Energy Development Strategy Montenegro

1 Energy Development Strategy OF Montenegro BY 2025 WHITE BOOK Podgorica, December 2007 _____ Energy Development Strategy OF Montenegro BY 2025 WHITE BOOK _____ Energy Development Strategy OF Montenegro BY 2025 MINISTRY FOR ECONOMIC Development OF Montenegro Rimski trg 46, 81000 Podgorica Copyright Ministry for Economic Development Podgorica, December 2007 Any request for reproduction of all or part of this publication must be addressed to the Ministry for Economic Development ! Energy Development Strategy OF Montenegro BY 2025 WHITE BOOK i Table I: Abbreviations and symbols Symbol Meaning AD Akcionarsko dru tvo (Shareholding Company) BAT Best Available Technology BOT Build8 Operate8 Transfer CANU Crnogorska Akademija Nauka i Umjetnosti (Montenegrin Academy of Science and Art) CDM Clean Development Mechanism CG Crna Gora ( Montenegro ) CO2 Carbon Dioxide DBOT Develop8 Build8 Operate8 Transfer EC European Commission EES Electro8energetic System EIHP Energy Institute Hrvoje Po ar EPCG Elektroprivreda Crne Gore (Electric Power Company of Montenegro ) ES Energy System ESCO Energy Service Company EU European Union EU815 Fifteen states of European Union EUR Euro EUR/cap EUR per capita GDP Gross Domestic Product GDP/cap GDP per capita HPP Hydropower Plant IEA International Energy Agency IREET Institute for Research in Energy , Ecology and Technology KAP Kombinat aluminijuma Podgorica (Aluminum Plant in Podgorica)

2 LNG Liquified Natural Gas LPG Liquified Petroleum Gas MEDEE Modele d'Evolution de la Demande d'Energie (Model of Energy Demand Development ) Monstat Statisti ki zavod Crne Gore (Montenegrin Bureau of Statistics) NOx Nitrogen Oxide NRSE New renewable sources of Energy OPM Open pit mine PHLG Permanent High Level Group RoM Republic of Montenegro RSE Renewable sources of Energy SA Sensitivity Analysis SEE South8 East Europe SI System of International units Energy Development Strategy OF Montenegro BY 2025 WHITE BOOK ii Symbol Meaning SO2 Sulphur Dioxide TL Transmission line TPP Thermal power plant TS Transformer station UNESCO United Nations Educational, Scientific and Cultural Organization UNFCCC United Nations Framework Convention on Climate Change UNIDO United Nations Industrial Development Organization UNMIK United Nations Interim Administration Mission in Kosovo USD US Dollar WASP Wien Automatic System Planning Package N eljezara Nik i (Steel Plant Niksic) Table II.

3 System of International Units (SI) Category Unit Sign Dimension Basic units Length Metre M m Mass Kilogram Kg kg Time Second S s Electric current Ampere A A Derived and special units Area m2 m2 Volume m3 m3 Energy Joule J kg m2 s82 Power Watt W kg m2 s83 Voltage Volt V 8 Table III: Prefixes in SI units Factor Prefix Symbol 1015 Peta P 1012 Tera T 109 Giga G 106 Mega M 103 Kilo k Energy Development Strategy OF Montenegro BY 2025 WHITE BOOK iii Throughout the world different Energy mesurement units are used in practice, such as: joules (J), British Thermal Unit (Btu), calories (cal), kilowatthour (kWh), etc. (Table IV), while the Strategy uses primarily J as prescribed SI unit for Energy and sometimes Wh as the most commonly used electrical Energy measurement unit (both with appropriate prefixes). In order to provide possibility of comparison with Eurostat statistics, ton of oil equivalent (toe) is used occasionally.

4 While J, kWh and cal are precisely defined units for toe, for ton of coal equivalent (tce) and Btu international conventions and agreement apply, under which: 1 toe (ton of oil equivalent) = 10 Gcal 1 tce (ton of coal equivalent) = 7 Gcal 1 Btu = 1, J Table IV: Transformation factors between Energy units Multiply with: To the unit TJ Gcal Mtoe MBtu GWh From the unit Terajoule (TJ) 1 1 x 1085 Gigacalories (Gcal) x 1083 1 1087 x 1083 Million tons of oil eqivalent (Mtoe) x 104 107 1 x 107 11,630 Million Btu (MBtu) 1 x 1083 x 1088 1 x 1084 Gigawatt8hour (GWh) 860 x 1085 3,412 1 Energy Development Strategy OF Montenegro BY 2025 WHITE BOOK iv TABLE OF CONTENTS 1. PRELIMINARY 1 2. 5 3. MAIN STRATEGIC 7 4. Strategy Development 9 INSTITUTIONAL REGULATORY DOMESTIC LEGISLATION AND RELEVANT INTERNATIONAL EUROPEAN DIMENSION OF MONTENEGRIN Energy 5.

5 Energy SECTOR OF Montenegro IN THE PERIOD 13 Energy SECTOR Energy SECTOR POSITION IN THE PRIMARY Energy Energy IMPORTS AND PRIMARY AND FINAL Energy TOTAL Energy ANALYSIS OF THE ELECTRICITY Energy EFFICIENCY AND ELECTRICITY PRODUCTION, TRANSMISSION AND DISTRIBUTION OF LIQUID FUEL HEAT MAJOR CONSUMERS OF ENVIRONMENTAL SOCIAL ASPECTS AND PRICES OF Energy INFORMATION 6. KEY ASSUMPTIONS FOR THE 21 7. Development OF Energy OF Montenegro BY 22 Existing scenarios, plans and strategies of the overall Development of Montenegro 22 Water industry RESERVES IN THE EXISTING Energy SYSTEM REVITALATION AND RECONSTRUCTION OF EXISTING Strategy FOR EFFICIENT USE OF Public Industry and economy ..26 FINAL Energy CONSUMPTION UNTIL Scenarios of Gross Domestic Product (GDP) Main assumptions for calculation of the final Energy Consumer structure and forecast of final Energy consumption by Development OF USE OF HYDRO Theoretical potential.

