* Serbia to import a third of its winter power needs
* Traders say imports may be higher
* Floods knock out power sector
By Maja Zuvela
SARAJEVO, July 2 An over-reliance on coal and
scant progress in diversifying energy sources will force Balkan
nations to increase power imports to keep the lights on this
winter and drag down their struggling economies, traders and
Recent floods in Serbia and a blast in June at Kosovo's
second biggest power plant have sent the countries scrambling to
find emergency electricity imports and underlined how easily
fragile power sectors in the region can be de-stabilised.
Officials in Serbia say the country, which produces 70
percent of its power from coal and the rest from hydro, will
have to import a third of its power needs to offset the
shortfall in output in the last quarter of the year due in part
to damage from the floods.
Traders warn, however, the biggest Balkan nation may have to
import power much longer than authorities anticipate, especially
if aging power plants stay offline longer than expected or the
region experiences a hot, dry summer or a harsh winter that
could limit hydro supplies.
"If the winter is mild and hydrology normal, power imports
will vary between 400 and 600 gigawatt-hours (GWh) a month in
autumn and go up to 800 GWh a month from December through
April," one trader said.
Based on current prices, that could cost up to 30 million
euros a month.
The floods engulfed a mine supplying Serbia's biggest power
plant - which meets half the country's power demand - and pushed
the cash-strapped nation to cut its 2014 economic growth
forecast to between zero and -0.5 percent from an earlier
estimate of 1 percent.
The damage to the mine was estimated at 100 million euros
($136.41 million) and officials estimate it will take a year to
get the site back to full capacity.
"In an era of increasingly frequent floods, storms and
droughts in the region, a strategy of putting all your eggs in
one basket is highly risky," Pippa Gallop, the research
coordinator at CEE Bankwatch Network, an EU-funded advocacy
group told Reuters.
In normal years, the region's power generation capacity is
already 2 GW short of demand, which experts estimate will jump
50 percent over the next decade as economies expand.
The problem is Balkan nations have made little progress in
cutting red tape and improving the regulatory framework to
jump-start plans to invest 28.8 billion euros in new hydro and
coal capacity by 2025.
"Recovery will be long and costly and governments should
rethink their energy policies, taking into account climate
change and need to decommission ageing coal power plants," said
Sijka Pistolova, analyst and editor-in-chief of the Energy
Observer web portal.
In Slovenia, power utility HSE has voiced a concern that a
strike over unpaid wages of 900 coal miners at the Velenje coal
mine could jeopardise the future operation of the Sostanj plant
which supplies a quarter of Slovenia's power.
Other countries, such as Albania, are over-reliant on hydro
power and vulnerable to swings in water levels while nations
such as Kosovo have staked their future on highly polluting and
($1 = 0.7331 Euros)
(Reporting by Maja Zuvela; Editing by Zoran Radosavljevic,
Michael Kahn and David Evans)