The World Bank can lead a coal to clean energy transition in Kosovo

Blog Post Power
Published July 16, 2018

Ilmi Granoff

Senior Director, Sustainable Finance

Justin Guay

Strategy Advisor

Shilpa Patel

Senior Advisor

The world of energy is changing rapidly and the World Bank can accelerate this positive change.

Last year at the One Planet Summit in Paris, the World Bank boldly committed to end upstream oil and gas financing after 2019, to allocate 28% of its portfolio to climate action by 2020, and to increase the transparency of  climate impacts from its investments.  All of which follows its precedent setting commitment in 2013 to restrict investment in new coal plants. As a result, the World Bank is viewed by many, including climate philanthropist, as both a leader and partner in mitigating climate change and fueling the clean energy transition needed by its client countries.

We welcome – and support – the Bank’s continued climate leadership. We have increasingly partnered with leading climate friendly bilateral and multilateral development agencies to spur clean energy investment around the world. We were instrumental in organizing and capitalizing the successful US-ICEF program, in partnership with the U.S. Overseas Private Investment Corporation, focused on early-stage project development for clean energy projects in India. There are now active conversations in our community about similar facilities that would help drive a pipeline of clean energy projects in other regions where clean energy finance faces many challenges. We need and want to work globally with more leaders such as the World Bank.

The exception to the World Bank’s otherwise progressive clean energy portfolio, is its engagement in Kosovo. While the Bank has been helping Kosovo address its energy challenges through energy efficiency improvements, renewable energy development, and regional power market integration, it still has not moved beyond its support for the last remaining coal project in its pipeline, a legacy coal plant.

Such a plant may have made sense a decade ago when it was first proposed: the levelized cost of energy (LCOE) from conventional coal stood at about $60/MWh, while solar then cost around $400/MWh, and wind around $70/MWh.  But a lot has changed since then.

According to recent analyses, the benchmark global LCOE for solar is $70/MWh and wind is $55/MWh and in many geographies, both are cheaper still. Consider that France just tendered 500 MW of solar power for $60/MWh. That matters because Kosovo has similar solar potential to the sunniest parts of France, which means it could also greatly benefit from these ever-decreasing prices. Meanwhile, an external expert panel to the World Bank priced a new coal plant in Kosovo at nearly 50% more (about $94/MWh) than a decade ago. Suffice to say, clean energy is now dirt cheap.

This declining solar price provides Kosovo with a great option to embrace cheap clean energy – enabling it to step into an energy economy more suited to the times and to future EU climate accession. Equally important is the number and quality of jobs created by the renewable energy and energy efficiency sectors, which was a main impetus behind the Bank’s multimillion dollar Kosovo energy efficiency and renewable energy project.

It appears the bank has been paying close attention to these trends and is now actively reconsidering its support for this legacy coal plant. We welcome this move and urge the bank to take a clear comprehensive view of the energy transition facing Kosovo as well as the rest of Europe — air pollution from coal is not contained by borders.

The good news is that Kosovars and their elected officials support a clean energy future. The coal plant was never in the country’s best interest, and the people of Kosovo are demonstrating their desire for clean, affordable energy and 21st century jobs, as opposed to returning to the pollution-choked skies of their past. Now is the time for the bank to cement its leadership, once again, to advance a clean energy economy by cancelling its investment in the Kosovo coal plant and ushering in a new era of cheap, clean energy in the Balkans. An act that will be deeply welcomed by Kosovars and greatly appreciated by all of us in the climate philanthropy community.