Energy Policy, Legislative Background, Funds and Programmes
Energy Policy
Energy Policy of Macedonia
Macedonia plans to harmonize its policies, including the ones on environment, with those of EU so as to promote closer integration with other European countries.
In December 2005, Macedonia was granted the status of a candidate for membership in the European Union. In the Council Decision of 30 January 2006 on the principles, priorities and conditions contained in the European Partnership with the former Yugoslav Republic of Macedonia the Energy sector is listed with following priorities:
- Begin to align the legislation on the internal electricity and gas markets, energy efficiency and renewable energy sources with the acquis in order to gradually open the energy market to competition.
- Strengthen the independence of the Energy Regulatory Commission.
- Start implementing the Energy Community Treaty.
- Enhance administrative capacity in all energy sectors. [European Commission]
Macedonia has signed the Treaty for the establishment of a European Energy Community in October 2005.
Energy Efficiency Strategy until 2020
In 2004, the government adopted the "Energy Efficiency Strategy until 2020". It focuses on the implementation of technologies to provide for efficient energy use, and provides guidance for the energy efficiency policy in the Republic of Macedonia.
As reasons for the slow implementation of energy efficiency as well as renewable energy projects, the Energy Regulatory Commission names lack of information, awareness and confidence in the industry sector as well as the government agencies and the population, a lack of institutions to develop these projects, plan and monitor them, further the lack of institutional framework for renewable energy projects and also a lack of capital and absence of mechanisms for favorable long-term credits.
The following elements are foreseen in the strategy:
Institutional and capacity building:
- Establishment of the Energy Efficiency Agency
- Introducing Certificates for Energy Auditors
- Building energy codes
- Equipment standards
- Energy Efficiency Fund
Technical programms:
- Residential building programm
- Commercial building programm
- Institutional building programm
- Industrial programms
- Street lighting programms
In the residential sector, the following measures should be implemented: consumption based billing, extension of district heating systems, insulation of windows, reflection shields for radiators, and thermostatic valves. Where possible, the shift from electricity to natural gas for heating should be achieved, or otherwise insulation of the building shell implemented.
Industry with an energy intensity 5 times higher than industry in England or France, the measures target at substitution of electric engines and drives, avoiding the conversion of electricity to heat, saving measures at ligthing systems, air compressors, thermal insulation and improved capacity factor.
In the commercial and institutional sector, the improvement of buildings, heating systems and lighting and efficient use of air conditioners are mentioned. In the area of street lighting, the substitution of existing lamps by HPS lamps savings of 10-40%, by introduction of controls (turning off the light when it is not used) 25-50 % are expected. The return of investment in street lighting is estimated with 1 year or less, whereas in the other sectors it is estimated at between 2 and 5 years. [ERC]
Reforms and National Development Strategy have focused on the following objectives:
- Speed up privatization, restructure the economy and the energy sector and open up to foreign investment
- Accelerate growth approx. 5.7 % p.a.
- Shift from heavy to light industry
- Promote energy conservation and efficiency
- Shift from electricity to gas heating: The target for 2000 has entailed adoption of natural gas as a medium of heating for 120.000 households
- Energy subsidies to be eliminated and prices to reflect costs.
Establish a Regulatory Agency and Framework concerning the pricing system of purchases from independent power producers or the prices the independent power producers would pay for using the transmission network of MEPSO– the public Electricity Transportation Company.
Legislative Background
The new Energy Law was published in the Official Gazette entered into force in May 2006. It replaces the Law on Energy of 1997 which had been amended several times, the last time in 2005.
The former law in its version of the year 2000 is available in English on the website seenergy. The other versions are available only in Macedonian at the regulator's website (ERC).
The objectives of the Energy Law of 2006 are to ensure
- reliable, safe and good quality supply of energy and energy fuels to the consumers;
- creation of efficient, competitive and financially sustainable energy sector;
- efficient development of energy sector;
- stimulation of competition on the market, thus respecting the tenets of non-discrimination, publicity and transparency;
- energy efficiency enhancement and encouragement of the utilization of renewable resources;
- independent competitive work of the Energy Regulatory Commission and
- Protection of the environment from adverse impacts of energy sector activities.
