The International Renewable Energy Agency (IRENA), at the request of the European Commission (EC), has developed a Renewable Energy Roadmap (REmap) analysis for the Central and South-Eastern Europe Energy Connectivity (CESEC) area. This study assesses the potential for renewable energy deployment in the CESEC region by 2030, beyond existing plans. It also analyses how an accelerated uptake of renewables would affect energy costs, investments, fossil-fuel consumption, greenhouse gas (GHG) emissions, the environment and people’s health. The results can contribute to strengthening energy and climate planning processes in European Union (EU) member states and in Energy Community Contracting Parties. Given below is the summary of the report.

The approach

The REmap study first analyses the expected deployment of renewables in the CESEC region by 2030 under a Reference Case, which assumes the implementation of existing plans, agreed policies and targets, or the continuation of current trends.1 It then identifies renewable energy options (REmap options) available on a country-by-country basis to accelerate the deployment of renewables by 2030.

These renewable-based options can then be compared with conventional technologies in terms of the levelised cost of energy (LCOE) to determine the costs of substitution. This study covers all aspects of energy use, including power and district heat supply as well as end uses in buildings, industry and transport. The analysis aims to identify a realistic and cost-effective portfolio of options to scale up renewables faster. IRENA’s REmap analysis aligns the energy investment and policy agenda with key climate and sustainability goals, including the Paris Agreement, the United Nations Agenda for 2030 and Sustainable Development Goals. The challenges to implement each identified option inevitably vary from country to country.

Country-level assessments are reinforced by the study’s broad regional overview. An hourly dispatch simulation for the entire interconnected European power system in 2030 helps to evaluate the technical feasibility of implementing REmap options in the electricity sector at the regional and national levels.

How CESC members could scale up renewables

Energy demand in the CESEC region is expected to increase slightly by 2030, about 5% above levels in 2015, the base year for this analysis. For the Energy Community Contracting Parties, this increase is expected to be substantially larger  –  about 26% above 2015 consumption  –  according to existing projections. In the Reference Case, the share of renewable energy in CESEC members is expected to show slow growth over the decade, rising from 16% of gross final energy consumption in 2015 to about 24% in 2030. In CESEC’s eight Contracting Parties of the Energy Community, the share of renewables in the energy mix is expected to grow from 10% in 2015 to about 19% in 2030.

Region-wide potential

The full deployment of renewable options identified in this study could raise the 2030 renewables share to 34%, cost-effectively, for the whole CESEC region, compared to 24% in the Reference Case. In CESEC’s eight Contracting Parties of the Energy Community, the REmap scenario could boost renewables to 30% by 2030, compared to 19% in the Reference Case. In the REmap scenario, the overall consumption of renewables in the CESEC region roughly doubles by 2030 compared to 2015. Renewable power and the electrification options to replace fossil fuels for heating and transport would together account for about two-thirds of the additional potential identified. Biomass-based district heating, solar thermal and liquid biofuels would account for the bulk of the remainder.

In absolute terms, renewable power would account for 51% of total gross final renewable energy consumption, renewable heat for 42% and liquid biofuels for the remaining 7%. Hydro, solar and wind would account for around 30%, 27% and 22% of the renewable power generation, respectively, with the bulk of the remainder being bioenergy. The renewable heat sector would be dominated by solid biomass. Overall, bioenergy (solid biomass, biofuels and biogas) would account for about half of total renewables consumption by 2030.

Potential for different CESEC members

A wide range of factors influences the realistic, cost-effective potential for growth in renewable share for each CESEC member. These include the technical potential and expected costs of realising such potential, the economic and energy market conditions of the country, the current energy mix and age profile of existing generation assets, and the pipeline for new developments, among others.

While the conditions for deployment vary significantly across the region, IRENA estimates that all CESEC members have potential to increase their renewable energy shares beyond the Reference Case by 2030. Country-specific economic potential would support overall renewable shares ranging from 23% to 56%. The additional potential identified, compared to the Reference Case, ranges from 6% to 20%.

Renewables in the power sector

With the continuation of current trends reflected in the Reference Case, by 2030 the power systems of the CESEC region would still rely heavily on fossil-based generation. Coal generation would still represent almost one-sixth of overall generation in CESEC, and almost one-third of the generation in the eight Contracting Parties of the Energy Community. The REmap Case presents a cost-effective way to replace coal and set the course for a sustainable energy future.

Share of renewables in gross final energy consumption by CESEC member (%)

In the REmap Case, renewable power capacity grows from 109 gigawatts (GW) in 2015 to 265 GW in 2030. This includes 116 GW of solar photovoltaic (PV), 58 GW of wind, 67 GW of hydro and 22 GW of biomass power. With the appropriate policies in place, about 55% of the electricity consumed by CESEC members could come from renewable sources (around 620  terawatt-hours [TWh] of renewable power generation in 2030, compared to 253 TWh in 2015).

