RENEWABLE ENERGY SOURCES AND SUSTAINABLE

DEVELOPMENT IN TRANSITION COUNTRIES

Fedajev Aleksandra, Nikoli Radmilo, Svkota Igor
University of Belgrade, Technical Faculty in Bor
Abstract:
Current trends on global energy market point out the necessity of energy security and
sustainable development. Transition economies are especially vulnerable due to unfavourable
situation on energy market, since they already face numerous macroeconomic imbalances.
The root of these imbalances is often related to sector of energy. In order to solve this
problem, these economies are turning to energy from renewable sources, thus increasing the
stability of domestic energy market. This paper shows analysis of trends in this area in
transition economies, during entire transition period.
Key words: renewable energy sources, transition economies, sustainable development,
regulations.
1. Introduction
Renewable energy sources may have a key role in achieving sustainable development,
especially in transition countries. Economies in these countries are usually struggling with
high energy consumption and high dependence on imported energy, which is a significant
limitation for economic development of these countries. Energy gained from renewable
sources provides following benefits:
1. Lower dependence on imported energy, which enables improvement in balance of
payments and price stability (due to imported inflation);
2. Diversification of energy suppliers and increased competitiveness in this sector, which
provides disestablishment of monopoly and lower energy prices;
3. Improved energy availability to rural areas, thus providing decrease of poverty and increase
of standard;
4. Lower negative influence of energy production to the environment.
Despite of awareness on significance and advantages of energy from renewable sources, most
of transition economies were unable to achieve respectful advance in this sector. There are
several reasons for this situation, such as slow development of technology (due to lack of
investments needed for research, development and construction of capacities for production of
energy from renewable sources), inconsistent and incoherent strategy of sustainable
development and its inefficient application. Some authors highlight the importance of
defining of transition sustainability policy [1], which provides sustainable development
through sustainable consumption, production and distribution of energy. Such policy enables
uniting of previously opposed policies, such as energy usage, efficiency of utilization of
resources, waste management, transport systems, technological innovations, social
entrepreneurship and regulations in environment protection. Defining of such policy requires
multidisciplinary approach, in order to overcome problems and limitations in its
implementation and enable its wide social acceptance. We often have a situation where certain
institutions included in policy implementation, from different levels of authority, have
opposed interests. It is very difficult to create a policy that enables wide social consensus on
necessity of such policy and providing public interest [2]. Beside certain institutions, there are
other subjects in the process, such as foreign investors, energy producers and consumers,

NGOs, professional associations etc, whose interests and roles in policy creation should also
be taken in consideration.
Having that in mind, it is necessary to establish close cooperation and continuous information
flow with stakeholders during creation and implementation of sustainability policy, in order to
find optimal solutions. Transition from consumer society to sustainable society requires
complete change of behavior, premises and values. Aside from interests of producers and
consumers, there are other participants in the process whose perceptions and roles should also
be taken in consideration. Through interactive communication with all of them, policy
creators should be able to identify interest groups that are expected to resist, but also ones that
should endorse the changes. After identification of these groups, policy creators should adjust
measures and instruments of policy in early stages of its creation according to those
acknowledgements.
2. Energy production and consumption in transition countries
Most of ex command economies found it difficult to refuse inheritance of planned economy.
High energy consumption is one of the typical examples. Figure 1 shows energy consumption
per capita of soma countries during transition period.
Figure 1 Energy consumption per capita in transition countries in a period between 1990
and 2013
0.01
0.01
0.01

Bulgaria

Estonia

Croatia

Latvia

Lithuania

Hungary

P oland

Romania

Slovenia

Slovakia

Macedonia

Albania

Serbia

0
0
0
0
0

Source: Eurostat

Significant decrease of consumption is recorded in Estonia and Lithuania, two economies that
were heavily influenced by Russia in the past, especially in energy supply. Those countries
had the highest energy consumption at the beginning of observed period. Decrease of
consumption was much milder in other countries (except Romania, with mild increase in this
period). After starting years of transition period, Slovenia increased the consumption, while
other countries had a relatively flat line. Albania had lowest consumption through entire
observed period. Till 2000, energy consumption in Serbia varied significantly, but after 2000
it was relatively stable.
Variations are much more visible in energy production, as we can see in Figure 2.

