Serbia’s ‘California’ Problem

The Energy Crisis - And the Solutions - Are Global

World Reports

Belgrade - Last winter, Mica Draganic, 65, had only beans and potatoes to feed her three small grandchildren. Although she did have a season’s worth of meat in the freezer, it fell victim to the ceaseless blackouts that continue to plague post-Milosevic Serbia.

After Draganic spent last summer fattening a pig for a zimnica (a substantial stew of meat and vegetables that is supposed to last through winter), the power kept going out. “We had no electricity for more than 10 hours a day,” she said. When the freezer stopped working, out came the zimnica - which Mica cooked up for several grateful neighbors - and gone was a season’s worth of hardy eating.

If you think California has energy problems, take a trip to Belgrade. One might think that energy is the furthest thing from people’s minds in a country racked by isolation, war and dictatorship. On the contrary, the president is briefed daily on who is producing kilowatt hours where. How much can this plant produce? How much needs to be imported? Except for the language, this could have been Sacramento in the spring of 2001.

While the source of Serbia’s problems are quite different than California’s - some of the powerplants supplying Serbia happen to be on the wrong side of the Kosovo border, for example - other causes sound strangely familiar. Low rainfall in the Balkans has depressed Serbia’s hydropower output, much as the Pacific Northwest was unable to come to California’s rescue because of drought.

In California, the inconveniences ranged from 90 minutes without Starbucks cappuccino to rush hour crawls through traffic intersections. This was not an issue in Serbia where a decade of Slobodan Milosevic has reduced the economy to practically nothing.

In Serbia, electricity is used to heat homes through the fierce Balkan winter. One of Milosevic’s smaller mistakes was to subsidize electricity and encourage people to abandon coal, wood and natural gas in favor of electric heating.

In 1990, the residential sector consumed 40 percent of Serbia’s electricity, a figure that is now at a startling 70 percent. Serbia’s households now consume more electricity per capita than any country in Europe.

Since 1990, peak demand has risen twice as fast as overall consumption, a trend that would give most utility engineers ulcers. Without additional capacity, more blackouts will occur, particularly during winter.

A modern power infrastructure might be able to handle the stress, but in Serbia, low prices have meant that the power sector has received little payment from its customers. Combine this with the damaging impact of four wars, UN sanctions and zero foreign investment, and the results are not surprising: severe under-investment, a lack of routine maintenance and the failure of the state-owned utility - ElektroPriveda Serbia (EPS) - to meet the basic power needs of the country.

One of the toughest jobs in the government belongs to Energy Minister Goran Novakovic, who recently told a press briefing, “EPS in Serbia is like a 95-year-old man. You never know whether he will wake up the next morning.” When politicians talk like this, one can only hope for a mild winter.

Serbia’s peak winter demand is about 7,200 MW, but EPS only has a capacity of 6,500 MW. This shortfall has to be made up with power imports from Greece, Romania and Bulgaria. EPS officials estimate that between October 2001 and March 2002, Serbia will have to import about 2.4 billion kilowatt-hours (kWh), at an estimated cost of $70 million.

Serbia’s dams on the Danube produced 30 percent less electricity this summer than average, a figure typical throughout the region.

It would help, of course, if customers paid their bills but, in Serbia, where people pay .05 to 1 cent per kWh, no utility in the world could survive. In Bulgaria, Albania and other neighboring countries, residents pay 4 to 6 cents per kWh. Even with their low subsidized prices, some Serbians pay more than one-third of their total income to the electric company.

Ignoring the pain and inevitable political fallout, the Serbian government allowed EPS to raise prices 60 percent in 2000, followed by another 40 percent increase. Today the average kWh costs approximately 2 cents, still lower than the cost of production. The International Monetary Fund was looking for a 46 percent additional increase in October 2001, a figure the government bargained down to 15 percent.

The government’s effort to explain the end of the subsidies has been a dismal failure. Serbs are not accustomed to trusting their leaders. Many frustrated consumers complain about EPS officials driving around in expensive cars (EPS subsequently donated its luxury sedans to striking coal miners). EPS’s decision to cut off non-payers - unthinkable in the Milosevic days (except maybe for the opposition) - means that Belgrade is facing potentially serious unrest if people start freezing during the winter.

The first goal would be to increase electricity production, but building powerplants takes time, which Serbia doesn’t have. Another response would be to replace electric heaters with gas boilers in buildings. But rebuilding gas lines or installing boilers takes money, which Serbia doesn’t have either.

The answer to Serbia’s dilemma actually comes from 8,000 miles away. California’s successful energy conservation campaign - which cut summer energy use by 11 percent - could be an inspiration to weary ministers in Belgrade. If turning off the lights, turning down the heat and drying clothes on clotheslines could reduce Serbia’s electricity use by 11 percent, this would almost eliminate the country’s electricity deficit. A collective voluntary effort to reduce energy waste could put a lot more dinars into people’s pockets.

Like buildings in most East European countries, Serbia’s aging housing stock is a gigantic energy sink. EPS estimates the average apartment loses more than one third of its heat through drafty windows and poorly sealed doors. Cities can invest in simple energy-saving techniques, such as weatherizing homes, schools and public buildings, and replacing old street lights with new, efficient lamps.

As outlets for the Milosevic media machine, Serbian TV and radio stations never had to pay their electric bills and now owe EPS large sums of money. EPS has begun exchanging these debts for free airtime. The US Agency for International Development is helping by paying for commercials and documentaries demonstrating the best techniques to seal windows and doors.

Energy efficiency helped California through the worst of its crisis and it can help Serbia through its current one. But just as Gov. Gray Davis was hoping for (and got) a cool summer, you can bet that Serbian Prime Minister Zoran Djindjic is praying for a warm winter. So are Mica Draganic and her grandchildren.

Seth Baruch works for the Alliance to Save Energy [1200 18th St., NW, Suite 900, Washington, DC 20036, (202) 857-0666,].

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