Drim Hotel on picturesque Lake Ohrid recently revamped its heating and cooling system. Although the hotel had been using heat pumps for a decade — an energy-efficient alternative to boilers and air conditioning systems — it opted to switch to solar thermal technology. Unlike photovoltaic systems (PV), which turn solar rays into electricity, solar thermal modules produce heat that is used to drive heating and cooling units.

Hotel manager Krste Blazheski told DW that a 10%-plus rise in the cost of electricity this year meant investing €170,000 in swapping the electric heat pumps for a combined solar thermal and photovoltaic (PV) system would soon pay off. "Return on investment will take three to four years maximum," Blazheski said. "Then we will have free power."

Still, the Drim's investment in solar thermal technology puts it firmly in the minority in North Macedonia. According to DW research sponsored by the European Journalism Fund, many firms and private citizens are eager to transition. Yet meager government subsidies for the capital-intensive investments, coupled with unlicensed contractors clogging the market with subpar merchandise and service, provide little encouragement.

"Macedonian sun for Macedonian energy," former Prime Minister Zoran Zaev said in 2018, announcing that the country would use its plentiful sunshine to generate economic growth. Five years later, the Balkan state — its flag emblazoned with a resplendent sun — is hardly racing toward its ambitious targets for solar thermal and photovoltaic energy.

One of the sunniest places in the world

According to the state statistical office, North Macedonian households installed nearly 80,000 solar thermal collectors in 2019. Mass expansion should be doable: With 280 days of sun a year, North Macedonia boasts more than most countries. Yet the latest report by the International Renewable Energy Agency revealed that less than 2% of the country's power is currently solar-generated, one of the lowest levels in Europe.

 

The Eko-svest NGO for environmental research and information, which recently launched a campaign on smart energy planning, reports that installing solar panels on just % of the country's territory could make North Macedonia energy independent. Apparently, there's no lack of popular interest. "Ninety percent of citizens believe solar energy could be used much more to meet energy needs," Eko-svest director Ana Colovikj Leshoska said. And roughly the same number believe that there should be more investment in energy independence, she added.

Too few subsidies

Inadequate support for investors is a huge obstacle to the rollout, experts and businesspeople alike say. Subsidies have so far been tiny. A mere €80,000 a year is allocated to household solar thermal collectors, meaning that 500 to 600 families receive €150-300 to help cover installation costs. Household systems, usually consisting of one or two modules, cost about €500 per panel. A single collector provides approximately 150 liters (40 gallons) of hot water a day. "This is nothing, considering the country's needs," said Ilija Nasov, director of the industry lobby group Solar Macedonia. Moreover, as a result of the strain placed on state funding by the coronavirus pandemic, North Macedonia's Economy Ministry has confirmed that there will be no state aid for solar thermal systems at all this year.

The cost of solar thermal technology in this developing country has led to the emergence of "phantom companies" that do inferior work with shoddy materials, made mostly in China. "People want to buy systems as cheaply as possible. They often make the mistake of inferior quality," said Sanja Popovska Vasilevska, from the Macedonian consumer protection agency. Companies pop up one day, complete the work and disappear the next, she said. Soon after, the system's pipes burst or similar. When frustrated consumers turn to her organization for help, it is usually impossible to find the firms, while the clients lose their investment, Popovska Vasilevska said.

New legislation to deter fly-by-night suppliers

Nasov said the current legislation urgently needed changing: Companies that install solar thermal collectors without a state-issued quality certificate should not qualify for subsidies. He said fly-by-nights that import cheap, flawed collectors remain exempt from customs, while North Macedonian manufacturers such as Camel Solar and Plasma pay an 18% tax to import raw materials for domestic solar collector production. "There is no control mechanism," Nasov said. Solar Macedonia organizes courses and issues certificates for licensed installers. Eighty people received training in three years. Yet 200 licensed installers nationwide are simply too few, according to the association.

"When installing photovoltaic systems, the situation is completely different," said Marko Bislimoski, head of North Macedonia's Energy and Water Services Regulatory Commission. Before approaching the commission to apply for energy production licenses, companies need numerous documents and building permits. Developers complain about the red tape, but it does ensure that photovoltaic investors don't run the same risks as consumers do in buying deficient thermal systems.

Despite the problems, there's a big push for renewables in North Macedonia, which the European Union supports. The target share of renewables in gross final energy consumption has been set at 40% by 2030 and 45% by 2040. Since 2018, the European Union's investment bank, EBRD, has financed about €27 million worth of solar and hydroelectric energy production facilities. "EBRD has supported significant investment in the transmission and distribution grid, necessary for the energy transition, security of supply and rollout of renewable energy sources," said Andi Aranitasi, head of EBRD in North Macedonia. Experts agree, however, that no, matter how well-intended, this and other sources of international funding are unlikely to help North Macedonia reach its lofty targets on time.

This article is part of a five-part series on renewable energy development in South Eastern Europe conducted with the support of  journalismfund.eu.

Edited by: Paul Hockenos, Rüdiger Rossig, Lucy James