What’s Kicking in Kosovo?
May 2019
Looking at Kosovo provides an overview of a microcosm of the steel market at large, where the conflicting demands of stable power clash with the need for cheap power and clean air. The Balkan country has seen its share of power-related disputes and headlines over the years, despite having one of the lowest demands for power in the region.

Kosovo recently popped back into the news cycle with the announcement that CountourGlobal, the company in charge of building the country’s new coal-fired power plant, has chosen a consortium of General Electric subsidiaries to build and outfit the 500MW project. Kosovo has pinned its hopes on the New Kosovo project, aiming to stabilise its ailing power grid and replace capacity from one of its two existing coal-fired power generators, Kosova A and B.

The country currently gets between 92-95% of its power from coal. On paper, it’s ideally positioned to do so, sitting on top of more than 14 billion tonnes of lignite—the fifth-largest country resource in the world. But, alas, the presence of coal does not automatically make a country good at exploiting it, in much the same way that the presence of food in my fridge does not make me a gourmet chef.

Kosovo has had some moderate success in mining its relatively low-quality coal, but far less success in burning it for power. In addition to its ageing and inefficient power stations, the nation has struggled with its power distribution network. In 2010, a paper published by researchers Dugolli and Kopacek indicated that the power systems of Kosovo were in a “very critical condition”, with a lack of repairs and investment dragging down potential—a sharp contrast from the region’s historical exports of lignite and energy.



Illegal connections on the country’s distribution system, tampering with energy meters, a lack of regular consumer-use measurements, non-payment of electricity used, and general electricity theft plague the country’s grid. On top of these losses, technical and transmission issues can account for significant losses as sections of the grid become overloaded or simply perform inefficiently. And, on top of those losses, the country simply isn’t producing enough energy—with little ability to respond to peaks in demand or provide alternative supply during maintenance and repairs.

The situation hasn’t gotten much better since 2010, with a 2016 study estimating that Kosovo loses as much as 30% of its total produced power due to technical and non-technical issues. More is wasted through a dearth of any energy efficiency measures—an issue which bloats demand, particularly in Kosovo’s capital.

The country has been planning a new coal plant close to its capital city, Pristina, for over a decade. Original plans saw a 2,000MW unit envisioned—something which would have returned the country to its energy exporter status and made it a leading energy force in the Balkans. Investors, however, balked—in large part due to issues beyond the proposed plant. The New Kosovo plant will be just 500MW, which in contrast is hoped to be enough to cover domestic demand. After the World Bank dropped out of financing the project, UK company ContourGlobal took over, signing a 20-year operating concession as it saw an opportunity to profit from a captive market.

Protests have already occurred in the country as high prices and prevailing pollution—from both coal plants and coal mines—stress the population. Kosovo needs reliable power, though. There’s no way around that: a stable power supply is a stable country. As bad as power price protests might be, protests over complete blackouts would be far worse.

It’s not only Kosovo citizens that see the need for better, more reliable power generation. In 2018, as a strange and unexpected side-effect of the country’s inability to generate enough power—and the refusal of neighbouring Serbia to supply power to prevent shortfalls, as per the Continental European Power System—the entire European electricity grid saw a 113GWh shortfall, slowing clocks that relied upon stable electrical supply to keep accurate time. These clocks saw shortfalls of up to six minutes over several months, all across Europe.

Despite the need for stability, it remains to be seen if consumers will be able to stomach the proposed New Kosovo energy price of €80/MWh (US$90/MWh) plus availability and maintenance fees—or the inevitably high levels of pollution that will stem from burning yet more brown coal. Lignite is the dirtiest and least efficient of coals, and New Kosovo will burn a lot of it, contributing to hazardous levels of air pollution in the ironically-named Pristina.

Pristina has already banned cars from its city centre, but the country’s two—soon to be three—power plants are all on the outskirts of the city, and there’s no getting away from them. The US$1.5bn New Kosovo plant might provide some level of grid stability, but Kosovo itself has deep, systematic issues that hold it back from true stability. One more power plant won’t change that.