Presentation

IFC Biomass Mapping

Study

Bosnia Herzegovina

SA Consulting GmbHFranziskanerplatz 31010 Vienna, Austria

www.s-a-consulting.com

Introduction

• In EU Renewable Energy Sources get significantattention and Policies have been developed

• European Union (EU) Renewable Energy Directive 2009/28/EC sets targets for member states

• Western Balkans of Strategic Importance to EU

• Energy Sector in the Region suffered heavily due to the war in the 1990s

• Existing Infrastructure needs refurbishment and significant investment

• BiH has abundant Biomass resources, but currentlylargely untapped

Section A:

Basic Analysis of Main Regulatory Framework

Current Status

• Good biomass potential (agricultural, forest)

• Regulatory and institutional framework has been

developed recently with help of IFC

• Energy Strategy has been developed mainly on an

entity level, but a nationwide Renewable Energy

Action Plan (NREAP) still does not exist

• Biomass market not developed yet

• Very limited - especially financial - support for DH

projects

Issues

• Numerous institutions coordinate activities on different levels and in several fields (resources, regulatory, exploitation, development, ...)

• Forest management issues – local management expertise and experience

• Long term contracts - forestry management prefers only one year supply contracts

• Legal issues and uncertainties– no specific laws and rules legal issues on property

• Infrastructure issues – wood infrastructure partly missing or outdated

• Missing experience with PPP models

Findings

• BiH has a very good biomass potential

• Potential has not been targeted by legal authorities

• Legal competencies are totally split among various

governmental bodies

• Identified Bottlenecks

– No countrywide energy action plan in place

– Outdated infrastructure

– Missing coordination between various legal bodies

– Missing experience and know how leads to lack of political support

– Formal procedure for long term supply agreements between forestry

companies and investors missing

– no financial incentives for heat supply in place

Opportunities

• Biomass and DH market are under development, but due to

excellent raw material reservoir biomass has the opportunity

to play an important role in the energy sector in BiH

• Professional and commercialized usage of agricultural and

forest residues with introduction of new technologies

• Positive effects on suburban and rural employment and

development

• Increased energy security and efficiency

• Possible projects between EUR 1 Mio and EUR 15 Mio.

Section B:

High Level Analysis of existing or

potential District Heating (DH) Systems

General overview of DH sector

• About 20 DHs in operation

• Technology often outdated and needs refurbishment

• Mostly public DHs (municipal) ownership

• Private DHs: Gračanica, Livno and Gradiška (biomass) and

Travnik (coal)

• Fuels: coal, heat from cogeneration, biomass, liquid fuels and

natural gas

Issues in DH sector

• Low level of energy efficiency of buildings

• Low level of annual load – less than 20% (excess of capacity

and no cogeneration)

• Tariff system (stimulation of energy cosumption, different

tariffs for private and legal bodies, responsibility of a

municipal assembly)

• Pipelines (heat losses and water leakages reach 20-30% of

energy input in fuel)

• Tendency – expansion of networks (air pollution is main

driving force!)

Summary of Findings

• Most of DHs use very old technology, esp. boilers (about 30 years old)

• DHs using biomass do not feel biomass supply as an issue

• Tendency of fuel switching - Municipalities, in which DH infrastructure does not exist or does not operate consider only biomass - different kinds of biomass - as fuel (Bihač, Kladanj, Teslić, Prnjavor and Vlasenica)

• Some DHs recognize cogeneration as an opportunity to increase the financial sustainability

• Collection rate has an important impact on project feasibility and -sustainable business model needs to be developed

• There is political willingness to support DH investments

• PPP Models should be introduced

• Still lack of experience and know how - Municipalities and Companies need support to develop concrete projects

• Lack of utilization of financing possibilities is an issue

• Tendency to switch fuel to biomass

Opportunities and Recommendations

• The best opportunity is to upgrade existing heat generation plants with cogeneration technology

• Provide assistance in project development and biomass supply contracting for DHs that use or will use biomass

• Motivate management of public enterprises managing public forests to establish clear rules and procedures for taking out of forest residues and to invest in machinery for the collection and chipping of forest residues or enable other companies (public or private) to do that - needs training and know how transfer

• NAMA (National Appropriate Mitigation Action) mechanismintroduction to support DH project development

• Demonstration projects are seen as a good start to developthe biomass and DH market in BiH

• Development of a financing scheme important

Section C.

High level Analysis of Biomass Fuel

Supply Sources for Heat and/or Power

Generation

• BiH is one of the most forest covered countries in Europe

• Country has a long tradition in the wood processing sector

• Large publically owned fully-integrated companies were

disintegrated or collapsed due to war situation

• Approx. 1.500 wood proccesing companies now operative

• Outdated Infrastructure is an issue

• Ineffective wood work leads to a 30% capacity loss of raw

material

• Wood residues are left in the forest without any usage

General Overview of Wood Processing Sector

• Wood processing companies are mostly aware of the importance and

possibility for using biomass they produce

• Most of them already use biomass in some way, e.g. heating and drying

• Ineffective wood work leads to a 30% loss of raw material

• Wood residues are left in forest without any usage – e.g. in Croatia poor

people are allowed to collect wood residues

• Main obstacles are the relatively small capacity of many the companies

and uncertainty concerning the legal framework, e.g. feed-in tariffs

• Cogeneration plants need relatively big investments and certainty in

sense of long-term contracts for wood and clear prices for feed-in tariffs.

• There is interest from side of municipalities to cooperate with wood-

processing companies regarding the inclusion in district heating systems

or the electricity grid system, but no concrete action taken so far

• Companies need support for creation of biomass market and the

development of concrete projects – training, technology, financing

possibilities, long-term agreements, etc.

Summary of Findings

General Overview of Agriculture Processing

Sector

• Bosnia and Herzegovina has huge biomass potential in the agriculture and food processing sector

• More than 1.5 million ha of agricultural land and excellent climatic conditions, as well as fertile soil and high quality water

• Large number of small land plots (average plot is about 1ha).

• A lot of land in BiH is uncultivated and just used as green areas. Some people use that areas for livestock, but unfortunately many of that areas are not in use.

Summary of Findings

• Agriculture companies are less aware of the importance and potential of biomass than wood processing companies

• Much less organized than the wood processing sector

• Sector needs professional information, training and support to better understand the potential of biomass

• Main obstacles are small individual plots, old technologies, insufficient cooperation, lack of data, etc.