Kosovo’s government has reached an agreement with US energy group ContourGlobal on the construction of a 500MW coal-fired power plant, Kosova e Re, a project worth €1bn.

This will be the first major investment in the energy sector in Kosovo in the country's recent history. After completion, the project will ensure energy security for the country, which is constantly facing power shortages.

ContourGlobal was selected as preferred bidder back in 2015 for the construction of the Kosova e Re plant, but the process was delayed due to the lack of financing. 

“The agreement is expected to be signed in the coming days,” the government said in a statement on September 13.

The deal was reached after Kosovan Prime Minister Ramush Haradinaj met officials from the Kosova e Re plant’s steering committee.

Construction will start in 2018 and the plant will be operational by 2023. As the plant will be built with the latest technology it will help reduce of greenhouse gas emissions.

The power plant will be built with a single supercritical block, with a minimum efficiency of 40% and a gross capacity of 500MW.

The plant will include a co-generation component for central heating that will enable expansion of capacities of the heating networks in the cities of Pristina, Obiliq, Drenas and Fushe Kosova.

Currently, Kosovo has two thermal power plants, Kosova A and Kosova B, both part of Kosovo ElectricityCorporation (KEK). 

The new plant is supposed to replace the 40-year-old Kosovo A power plant, which is considered to be one of the biggest polluters in Europe and was planned to be put out of operation by the end of 2017. However, the project has been criticised by environmental groups who say Pristina should look to alternative fuel sources rather than investing in more coal capacity. 

The power sector of Kosovo, which is rich in coal, relies on coal-fired power plants, which are considered one of the sectors with the greatest potential for development. However, current thermal power plants (TPPs) are not operating in full capacity due to the lack of coal supplies. Kosovo's TPPs currently generate around 400 MW of electricity, while the same quantity is being imported.

The American Chamber of Commerce in Kosovo (AmCham) warned recently that Kosovo could face an energy crisis in early 2018 as a result of delays in the expropriation of land where a new coal mine is planned to be built.