At a Prelez i Muhaxherëve village council meeting three years ago, Adnan Reka held a presentation that elicited excitement and skepticism among his fellow villagers. Reka had developed a reputation among the village council members for helping implement major improvements for the village, but the idea he presented that day sounded too big for some. He wanted to turn Prelez i Muhaxherëve, a village of less than 1,500 people located eight kilometers north of Ferizaj, into one of Southeast Europe’s first villages where every occupied house would be powered by solar energy.

“We’ve managed to consolidate a vibrant village council,” Reka said, but the projects they’ve achieved have been more modest: a sports pitch, a park, a fence around the cemetery. “Most people in the village don’t have previous experience with solar energy, so they didn’t know what to expect when they first heard about the idea.”

After discussions and a feasibility study conducted by JV Engineering, a Swiss company with a local office in Prelez i Muhaxherëve which Reka works for, the village council gave the green light to the proposal and they reached out to the USAID project Kosovo Energy Security of Supply (KESS) for further technical support. “When the USAID representatives came to the village and saw how organized the community is, they didn’t hesitate to support us,’’ Reka said. 

USAID included Prelez i Muhaxherëve in a topographic analysis to assess the village’s rooftop solar energy potential, the monthly household energy consumption and the financial cost of the project. The results showed that to cover about 80% of the village’s electricity consumption, each of the roughly 100 occupied houses would need to install solar panels which would cost 4,000 to 5,000 euros per house. If completed, the project would reduce carbon dioxide emissions by 563 tons per year.

The village council has secured donations to cover 20% of the project’s total cost, but they need to cover 50% of the expenses from outside support for the project to be affordable for the villagers. “Our hope is that in this case the Ministry of Finance will drop the product tax on solar panels,” Reka said. “That would reduce the costs of the project by 18%.”

If Reka and his fellow villagers managed to secure the rest of the donations and institutional support needed to make the project happen, Prelez i Muhaxherëve households would join around 250 prosumers already operating in Kosovo. Prosumers generate their own electricity through solar panels and feed the electricity they don’t use into the grid.

According to Kosovo’s Energy Regulatory Office (ERO), an independent regulatory body, prosumers in Kosovo currently produce 8 megawatts of solar electricity. “We started to have the first prosumers five or six years ago. It was a new field for us back then, until we drafted the adequate legislation and understood how to proceed further,” said Afrim Ajvazi, the head of the Legal and Licencing Department at ERO. “Now, in a month we get around 10 to 15 applications for solar panel installation.”

According to Ajvazi, most of the solar power prosumers are businesses aiming to lower their electricity bills, but interest from private households is increasing.

Hotel Gračanica, located on the periphery of Prishtina, is one of the private businesses installing solar panels to reduce costs. Since August they’ve been operating with 141 photovoltaic panels. The manager of the hotel, Aziza Ramić, said that during summer months the solar panels cover around half of their electricity needs. 

Other prosumers with large solar panel installations on their rooftops are shopping centers like Gorenje, Albi Mall, and Prizren’s Abi Çarshia (the largest rooftop solar project in the region). Some supermarket chains like Interex also have rooftop solar at their stores.    

“Since the peak of the energy crisis last winter, we’ve seen a surge in demand for solar panel installation,” said Gentiana Alija Shala, who is the founder and CEO of Alfa Solar, the only woman-led solar company in Kosovo. 

Jaha Solar, a Kosovo-based solar factory (the first in the region), had a similar experience during the energy crisis. “We had maximal demand from clients, but we couldn’t reach our full production capacity since we were still recovering from the pandemic’s impact,” said Jetmir Hasanaj, Jaha Solar’s chief technical officer. 

With a favorable level of direct sun irradiation and 220 days of sunlight a year on average, Kosovo is well-positioned for solar energy production. “Kosovo is friends with the sun. We have an ideal position,” said Alija Shala. A survey conducted by USAID showed that relying only on the rooftops of businesses and some private houses, there could be upwards of 250 MW of small-scale solar projects installed for self-consumption, which is equivalent to 20% of Kosovo’s current total installed electricity capacity.

The new national Energy Strategy 2022-2031, drafted by the Ministry of Economy and adopted in mid-March, aims to decarbonize Kosovo’s energy sector and will likely lead to a massive increase in solar power production in Kosovo. By 2031, the strategy aims to cut greenhouse gas emissions in the power sector by at least 32%, supplying at least 35% of the energy needs through renewable energy sources and reaching a total installed renewable energy capacity of 1,600 MW with a minimum of 100 MW prosumer capacity. 

With hydropower plants facing resistance from environmentalists and local communities, the strategy focuses on new solar and wind projects to meet renewable energy needs with calls for new installations of 600 MW capacity of each.

For Ajvazi from ERO, these aims are overly ambitious considering that the current renewable energy capacity is around 250 MW, or only 20% of the total installed capacity. The rest of Kosovo’s capacity, 80%, comes from lignite coal plants. Despite accounting for 80% of installed capacity, coal covers as much as 95% of actually produced electricity, while solar produced only 0.2% of Kosovo’s electricity in 2021. The capacity of installed solar power plants, which unlike prosumers are intended solely for production and not for self-consumption, is currently 10 MW.

“Without incentive mechanisms, it will be quite hard to reach the strategy’s objectives about decarbonization,” Ajvazi said.   

