Exploring the impact of reduced hydro capacity and lignite resources on the Macedonian power sector development

Abstract

The reference development pathway of the Macedonian energy sector highlights the important role that lignite and hydro power play in the power sector, each accounting for 40% of total capacity in 2021. In 2030, this dominance continues, although hydro has a higher share due to the retirement of some of the existing lignite plants. Three sensitivity runs of the MARKAL-Macedonia energy system model have been undertaken to explore the importance of these technologies to the system, considering that their resource may be reduced with time: (1) Reducing the availability of lignite from domestic mines by 50% in 2030 (with limited capacity of imports), (2) Removing three large hydro options, which account for 310 MW in the business-as-usual case, and (3) Both of the above restrictions. The reduction in lignite availability is estimated to lead to additional overall system costs of 0.7%, compared to hydro restrictions at only 0.1%. With both restrictions applied, the additional costs rise to over 1%, amounting to 348 M? over the 25 year planning horizon. In particular, costs are driven up by an increasing reliance on electricity imports. In all cases, the total electricity generation decreases, but import increases, which leads to a drop in capacity requirements. In both, the lignite and the hydro restricted cases, it is primarily gas-fired generation and imports that ?fill the gap?. This highlights the importance of an increasingly diversified and efficient supply, which should be promoted through initiatives on renewables, energy efficiency, and lower carbon emissions.