Draft principles for sustainable hydropower in the wb

PRINCIPLES FOR SUSTAINABLE HYDROPOWER DEVELOPMENT IN THE WESTERN BALKANS The countries of the Western Balkans need new sources of energy production. Even though their economies will reduce their energy intensity in the coming years by implementing ambitious targets for energy efficiency, the region will experience growing energy demand at the same time as it needs to continue decommissioning aging and polluting fossil-fuel generation capacity to move towards efficient, sustainable and carbon neutral economy. In this context, the region needs stronger coordination between the energy, environment and climate change legislation and policies in line with accession commitments.

Due to the region's topographic and hydrologic characteristics, but also its technology and considerable know-how, hydropower already plays a significant role in the region’s energy production and economic opportunities. This role could be strengthened by observing essential sustainability principles. 

Hydropower amongst other renewable energy sources Hydropower development should be only one element of a broader strategy to replace carbon-intensive generation capacity, achieve the binding renewable energy targets established in the National Renewable Energy Action Plans and overcoming the electricity deficit in the region. All renewable energy sources should play a strategic role in the new energy mix, which should also include wind, photovoltaic and biomass, in parallel with the implementation of energy efficiency measures. In this context, the implementation of the EU Large Combustion Plants Directive 1 , Industrial Emissions Directive 2 and Renewable Energy Directive3 represents an important driver for the Western Balkan countries to develop renewable energies. 

The priority of rehabilitating the existing structures As a result of the Western Balkans’s strong tradition of hydropower development, hydropower already contributes 49% of the six countries’ electricity production. However, with 90% of the region's hydropower capacity constructed before 1990 (and some 10% before 1955), infrastructures are aging and at risk after years of under-investment. Rehabilitating and increasing the efficiency of existing hydropower plants in combination with ecological restoration measures shall thus be the first, immediate priority for investments, to safeguard the existing capacity and generation that hydropower currently makes to the region’s energy mix. 

A limited number of additional large hydropower plants In order to add increased capacity to meet growing energy demands (rehabilitation can only maintain but not increase significantly the capacity), some additional new generation plants could be developed across the region. However, most of the prime hydropower sites in the region have already been taken. Due to the necessity to preserve the environment, modifications in hydrology resulting from climate change and available water resources, and the challenges for greenfield projects to be financially viable in the current market, only a limited number of projects are likely to materialise.

Most hydropower energy and capacity in the region is being delivered by the large hydropower plants. The development of greenfield projects should be limited to large hydropower plants, as the contribution of small hydropower plants (of a capacity below 10 MW) to the global energy production is extremely limited while their impacts on the environment are disproportionately severe. The 390 small hydropower plants currently in operation in the Western Balkans 6 region represent almost 90% of all hydropower plants in number while only producing 3% of the total hydropower generation and constitute 7% of the total hydropower capacity. Additionally, with state-support schemes phasing out after 2020, private sector interest in developing small hydropower plants is expected to diminish significantly. 

Grid integration of renewable energy sources and regional electricity market

Hydropower development needs to be accompanied by adjustments to the transmission and distribution networks and, ultimately, with the development of the regional electricity market to ensure that project

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Directive 2001/80/EC Directive 2010/75/EU 3 Directive 2009/28/EC 2

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developers have a wider market for their production. The transmission network is largely ready, so attention should mostly focus on the distribution network, in particular on reducing technical losses. 

Integrated water resources management Hydropower development must take account of interactions upstream and downstream, beyond administrative and political boundaries. In this perspective, the implementation of the EU Water Framework Directive4, an essential piece of legislation on the path to EU accession on all water sources and uses, requires the development of River Basin Management Plans. These plans shall offer an essential first step for integrated water resources management at river basin level and for a sustainable development of hydropower generation. River Basin Management Plans shall allow contribute to a proper assessment of the viable hydropower capacity of the region as well as an assessment of the cumulative effect of existing infrastructures and prospective projects.

A variety of guidance documents have been developed to implement integrated water resources management, based in particular on previous experiences and best practices. Using the following guidelines when planning hydropower development may prove particularly instrumental for its successful implementation: -the forthcoming European Commission guidelines on Natura 2000 and hydropower and the Common Implementation Strategy (CIS) guidance on article 4(7) of the EU Water Framework Directive next to other existing CIS guidance; -the International Commission for the Protection of the Danube River Guiding Principles: Sustainable Hydropower Development in the Danube Basin; and -the European Bank for Reconstruction and Development Environmental and Social Guidance Note for Hydropower Projects and forthcoming other IFIs guidelines. 

The climate challenge for hydropower development There is a scientific consensus that the Western Balkans will suffer disproportionately from climate change5. Climate change will affect the spatial and seasonal precipitation distribution, with a significant decrease expected, especially during the summer months, in parallel with increasing temperatures. The progressive decline in water availability will exacerbate existing pressures on water resources. It will compromise hydropower generation and will increase the competition with other sectors depending on water (such as agriculture and industry). At the same time, more frequent and extreme floods, such as the tragic ones in 2014, are expected to occur, requiring higher flood resilience, in particular additional flood protection infrastructure.