Figure 2 Primary energy production per capita flow in a period between 1990 and 2013
0.01
0
0

Bulgaria

Estonia

Croatia

Latvia

Lithuania

Hungary

Poland

Romania

Slovenia

Slovakia

Macedonia

Albania

Serbia

0
0
0
0
0
0
0
0

Source: Eurostat

After few ups and downs, after 2000 Estonia records strong increase of primary energy
production, mostly due to actions focused to increase of production from renewable sources.
Opposed to Estonia, Poland records constant decrease of primary energy production during
entire observed period. Lithuanian production varies, while there are no significant variations
recorded in other transition countries.
In order to take an insight of economys ability to produce enough energy to match the
demands of industry and population, we need to define relation between total energy
consumption and primary energy production. Figure 3 shows the share of primary production
in total consumption.
Figure 3 Share of primary energy production in gross energy consumption in a period
between 1990 and 2013
120
100
Bulgaria

Estonia

Croatia

Latvia

Lithuania

Hungary

Poland

Romania

Slovenia

Slovakia

Macedonia

Albania

Serbia

80
60
40
20
0

Source: Eurostat

It is obvious from Figure 3 that differences between observed countries have been reduced
during the observed period. Also, share of primary energy production records decrease in
most of observed countries.
4. Production and consumption of energy from renewable sources in transition countries
Utilization of renewable energy sources in transition countries is unequal and insufficient [3].
Reasons are numerous, and most important are lack of investments needed for infrastructure

and equipment, complicated regulations and lack of political will and understanding of
authorities and society on importance of reorientation to renewable energy sources [4]. That is
why, regardless on respectable development potential, share of energy production from
renewable sources in total primary production is still low in most of transition countries, as it
is shown in Figure 4.
Figure 4 Share of energy production from renewable sources in primary energy production
in transition countries in a period between 1990 and 2013
120
Bulgaria
100

Estonia
Croatia

80

Latvia
Lithuania

60
40
20
0

Hungary
P oland
Romania
Slovenia
Slovakia
Macedonia
Albania
Serbia

Source: Eurostat

Latvia recorded very high share of energy production from renewable resource in total
primary energy production through entire observed period, and after 1998 it almost reached
100%. Albania also recorded high share of production from renewable sources, with a slight
decrease after 2005. From 2009, Lithuania records serious increase of renewable energy,
reaching 90% of share after 2010. Poland is again at the bottom of the list, without being able
to exceed 12% of share through entire observed period.
In order to take an insight of relative significance of specific renewable resources in gross
primary energy production, we can observe shares of most important renewable energy
sources in gross energy production from renewable sources in Figure 5.
Figure 5 Structure of primary energy production from renewable sources in transition
countries in 2013
100%
90%
80%
70%
60%

Biogas

50%

Solid biofuels

40%

Solar power

30%

Wind power

20%

Hydro power

10%
0%

S
ource: Eurostat

Solid biofuels are the dominant renewable energy source in most of transition countries
(especially in Estonia, Lithuania, Hungary and Poland). On the other hand, 70% of renewable
energy in Albania is hydro energy, while in Croatia, Macedonia and Serbia we have nearly
equal share of solid biofuels and hydro energy. Generally, lowest shares in the structure of
energy produced from renewable sources belong to solar energy, biogas and wind energy.
If we analyze the share of energy consumption from renewable sources in gross energy
consumption, we can conclude that this share is generally still low. Figure 6 shows these
shares by countries.
Figure 6 Share of consumption of energy from renewable sources in gross energy
consumption in transition countries in a period between 1990 and 2013
70
60
50

