-year contracts allowed the RE market to be boosted at its initial stage of development. Later, the country decided to replace this scheme with a competitive auction system [19]. To date, 12 countries had adopted FIT policies: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Georgia, Kyrgyzstan, Macedonia, Republic of 20 Moldova, Montenegro, Serbia and Ukraine. Table 8 shows the main elements of the implemented FIT policies in transition economies. Table 8 FIT legislation and rates in transition economies. Country RES technology FIT excl. VAT (per kWh) coefficient Period Albania Law No. 07/2017 on RES, 2017 Solar PV < 2 MW €ct 10 15 years Wind < 3 MW €ct 7.6 Armenia Law on Energy Efficiency and Renewable Energy, 2004 (amended in 2011) SHPP on natural water streams 23.864 AMD 15 years SHPP on irrigation systems 15.906 AMD SHPP on natural drinking sources 10.605 AMD Solar, wind, biomass <1 MW 42.845 AMD 20 years Azerbaijan Law on Electrical and Heating Power Stations, 1999 Wind 41.48 /MWh Small and mini hydro 23.21/ MWh Belarus Law on Renewable Energy Sources No 204-W, 2010 Solar PV (< 300kW, 301kW-2MW, >2MW) 2 or 1.7 or 1.5 20 years Wind 1.1 or 1.01 Hydro (< 300kW, 301kW-2MW, >2MW) 1.3 or 1.25 or 1.2 Wood and biomass <750kW(< 300kW, 301kW-2MW, >2MW) 1.3 or 1. or 1.2 Biogas < 750kW 1.2 or 1.15 or 1.1 Bosnia and Herzegovina Law on the Use of RES, 2013 (amended in 2014), Decree and Rulebook on RES, 2014, Decision on guaranteed price, 2017 Wind Micro 2 kW – 23 kW KM 0.37124 (approx. €ct 17.86) 12 years Mini 23 kW – 150 kW KM 0.22140 (approx. €ct 10.65) Small 150 kW – 1 MW KM 0.18917 (approx. €ct 9.10) Medium 1 MW – 10 MW KM 0.16033 (approx. €ct 7.71) Large over 10 MW KM 0.14766 (approx. €ct 7.10) Solar Micro KM 0.49075 (approx. €ct 27.70) Mini KM 0.30696 (approx. €ct 18.31) Small KM 0.25971 (approx. €ct 15.78) Hydro Micro 2 kW – 23 kW KM 0.29036 (approx. €ct 14.84) Mini 23 kW – 150 kW KM 0.18192 (approx. €ct 9.30) Small 150 kW – 1 MW KM 0.13751 (approx. €ct 7.03) Medium 1 MW – 10 MW KM 0.12373 (approx. €ct 6.33) Biogas Micro 2 kW – 23 kW KM 0.71160 (approx. €ct 36.37) Mini 23 kW – 150 kW KM 0.66637 (approx. €ct 34.07) Small 150 kW – 1 MW KM 0.27891 (approx. €ct 14.26) Biomass Micro 2 kW – 23 kW KM 0.31292 (approx. €ct 16.10) Mini 23 kW – 150 kW KM 0.24987 (approx. €ct 12.77) Small 150 kW – 1 MW KM 0.24067 (approx. €ct 12.30) Medium 1 MW – 10 MW KM 0.22706 (approx. €ct 11.61) Kyrgyz Republic Law on RES, 2013 (amended in 2015), Rulebook on RES promotion, 2014, Decision on the amount of the guaranteed price, 2017 21 Wind Up to 10 MW BAM 0.1466 (approx. €ct 7.52) 15 years Solar Residential Up to 50 kW BAM 0.2734 (approx. €ct 14.02) 50 - 250 kW BAM 0.2341 (approx. €ct 12.00) 250 kW - 1 MW BAM 0.1856 (approx. €ct 9.51) Ground mounted up to 250 kW BAM 0.2169 (approx. €ct 11.12) Hydro Up to 1 MW BAM 0.1396 (approx. €ct 7.16) 1 - 5 MW BAM 0.1227 (approx. €ct 6.29) 5 - 10 MW BAM 0.1186 (approx. €ct 6.10) Biogas Up to 1 MW BAM 0.2402 (approx. €ct 12.28) Biomass Up to 1 MW BAM 0.2413 (approx. €ct 21.53) 1 - 10 MW BAM 0.2261 (approx. €ct 11.55) Georgia Decree No. 214, 2013 Solar, wind and Hydro Up to 144 GEL / MWh for eight months of the year (September through April). 15 years Kyrgyzstan Law on Renewable Energy, 2008 (amended in 2012) Solar 13.4 KGS 6 8 years Wind 5.60 KGS 2.5 Biomass 6.10 KGS 2.75 Geothermal 7.50 KGS 3.35 Small hydro (<30 MW) 4.70 KGS 2.1 Macedonia, FYR Decree on Electricity Feed-in Tariffs, 2011 (amended in 2013), Decision for total installed capacity, 2013 Wind (50 MW) ≤ 0.050 MW 8.90 €ct 20 years Hydro up to 10 MW ≤ 85,000 kWh 12.00 €ct > 85,000 and ≤ 170,000 8.00 €ct > 170,000 and ≤ 350,000 6.00 €ct > 350,000 and ≤ 700,000 5.00 €ct > 700,000 kWh 4.50 €ct Solar up to 1 MW ≤ 0.050 MW €ct 16 15 years > 0.050 MW €ct 12 Biomass up to 3 MW €ct 15.00 Biogas €ct 18.00 Republic of Moldova Law No. 10 on Use of Energy from Renewable Sources, 2016 (entered into force 2018), Decision No. 375, 2017 Solar (< 1 MW) 1.90 lei/kWh 15 years Wind (< 4 MW) 1.40 lei/kWh Montenegro Energy Law, 2010 (amended in 2015), Tariff System Decree, 2011 (amended in 2014 and 2015) Wind 9.61 ct€ 12 years Solar up to 1 MW 12.00 ct€ Hydro up to 3 MW 10.44 ct€ from 3 up to 5 MW 8.87 ct€ from 5 up to 8 MW 8.35 ct€ from 8 up to 10 MW 6.80 ct€ Biogas up to 10 MW Biogas 15.00 ct€ Waste gas 8.00 ct€ Solid waste 9.00 ct€ From forestry and agriculture 13.71 ct€ 22 Biomass