Existing assumptions about the viability of hydropower plants will need to be updated to take account of hydrological alterations resulting from climate change and climate adaptation scenarios will have to be integrated into future development of hydropower. The multipurpose use of hydropower infrastructure linked to flood control measures should be considered as part of a flood protection strategy. 

Environmental impacts of hydropower development Hydropower can have large, negative impacts on the environment and, in particular, on water resources, the ecological status of the rivers and the associated ecosystems and biodiversity. The unique nature and biodiversity of the region, including several pristine river ecosystems, and the services they provide to its inhabitants, means that hydropower must be developed in compliance with the highest standards of ecological preservation. Hydropower development shall, according to the Water Framework Directive, not lead to a deterioration of water body status as long as the conditions for exemptions are not met and maintain a favourable conservation of habitats and species.

In that perspective, relevant EU environmental legislation, independently of its transposition status, and applicable international conventions remains the reference for hydropower development: - EU Water Framework Directive and the two associated directives: the Environmental Quality Standards Directive and the Groundwater Directive;

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Directive 2000/60/EC World Bank Group, Turn down the heat: confronting the new climate normal – the climate challenge for the Western Balkans, 2015 World Bank, Water and Climate Adaptation Plan for the Sava River Basin : Final Report, 2015 5

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- EU Floods Directive 6; - EU Birds 7 and Habitats 8 Directives; - EU Strategic Environmental Impact Assessment 9 and Environmental Impact Assessment Directives; - Aarhus Convention 11; - Espoo Convention 12 and SEA Protocol; - Bern Convention 13 - Relevant transboundary water conventions and agreements.14

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These requirements are interlinked and should therefore be implemented in a coordinated manner.

Some areas are of particularly high nature and biodiversity value and vulnerability, and not all impacts of hydropower development can be mitigated. Such zones should be identified and preserved, in particular by excluding them from hydropower development. The on-going process of designating Natura 2000 sites will contribute to identify and preserve such areas. 

Transboundary considerations A transboundary approach to hydropower is essential in a region where most, if not all, river basins are shared, and affecting significantly the water balance and the flow upstream or downstream. The EU legislation and several applicable international conventions specify how to co-operate successfully on such transboundary aspects. Planning hydropower development at the level of river basins, with the development of integrated River Basin Management Plans as required by the EU Water Framework Directive, will ensure that all countries' interests are considered.

Hydropower projects based on transboundary cooperation may present not only opportunities for sharing electricity production and participate to the regional and broader EU electricity market, but also cofinancing opportunities. 

Including sustainability principles in hydropower planning Sound strategic planning and high standards in project design will be achieved with the development, respectively, of high quality Strategic Environmental Assessments and Environmental Impacts Assessments.

The EU Directives shall be the reference to develop these assessments – not only the Strategic Environmental Assessments and Environmental Impacts Assessments Directives but all relevant Directives, such as the Water Framework Directive or the Habitats Directive. The assessments should cover not only environmental impacts but all pertinent aspects, including integrated water resources management, the effects of changes in climate patterns, transboundary considerations as well as social impacts and preserving cultural heritage.

For projects likely to have significant effects on the environment, Environmental Impact Assessments must be systematically undertaken and quality-checked when developing greenfield projects as well as for rehabilitating existing infrastructures. The assessments could identify a wide range of measures to be introduced for environmental mitigation and ecological restoration.

The Environmental Impact Assessments should not only consider impacts at the scale of the site of the project but also at the scale of the river, to include potential consequences upstream and downstream.

Cumulative impacts of other activities should also be assessed.

Projects located in designated protected areas, or areas of high nature and biodiversity value and vulnerability shall be assessed with a higher scrutiny in compliance with the provisions of the EU Habitats 6

Directive 2007/60/EC Directive 2009/147/EC 8 Directive 92/43/EEC 9 Directive 2001/42/EC 10 Directive 2011/92/EU as amended by Directive 2014/52/EU 11 UNECE Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters 12 UNECE Convention on Environmental Impact Assessment in a Transboundary Context 13 Convention on the Conservation of European Wildlife and Natural Habitats 14 Convention on the Protection and Use of Transboundary Watercourses and International Lakes, Danube River Protection Convention, Framework Agreement on the Sava River Basin 7

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and Birds Directives. Projects which are expected to cause deterioration to water bodies should only go ahead if compliant with the provisions of the Water Framework Directive.

All assessments must be subject to proper public consultation, engaging with local community as well as civil society organisations. Transboundary consultations with affected countries have to be undertaken as well.

Not only do the requirements to proceed with these assessments constitute a legal obligation agreed under the Energy Community Treaty, and an approaching obligation in the process of accession to the European Union, but they most often result in significant improvements of the technical aspects of projects.

By endorsing these principles, the Western Balkans six reiterate the commitments made in the context of their future accession to the European Union as well as under the Energy Community Treaty and the Paris Agreement.

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