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Bosnia and Herzegovina (2012)

Source: REEEP Policy Database (contributed by SERN for REEEP)

This policy & regulatory overview is not updated anymore since 2015. We decided to keep it online due to high demand but would like to make you aware of the fact that it might be outdated.

Energy sources

Total installed electricity capacity: 3,397 MW
- Thermal: 44%
- Hydroelectricity: 56%

Share of Total Primary Energy Supply*: 5,953 ktoe (IEA 2009)
Coal and Peat: 62.6%
Oil: 22.9%
Hydroelectricity: 8.6%
Natural Gas: 3.0%
Biofuel and Waste: 2.9%

*Shares of TPES excludes electricity trade

The electricity production by fuel source type in 2009 was as follows:
- Coal and Lignite: 56.5%
- Hydroelectric: 39,8%
- Oil and products: 1.35%

In 2009, total annual production of electricity was 14.03 TWh, with 56.5% generated from coal and 39% from hydro.  This level of production, for the time being, covers consumption needs in the country while some electricity is also exported (6,340 GWh in 2009).

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Reliance

Bosnia and Herzegovina is a net exporter of electricity but all gas and petroleum products are imported.

In 2009, 41.8% of the Total Primary Energy Supply (TPES) was imported. BiH imports all of its oil supplies, which total around 22,000 barrels per day, from Russia. Most of Bosnian gas is imported from Russia via the Bratsvo pipeline through Hungary and Serbia.

The imports/export balance by energy source in 2008 (source: IEA) was as follows (all units ktoe):
Crude Oil: 180.0 / 0.0
Oil Products: 1163.0 / 0.0
Natural Gas: 353.0 / 0.0
Coal and Peat: 522.0 / 441.0
Electricity: 288.0 / 430.0

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National electrification rate (2002):  98.5%

The World Bank’s Poverty Reduction Strategy Report indicates that district heating is available only in 40% of urban areas and gas is available in 20% of urban areas.  In non-urban and mixed areas it is virtually unavailable and poverty rates here vary from 20% to 24%.

Electricity is transmitted throughout the country via a network of 400 kV (864.93 km), 220 kV (1525.5 km) and 110 kV (3888.82) transmission and distribution lines, with 36 total interconnections.

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Capacity concerns

BiH remains a complex state with an uncertain vision of the future, a complexity and uncertainty that is mirrored in the electricity sector.  The political economy structure that has evolved from the Dayton process (peace agreement signed in 1995) has only helped to slow sector reforms and is likely to continue to provide an impediment to progress going forward.  An electricity policy statement has been in place since 2000, but navigating its proposals through complex structures and conflicting interests has been a persistent challenge.

During the war, more than 60% of the electricity grid was damaged or otherwise prevented from functioning. In 2003, it was estimated that 91% of the grid had been restored to pre-1991 levels. Transmission and distribution losses amounted to 2.02 TWh in 2009, equivalent to 14.4% of total production. A number of countries in South East Europe are facing an energy deficit, amounting to roughly 22 TWh as of 2010, which may increase demand on the export capacity of Bosnia and Herzegovina.

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Renewable energy

There are two major renewable energy sources in Bosnia and Herzegovina: hydropower for electricity production and biomass for heat production.

According to the CETEOR study, the estimated potential for the renewables is as follows: 

Hydropower
The theoretical potential for hydro potential in the country is estimated at 8,000 MW. With an installed capacity of 2052 MW (53% of electricity generation), hydropower is already highly significant in Bosnia and Herzegovina, although its potential is far from being fully exploited yet (37% of economic potential). The majority of the installations are more than 30 yrs old. Average precipitation in the country is 1250 mm/m2, the third highest in the region after Montenegro and Slovenia, although these volumes of water are not evenly distributed, neither spatially or temporally. Small hydro is regarded as the most promising source of new renewable energy for the country. Currently, there are ten small, mini or micro hydro plants in operation, with a total capacity of 31 MW. Another two plants are under construction (1.8 MW) and 20 more are planned, totalling a further 28 MW.

Wind energy
Total wind potential in the country is estimated at 2,000 MW, of which approximately 900 MW is exploitable. There are promising wind values shown by measurements taken before the war for the region of Trebinje through Mostar to Bugojno, and more up-to-date measurements from meteorological stations and airports which reveal large areas of the country with wind velocities of over 10 m/s at a height of 10 m on 150 days in the year.

