Wind of change to continue blowing through Southeast Europe energy sector

By bne IntelliNews November 12, 2008

Dominic Swire in Prague -

The current financial crisis will put paid to many investment plans in Southeast Europe, but one area where it's not expected to have much of an effect is on the wind power industry, which has been thundering ahead as Europe's largest utilities scramble to get a foothold in this burgeoning market.

Along with soaring fuel prices and concerns over energy security, the EU's binding energy targets for 2020 are one of the main factors behind this bout of environmental consciousness. By then, Brussels hopes to reduce greenhouse emissions by 20% from 2005 levels and produce 20% of its energy from renewable sources. Most of the Balkan states hope to be EU members by that time, so there is a clear incentive for them to comply, and this makes the sector all the more exciting for investors. "Now most, if not all, EU utility companies are buying significant wind portfolios. All have grand plans for developing wind in the next few years with significant investment and a big increase of installed capacity," says Giacomo Boati from Cambridge Energy Research Associates (CERA).

Turkey, Bulgaria and Albania all have big plans to make massive investments into wind power, but Romania has perhaps the most ambitious.

Energias de Portugal is the latest European utility to announce plans to expand into Romania's wind power sector when it announced on October 23 that its EdP Renovaveis subsidiary had acquired 85% of two Romanian wind farm developers with a combined project portfolio totaling 736 megawatts (MW). This was preceded by reports on September 23 that E.On is planning to build three wind energy parks with a total installed capacity of 112 MW in the northeastern county of Vaslui at an estimated cost of €170m. E.On already has several ongoing wind power projects in three counties in northeastern Romania with a total installed capacity of 150-200 MW, which will require investments of around €225m-300m.

The biggest deal so far has been the August sale of Romania's Fantanele and Cogealac wind farms to Czech utility CEZ for €1.1bn. Together the two projects will make the largest onshore wind farm in Europe, with the capacity to produce 600 MW. Currently, Romania only produces 8 MW through wind technology. "This wind farm project will strengthen the position of the CEZ Group in Romania itself and enlarges our activities in the electricity generation sector there... Investment into renewables is one of the strategic measures we are taking to respond to the adopted energy-climatic package of the EU," CEO of CEZ, Martin Roman, declared following the deal.

Just across the border, Bulgaria too has announced bold plans to pump €500m into it's wind energy sector next year, with the aim of producing 500 MW of energy from wind by 2010, rising to 1,000 MW in 2015, according to Bulgaria's Association of Producers of Ecological Energy. It's an ambitious goal, because at present there is just 110-120 MW of installed wind capacity in the country, says the chairman of the Association of Producers of Ecological Energy, Velizar Kiryakov. At the end of 2007, only 18 countries in the world produced more than 500 MW from wind energy, according to data from the World Wind Energy Association (WWEA).

To meet its goals, Bulgaria will need interest from more firms like Denmark's Greentech Energy Systems, which said in October that it's targeting Bulgaria as the most likely location for expansion in Central and Southeast Europe. "There's no doubt that Bulgaria is the one that we are, we can say, most far advanced in, but it's still in the investigation stage," Greentech's CFO, Mark Fromholt, told SeeNews in November, adding that Romania and the Czech Republic are also interesting candidates. Bulgaria's state news agency BTA reported that Greentech has expressed interest in building a €150m wind park with a 171 MW capacity in the country.

Albania is also jumping on the wind energy bandwagon as a way to become a power exporter - an incredible proposition given the country suffers from a chronic shortage of electricity that has caused up to 12-hour-long power cuts and blackouts throughout the country this year. In September, Italy's Moncada Costruzioni and Enpower Albania agreed to export surplus wind energy to Italy via a planned power cable between the Albanian port of Vlora and Italy's Brindisi. To meet the cable's 500-MW capacity, it will have to build several wind farms, licenses for which the country's Electricity Regulatory Authority has already been dishing out to companies like Hera to build. "Although Albania has the potential to become one the of the region's premier energy producers and exporters there is at present a distinct lack of infrastructure to make this a reality," says Dragana Ignjatovic of Global insight.

One country that has taken concrete steps to build up its wind power industry is Turkey, which last year saw its wind capacity grow by 220% - the fastest in the world by some way. Second place was China with 127.5%. As a result, Turkey now produces 206.5 MW, compared with just 20.1 MW at the end of 2005, according to the WWEA, which ranks the country as the 26th biggest producer in the world.

One of the most attractive things about Turkey is the fact it is currently in the process of liberalizing its electricity market for foreign buyers - who like what they see, says CERA's Boati. "Turkey is among one of Europe's fastest growing countries in terms of power demand... it's a country that has not had a strong foreign participation so far, so many companies have seen potential for investment," he says.


Despite all this activity, concerns have been raised as to whether some of these projects could be blown off course by the financial crisis that has swept across the globe. The headlines have come fast and furious - "Alternative Energy Suddenly Faces Headwinds" (New York Times); Winds Shift for Renewable Energy As Oil Price Sinks, Money Gets Tight (Wall Street Journal). However, the reality is the wind sector is not at risk, argues William Ambrose, head of Emerging Energy Research. "These headlines are driven by panic on the margins, which reflect the concerns of companies and projects that certainly are at risk," he explains. "While the global financial crisis is taking the steam out of the new energy boom, with a slowdown in new project spending expected in 2009, the long-term fundamentals remain in place - the globe is still warming, the earth's fossil fuel resources are still being depleted, and the developing world's demand for energy will continue to grow in leaps and bounds."

CEZ spokesman Martin Schreier categorically stated to bne that the current financial climate will have "no impact" on the utility's plans to develop wind energy in Southeast Europe.

"I don't think [the crisis] will have a big impact on projects being brought forward by large utilities, as most of them still have sound balance sheets and, if willing to do so, could finance the projects out of their balance sheets," argues Boati.

Elsewhere in the region, though, the wind of change has yet to blow. Only one of the countries that make up the former Yugoslavia is producing energy from wind and that's Croatia, which registered 17.8 MW at the end of 2007. The others have a long way to go. Of these, the biggest electricity consumer is Serbia, which accounts for almost half the CO2 emissions in the Western Balkans and is one of the most polluting countries in Europe, according to the energy consultant Aleksandar Kovacevic, author of the International Energy Agency's recent report, "Energy in the Western Balkans - The Path to Reform and Reconstruction." Kovacevic points out that most of Serbia's energy is produced from a mixture of coal, oil and gas, a policy that doesn't look like changing anytime soon. "Serbia's official energy strategy envisages even more electricity generated from lignite, which means even more carbon intensive development... so far, we don't see any particular understanding about the magnitude of the problem," Kovacevic says.

But as Serbia and others in the region that have yet to invest in wind energy watch their neighbours steadily rise up the rankings of global wind energy producers, it's likely that they, too, will eventually reassess energy policy. Indeed, on September 16, it was reported that Green Star Alternative Energy intends to merge with Serbia's only wind power developer Notos.

Send comments to The Editor

Related Articles

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

CEE leaders call for Nato troops to help deter Russian aggression

bne IntelliNews -   Central and Eastern European leaders blasted Russian "aggression" on November 4 and called for Nato to boost its presence in the region. The joint statement, issued at an ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.