Electricity Supply Crisis in North Macedonia

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Due to an energy crisis, North Macedonia is importing electricity and drawing it from the European electrical grid because the country's biggest producer, TPP Bitola, has switched off the last of its three blocks because of a defect. 

On Nov. 8, the government declared a 30-day state of energy crisis, based on an estimated risk of electricity shortages resulting from the limited capacities of North Macedonian production and the higher electricity prices on foreign markets. 

"The only measure stemming from the decision to declare a state of energy crisis is the injecting of money into state-owned energy companies for the purpose of stabilizing the situation on the electricity market and securing stable supply," Minister of Economy Kreshnik Bekteshi has said. 

According to him, the government will intervene with budget funds so as to increase the liquidity of power company ESM and power transmission system operator MEPSO, and for electricity imports in the event of potential malfunctions in power plants. 

ESM representatives have said that the country's electricity needs after the shutdown of TPP Bitola "are being met from other capacities and by procured electricity, as well as from the reserves" designed for such short episodes. 

Due to conspicuously reduced electricity production, the state has purchased electricity for EUR5.5m, launching import which is to last until Nov. 20, whereas after the malfunction in TPP Bitola MEPSO again started drawing electricity from the European electrical grid. 

MEPSO has already received five warnings for drawing electricity from the European grid over the past two weeks and will have to pay EUR15m plus penalties because it drew electricity even when the North Macedonian power system was not malfunctioning. 

In Bekteshi's words, the energy crisis has largely spilled over from world markets into North Macedonia, which imports a big portion of its electricity. 

"Given that the price of electricity has increased enormously on world energy exchanges, work is being done to fully activate domestic capacities. 

We are working on finding the best way out of this energy crisis," said Bekteshi, stressing that the prices for citizens would not be raised until the end of the year. 

North Macedonian government officials have told BETA that the new law fully implements the third package of EU directives referring to the internal energy market and completely liberalizes the market. 

That means big consumers procure electricity on the market on their own, while the government provides cheaper electricity for households and small consumers through a universal supplier, from domestic production. 

"The price for this year is 36 euros per MWh and is currently five to six times lower than on the energy exchanges in the region and Europe," the officials said. 

They pointed out that due to the price hike on energy exchanges, primarily on Hungary's HUPX, which is in a way the reference exchange for North Macedonia, serious problems had appeared in supplies to institutions and state and privately owned companies, which procured electricity on the free market. 

"Certain suppliers have begun canceling their existing contracts with consumers or offering them considerably higher prices for the electricity they are to deliver. 

The Energy Regulatory Commission reacted immediately and launched procedures for stripping those suppliers of their license, in order to stop serious disruptions on the electricity market," the government officials said. 

They underscored that the government could not influence events on global exchanges, but was making an effort to provide additional quantities of electricity by increasing production at the ESM, which would buffer the price shock for companies. 

Over the last 15 years, roughly 70% of electricity in North Macedonia has come from domestic power plants, primarily the ESM, while about 30% of the needs have been covered by imports. 

According to information from the government, the output of thermal power plants has been reduced in the last 10 years, particularly of TPP Oslomej which is not operating at full capacity because there is no available lignite in the mines in its vicinity, and for the past year or two it has been operating thanks to imports from Kosovo. 

The situation is similar in TPP Bitola, where the quantities of lignite used for electricity production have been reduced in recent years, which automatically reduced the efficiency of the country's biggest thermal power plant, and one should take into account the fact that it has been operating for more than 40 years. 

The quantities of lignite in TPP Bitola's mine are sufficient, the government officials added, for the TPP to operate with two blocks throughout the winter, whereas efforts are being invested in securing sufficient quantities of lignite from the region for block three, so that domestic production may increase and "the negative effects caused by the distortion of the price of electricity on world energy exchanges decrease." 

"In collaboration with the Chamber of Commerce of North Macedonia, the possibility of including TPP Negotino, which is powered by fuel oil and is kept as a cold reserve, is being analyzed" the officials said. 

When asked whether the use of nuclear energy was back on the table, the officials said that the construction of nuclear power plants was not being considered at the moment or for the near future, but added that in the event of initiatives of neighboring states for regional projects something like that might be accepted if it was in the interest of the citizens of North Macedonia and their energy security. 

The government points out that North Macedonia is "seriously committed to realizing a green scenario, which does not envisage the production of electricity from coal after 2035." 

"That means the electricity balances will predominantly come from renewable energy sources, primarily photovoltaic power plants, wind power plants and large hydropower plants. 

Of course, the stability of the system is to be secured by gas-powered thermal power plants as well, the construction of which is foreseen in Skopje and Bitola, for which feasibility studies are currently being made," the officials said. 

The government adopted the Energy Strategy by 2040, which envisages a transition to electricity production from renewable sources, in late 2019.

On the occasion of the 1000th edition of Beta Monitor, a specialized economic bulletin focused on South East European countries, Beta News Agency is releasing a series of articles on energy available free of charge on www.beta.rs in Serbian and on www.betabriefing.com in English.