Fossil or hydro based capacity development? - Power sector modelling in the South-East European Region

Abstract

This paper analyses the impact of current generation and interconnection capacity plans on the generation mix of the five South East European countries (Albania, Bosnia and Hercegovina, Macedonia, Montenegro, Serbia) in the context of carbon price levels and assesses the conditions for the exploitation of the existing hydro potential. Future electricity mix of the five countries are analyzed – using the European Electricity Market Model (EEMM) of REKK - for 3 scenarios up to 2030 assuming different conditions for electricity supply and demand. We have found that vulnerability due to weather dependent hydro generation is a relevant policy issue that needs to be tackled if the available hydro potential is to be exploited more in the future in the SEE region. Higher interconnection would allow for import even in dry years with a more limited number of new coal plants actually planned in the region as countries would have unconstrained access to them.