An Update on the Energy Situation in the Federal Republic of Yugoslavia

OCHA BELGRADE
Federal Republic of Yugoslavia
On 20 September 1999, OCHA Belgrade issued a report entitled “Electricity and Heating in the Federal Republic of Yugoslavia: Winter 1999-2000”. This report concluded that FRY (excluding Kosovo) faces significant shortages of electrical energy this winter, and advocated humanitarian assistance to try to reduce the prospect of random massive stoppages of electricity this winter.

This report is an update on the situation at the end of October 1999. October has seen important improvements in the energy situation, particularly in the realms of oil, natural gas, improvised repairs, and transmission. However, there are concerns about the sustainability of some of these improvements. At the same time, developments in other areas – particularly coal, water, technical repair capacity and winter demand levels – suggest that serious winter electricity shortages remain very likely. The concern is that scarce resources (primary energy sources and hydro-power stations in particular) are being used to ensure electricity supplies in the short term, leaving FRY facing the prospect of serious shortages at the height of winter.

As OCHA has been approached for clarification on its assumptions about winter demand, this report also contains an extensive discussion of the pattern of winter electricity demand in FRY.

1. PRIMARY ENERGY

1.1. Oil

The oil refineries in Pancevo and Novi Sad have resumed limited operation, and despite some technical failures, are producing around 8,500 tons per day. This represents a significant improvement from the previous situation.

However, the crude oil being refined is coming from domestic stocks. Over recent months, domestic crude production has been stored for the moment when the oil refineries came back on line. As the OCHA report recommended, these stocks have been prioritized for diesel, mazut, and power plants, as well as for the harvest and the food processing industry. However, the problem is that current crude reserves may last about a month and a half. As there is no significant crude import and EU sanctions remain in place, oil supplies are not likely to remain at the same levels for very long unless there are unforeseen developments.

1.2. Natural gas

On Monday, 18 October 1999, gas began to flow to FRY and to Bosnia-Herzegovina from Russia through Hungary. According to the UN Economic Commission for Europe’s Gas Centre, the contract with Russia foresees the deliveries of 1.5 Bcm to Serbia during the winter. NIS (the Serbian gas company) suggests that 2.2 Bcm of gas is required between October 1999 and March 2000 for humanitarian purposes. Around 0.25 Bcm can be produced locally, meaning that, according to NIS, a total of 1.95 Bcm needs to be imported.

1.3. Coal (lignite)

Due to the improved supply of diesel oil to lignite mines, and the low output of thermal power stations, some lignite has been stored for the winter period. For example, the Kolubara coal mine, producing around 60 000 tons of lignite per day (normal rate should be 100 000 tons per day), has still been able to provide about 5000 tons of lignite per day for storage.

Despite this slight improvement, the lignite situation remains concerning. The available stock will support winter production for about a month and a half, and there are already shortages of lignite for direct domestic use. It is doubtful whether lignite production levels can reach what will be needed over the winter.

There are two significant lignite basins in Serbia: Kostolac and Kolubara. About 15 725 000 tons of lignite are required for this winter. To provide minimal power needs, it will be necessary to remove around 36 953 000 cubic meters of overburden (the rubble above the lignite deposits) during that period. About 1.92 kg of lignite is required for each kWh of electricity. Normally, overburden is removed in summer so, during the winter, machinery might be used for lignite production to larger extent. This was not the case in summer 1999.

This is a level of production never achieved in Serbian mines, and represents an impossible task given the condition of existing machinery and the lack of spare parts. The problems have been compounded by a recent fire at the Kolubara mine, which damaged a main conveyer.

1.4. Water

The reduced output of thermal power stations has been made up for by large production of hydro power stations. This is draining already short reservoir reserves, threatening peak power production later in the winter. Reservoir depletion from this extra use is preventing water level replenishment from precipitation.

1.5. Electricity import

Whilst there are standing electricity trading agreements with FYROM and Greece, the intention of these has been to supply electricity to FYROM and Greece (which are traditionally net importers of electricity). In any event, electricity exchange with these countries is possible in significant amounts only via Kosovo. The Kosovo high voltage lines are disconnected from the Serbian grid. UNMIK reports that Kosovo itself faces electricity shortages and will rely on import at least until December.

The real import possibilities are with Bosnia, Bulgaria and Romania. Important improvements have occurred in Nis that will improve import capacity from Bulgaria. However, import capacity from Bosnia is limited because the major line also passes through Kosovo.

Import capacity might be estimated to provide a maximum of 10 million kWh per day, which is less than half the level of imported electricity of the previous winter.

2. PRODUCTION

The output of thermal power stations is very low due to poor maintenance, and the risk of technical failures is growing as well. There are very few spare parts or spare materials.

There have already been significant technical failures in the last month at the Obrenovac A and Kostolac power stations. In addition, it must be borne in mind that the Kosovo power stations (1235 MW) are presently disconnected from grid and that the Kolubara B station was badly damaged during the bombing campaign.

3. TRANSMISSION CAPABILITIES AND TECHNICAL FAILURES

There has been some limited import of equipment by EPS, and negotiations with potential suppliers are ongoing. However, given financial shortages and sanctions, EPS has been unable to purchase large stocks of transformers, transmission equipment or spare parts.

In the absence of significant additional equipment, improvisation has been the order of the day. Existing equipment is being moved here and there to restructure the system. Whilst on one hand this may increase system stability, on the other hand it may make repairs (in the case of technical failures) more difficult. In addition, any technical failure will remain very difficult because of shortages of spare parts.