Biomass energy
The potential is present for biomass energy to provide 14% of the total energy supply, versus the actual 6.5% of the total energy consumption.  An estimated 34.5 PJ of energy is available as biomass resource in the country, predominantly firewood, grain residues, and residues from log processing. Potential co-generation amounts to 410 MW of heat and approximately 200 MW of electricity per annum, with an additional 600 MW of estimated thermal capacity being available from wood wastes. The potential of biogas from the agricultural sector as an energy source has also been recognised, although no in-depth study has currently been conducted. Near Sarajevo, a landfill gas plant with a 350 kW generator has been built with Austrian support; its capacity is due to be doubled in the near future. The electricity is fed into the urban grid. However, remuneration for electricity generated from biomass sources is low in Bosnia, currently standing at 3.81 € cents/kWh.

Geothermal power
Geothermal potential has been estimated at 33 MWt. Thermal plants of 50 – 100 MW have also been proposed as a potential power source for district heating programs.

Solar energy
Bosnia and Herzegovina, in common with other nations of the former Yugoslavia, has a good solar regime. Theoretical potential has been estimated at 74.65 PWh per annum, with solar irradiation figures of 1 240 kWh/m²/yr in the north of the country and up to 1 600 kWh/m²/yr in the south. Despite this, current utilisation of solar power is low in the country.

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Energy efficiency

The electricity system losses are approximately 20%, with the electric companies EPHZHB and EPRS averaging about 27%. In the EU the comparable loss is around 12%.  The district heating systems also generate high losses. The introduction of CHP installations has been proposed as a solution for more efficient energy provisions for groups of buildings or installations.

Waste of energy at the consumer level is another problem.  Billing by square meter, without individual metering does not give any incentive to consumers to save energy or reduce losses. Building regulations in the country have also been a cause for concern in terms of energy efficiency, with average energy losses in the winter months of up to 30%.

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Ownership

Electricity
The process of electricity reform in BiH was initiated by signing the Statements of the entity governments on the electricity policy in 2000, and was continued by the adoption of the Act on Transmission of Electric Power, Regulator and System Operator of Bosnia and Herzegovina and the Entity laws on electricity in 2002.  With the adoption in 2004 of the Law Establishing the Company for Transmission of Electric Power in Bosnia and Herzegovina, and the Law Establishing an Independent Operator for the Transmission System, BiH commenced the reform of the electricity sector in practice.

The power sector consists of three integrated monopoly companies, “Electric Company of Bosnia and Herzegovina” (EPFBiH, http://www.elektroprivreda.ba/), “Electric Company of the Republic of Srpska” (EPRS) and “Electric Company of Hrvatske Zajednice Herceg Bosna” (EPHZHB, http://www.ephzhb.ba/). The three companies are interconnected but do not compete, instead they serve the political interests in their respective ethnic territories. 

A single company for transmission of electricity in BiH (Elektroprenos Bosne i Hercegovine, Banja Luka, http://www.elprenosbih.ba/) started its operations in February 2006.

Gas Market
The gas market is small, with integrated supplies from integrated companies owned by state-owned companies. A draft gas law has been under discussion for some years, with difficulties in achieving co-ordination and agreement between the State and the Entities. The Republika Srpska has issued its own gas law, while BiH has issued a gas market decree. 3 transmission companies for natural gas exist: BH Gas (http://www.bh-gas.ba/eng/index.htm) is the single wholesale supplier, operating 68% of transmission pipelines in BH. Sarajevogas Sarajevo is the largest natural gas distributor, serving 94% of distribution customers in the country.

Liquid Fuels
The single oil refinery in BiH is currently owned by Russian company Zarubezhneft (http://www.nestro.ru/www/nestroweb.nsf/main_eng) after the buyout of refining rights due to large previous debts in 2008.

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Competition

Since January 2008 the market has been open to competition for professional customers, which amount to approximately 60% of the market. It is planned that the market will be open to all customers by 2015.

Today, the electricity market in BiH has not yet started to operate effectively, despite a high level of legal framework definition.  The new commercial power companies are still forming in the country, there are still no market levels of electricity prices, or ability to change electricity supplier.

Competition in the power sector is limited, as the three vertically-integrated companies operate a virtual monopoly in their respective spheres. Liquid fuel market competition is equally limited, with BH Gas being the single wholesale gas supplier.

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Energy framework

Bosnia and Herzegovina ratified the Energy Charter Treaty and the Protocol on Energy Efficiency and Related Environmental Aspects (PEEREA) in 2001 , which makes a commitment to formulate or implement policies for improving energy efficiency and reducing the negative environmental impact of the energy cycle. An in-depth review of energy efficiency policies of Bosnia and Herzegovina was carried out in 2011, following a regular review report submitted by the Bosnia and Herzegovina authorities in 2008.