Bulgaria

Estonia

Croatia

Latvia

Lithuania

Hungary

P oland

Romania

Slovenia

Slovakia

Macedonia

Albania

Serbia

40
30
20
10
0

Source: Eurostat

Before 2000, Albania was the leading country in the share of renewable energy consumption,
and after 2000 Latvia and Albania alternately held leading position. At the end of observed
period, it was Latvia that prevailed on top position. On the contrary, countries with lowest
shares of renewable energy consumption were Bulgaria, Slovakia, Hungary and Poland.
4. Perspectives for development of energy production from renewable sources
Tendencies at global energy market are forcing the economies to provide energy security.
Energy security is the ability of a nation to deliver the energy resources needed to ensure its
welfare and implies secure supply and stable prices [2]. With understanding of energy security
and reduced dependence on imported energy importance, European Union intensively
implements measures aiming to diversify energy supply options, but also to control the
consumption. One of the main measures related to diversification of supply options is increase
of energy production from renewable sources and its share in gross energy production. In that
sense, each of EU countries, but also potential members, defined the targets for energy
production from renewable sources share in gross energy production till 2020, according to
Directive 2009/28/EC (Table 1).

Table 1 National targets of energy production from renewable resources share in gross final
energy consumption by 2020 [3]
Transition economy
Target by 2020
Bulgaria
16%
Estonia
25%
Latvia
42%
Lithuania
23%
Hungary
13%
Poland
15%
Romania
24%
Slovenia
25%
Slovakia
14%
Albania
38%
Croatia
20%
Macedonia
28%
Serbia
27%
Source: Renewables 2014 Global Status Report

Latvia is the country with highest targeted value, which is understandable since it records
constant growth of share of energy consumption from the renewables, and its share is
currently highest among transition countries. On the opposite, Hungary has the lowest target,
which is also understandable since its share in previous period never exceeded 10%.
In order to accomplish the targets and encourage energy production from renewable sources,
transition countries carry out numerous measures, as it is shown in Table 2.

loans or grantsPublic investment,

Albania
*
*
Bulgaria
Croatia
Estonia
Hungary
Lithuania
R
Latvia
*
Poland
R
Romania
Serbia
Macedonia
Slovenia
Slovakia
R
Source: Renewables 2014 Global Status Report; O - existing national; R - revised; * - new.

paymentEnergy production

energy, CO2,VAT, orReduction in sales,

rabateCapital subsidy or

mandateBiofuels obligation/

mandateHeat obligation/

Tendering

Tradable REC

Net metering

obligation/RPSElectric utility quota

production taxInvestment or

FISCAL INCENTIVES AND

PUBLIC FINANCING

REGULATORY POLICIES
tariff/premiumFeed-in

Country

Renewable energy targets

Table 2 Renewable energy support policies

According to this table, Albania implements most of renewable energy support measures (11
out of 13). This country implements almost each of regulatory and fiscal measures in order to
increase renewable energy share. Only 2 measures are left for implementation. Macedonia is
on the other end of line, with only 2 measures in implementation, while Croatia and Serbia are
not far away, with only 3 of them. These countries should seriously reconsider their regulatory
in this sector, taking an example from countries like Albania and Slovenia.

Conclusion
Majority of transition economies face numerous macroeconomic and structural disturbances,
inherited from period of planned economy. One of the key imbalances comes from energetic
sector. Namely, system of production in command economies was based on cheap energy and
enormous energy consumption. Consequently, after disunion of USSR and SEV, new
countries and their economies faced numerous macroeconomic problems at the beginning of
transition process, such as slow economic growth, imported inflation, payment imbalance etc.
Efficient energy production from renewable sources enables acceleration of economic
development for transition countries, but also reduces negative impacts to the environment
caused by energy production from traditional sources. Achieving these goals requires active
participation of governments in support of renewable energy sector, which leads to creation of
favorable ambience for investments, followed by technological development in this sector and
stabilization of energy market.
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at

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