The hourly simulations of the REmap scenario indicate that such a power generation mix could be feasible at a regional level if CESEC members use interconnections (existing and already planned) efficiently. The REmap capacity mix would also result in a reduced need for electricity imports to the region. At the same time, further integration of power systems needs to be linked to progressive pricing of externalities to avoid carbon leakage.

Regional co-operation in planning for the security of supply and power sector adequacy will be fundamental to realising the regional vision for the power sector laid out in the REmap scenario. This will be particularly important for countries with limited experience and incipient domestic renewable energy markets. Replacing large volumes of conventional generation with renewables would be facilitated by a concerted effort. Closer co-operation with neighbours will likely result in lower energy costs than a purely national approach.

Renewable heating systems

The REmap analysis suggests that a transition to biomass-based district heating systems is among the largest options to accelerate renewables in the region and reduce dependence on imported fossil fuels. Efficient electrification of district heating systems  –  possibly connected to geothermal sources  –  can further contribute to improving efficiency and introducing renewables in the sector. In the REmap Case for the CESEC region, the overall share of renewable energy in district heating systems grows to almost half of total generation by 2030. This measure alone could reduce fossil fuel demand by 251 petajoules (PJ), an amount comparable to the natural gas consumption of Austria.

Besides district heating, accelerating electrification with heat pumps in buildings and industry could reduce fossil fuel consumption by about 11% (or 583  PJ) in 2030, below the Reference Case. The electrification of buildings needs to be considered in conjunction with improvements in the overall energy performance of the building envelope – for new construction as well as renovations – to tap the full potential for fuel demand reductions. In addition to increased electrification, solar thermal can provide affordable hot water in residential and commercial buildings as well as competitive low temperature heat for certain industry subsectors. Most CESEC members can substantially scale up deployment of this technology, which has the potential to reduce demand for fossil fuels in the region’s heat sector by about 3% in 2030 compared to the Reference Case.

Renewables in transport

Electrification with renewable power is a key option for the decarbonisation of the transport sector. Electric vehicles (EVs) are typically three to four times more energy efficient than internal combustion vehicles. In addition, the use of electricity enables an easier shift to renewables, as renewable power options are already cost-effective. The REmap analysis for the CESEC region suggests that with appropriate policies in place, most sales of light duty vehicles could be EVs by 2030. Overall, about 20% of the vehicle stock could potentially be replaced by 2030. Accelerating the electrification of road transport could reduce fossil fuel demand in CESEC by about 294 PJ below the Reference Case in 2030, an amount comparable to the total energy consumption in the transport sector of Ukraine.

 Liquid biofuels – both advanced and conventional – can also be significantly scaled up in CESEC countries to supply the existing stock of vehicles with internal combustion engines (ICEs) and to be used in transport modes where electrification is still not viable. The use of blended liquid biofuels could roughly triple by 2030 with sustainable feedstocks available in the region, compared to 2015. By 2030, biofuels could account for about 9% of energy consumption for transport in CESEC countries (or 306 PJ, an amount larger than twice the total energy consumption for transport in Bulgaria).

Benefits of the REmap scenario

CESEC members will need to scale up investments to modernise their energy systems over the next decade regardless of the choice of technologies. IRENA estimates the cumulative energy sector investments required in the Reference Case in the CESEC region at EUR (euro) 303 billion (about USD [US dollars] 336 billion) over the period 2015-2030. In the REmap Case, CESEC members would invest about an additional EUR 78 billion cumulative until 2030, compared to the Reference Case. With these additional investments, CESEC members can build an energy system that is substantially less reliant on imported natural gas and oil while delivering energy at competitive costs. Such reduced reliance on (imported) fossil fuels brings multiple benefits, including not only a significantly reduced negative impact on the environment and the health of citizens, but also improved sector stability as countries are progressively less exposed to unforeseeable swings in the international prices of energy commodities. The COVID-19 pandemic has devastated people’s lives around the world and thrown economies into severe crises – including those of CESEC members. The energy sector is at the centre of the economy and will be a crucial element of the recovery post-COVID-19.

An energy system fuelled primarily by renewable sources in the CESEC region is technically feasible and economically desirable. By placing energy transition investments, regulations and policies at the centre of recovery plans, policy makers can simultaneously alleviate the economic impacts of the COVID-19 crisis, stimulate economic growth and create jobs, while accelerating the transformation of the energy sector.

Deploying all the additional renewable options identified in the REmap scenario could deliver savings for CESEC members in terms of LCOE of energy services, estimated at EUR 3.4 billion/year in 2030, compared to the Reference Case. Several factors could reduce these estimated savings, including high costs of capital or persistently low international fossil fuel prices. Similarly, additional grid infrastructure investments not accounted for in this study – where needed in addition to the Reference Case – could reduce the estimated cost advantage of renewables. Conversely, faster than expected technology improvements could further improve the economics of renewables.