The Poverty Reduction Strategy Papers define the priorities with respect to energy efficiency.  These include:

  1. The development and implementation of a clear, well designed energy policy and appropriate action plans to encourage energy saving in households and industry;
  2. To reduce energy consumption; use existing and available technologies such as heat insulation, air recycling, more efficient electric appliances etc.
  3. As a priority, encourage greater use of public transportation and rationalize use of cars in cities and increase awareness on savings, through increased energy efficiency.


“Decision about a Methodology for the Determination of Purchase Prices for Electricity from Renewable Sources with Installed Power up to 5 MW (“OG of FBiH” 32/2002, “OG of RS” 71/2003)” obliges the federal power utility companies of BiH to purchase electricity from renewable sources. The tariff prices are determined by means of applying a corrective coefficient to the current electricity tariff item on 10 (20) kV lines, depending on the renewable resource the electricity was generated from. Values are as follows:

  • Small hydropower plants 0.80 (3.96 € cents/kWh)
  • Power plants on biogas from the waste area and biomass 0.77 (3.81 € cents/kWh)
  • Power plants on wind and geothermal sources 1.00 (4.95 € cents/kWh)
  • Power plants on solar energy 1.10 (5.44 € cents/kWh)


On September 2009 the Government of RS issued a draft of the Energy Development Strategy of the Republic of Srpska, with general objectives including the increased use of domestic energy sources to improve energy security, and the use of modern technologies for energy production and consumption, as well as increasing energy efficiency at all levels of the energy sector, and involving the public in making decisions about the construction of energy facilities.

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Energy debates

The country has entered into international agreements in the energy field.  The most important is the Agreement on Establishment of the Energy Community, which has been ratified and entered into force on the 1st of July, 2006.

The basic goals of the EnC are the creation of a stable and single regulatory framework and market space, which enables a reliable supply of energy products and also attracts investments into the sector, especially electricity and natural gas.  Competition is seen as a critical item in terms of supply.  Environmental protection energy efficiency and conservation are seen as an integral part of the process, including the development of renewable resources.

Legislation passed in the RS on the 23rd of March 2011 introduced a Rulebook detailing the transparent and efficient procedures for the granting of certificates for the generation of electricity from renewable energy sources in the country, as well as a simplification of procedures for the certification of electricity origin, with similar legislation currently being introduced by the government of BiH.

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Energy studies

Two reports address energy efficiency and environmental protection as key policy objectives.  The National Environmental Action Plan (NEAP) and the Mid-term Development Strategy (PRSP) emphasize that environmental protection and energy savings are important in the fight against poverty.  Both the NEAP and PRSP provide a good foundation for the development of an energy strategy for the country.  However, it is imperative for these high-level policy documents to be further developed into a concrete strategy for both entities that could guide society towards a sustainable, energy efficient and environmentally acceptable energy system.

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Role of government

Government of the Federation of Bosnia and Herzegovina

- The Federal Ministry of Energy, Mining and Industry implements the policy and enforces the laws as determined by the legislative body, executes the administrative supervision of implementation of the laws and other regulations, proposes and gives recommendations in the field of legislation, answers to questions of the legislative authorities, and performs tasks of administrative and professional nature.

- Federal Ministry of Physical Planning and Environment
Oversees the: administration, expertise, and other works falling under the competence of the Federation of Bosnia and Herzegovina and relating to physical planning and development enforcing the policy of usage of land at the Federal level, preparation of geological backgrounds for physical planning and environmental protection, preparation of environmental strategies and policies, standards for air, water, and soil quality, and other activities set out by the governing laws.

- Republic of Srpska Government

Five units within the Ministry of Economy, Energy and Development of RS have energy related responsibilities:  section for energy and energy related power utilities, section for energy and fuels, section for development of energy and mining, thermo energetic inspection, and electric power inspection.

- Ministry of Urbanism, Civil Engineering and Ecology of RS. Responsibilities include the protection of the environment.

Bosnia and Herzegovina
A Council of Ministers was established as a Unit for Economic Policy Planning and Implementation of the BiH medium term Development Strategy.

The State Electricity Regulatory Commission regulates the electricity market.

- The Independent System Operator BiH manages the market, develops and applies the rules for using the transmission system, develops and implements the market rules related to the system and ancillary services on the transmission system, acts according to the law in order to establish an Independent System Operator for the transmission system.

