Western Balkan Action Plan for Power Grids: Advancing Grid Modernisation and Integration through Coordinated Regional Planning and EU Funding Support

This Action Plan [1] is the first common regional and groundbreaking attempt to address this issue and one of the flagship deliverables of the large, multi-year regional GIZ project, funded by the German Federal Ministry for Economic Cooperation and Development, with a focus on grid investments, digitalisation, flexibility enhancement, and institutional strengthening.

WB region stands at a pivotal moment in its energy transition. Even though this region is having among the highest RES potential in Europe, in 2024 around 2/3 of its electricity generation output came from the coal-fired power plants. In the last few years RES integration significantly improved, but WB is still lagging its decarbonization targets.

One of the largest barriers in green transition of the WB is related to the power grid. Power system decarbonization implies a significant upgrade and modernisation of the existing power grid, which was initially designed for different operating conditions few decades ago. WB power grids were not designed for the realities of the 21st century. About 55% of the grid elements in WB have already reached its lifetime end, so in the upcoming period it is necessary to implement a parallel process of the grid revitalization and grid upgrading. This region consists of six relatively small, but very well-connected power systems with strong mutual influence.

Therefore, regional coordination and financial optimization and support for the revitalization and modernization of WB power grids is of utmost importance.

The Action Plan identified five essential reasons to accelerate WB grid deployment: 1 1.

2.

3.

4.

5. Meet 2030 climate and energy targets

Avoid RES curtailment, redispatching and stranded asset costs

Improve resilience and reduce technical losses

Enable cross-border electricity trade and system flexibility and balancing

Full integration and coupling into the EU electricity market Detected key barriers for faster WB power grid development are:

1. Environmental, Spatial Planning and Land Use Conflicts 2. Insufficient Institutional Capacity 3. Fragmented Responsibilities (Transmission System Operator (TSO), Distribution

System Operator (DSO), National Regulatory Agency (NRA), relevant Ministries) 4. Unclear Timelines 5. Lack of Digital Tools

To resolve barriers and challenges, this paper discusses key strategic priorities.

The Action Plan estimates that the WB region will require 10–14 billion € of transmission and distribution investments in the period 2025 - 2030, based on national energy and climate plans

(NECPs), regulatory filings, project pipelines and EU Action Plan for Grids. This level of investment assumes by far the most intensive development period in history. Therefore, a coordinated regional approach is of utmost importance.

Knowing that national funding capabilities through network tariffs and other mechanisms are far below these values, this paper additionally emphasises the importance and the ways to more intensively use available EU funding options.