The energy sector is one of Bosnia and Herzegovina’s (BiH) most important export sectors and engines for economic growth. The sector also has key relevance for the country’s accession to the European Union (EU) and energy security in the Western Balkans. BiH could more than double its electricity production if it capitalized on its potential for hydroelectric power, used renewable energy sources, implemented energy efficiency measures and built more thermal power plants. To date, however, a number of obstacles – political and bureaucratic, and the absence of a market-oriented environ-ment – have driven away even the most determined investors.

USAID Assistance

The main objectives of USAID’s Energy Investment Activity are to help the country attract investment and create jobs in the energy sector. Through this activity, USAID works to revise and align the permitting processes for construction of electricity generation facilities, so they are consistent, transparent and investor friendly throughout the country.

The project develops and recommends legislative and other measures, at all levels of government, that will stimulate investment in new power plants—especially renewable energy power plants and biomass co-generation throughout the country. It helps establish a retail market in which electricity consumers can choose their supplier, and works to achieve energy savings and emissions reductions through regulatory incentives. The project also supports the BiH Ministry of Foreign Trade and Economic Relations in coordinating the country’s energy sector on its path to EU accession. A strong public outreach and awareness program will ensure BiH citizens understand and benefit from the changes taking place in the energy sector.

USAID’s implementing partner for this five-year $7.17 million project is Advanced Engineering Associates International.

Implementation and Results

In partnership with local authorities, USAID’s Energy Investment Activity works to ensure that the energy sector remains a profitable sector of the BiH economy by proposing and advocating for passage of transparent and investor-friendly legislation that will enable new generation plants to be built. The project is identifying opportunities to stimulate investment in biomass power plants in the agriculture, wood processing and livestock farming sectors and assessing the feasibility of such plants through a web-based software tool developed by the project.

The project also works with energy regulators and government authorities to develop the necessary commercial processes that allow electricity customers to choose their suppliers according to the prices and services offered. Together with key energy stakeholders, the project will assist in drafting an “Energy Efficiency Obligation Scheme,” which is a financing mechanism for energy efficiency measures. Implementation of EE measures could eliminate the need for at least one thermal power plant and create jobs in the energy efficiency sector.

The project assisted in drafting the National Emission Reduction Plan for BiH (NERP), which was found to be the only NERP in the region fully compliant with Energy Community Secretariat requirements.

In the natural gas sector, the project works to remove the obstacles to investment and to assist BiH in diversifying its sources of supply to enhance energy security. The project is also helping the BiH gas sector develop and propose transparent natural gas legislation, as required by applicable EU Directives.