EU and partners support energy efficiency investments in the Balkans with more than a billion euros

- The Western Balkans markets are making progress in greening their economies, with an investment portfolio in energy efficiency and renewable energy reaching €1 billion. In addition to investments, the region has also made progress in aligning with European Union (EU) legislation, creating a broader enabling environment for investments in sustainable and energy-efficient solutions. These are the results achieved under the Regional Energy Efficiency Programme (REEP), the European Union’s key instrument for green investment in the region. The programme was launched in 2013 in cooperation with the European Bank for Reconstruction and Development (EBRD) and the German Development Bank (KfW), and continues to support the green transition of the Western Balkans with an additional €88 million approved for future investments. The additional funds were approved at the Western Balkans Investment Framework Steering Board meeting last month, the statement said.

 

From the outset, REEP has supported the region in improving the regulatory framework and removing barriers to energy efficiency investments, which has led to an increase in investment in this area. One of the main segments of the program is investments in energy renovation of public buildings, which not only improves their energy efficiency - which indirectly contributes to improving air quality, but these projects also contribute to local GDP by supporting local supply chains and companies engaged in carrying out the works.

Five hundred and forty public buildings across the region, such as student dormitories, schools and healthcare facilities, will be or have already been renovated to improved energy efficiency standards (thermal insulation of walls and roofs, replacement of heating systems, double-glazed windows, heat pumps, solar panels, etc.). The renovation of buildings includes energy efficiency measures, as well as structural measures (e.g. static renovation, painting, installation of sprinklers) and measures to improve comfort in order to improve conditions for end users.

In Bosnia and Herzegovina, around 40 public buildings in the Sarajevo Canton have been renovated through this program, including healthcare facilities, schools, kindergartens and student dormitories.

Another important segment of the program is the decarbonization of district heating systems through projects to replace fossil fuels with renewable energy sources in local heating plants.

REEP also supports financing for households, small and medium-sized enterprises and enables direct financing for the private sector. By 2025, more than 34,000 households and 2,000 small businesses have already invested or are in the process of investing in energy efficiency measures and renewable energy sources using EU grants and specialized credit lines available in local partner banks.

The programme has generated a significant environmental impact by saving 1,220 GWh of energy per year (which is, for example, 37 percent of the annual energy consumption in North Macedonia). It has also avoided the emission of 730 thousand tons of CO₂ – the equivalent of removing 183,000 cars from the streets. This illustrates another key aspect of the programme: its direct contribution to reducing air pollution and creating a more sustainable and greener urban life.

REEP financing is provided directly to states or municipalities for large-scale investments such as the renovation of public buildings. It is also distributed through local commercial banks, which lend to small businesses and households interested in investing in energy efficiency or renewable energy sources.

The energy productivity of the Western Balkans region remains significantly below the average of the European Union member states, indicating the need for structural investments in energy efficiency and the ongoing need to align national legislation and policies with EU standards (updating energy efficiency laws, implementing secondary legislation, adopting long-term building renovation strategies, etc.).

Mauro Di Veroli, Head of the Western Balkans Investment Framework at the European Commission, said that the Green Agenda for the Western Balkans is a cornerstone of a regional strategy aimed at sustainable development in line with the European Green Deal. The aim is to support the decarbonisation process of the economies in the region, where the energy sector, together with other industries, still has a high level of carbon emissions. The European Commission supports the green transition through the Regional Energy Efficiency Programme – an initiative co-financed by KfW and the EBRD and several bilateral donors. The programme brings concrete benefits to the citizens of the Western Balkans by helping them improve the energy efficiency of their households.

- We are also focusing in particular on public buildings, which account for almost a third of total CO2 emissions. These are key areas where EU funds and technical assistance are making a measurable difference in the region - said Mauro Di Veroli.

Matteo Colangeli, EBRD Regional Director for the Western Balkans, says that the Regional Energy Efficiency Programme is one of the key drivers of the green transition in the region. The program improved the legal framework, facilitated the process of investing in renewable energy sources, and secured financing for energy efficiency measures for households, businesses, and public institutions.

- Together with our partners, we will continue to provide financial and advisory support to decarbonize energy sources and reduce energy losses in all sectors of the economy. In addition, the investments supported by REEP will help the countries meet their obligations under the European Union's Reform and Growth Instrument for the Western Balkans, which will open up access to additional funds for the green transition and increase the competitiveness of their economies - said the EBRD official.

Pablo Obrador, Head of the Energy Sector for South-East Europe at KfW, points out that since 2013, the program has brought significant environmental impact with energy savings of 1,220 GWh per year. It has also avoided the emission of 730 thousand tons of CO₂, which is equivalent to removing 183,000 cars from the road.

Borko Raičević, Energy Efficiency Expert at the Energy Community Secretariat, states that REEP is a leading initiative that not only enables financing of energy efficiency projects, but also strengthens the strategic and legislative framework across the Western Balkans, which is crucial for achieving the Energy Community's 2030 energy and climate goals.

The Energy Community Secretariat plays an active role in the implementation of REEP projects related to policy-making and legislative solutions. In addition, REEP achievements and activities are regularly presented and coordinated through the Energy Efficiency Coordination Group – a platform that brings together representatives of countries, the European Union, international financial institutions and donors to coordinate efforts, address implementation challenges and ensure that REEP remains a key driver of reforms and sustainable energy transition, Raičević points out.

The Regional Energy Efficiency Programme for the Western Balkans (REEP) aims to support the region in improving energy efficiency. It combines financial instruments for the private sector and households, technical assistance and policy development and implementation support for public institutions, with the aim of overcoming market barriers and fostering long-term market development.

REEP has been identified as one of the flagship projects within the European Commission’s Economic and Investment Plan for the Western Balkans, under the “Renovation Wave” initiative under the Clean Energy Investment Window. These projects significantly contribute to reducing greenhouse gas emissions and improving the standard of living and health of citizens.