up to 10 MW From wood-processing industry 12.31 ct€ Serbia Energy Law, 2014, Regulation on Incentive Measures, 2010 (amended in 2018) Wind €ct 9.20 12 years Solar Roof-mounted power plants up to 0.03 MW €ct 14.60-80*P Roof-mounted power plants 0.03 - 0.5 MW €ct 12.404 - 6.809*P Ground-mounted power plants €ct 9 Hydro up to 30 MW Up to 0.2 MW €ct 12.60 0.2 - 0.5 MW €ct 13.933-6.667* P 0.5 - 1 MW €ct 10.60 1 - 10 MW €ct 10.944-0.344 10 - 30 MW €ct 7.50 Geothermal €ct 8.2 Biogas 0-2 MW €ct 18.333-1.111*P 2-5 MW €ct 16.85 - 0.370*P Over 5 MW €ct 15 landfill and sewage gas €ct 8.44 waste-based €ct 8.57 Biomass Up to 1 MW €ct 13.26 1 - 10 MW €ct 13.82-0.56*P Over 10 MW €ct 8.22 Ukraine Electricity Law No. 10183, amended by Law No. 1220-VI in 2009, No. 5485-VI in 2013, No. 514-VIII in 2015 and No. 1804-VIII in 2016 Start date 2017 2020 2025 Households Solar (< 30 kW) 3.36 3.02 2.69 Wind (< 30 kW) 2.16 1.94 1.73 Business entities Solar 2.79 2.51 2.23 Wind < 600kW 1.08 0.96 0.84 Until 2030 600kW-2000kW 1.26 1.12 0.98 > 2000 kW 1.89 1.68 1.47 Hydro Micro 3.24 2.92 2.59 Mini 2.59 2.33 2.07 small 1.94 1.75 1.55 Biomass and biogas 2.7 1.84 1.61 Geothermal 2.79 2.51 2.33 Source: Own elaboration from IEA [14], Climatescope [17] and legal documents of each country. The tariffs are usually awarded for 15 years (Albania, The Republic of Srpska, Georgia and Moldova) and for 12 years (Montenegro, The Federation of Bosnia and Herzegovina, and Serbia). Armenia and Macedonia award FITs for 15 or 20 years, depending on the REs technology. Thus, in Armenia a 20-year FIT applies to wind, solar and biomass plants, whereas in Macedonia, it applies to wind and hydro power plants. Similarly, while in Belarus the producers of electricity from all RE sources have the right to use FITs for 20 years, in Kyrgyzstan, the FITs are for only eight years. 23 In addition, in Belarus, Kyrgyzstan and Ukraine, the tariff levels are defined by applying a technology specific coefficient to the retail power price, with the highest coefficient being applied to solar energy plants. Furthermore, the green tariff rate in Ukraine has an established "minimum floor", which is set each quarter by the National Energy and Utility Regulatory Commission (NEURC) through exchanging the green tariff calculated, as of 1 January 2009, into euros. It should also be noted that Ukraine establishes different FITs for renewable electricity produced by households and business entities. The only country that does not have a FIT for solar energy is Azerbaijan. Although there are FITs for wind and small hydro power plants, recent years have seen only a small amount of private investment, with the exception of some pilot wind power plants. Furthermore, this mechanism is not extended to other RE technologies [15]. It should also be highlighted that although a negotiated 15-year Power Purchase Agreement (PPA) is a major incentive for the development of new renewable power generation in Georgia, the country could likely move on to another form of incentive by the end of the decade, due to its membership of the EU Energy Community [17]. Moldova has the most recent FIT policy that entered into force in 2018. The feed-in tariffs are determined by the National Energy Regulatory Authority (NERA), depending on the power plant type and its capacity, so that the net present value (NPV) of the project, calculated for a period of 15 years, is zero (15 years payback time). The tariffs are awarded on the basis of the "first come, first served" principle. Similarly, in Belarus, the amount of capacity that can qualify in each year is limited by quotas. More specifically, in 2017, Albania introduced a specific form of FIT called contracts for difference (CfD). It is a feed-in premium system, that enables RE producers to sell the electricity and receive the difference between the auction and the market price (reference price). According to the Law, the CfD are concluded for a maximum period of 15 years and apply to installations with an installed capacity of more than 2 MW, while smaller RE facilities are entitled to claim a regulated FIT. Finally, in Bosnia and Herzegovina, in both of the country’s two political entities, the guaranteed tariffs are calculated by adding technology-specific premiums to a reference price. Republic of Srpska also offers a premium for electricity produced from RES, which is either sold directly to the market or is used for its own consumption. 