The six solar power plants installed before 2020, along with other renewable energy sources such as the majority of the country’s mini hydroelectric dams, benefit from a government-guaranteed above-market purchasing price. In 2020, ERO’s board decided to end this practice for new projects. The decision was made after a media investigation documented how six companies that benefited from the feed-in tariff scheme were owned by a single businessman, Blerim Devolli, despite anti-monopoly rules clearly prohibiting such practices. 

“The ceasing of the feed-in tariff will prevent the misuse of power influence in the energy private sector,” said Agim Mazreku, climate and energy policy specialist, adding that many other countries in the EU, such as Spain and Portugal, have introduced competitive schemes instead of feed-in tariffs. “In the region, Albania and especially North Macedonia have had very successful auctions,” Mazreku said.

With the draft law on renewable energy now favoring competitive schemes, in May the Ministry of Economy announced the opening of the country’s first competitive auction for a solar power plant project. Anticipating private investment of around 75 million euros for a plant capable of producing around 100 MW, the winning bidder will receive a 30 year lease to land and be given the right to build a solar power plant with a 15 year power purchase agreement with the government.

The land for the auction is in Guri i Kuq and Kramovik, villages near Rahovec.

During the announcement ceremony, Economy Minister Artane Rizvanolli said that the auction marks “the starting point of a new era for sustainable development in our country.” 

In addition to the auction announcement, in the last year there have been other significant projects connected to green energy and energy independence. An 80 million euro project “Solar 4 Kosovo,” signed in December 2022, will provide 38,000 Prishtina residents with central heating, making Kosovo the first country among its neighbors to use solar panels for domestic heating. The project, among the largest of its kind in Europe, is expected to be finalized in 2026. 

Other solar initiatives are the construction of a 100 MW solar park located near the Kosovo Energy Corporation’s “Kosova A” coal power plant and a 150 MW solar park in Gjakova. And in July 2022, the government signed a 202 million dollar program grant with the Millennium Challenge Corporation (MCC) for energy storage batteries with a capacity of 340 MWh. Kosovo’s government will cofinance the project with 34.7 million dollars. Battery usage is expected to create energy reserves that will lower the current high energy import costs and help diversify energy production.

While the government presents these projects as proof of its unwavering commitment and support for the solar energy sector and green transition, solar companies have been urging the government and the ERO to do more to eliminate existing barriers and create a more favorable environment for the solar industry and for prosumers.

Currently, according to ERO rules, businesses are not allowed to install more than 100 KW of solar energy. Both Alija Shala and Hasanaj think that this rule is limiting, especially for larger businesses. 

“The limit in Albania is 500 KW while in North Macedonia 1 MW,” Alija Shala said. “A lot of installation companies from Kosovo are now switching their focus to these countries instead of Kosovo.” Ajvazi from ERO said that at the beginning the rule was set “to be able to manage the newly developed prosumer field and make sure that the grid won’t be overloaded.”

Alija Shala and Hasanaj argue that the real purpose of limiting prosumers isn’t to manage the grid, but to serve the interests of the Energy Distribution Company (KEDS), a private company with the exclusive right to distribute electricity in Kosovo. “Prosumers are not profitable to KEDS because they lower electricity bills,” said Hasanaj. 

Mazreku noted that the “KEDS lobby is very strong at ERO. The truth is that KEDS hasn’t made the right investments in the distribution system and now can’t afford to make those investments because of the energy crisis.”

According to a new regulation that is now being drafted by the ERO, it is likely that the limit will be raised to 200 MW, however a final decision hasn’t been made yet. The local solar industry has welcomed this step, but still considers that 200 MW too low. 

Though the new regulation calls for expanding the prosumer production limit, it is also expected to introduce a net billing scheme, which is less financially beneficial to prosumers. In a net billing scheme, prosumers are paid for the extra electricity they produce and feed back into the grid at a lower rate than the one they must pay to get electricity from the grid. Currently, the system is net metering, which pays prosumers for their extra electricity at the same rate that regular consumers pay for electricity.

“With the net billing scheme, if you buy the energy from the grid, let’s say for one euro, you will export your own solar-generated electricity for 90 cents. The aim is to discourage misuse and invest in grid maintenance,” said Ajvazi. 

Hasanaj believes net billing will discourage people from investing in solar energy. 

Mazreku suggested that net billing should be applied only for large commercial prosumers. “For the residential sector and capacities up to 100 KW, we should continue with net metering,” he said. He also believes residential solar producers should receive other forms of government support.

The Ministry of Economy told K2.0 by email that a program of that type for solar energy installation, with a budget of 5 million euros, is currently being drafted and is part of a 75 million euro support package from the EU to help deal with the energy crisis.

One step people in the solar industry are hoping the government will consider is a reduction or elimination of taxes on solar panels. “With the drop of the product tax, 5 KW of grid installation that previously cost 7,500 euros would cost 1,350 euros less, making the investment much more affordable and the 10-12 years investment return period shorter,” said Alija Shala. The Ministry of Finance hasn’t made any indication of whether they are considering this step or not.

Adnan Reka from Prelez i Muhaxherëve is still waiting for an answer for his village. “It would be a lost chance for the state if it doesn’t support us,” he said. “Our hopes are still there, but if we don’t get help for 50% of the costs, it is unlikely that the project will see the light of day.”

Feature image: Red Zeppelin via CC.

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