Subsidies for Energy
Efficiency in Kosovo

SEEK is a pilot program which addresses the inadequate electricity supply in Kosovo. SEEK will focus on reducing electricity consumption in the residential sector through subsidies and other incentives to encourage households to invest in energy efficiency measures. At the conclusion of the SEEK Program over 3000 households will become more energy efficient through retrofits and promoting the use of energy efficient heating devices. Also, SEEK has a specific focus on women and will invest in energy efficiency measures for women owned businesses.

Key Problem, Impact, and Root Cause

Electricity supply is inadequate to meet end-user demands which impacts Kosovo’s economy by supply-demand shortfalls, thereby reducing the economic output and increasing the cost of electricity supply primarily due to increased imports during peak electricity demand in the winter season.

The root cause of the problem identified the excessive electric energy intensity in the Kosovo residential sector. Meanwhile, the demand for electricity in Kosovo has been growing in recent years, averaging at 2.7% increase yearly. Households are the primary consumers of electricity, accounting for 55% of total electricity consumption. Industrial and commercial customers (many of which are public buildings) account for 24% and 20% of consumption, respectively. 25% of micro firms and 4% of large firm’s turnover is invested in alternative energy generation (diesel generators, fuel, and maintenance) in order to circumvent the unreliable supply of electricity. No widespread investments have taken place on the part of households to reduce their energy costs. Still a large number of buildings in Kosovo have no energy saving approach with poorly built thermal envelopes. Low and middle-income families spend an average of 13% of their incomes, and roughly 14% of the poorest households spend over 30% of their incomes on energy.

Additionally, there is low awareness on the benefits and life-cycle cost savings of investing in energy efficiency measures, coupled with lack of access to capital and the ability to pre-pay for such investments, while for those that may wish to invest, finding energy auditors and paying for the audits that will identify appropriate interventions present further obstacles to households in effectively increasing their energy efficiency. Moreover, businesses report that households will usually choose the cheapest option available in construction, over options that might save them money in the long term. In order to avoid severe increases in power cuts, Kosovo will need to either use much less electricity or access new sources of electrical supply, either domestically or through import.

The Solution and Expected Outcomes

As part of MFK’s Reliable Energy Landscape Project (RELP), SEEK will make improvements in residential energy efficiency through upgrades to residence thermal envelope, energy efficient equipment upgrades, behavior change to improve energy efficiency and conservation, and greater utilization of more efficient heat sources.

Through SEEK intervention packages we can expect increased awareness on energy efficiency benefits among households, increased investment in energy efficiency measures, while gained savings will be used for other welfare or economic activities.

 

When scaled up, the cost of electricity supply will decrease due to reduced demand and pressure on power transmission and distribution infrastructure, resulting in more reliable electricity supply, while fewer outages will decrease the expensive electricity imports, resulting in lower electricity tariffs for consumers. Through its Household Efficiency Retrofits (HER) and Apartment Building Efficiency Retrofits (AER) Intervention Packages, SEEK will provide financial incentives to the residential sector to enable investment in energy efficiency measures – especially by low-income or vulnerable households, with an income-differentiated level of incentive or rebate – and capacity-building for potential energy efficiency service providers to develop efficiency projects and particularly to improve energy audit skills.

 

 

SEEK’s primary technical focus of interventions are energy efficiency measures that will reduce the consumption of electricity for heating and promote the use of energy efficient heating devices, as well as incentives aimed at increasing the involvement of women in energy sector business opportunities, and efficiency investments in women owned businesses.