24 Ukraine also offers a premium to the FIT of 5%, if at least 30% of the equipment is from local sources, and of 10%, if at least 50% is from local sources [20]. 3.2.2. Net metering Net metering mechanisms have been implemented by the following counties: Albania, Armenia, Bosnia and Herzegovina, Georgia, Moldova, Montenegro and Ukraine. In 2017, Albania adopted the new law on Renewable Energy Sources (RES Law, Art. 15), which introduced a net metering scheme for solar and wind installations, of less than 500 kW, for private households and small and medium-sized companies. According to the Law, the net balance is calculated on a monthly basis and excess electricity is remunerated according to prices approved by the Albanian Energy Regulator Authority (ERE). On the contrary, in Bosnia and Herzegovina, net metering exists, but surplus production is not subject to remuneration. The Armenian government is also supporting the residential and commercial solar and other renewables installations, up to 150 kW, through a net-metering scheme, which was introduced by amendment to the Armenia Energy Law in 2015, and came into force in June 2016. This allows participants to supply electricity to the network, without any license or additional tax obligations, and reduces their power electricity bills by the amount of electricity they inject, valued at 50% of the retail electricity price. The Parliament of Georgia approved the regulation for net metering in early 2016, and the scheme is open to solar, wind, biomass, and hydropower generation installations, with a capacity of up to 100 kW. A similar scheme was introduced in Moldova by Law No. 10 of 26 February 2016, for small systems up to 200 kW, aiming at covering their own electricity consumption. Finally, net metering mechanism in Ukraine came into force in April 2015 (Law № 514-VIII). This mechanism can be applied to solar PV installations lower to a 30 kW capacity. As of the end of September 2018, total capacity of rooftop PV systems, installed in the country under net metering, has reached 121 MW, as reported by The State Agency on Energy Efficiency and Energy Saving of Ukraine (SAEE). In Montenegro, net metering is also in place for systems up to 50 kW, which promotes small-scale residential solar PV [21]. 25 3.2.3. Tendering According to the IRENA report [22], the number of countries that adopted tendering (public competitive bidding or auctions) for RE increased from 6, in 2005, to more than 67, by early 2017. In line with this trend, RE auctions became an emerging trend in the region. Several Balkan countries, such as Albania, Bosnia and Herzegovina and Montenegro, as well as Armenia and Kazakhstan, issued their first tenders in 2018. Figure 5 shows the RE capacities by source awarded through those auctions. Fig. 5. Results of the first auctions in transition economies, 2018 Source: Own elaboration from IEA [15], Climatescope [17], and World Bank [18] Firstly, it may be noted that Kazakhstan issued the largest tenders across these countries, in terms of the RE installed capacity, aiming to reach a significant amount of 1 GW. The multiple auctions carried out successfully in the country awarded 857.93 MW capacity, including 270 MW solar, 500.85 MW wind, 82.08 MW hydropower, and 5 MW biomass-fired generation. Secondly, Montenegro also held its first auction for the construction of a PV project with an installed generation capacity of 250 MW. In addition, Albania, Bosnia and Herzegovina and Armenia awarded contracts 0 100 200 300 400 500 600 700 800 900 1000 Armenia Bosnia and Herzegovina Albania Montenegro Kazakhstan Solar PV Wind Hydro Biomass and waste 32 5. Conclusions and policy implications This study analysed the RE use for electricity generation from 1995 to 2016, and the RE policies and measures established for RE deployment in 17 transition economies that signed the Paris Agreement, although ratification is still pending in Russia and Kyrgyzstan. In addition, the newly added RE installed capacities from 2015 to 2018 have been taken into consideration. The results show that the average share of RE in electricity generation, across all 17 countries, decreased by 7.65%, while the average electricity consumption per capita, as well as the average electricity production, increased by 14.74% and 19.67%, respectively. The RE share accounted for 