Wind power development in Eastern Europe/Eurasia

This group of countries ranges from new EU members such as the Baltic states (Estonia, Latvia, Lithuania), Bosnia and Herzegovina, Croatia, Serbia, Slovenia, through Romania and Bulgaria and then eastwards into Russia and Ukraine, and finally south-eastwards into Central Asia, across the countries that used to make up the Soviet Union. The IEA has also included Cyprus and Malta in this grouping.

The group covers radically different economies and power systems. Some countries, such as Turkmenistan or Azerbaijan, have massive reserves of oil and gas; others, such as Tajikistan and Albania meet their power needs almost entirely from hydro, while some countries have to import either electricity, fuel or both.

Centre stage is resource-rich Russia, which is the world’s fourth-largest power generator. Many of these countries have power stations or pipelines that are now nearing the end of their life, and which will need replacement regardless of any increase in demand.

All these areas have been assessed to some extent for their renewable energy potential, and much of this vast Eurasian landmass has excellent wind resources. But how, when, and indeed whether this will be tapped is more tricky to answer.

To date, the main wind farm developments have been in those eastern European and Baltic states which became members of the European Union in 20042, such as Romania, Bulgaria and the Baltic states. These new member states had to apply the 2001 EU Renewables Directive, and their accession treaty set national indicative targets for renewable power production for each state.

They are of course now also bound by the EU’s new legislation for 20% of the bloc’s energy consumption to come from renewable sources, which includes a binding target for each country.

Another driver for the introduction of wind turbines development across the Eastern Europe and Eurasia region has been the Joint Implementation mechanism that forms part of the Kyoto Protocol. Under this arrangement, any Annex 1 (industrialized) country can invest in emissions reduction projects in any other Annex 1 country as an alternative to reducing its own emissions. This mechanism was targeted at the socalled ‘transition economies’, but as many of these have now become EU members, the main focus for JI is now on Russia and Ukraine.

As of August 2010, there were 30 wind energy projects in the JI pipeline, totalling an installed capacity of 1,280 MW. The largest one of these, at 300 MW, is located in Ukraine.

Wind power development has already started in some of the countries covered in this section. While Romania, which according to the EU Directive must meet 24% of its energy demand by renewables in 2020, had only 14 MW of wind power installed at the end of 2009, the country’s project pipeline is impressive.

EWEA’s scenarios indicate that in 2020 the country could have up to 3.5 GW installed, and the Romanian wind energy association believes that 3 GW could be reached as early as 2013. In April 2010, Iberdrola Renovables was granted permission to build 1,500 MW of new wind capacity between 2011 and 2017, and German RWE is planning to develop 350 MW.

The situation in Bulgaria is also promising. With a renewable energy target of 16% under the EU Directive, the country introduced favourable policies to promote renewable energy development, and wind power installations have been growing considerably in recent years, with a total of 177 MW operating at the end of 2009.

According to the EBRD, around 1,000 MW worth of wind projects are currently at various planning stages, and the overall potential is estimated at around 2.2-3.4 GW.

The Baltic States have also started to develop wind power, with 142 MW of installed capacity in Estonia, 91 MW in Lithuania and 28 MW in Latvia at the end of 2009. Under the new EU Directive, these countries have binding targets of meeting 25%, 23% and 40% respectively of their energy needs with renewable sources, and they all have significant wind resources, especially along the coastlines, which can go a long way towards achieving their goals.

Russia is, due to its sheer size, key when it comes to determining potential renewable energy growth in this region. The world’s fourth-largest electricity generator of electric power produces 68% of its power from thermal power generation, 21% from large hydro plants and 10% from nuclear power.

‘New’ renewable energy currently only accounts for around 1% of Russia’s electricity supply. Russia’s massive reserves of gas, coal and oil lead to a low cost of energy, which creates a challenge for the development of renewable sources.

However, the country has a significant potential for renewable energy development, not least due to its size and geography. With many current power plants reaching the end of their lifetime, the Russian government estimates that 186 GW of new or replacement generation capacity is needed by 2020.

Part of Russia’s strategy is to reduce the proportion of its power generation from gas, partly by addition of more nuclear power and large hydro. However, in January 2009 the government set a target for renewable power generation to supply 4.5% of demand by 2020, up from less than 1% at present. In a system as large as Russia’s, this signifies an additional 22 GW of new renewables generation – the Russian Wind Energy Association calculates that this could include 7 GW of new wind power by 2020.

