Enhancing Capacity for Low Emission Development Strategies (EC-LEDS)

Developing legal and regulatory frameworks for competitive energy markets and renewable energy development in Eastern Europe and Eurasia

Client
U.S. Agency for International Development (USAID)

For the past two decades, several Eastern European and Eurasian countries have undergone structural political and economic reforms to align with market-oriented European Union (EU) standards in hopes of becoming eligible for membership in the EU. The EU, which recognizes energy as a high-priority economic sector, requires growth in renewable energy generation and greater privatization of energy supply chains. Implementing these policies presents serious challenges to former Soviet bloc countries that have traditionally had heavily state-owned energy sectors. Most notably, they need to reform energy laws and regulations to create fair and competitive markets in which private developers and consumers can play active roles in how electricity is generated, priced, distributed, and used. Solving these challenges is vital for these states to effectively integrate into the low-carbon energy future of the EU and not be left behind.

To meet these challenges, RTI International implements the U.S. Agency for International Development (USAID)-funded Enhancing Capacity for Low Emission Development Strategies (EC-LEDS) program. The program works in Albania, Armenia, Azerbaijan, Kosovo, Macedonia, Moldova, Serbia, and Ukraine. Our aim is to develop international and regional laws, regulations, and rules needed to realize investments in implementing market-driven energy infrastructure and practices, as well as viable clean energy solutions to meet EU standards. These countries face a unique opportunity to develop and install alternative clean energy technology that will both alleviate poverty and promote economic growth, while reducing dependence on high-emission energy sources.

Developing regional energy markets to increase investment and enhance cross-border trade

We work with countries that share similar goals of shifting electricity generation and delivery from a public monopoly into a more competitive and robust market model. We work to amend power sector laws, develop market rules, and promote new energy laws to align with the EU Third Energy Package in the power and gas markets. Collectively, we have helped draft and finalize more than 58 pieces of energy legislation that have been adopted by country parliaments.

In addition to stabilizing national grid systems to be more efficient and reliable, we are helping to increase cross-border trade. Trading electricity across borders helps countries meet periods of high electricity demand by using the excess electricity generation of another country. Each country gains energy reliability while seeing greater opportunities for renewable energy industry job growth and the expansion of energy supply chains. Cross-border trade efforts between Albania and Kosovo and between Armenia and Georgia resulted in breakthrough legislation. These achievements gave stakeholders clear agendas and targets around which to base near- and medium-term planning, setting the stage for market certainty in power exchange infrastructure.   

Procuring private investment has been a key element to the EC-LEDS program and is a major pillar to making competitive energy markets sustainable by attaching incentives to energy efficiency and quality consumer service. We enhance investment opportunities between public and private entities by developing policies that promote investor-friendly tools such as market rules to uphold third party participation, electricity tariff pricing laws, developer licensing, and power purchase agreement templates. To supplement legislative goals, we worked on the ground to strengthen the financial transaction capabilities of stakeholders to ensure each party thoroughly understood best practices and to streamline the business process.

As a result, in Armenia, our team drafted two pieces of legislation that were adopted in July 2017 and March 2018, respectively. Moreover, in Albania, the Energy Regulatory Authority approved the final regulation on new investment for licensees in the power sector. Private energy developers and producers depend on such legislation when making decisions to build and operate certain types of power plants. Creating uniform rules and clear legal procedures that allow companies to sell their power at the best price for them and the customer is essential for any energy market to succeed.

Reducing greenhouse gas (GHG) emissions through a diversified energy supply

To enhance the rate of renewable power investment and integration, we support emergency energy planning and the integration of renewable generation sources with financing mechanisms and innovative technologies—such as smart grids and net metering—to enhance clean energy use, effectiveness, and sales cycles.

Our technical assistance in Moldova helped design the Emergency Action Plan for the national power market, as well as energy-law amendments that were adopted and signed into law in 2017 and 2018. These achievements represented major steps forward in defining renewable generation targets and expanding a best practice-driven energy market to promote robust private renewable energy developer participation in electricity generation and distribution.

In addition, our team worked with a private enterprise in Kosovo to procure and make financially viable commercial-scale solar photovoltaic (PV) generation to meet cost savings and efficiency needs. Our work with private businesses not only identified cost-saving strategies for companies, but also gave a blueprint for how to implement commercial-scale solar systems that can enable businesses to increase revenue by producing electricity.

 

Building capacity of host government institutions to prepare and implement low-emission development strategies (LEDS)

Our experts work closely with host government institutions to include efficient technologies and practices into power sector laws and energy strategies. This assistance will improve the legal and regulatory basis for national and municipal entities to implement low emission development strategies with the support of private market actors and consumers. Most notably, we drafted a 15-year energy policy strategy for Albania that promotes competitive markets for electricity producers and suppliers and accommodates cross-border trade. The strategy was formally adopted by the Albanian government in March 2018.

Our team is also building host government institutions’ capacity to independently draft and enforce high-level policy concepts for energy market development. In Armenia, our team continues to work with the Public Services Regulatory Commission of Armenia on enforcing transitional rules and regulations. The commission is also building the capacity of the Settlement Center—which is responsible for power and energy calculations in wholesale market, on grid codes, and provisional licenses—to one day become the official Market Operator. Regulators have the obligation to independently procure electricity generation and allow fair third-party access to the grid. Strengthening the knowledge and capacities of these institutions to uphold market integrity is the linchpin essential to guaranteeing the future success and growth of competitive sustainable energy markets.

USAID’s EC-LEDS program is significantly improving these countries’ ability to be full EU member states. It is also defining a firm direction for regional energy policy and infrastructure to be better equipped to meet future needs for sustainable growth. Partner government and private institutions continue to build on and promote integrated decision-making, planning, and implementation of key energy market elements that will fuel 21st century economic growth.