18.18% in electricity generation, with significant differences across those countries. Albania and Tajikistan produced about 100% of its electricity from RE sources. On the contrary, Turkmenistan had no renewable share. It should also be noted that scarce use of RE has been observed, not only in the countries that are net energy exporters, but also in those that are heavily dependent on energy imports, such as Belarus and Moldova. In terms of the types of RE sources, hydropower generates the largest share of electricity in the region, while the participation of solar, wind, geothermal and biofuel, and waste energy, remains quite low. However, it is solar PV, and associated technologies, that grew fastest in the last few years, with the growth rates higher than those worldwide. With respect to the RE regulation, all transition economies, except Georgia and Turkmenistan, have national strategies that outline RE targets, although most of the countries should have updated this by 2020. In addition, the countries of South-Eastern Europe adopted NREPs as an obligation within Energy Community. With regard to the RE support policies in the region, feed-in tariffs are the most used mechanism that is currently in force in twelve countries, although they are constantly improving and amending their legislation. This is followed by net metering which had been introduced in seven countries, between 2015 and 2017. Tendering is also spreading rapidly in the region in line with the worldwide trend, often replacing the feed-in tariffs with the aim of driving down renewable electricity costs. Thus, five countries had already held their first auctions in 2018, and another five countries are working in collaboration with EBRD on the introduction of an auction system in 2019. In addition, tax incentives are also in place in four countries of the region. 33 In general, setting long-term RE targets can be recommended in the first instance, since most of them expire in 2020. Most of the selected countries should update their objectives, whereas in the case of Georgia and Turkmenistan, it would be their first RE target. Not only will this allow policy-makers to prioritise RE deployment, but it will also develop a clear strategy to promote RE. Similarly, more active fiscal policy, together with well-designed auction systems, can be appropriate to facilitate the RE deployment in transition economies, especially in the case of large-scale solar PV and wind installations. In addition, many factors can have an impact on the success of the auction programme, and local content requirement is one of them. Therefore, the LCRs, if established, should be revised from time to time, in order to attract more project developers and guarantee better auction results. Finally, more active adoption and use of net metering schemes can be beneficial for RE development in these countries. Although the transition economies had a reduction in the participation of RE in electricity generation, the study shows that these countries are on the way to the implementation of the appropriate measures for RE deployment to diversify their energy mix, and to meet their INDC objectives. Most of the mechanisms supporting the use of clean energy in these economies have been introduced recently, and some of them are still in the developing process. To evaluate the impact of the recently adopted policies, such as net metering and auction systems, developing further studies is recommended in the future, with updated statistical data on RE in transition economies. Acknowledgements The authors wish to acknowledge the funding provided by the following institutions: the RTI2018-096725-B-I00 Project funded by “FEDER/Ministerio de Ciencia e Innovación y Ministerio de Universidades-Agencia Estatal de Investigación (España)”; the US- 1260925 Project funded by “FEDER/Consejería de Economía, Conocimiento, Empresas y Universidad de la Junta de Andalucía (Programa Operativo FEDER 2014-2020)”, the “Cátedra de Economía de la Energía y del Medio Ambiente” sponsored by “Red Eléctrica de España” at the University of Seville; the Andalusian Regional Government (Project SEJ-132); and the Department of Economic Analysis and Political Economy at the University of Seville (Universidad de Sevilla, España). 34 References [1] UNFCCC. Adoption of the Paris Agreement - COP21. 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