Russia has huge potential for wind power development, according to the EBRD, with the windiest regions concentrated along the coastline, in the steppes and in the mountains, mainly in the North and West of the country. To date, the development of the wind sector has been slow, with only a little over 20 MW of wind farm installed, and no new construction of commercial wind farms since 2002.

More recently, however, the wind power industry in Russia has started gaining a little bit of traction, with a demonstration project becoming operational in Murmansk in 2008. Planning has also begun to build a large-scale wind farm in the same region. At present more than 1,700 MW of wind farm projects are reported to be under development.

Ukraine, also a country covering a vast land mass, has good wind resources and a developing economy. According to EBRD estimates, over 40% of the country’s territory would be suitable for wind generation. About 5,000 MW of wind power could be developed in the mid-term, and as much as 20-30% of the country’s total electricity demand could be met by wind. In 1996, the Ukrainian government announced a target of installing 200 MW by 2010, but by the end of 2009, only 94 MW had been reached.

Further east, several countries including Kazakhstan, Turkmenistan, Azerbaijan and Uzbekistan have areas with excellent wind resources, but large oil and gas reserves have to date been a disincentive to any renewable energy development.

Countries with fewer fossil fuel resources, such as Kyrgyzstan, Georgia and Tajikistan might be more promising for wind power development in the short and medium term, but no development has taken place to date.

The GWEO scenarios For East ern Europe/Eurasia

Apart from the new EU member states in this region, which are undertaking considerable efforts to catch up in terms of renewable energy deployment, no significant development has taken place in Eastern Europe. Prognostication of the installed wind power capacity in the near and mid-term future is particularly difficult in this region, as this will largely depend on political decisions in some key countries, especially Russia and Ukraine.

If these governments decide to exploit the tremendous resource at their doorstep and provide the necessary incentives for attracting investors, wind power generation could play a key role in fuelling these growing economies. Without this political will, however, the wind energy markets are set to stagnate.

According to the IEA’s Reference scenario, this is exactly what will happen. This scenario sees annual markets across the whole region (including the new EU member states) increase from 275 MW in 2009 to reach 500 MW by 2015, and then 750 MW by 2030.

This would result in a total installed capacity of close to 6 GW by 2020 and 13 GW by 2030, up from under 500 MW in 2009. Such a development would not have any substantial impact on power generation, economic growth or emissions savings in these countries.

In 2020, wind power would only produce 14.3 TWh across the entire region – compared to an estimated electricity consumption of 880 TWh in Russia alone at that time and 1,500 TWh in the whole region of Eastern Europe/Eurasia, according to the IEA.

Investment in wind turbines equipment would also be negligible, amounting to only around €600 million in 2020, and employment in the wind sector would stand at around 8,500 jobs by then.

The Moderate scenario is slightly more optimistic, assuming that both the EU member states and some other countries with existing renewable energy targets will meet these as planned. This would result in annual markets increasing nearly tenfold between 2009 and 2020, and reaching more than 8 GW by 2030. The installed capacity would then stand at 12 GW in 2020 and 71 GW by 2030.

The resulting benefits for power generation and climate protection would be more sizeable under this scenario. In 2020, wind power would produce close to 30 TWh of clean electricity, and this would grow to 174 TWh by 2030, saving 17.7 mil tCO2 and 104.5 mil tCO2 respectively. If we consider that the region’s electricity demand is forecast to reach 1,800 T Wh by 2030, though, the overall share of wind power in the electricity system would still be rather small compared to other regions in this scenario.

In terms of investment and jobs, the Moderate scenario figures would translate into investments worth €2.7 billion in 2020, creating 33,000 jobs, and €9.1 billion in 2030 with a workforce of 121,500 million people employed in the wind sector.

The figures in the Advanced scenario are slightly higher. Here, 15.8 GW of wind power would be installed by 2020, producing 38.7 T Wh and saving 23 million tons of CO2. Annual markets running at around 4 GW in 2020 would attract €4.8 billion in investment every year, and this would increase to close to 10 GW by 2030, which would translate into €10.6 billion invested in the sector. More than 145,000 people would by then be working in the field of wind energy.