6 30 Use of hydro Development OF USE OF COAL Coal Use of coal ..32 Development OF LOCAL Energy , COGENERATION AND HEAT Energy SUPPLY OF LIQUID Oil and gas potential in Supply of petroleum, petroleum derivatives and mandatory 908day reserves ..34 Energy Development Strategy OF Montenegro BY 2025 WHITE BOOK v Development OF LIQUID PETROL GAS, LIQUID NATURAL GAS, AND NATURAL GAS, SUPPLY Supply of liquefied petroleum gas (LPG)..35 Supply of liquefied natural gas (LNG) ..35 Natural gas supply ..35 Strategy OF INTRODUCTION OF RENEWABLE Energy Potentials of the renewable Energy sources (RES)..36 Strategy of exploitation of RESEARCHES IN Energy Development OF THE POWER GENERATION Electricity demand Scenario of introducing additional power generation capacities into the power system 38 Development OF POWER TRANSMISSION Development OF POWER DISTRIBUTION OVERALL Energy BALANCE UNTIL ASSESSMENT OF MACROECONOMIC EFFECTS OF ELECTRICAL Energy GENERATION IN 8.

7 ENVIRONMENTAL 49 ANALYSIS OF Energy Development SCENARIOS FROM THE ENVIRONMENTAL PROTECTION EMISSION OF POLUTANTS OF ELECTRO8 ENERGETIC Energy INFRASTRUCTURE AND SPATIAL 9. INVESTMENT PROMOTION, COSTS AND FINANCING OF THE Energy STRATEGY53 WHAT DIFFERENTIATES THE Energy SECTOR OF Montenegro FROM THE NEIGHBORHOOD? 53 INVESTMENTS IN THE Energy SECTOR OF Montenegro AND COMPARATIVE INVESTMENT PROMOTION AND CAPITAL FINANCIAL RESOURCES REQUIRED FOR THE Development OF THE Energy ROLE OF STATE, PRIVATE SECTOR AND FINANCING SOURCES OF ANTICIPATED Development OF Energy 10. OTHER Strategy 57 PROBLEMS RELATED TO RESTRUCTURING OF ELECTRO8 ENERGETIC SECTOR OF Montenegro 57 PRICES OF ELECTRICAL Energy AND POVERTY Development OF Energy SECTOR AND SOCIAL POSITION OF INDICATORS OF BENEFITS OF THE Energy SECTOR Development FOR CITIZENS OF PRICE LOCAL AND REGIONAL Energy ACCESSION TO EU, REGIONAL AND EUROPEAN Development NATIONAL SECURITY AND TECHNOLOGICAL Development AND EDUCATION AND INTERNATIONAL BOLOGNA ALTERNATIVE (NUCLEAR) PUBLIC AWARENESS AND STRATEGIC 11.

8 Strategy 65 ACTION Strategy IMPLEMENTATION MONITORING OBJECTIVES AND 12. SUMMARY OF MAJOR Strategy 67 13. 74 Energy Development Strategy OF Montenegro BY 2025 WHITE BOOK vi STATEMENT OF THE MINISTER There is no doubt that Energy is the main incentive to overall economic, as well as social, Development of every country. As an element of economic infrastructure, Energy represents the Development basis of overall economic growth. On the other hand, Energy represents an autonomous economic sector playing an important part in the macroeconomic overview of a country. Finally, the Energy sector has a decisive effect on the quality of life and the living standard. In dynamic, developing systems, the relationship between Energy Development and environmental protection represents one of the basic concept issues. Finding the right balance in this interaction is very complex. Therefore, supporting any extremes or superficial exclusivity in presenting and treating arguments could leave permanent and irreparable consequences on economic and\or ecological future of a country.

9 These facts call for a systematically comprehensive and methodologically plausible approach to the issues of Energy Development as this is the only way to avoid the traps of a stochastic treatment. Therefore, following the global Development commitments, the Government of Montenegro has decided to formulate the framework and the course of actions to be undertaken with regard to Energy Development , as set out in the Energy Development Strategy of Montenegro by 2025. The Strategy represents a document which, taking into account the current resources and projected needs, determines the optimum guidelines of the Energy process in Montenegro in order to utilize available potentials and create the prerequisites for an unimpeded Development of all economic sectors. Due to the complexity and diversity of parameters to be taken into consideration, the Strategy preparation has been based on acknowledged professional methodologies, highly expert knowledge, and best practises and positive experiences of developed countries.

10 Thus, the Montenegrin Government engaged renowned international and domestic institutions and experts for the drafting of the Strategy which, after the preparation of numerous segmented studies, resulted in the primary version of the Strategy , also known as the Green Paper. The importance of the issues tackled in the Strategy requires a high degree of social consensus on the final commitments. The forecasting of Montenegro 's Energy future, in any of its segment, must not be subject to any ideological or political influences or pragmatic short8term needs of any individual or interest group. Therefore, the Green Paper was the subject of public debates participated by all segments of both professional and general public in Montenegro from targeted professional institutions and local governments to non8governmental organisations and other members of civil society. Like never before, the public debates had a very positive effect on the final outlining of the document in question.