4. HUMANITARIAN ASSISTANCE TO STABILISE THE ELECTRICITY GRID

The government of Switzerland has recently seconded a team of electrical engineers to OCHA Belgrade to identify urgent needs and ensure that delivered spare parts have maximum and verifiable humanitarian impact. Spare parts will in the first instance be provided by Switzerland. Whilst this assistance will assist in stabilising parts of the electricity grid, other donors will need to provide assistance if random massive electricity outages over the winter are to be prevented. As the import of even the most basic spare parts usually takes a number of months, time for donors to consider providing basic spare parts to help stabilise the electricity grid is now running short.

5. DEMAND FOR ELECTRICITY

5.1 The pattern of winter demand in FRY

Over the last nine years, winter households electricity consumption has grown on average by 4.5% each year, while total consumption (when adjusted according to the weather patterns of the last hundred years) has grown by 2.15% on average.

The major reasons behind the growth in winter demand is the growing use of electricity for heating. This trend is driven by the fact that electricity is by far the cheapest heating source. During the last ten years, electricity has become the fuel of choice for a number of new consumers, including a number of refugees and new homeowners. New houses, often built without proper building permissions, are built with cheap electricity in mind. As a result, insulation is insufficient. The maintenance of existing housing stocks is also inadequate. Around twice the amount of electricity is needed today for heating at outside temperature of 0oC than was required in 1989. In addition to that, the correlation between outside temperature and power demand is growing. (It might be calculated that each 1C under 0C requires an additional 100 MW in power production capacity, while each 1 m/s of wind above 5 m/s and under 0C requires an additional 60 MW.)

The following table shows 1997/8 electricity consumption (figures for 1998/9 are not yet available), divided between the 182 days of “summer” and the 183 days of “winter”:

The level of consumption at the peak of last winter in December 1998 was as follows:

• 4.2 billion kWh was delivered during the month;
• 149.5 million kWh was delivered on the day when demand was highest;
• 7189 MW was the maximum amount of engaged power achieved at any point;
• On average, 136 million kWh was delivered per day. Average demand in July 1998 was 67.97 million kWh per day (ie. only 50% of December consumption). The whole difference was used for heating in industry, business facilities and households.

International calculations are often based on the assumption that availability of engaged capacity of power stations is of the order of 80%. On this assumption, the difference between summer and winter required capacity (in 1998/9 production was 136 million kWh per day during the winter and 68 million kWh per day during the summer) would have been around 3000 MW (3 million kW) in engaged capacity.

However, it would be incorrect to apply the above assumption to FRY, where the availability of engaged capacity of power stations is much lower (around 55%) as a result of neglected maintenance. Accordingly, required engaged capacity needs to be well above 3000MW, but as a result of limited available total capacity average production is estimated to be less than 90 million kWh per day during forthcoming winter.

5.2. Winter demand predictions in 1999/2000

In its report of 20 August 1999, OCHA estimated a drop in 1999/2000 winter demand of about 10% from 1998/1999 levels. This estimation was based on a consumption equation which might be described as Serbia + Montenegro - Kosovo + IDPs - industrial consumption decline +/- weather differences. A rough estimation of demand for the 1999/2000 winter would be about 106 million kWh per day in November, and 120 million kWh per day in December and January.

There are a number of factors which must be emphasized in estimating demand:

• Growth in demand for electricity for heating in Serbia and Montenegro: As explained above, the last nine years has seen a growth in demand for electricity for households heating which averages over 4.5% per year. On the basis of this trend, there will be greater reliance on electricity for heating this winter than last winter. And there are some indications that demand may have risen by a larger than average amount this winter. (During the week beginning on 18 October, with average temperatures between 4 and 8 C and with wind daily, consumption approached the magnitude of 110 million kWh per day. This is particularly high given the time of year and the temperatures.) A number of factors may contribute to a strengthening of this ten year trend in the coming winter:

  - The current economic situation may see more and more people economize on heating by turning to electricity;

  - There are shortages of alternative fuels, with people already queuing for short (and low quality) supplies of coal;

  - District heating plants have had many failures and outages already, leading people who rely on district heating to switch to electricity to make up the shortfall;

  - Pensions have been paid in the form of electricity vouchers, meaning that pensioners have every incentive to use electricity for heating and no incentive to conserve electricity;

  - People may be storing what alternative energy sources they do possess in order to cope with predicted shortages later in the winter.

• Kosovo: During recent years, Kosovo consumed as much electricity as it produced due to low availability of power stations there. UNMIK reports that Kosovo power stations are in poor condition. The absence of Kosovo from the electricity grid will decrease the overall stability of the FRY electricity grid (due to the missing interconnection with neighboring electrical systems). Kosovo demand in previous years was of the magnitude of 10 million kWh per day.
• Industrial decline: Industrial output decline is estimated to be between 30 and 40% in comparison with 1998. OCHA estimates that winter industrial consumption will be 30% smaller than previous winter, and will average around 8 million kWh per day. However, it should be noted that the energy efficiency of major industrial consumers (copper and aluminium works) declines every year due to heavily subsidized electricity prices (note that electricity consumption per ton of metal produced has practically doubled over the last few years).
• IDPs: About 200,000 IDPs fled from Kosovo to Serbia and Montenegro. Their impact on electricity consumption is not direct because they are not equipped with homes and electrical devices in the same proportion as the remaining population. However, they will still add to demand.
• Import: Import capacity is limited because of electricity shortage in neighbouring countries, damaged transmission capacities, political difficulties, and lack of financing. Probably not more than 10 million kWh per day might be available from import.
• Weather: Experience over the last 10 years shows that the impact of the weather on electricity consumption is growing. Electricity consumption is very sensitive to weather changes due to very low quality of housing (particularly insulation).

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