USAID CELEBRATES ENERGY SECTOR REFORMS IN NORTH MACEDONIA

Over the last four years USAID, in partnership with the Government of North Macedonia, the Ministry of Economy, and the Energy Regulatory Commission, implemented the long-awaited comprehensive reform of the energy sector. This partnership created the legal framework for an open, transparent, and vibrant energy market in line with the principles of competition and non-discrimination, better energy services to households and industry, and integration with regional energy markets.  

USAID’s Development of Regional Energy Markets Project worked in collaboration with the Government of North Macedonia to develop energy policies and legal prerequisites in line with European Union and Energy Community requirements, resulting in diversification and improvement of the country’s energy supply security.

These reforms led to the successful development of the new Energy Law, which was adopted in May 2018. With the subsequent development and adoption of nearly 50 by-laws, the legal framework was established for a universal electricity supplier, full liberalization of the electricity market, and introduction of premiums as an incentive mechanism for renewable energy, among many others. 

Once the legal framework was in place, the Government of North Macedonia was able to:

• Conduct its first-ever auctions using premiums as an incentive mechanism for renewable energy on two tenders for photovoltaic power plants of 56 MW installed capacity that will generate 76 GWh annually, enough to supply electricity for 12,000 households. This will bring approximately 40 million euros of renewable energy investment. The third tender for 80 MW is currently underway.
• Introduce the concept of a universal supplier of electricity as a mechanism to protect households from electricity price shocks, making North Macedonia first country in the Energy Community to implement this concept.
• Successfully complete the process of unbundling the generation, transmission, and distribution of electricity in the country, and then achieve certification of the electricity transmission system operator by the Energy Regulatory Commission in accordance with EU regulations and Energy Community requirements.
• Designate the Nominated Electricity Market Operator in line with EU requirements, making possible electricity market coupling with EU member states and integration with the EU electricity market.
• Introduce Green Certificates, which guarantee that electricity has been produced by renewable energy sources. The frequent use and trade of these certificates among electricity producers and suppliers will further stimulate the renewable energy market.

Through this collaborative partnership with the government, the Energy Efficiency Law was developed and adopted in February 2020. This Law, fully aligned with the EU Energy Efficiency Directive and Energy Community requirements, created opportunities for energy savings and reduced energy consumption, which could have a significant impact in decreasing the need for energy in these times of global energy crisis, when the prices of energy are increasingly growing.

Supporting energy law reform in North Macedonia was one focus of USAID’s Development of Regional Energy Markets Project, which was  implemented by Tetra Tech ES Inc. and ACT! Consultancy Services Ltd. from December 2017 through December 2021.