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Government agencies

The Centre for Energy, established in 2005.
Main activities: analysis of the Bosnian energetic situation, input for an energy development strategy, basis and methodology for an Bosnian energy balance, involvement in creating an energy regulation system, energy efficiency and energy technology improvements.

The Centre for Environmental Technological Development, (CETEOR) is a private organization company established in Sarajevo 1992 whose activities have a focus on sustainable development.

Regional Environmental Centre - REC Country Office of Bosnia and Herzegovina and REC Field Office Banja Luka.
The REC offices were established 1997 in Sarajevo, being a part of an international organization. The country office provides a full range of services to NGOs in terms of financial support, capacity building and information in the environmental field.

The Foreign Investment Promotion of Bosnia and Herzegovina (FIPA) is a government agency providing free information and contact services for foreign investors evaluating investment opportunities in BiH.

Energoinvest, established in 1951, is a company active in the fields of consulting, planning, construction and research in the energy and power sectors.

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Energy procedure

The countries of South East Europe, including Bosnia and Herzegovina, and the European Commission are cooperating to develop a regional energy market, the Energy Community of South East Europe (ECSEE) and integrate it into the internal energy market of the European Union. 

With a funding of $36 million, the World Bank promotes the Energy Community of South East Europe (APL 3) Program Project. This program facilitates Bosnia and Herzegovina's participation in the ECSEE through investments to improve dam safety; reduce adverse environmental impacts at thermal power stations; replace aging existing facilities and equipment at hydropower and thermal power stations; rehabilitate distribution systems and introduce distribution supervisory control and data acquisition systems, establish a market operation system, improve the financial management information systems of the Elektroprivredas; and through technical assistance to facilitate project implementation, and determine the best way to reduce sulfur dioxide and nitrogen oxide emissions at power plants.

On March 2009 the Federal Ministry of Energy, Mining and Industry (FMEMI) issued the Strategic Plan and Program of the Energy Sector Development of Federation of BiH (SPP). The SPP document is made on the basis of the item 6 of the Conclusions of the Parliament of FBiH, House of Representatives from 25th July 2007 and People House from 8th November 2007. The aim of this document is, in the absence of the Strategy of development of energy sector BiH, to intensify activities on reforming the energy sector in the FBiH, secure conceptual propositions for the modernisation of the already existing and the construction of new, modern energy facilities and infrastructure, with a high degree of the energy efficiency and sustainable development.

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Energy regulator

The State Electricity Regulatory Commission (SERC) is an independent and non-profit institution of Bosnia and Herzegovina (BiH), which acts in accordance with the principles of objectivity, transparency and non-discrimination. The SERC was established by the Parliament of BiH by adopting the Act on Transmission, Regulator and Electricity System Operator, and appointing the Commissioners (July 1, 2003).

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Degree of independence

Commissioners take responsibility on an equal basis for the position of Chairman each year.  As of August 1, 2004, the SERC has been operating at full capacity, with 17 staff members. The SERC is financed by regulatory fees paid by regulated companies.

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Regulatory framework

A framework of regulation for sustainable energy exists only indirectly. Energy efficiency and sustainable energy are covered in other legislation. Regulators, for example, have the responsibility of considering both environmental and energy efficiency issues in their tariff making and investment approval regulations and decisions. Regulations pertaining specifically to sustainable energy, it’s uptake and the granting and terms of concessions for RES power generation are currently being prepared. Since 2008, electricity generation facilities using renewable energy sources are only made to pay 50% of the fixed connection fee to the national grid, as an incentive mechanism. Various draft decisions at the entity level have also been made, including eligibility rules, feed-in tariff structures, and licensing rules.

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Regulatory roles

The State Energy Regulatory Commission SERC has jurisdiction over the transmission of electricity, transmission system operation and international trade in electricity, whereas generation, distribution and trading are to be the responsibility of the regulatory Commissions of the individual areas separately (ERCFBiH and ERCRS).

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Energy regulation role

A department in the Ministry for Energy, Mining and Industry is responsible for defining an energy strategy for BiH. However, as of yet no role has been taken by this department in the field of regulation.

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Regulatory barriers

The first barrier to progress in the energy efficiency and sustainability area is the lack of an overall energy policy for the state and at the entity levels. However, even when this is in place other barriers will emerge, the most significant of which is likely to be adequate funding for pursuing energy efficiency polices.  Given this, the main drivers for energy efficiency gains are expected to be EU directives and standards.  The lack of a legal framework is also a clear barrier and must be addressed urgently, including the inconsistency of rulings between agencies, the lack of a single control and monitoring authority for RES concessions, and the lack of an appointed body for the issuance of guarantee-of-origin certificates for renewable electricity.. The lack of a unified approach to renewable energy development is also a hindrance, with multiple authorities currently operating in the field.
 