The "Energy activities of public interest" listed in Article 3 of Paragraph 1, now also include the generation of electricity from renewable energy sources.
Article 10 defines that the Government of the Republic of Macedonia upon proposal of the Ministry shall adopt an Energy Strategy for a period of at least 20 years, which should, among other questions, address long-term objectives for energy activities, and ensure security of supply, set priorities for development, and also define incentives for investment in energy facilities utilizing renewable energy sources, as well as incentives regarding the enhancement of energy efficiency. Following the Strategy, the Government is to adopt a programme for the realization of the Energy Strategy for a period of 5 years.
Paragraph II defines the Energy Policy, which shall be laid down in the Energy Development Strategy and the respective Implementation Strategy (Articles 9 to 12). Article 13 envisages a Local Energy Development Programme for the City of Skopje and the Municipalities which is to comply with the Energy Development Strategy. Article 15 sets out that the City of Skopje and the other Municipalities of the country are competent for the distribution of natural gas, the supply of tariff consumers with natural gas, the production and distribution of heat and geothermal energy.
Paragraph III defines the competencies of the Energy Regulatory Commission and the conditions for tariff setting.
Further, the law set out the provisions for licensing, the construction of new energy facilities, for the electricity, gas and oil and thermal energy markets.
Chapter IX deals with Energy Efficiency and Renewable Energy Sources. A Strategy for the Improvement of energy efficiency and a strategy for the utilization for RES are to be developed. The Law does not set concrete targets. In the field of energy efficiency, it envisages, among other issues, standards and labeling of household appliances. In the area of RES, transitional support measures for utilization of RES - including preferential tariffs for electricity producers - are mentioned as required contents of the RES strategy. [ERC, Energy Law]
The Law on Environment (June 2005)
Law on Ambient Air Quality (September 2004)
Law on Nature Protection (September 2004)
Law on Waste Management (September 2004)
Law on Water (Proposal) (January 2005)
Low on Water Use (OG No 4/98 )
Low on Self-Government (OG 5/2002)
Low on the City of Skopje (OG 55/2004)
Law on Trade Companies - 1996
Law on Public Enterprises - 1996
Law on Concessions – 2002
Important Contracts between Austria and Macedonia concerning Energy Issues
In 2006, the Austrian company EVN becomes owner of the low voltage electrical distribution gridline in Macedonia.
Energy Related Funds and Programmes
The Public Investment Program (PIP) in the Republic of Macedonia
According to the PIP, government investments in the energy industry of 96.29 Mio Euros are planned in the period 2003-2005. In the energy sector, activities were directed to realize the construction of “Kozjak” hydropower plant and for rehabilitating the existing hydropower plants. Simultaneously, activities were intensified for constructing interconnections with the energy systems of the neighboring countries as a step towards establishing the stability of the energy system of the Republic of Macedonia. This applies also to the project for construction of electricity transmission line from Stip to Cervena Mogila (Republic of Bulgaria). [ Ministry of Finance ]
Future investments are expected in the field of hydro power plants – the realization of Cebren and Galiste, as well as a group of 20 small-scale hydropower plants.
Fund for Environment of Macedonia
The Fund for Environment, according to the Law on Environment and Nature Protection and Improvement, was founded by the end of 1997 to mobilize available financial resources in the Country and potential financial resources from abroad and to canalize in taking over preventive and sanction measures for protection of the environment. With this, the Fund actively participates in creating provisions for accomplishing the fundamental constitutional right, i.e. the right for health and clean environment.
The distribution of funds is accomplished according the Program complied with the National Environmental Action Plan (NEAP) for environment protection and corresponding LEAP - Action Plans of the local government units. The new Law on the Fund will specify in more detail the criteria for allocation of the Fund's resources to environmental areas, which will certainly contribute to a better organized and more cost-effective action towards protection of all segments of the environment.An installation of software is planned, with which a priority list will be prepared from projects about environment, delivered from the local government Units. The Fund is founded and developed with the help of the USAID. In the Stability Pact it was nominated as a leading Fund in realization of the project for development of a Fund network of country members of the Stability Pact. Within its activities, the Fund paid attention on implementing the Strategy of Cleaner Production.
