EBRD lends €26.4 million to Macedonian Transmission System Operator

• EBRD lends €26.4 million to MEPSO to bolster North Macedonia’s electrical grid
• Project to receive a €7.6 million grant from the Western Balkans Investment Fund
• Loan to enable connection of 1.2 GW of new renewable sources in southeast region

The European Bank for Reconstruction and Development (EBRD) is providing a loan of up to €26.4 million to Macedonian Transmission System Operator AD (MEPSO), the state-owned electricity transmission system operator in North Macedonia.

The loan will be used to fund the construction of a 400/110 kV substation near Miletkovo and a new 110 kV overhead transmission line (OHTL) connection, as well as to rehabilitate the existing 110 kV OHTL and substations in and between Miletkovo, Valando and Strumica. MEPSO will also develop a training centre for high-voltage grid operators and other sectoral specialists.

In addition, the project will benefit from a €7.6 million investment grant from the Western Balkans Investment Fund and a €0.5 million grant from the Climate Investment Fund Accelerating Coal Transition. The total project cost will be €34.5 million.

The funding will help MEPSO to improve the electricity transmission network in the southeast region of North Macedonia. This project is crucial, as it will enable the connection of 1.2 GW of new renewable energy sources in the southeast region, predominantly home to wind farms, thereby significantly advancing the country's green transition and accelerating the shift away from coal. The project is also expected to reduce energy losses by about 14.5 GWh each year. MEPSO will further create a training centre for high-voltage grid operators in the coal-reliant southwest region, benefiting not only MEPSO employees, but also other workers affected by the transition to green energy.

EBRD President Odile Renaud Basso and Mr Zudi Enuz, General Director and President of the Management Board, MEPSO signed the loan during the EBRD President’s visit to Skopje. The signing was witnessed by Minister of Energy, Mining and Minerals Sanja Bozinovska and H.E Ambassador David Geer, Head of the EU Delegation to North Macedonia.

Odile Renaud Basso said: “I am delighted to sign this €26.4 million loan to MEPSO. I would like to underscore the essential impact of this project. By decreasing transmission losses by 14.5 GWh and reducing CO2 emissions by over 8,000 tonnes per year, this project will transform North Macedonia’s energy landscape. Crucially, it will enable the connection of up to 1.2 GW of additional renewable energy sources in North Macedonia, a significant leap from the current capacity of only 100 MW supported by the ageing substations in the southeast region.

“Beyond these benefits, the project will foster human capital development. We are supporting MEPSO in establishing a training centre in the coal-reliant southwest region. This centre will focus on training grid operators, targeting in particular communities affected by the coal transition. It will draw on their energy sector expertise and provide them with green skills for the future. The project also includes support to develop a grid master plan, which will identify key grid investments necessary to deploy new renewables and ensure a smooth transition to green energy.”

Mr Zudi Enuz, General Director and President of the Management Board, MEPSO stated: “At this moment, the capacity of the transmission network around TS Valandovo, for integration of the renewable energy resources, is limited to about 100MW. Upon the completion of the project, for the purpose of strengthening the transmission network in South-Eastern region, the capacity for integration of the new renewable energy resources will be about 1.2 GW. With this loan, EBRD and the grants from the Western Balkans Investment Framework and the Climate Investment FUN (CIF), an additional input in the process of integration of the renewable energy resources in the national transmission system, operated by AD MEPSO, will be made.”

Sanja Bozinovska, Minister of Energy, Mining and Minerals stated: It is my great pleasure that today we are creating pre-conditions for the realisation of a capital energy project in the domestic electrical power transmission network. This is related to the reconstruction of the 110 KW substation Valandovo-Strumica, and the construction of the new 400/100 KW substation in the village Miletkovo, near Gevgelija. This project realisation will enable further strengthening of the AD MEPSO transmission network in the South-Eastern part of the country, which will significantly lower the electrical power losses, and will strengthen the stability and reliability of the network, directly contributing towards quality integration of additional number of electrical power plants from renewable energy resources, at the network of the Macedonian electrical-power transmission operator. One of the energy priorities of this Government is strengthening of the electrical-power capacity, through reconstruction i.e. revitalisation of the existing transmission lines.”

H.E Ambassador David Geer, Head of the EU Delegation to North Macedonia commented that “Without transmission there is no transition. This is why investing in transmission lines and smart grids is crucial for North Macedonia’s progress on decarbonisation and pushing forward the Green Agenda. We are proud that Team Europe - with EUR 26.4 million EBRD loan and EUR 7.6 million investment grant from the EU Western Balkan Investment Framework – is backing the country in this endeavour. With this support, the Government and the state utility company MEPSO will be able to ensure that the limited capacities of the grid are increased, by investing in rehabilitation and construction of new lines, so that they can absorb the renewable energy to be produced in the country.”

The EBRD has been a key partner of MEPSO, financing several critical projects to date. These include North Macedonia’s interconnections with Bulgaria and Albania and the rehabilitation of most of the country’s high-voltage grid. The Bank’s strong cooperation with MEPSO extends to support for a corporate governance action plan and capacity building of the procurement function. 

The EBRD is a major institutional investor in North Macedonia. To date, it has invested more than €2.8 billion in 190 projects across the country.