In terms of the impact on fossil fuel import dependency, the REmap scenario would result in natural gas demand reductions estimated at 18% (about 893 PJ) below levels in the Reference Case, an amount comparable to the annual gas demand in Ukraine. Oil demand reductions are also substantial, estimated at 14% (about 564 PJ), comparable to today’s annual oil consumption of Croatia and Greece combined.

Accelerating a transformation towards a renewables-based energy system is one of the key cost-effective actions available for CESEC members to meet the goals of the Paris Agreement. The full deployment of REmap options identified in this study would deliver additional emissions reductions estimated at 165  megatonnes (Mt) of carbon dioxide (CO2 )/ year, 21% below the Reference Case in 2030. This amount is comparable to today’s total emissions of Romania and Bulgaria combined. Of these additional emissions reductions, an estimated 51 Mt CO2 /year (20% below the Reference Case), could be realised in CESEC’s eight Contracting Parties of the Energy Community.

Renewables, in combination with energy efficiency and electrification of heat and transport, reduce the need for combustion of polluting fossil fuels and contribute to a substantial improvement in air quality and the health of citizens in the region. The economic value of avoided air pollution with the deployment of the REmap scenario in the CESEC region is estimated at between EUR 5 billion and EUR 20 billion per year in 2030.

Similarly, the externality costs related to carbon emissions that can be avoided by transitioning to renewables are substantial, ranging between EUR 2 billion and EUR 12 billion per year in 2030.

Overall, IRENA estimates the economic value of avoided energy sector externalities with the deployment of the REmap scenario in the CESEC region at between EUR 8 billion and EUR 32 billion per year by 2030. When the savings calculated by a pure cost benefit analysis of technologies are added to the estimated economic value of the avoided health and environmental damages, the REmap scenario delivers total benefits to society estimated at between EUR 11 billion and EUR 35 billion per year by 2030.

Key actions to enable the transformation

Achieving the shift to modern, clean, competitive and regionally integrated energy systems in the CESEC region will require decisive policy action at the national and regional levels. Developing a long-term vision in national plans is a key and important first step. However, the necessary investments will also depend on adopting appropriate regulatory and market frameworks. Neighbours can work closely with each other to reduce costs and tap the synergies of a regional approach. At the national level, CESEC members are advised to prioritise the improvement of investment conditions for renewables in their respective markets.

Although renewables are ready to compete, they need a level playing field, with open, stable and transparent regulatory frameworks to enable fair competition with fossil technologies. Key elements of such a level playing field are a progressive elimination of remaining subsidies to fossil fuels – including through indirect mechanisms, such as below-market regulated energy prices – and a fair set of market and operation rules, adapted to the intrinsic variable nature of renewable technologies.

Investment needs and economic benefits of the REmap scenario

The energy supply sector provides an immediate opportunity for scaling up renewable investments in the region, as renewable technologies are cost-competitive, and there is a need to replace obsolete fossil generation assets. However, policy makers need to foster the transition towards renewables in end-use sectors as well. Planning for an acceleration of renewable electrification of heat and transport is fundamental to developing the markets and the infrastructure as quickly as possible and to tapping the large potential benefits.

The high cost of capital has been an important barrier for renewable investment in several CESEC member countries. Even under challenging macroeconomic conditions, national energy policy can go a long way in reducing perceived risks for investors, for example by adopting best practices in auctions and administrative procedures. Additionally, CESEC members can work together with the EU, the Energy Community Secretariat, as well as with multilateral financial institutions to develop risk-mitigation mechanisms tailored to the specific conditions and needs of the region.

Cities in the region will benefit from a cleaner energy system and can also play an important role in driving the transformation. Co-ordination of national energy planning with subnational entities can accelerate the transition in areas such as electromobility and the adoption of distributed renewables. Additionally, decentralised structures such as renewable energy communities have a role to play in mobilising private investment and securing public acceptance.

At the regional level, CESEC members should work closely with neighbours to tap the synergies of regional co-operation. Co-operation can happen at multiple levels involving both the software and the hardware of energy systems. This can accelerate the transition by mutual experiencesharing in developing and implementing policies and regulations and by reducing the costs of balancing energy systems and security of supply. Open co-operation at the regional level can also increase the attractiveness of renewable energy in individual countries – particularly for smaller CESEC members – by reducing the risk perception for investors and increasing addressable market size for developers.

One key area for regional co-operation is the transition towards integrated electricity markets, which will be instrumental for costeffective decarbonisation of national power systems. Co-operation towards building functional regional markets is also applicable to other renewable carriers with large potential for trade in the CESEC region, such as biomass.  

Integrated markets require integrated infrastructure. In this area there is also significant potential for co-operation. CESEC members could work towards regional or subregional co-ordinated investment plans to share the costs and benefits of key infrastructure for the transition to renewables such as equipment manufacturing facilities, transboundary hydro projects, biofuel conversion plants and EV charging infrastructure.

Some CESEC members will need external help to develop their national plans, address socio-economic challenges and mobilise the required investments. European institutions, international organisations, development agencies and multilateral banks can and should play important roles in supporting these countries moving forward.

The full study can be accessed by clicking here