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References

IEA Country Statistics (2010). Available at: http://www.iea.org/countries/non-membercountries/bosniaandherzegovina/ [Accessed 15th September 2013]

ENERCEE Website. Bosnia and Herzegovina. Available at: http://www.enercee.net/countries/country-selection/bosnia-herzegovina.html [Accessed 15th September 2013]

Scholl, B. (2007) Electricity Reform in Bosnia and Herzegovina. Utilities policy. Volume 17. Issue 1. March 2009, pp 49-64. Available at: http://www.brianscholl.org/research/electricity.pdf [Accessed 15th September 2013]

Energy Policy Framework conditions for Electricity Markets and Renewable Energies, 21 Country analysis, GTZ, June 2004. Available at: http://www.giz.de/Themen/en/dokumente/en-windenergy-bosnia-herzegovina-study-2004.pdf [Accessed 15th September 2013]

Energy Community Regulatory Board. National Report Bosnia and Herzegovina. September 2008. Available at: http://www.energy-community.org/pls/portal/docs/244178.PDF [Accessed 15th September 2013]

Energy Sector Study BAH. Final Report. Module 6 – Power Sector Restructuring and Regulatory Framework. ESSBIH Project funded by World Bank, 2008. Available at: http://www.eihp.hr/bh-study/files/final_e/m6_fr.pdf [Accessed 15th September 2013]

Energy Charter Secretariat 2012. In Depth Review of energy efficiency policies and programmes: Bosnia and Herzegovina. http://www.encharter.org/fileadmin/user_upload/Publications/BiH_EE_2012_ENG.pdf [Accessed 15th September 2013]

EC Europa. IPA National Programme 2011. Bosnia and Herzegovina. Support to energy market liberalization. Available at: http://ec.europa.eu/enlargement/pdf/bosnia_and_herzegovina/ipa/2011/11_ipa_2011_energy_final.pdf [Accessed 15th September 2013]

The In-House Lawyer. New Energy Legislation in Bosnia and Herzegovina. Wednesday 1st June 2011. Available at: http://www.inhouselawyer.co.uk/index.php/eastern-home/9428-new-energy-legislation-in-bosnia-and-herzegovina [Accessed 15th September 2013]

Government of Federation of Bosnia and Herzegovina. National Environmental Action Plan. Available at: http://waterwiki.net/images/7/70/NEAPBiH.pdf [Accessed 15th September 2013]

EC Europa. Bosnia and Herzegovina Mid Term Development Strategy - 
Poverty Reduction Strategy Paper (PRSP). Available at: http://ec.europa.eu/enlargement/archives/seerecon/bosnia/documents/prsp/index.html [Accessed 15th September 2013]

Government of Federation of Bosnia and Herzegovina, Federal Ministry of Energy, Mining and Industry. Available at: http://www.fbihvlada.gov.ba/english/ministarstva/energija_rudarstvo_industrija.php [Accessed 15th September 2013]

Government of Federation of Bosnia and Herzegovina, Federal Ministry of Physical Planning. http://www.fmpu.gov.ba/content/view/47/26/lang,en/ [Accessed 15th September 2013]

World Bank. Restructuring Paper on a proposed project restructuring of the energy community of South East Europe APL 3 Bosnia and Herzegovina project. 16 June 2006. Available at: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/02/08/000333038_20110208224133/Rendered/INDEX/592020PJPR0v1011110RPAPER0202502011.txt [Accessed 15th September 2013]

P. Gvero (c2003) The Potential of Renewable Energy Sources in Bosnia and Herzegovina. University of Banja Luka. Available at: http://www.joanneum.at/climate/Presentations/Petar%20Gvero_The%20Potential%20of%20Renewable%20Energy%20Sources%20in%20Bosnia%20and%20Herzegovina.pdf [Accessed 15th September 2013]

State Electricity Regulatory Commission website. BiH Laws. Available at: http://www.derk.ba/en/legislation/lawsinbih [Accessed 15th September 2013]

Development Bank of Turkey (2010) Bosnia Herzegovina Energy Sector Report. Available at: http://www.sarajevobusinessforum.com/projects/ENERGY.pdf [Accessed 15th September 2013] Close References