Power policy

North Macedonia continuously revises its renewable energy targets. In 2019, North Macedonia drafted three energy scenarios in a ‘Strategy for Energy Development’. These focus on improving energy efficiency and expanding renewable energy to varying degrees by 2040. North Macedonia's targeted 28% renewables in gross final energy consumption (66% in production) by 2030. In 2018, the country had revised its National Renewable Energy Action Plan to target 24% of its gross final energy consumption from renewable sources by 2020, revising the target down from 28% in a previous version due to an unreachable gap. In 2022 the Economic Reform Program 2022-24, introduced a new target, aiming for the share of renewables in the country to represent 46% by 2025.

North Macedonia has policies in place for the use of tenders and auctions. However, few auctions for renewable energy have been held. There are auction procedures in place for solar and have recently been finalized for hydro power and wind. No rules appear to yet exist for biomass, geothermal energy or storage, though it is more likely that geothermal and biomass plants get built first, since they are identified as preferential producers. Given the country's intention to install over 1GW of wind and solar capacity by 2027, further auctions are expected.

Feed-in tariffs for energy generated from small hydropower, wind and biomass/biogas have been on offer for several years. Prior to the 2019 new Energy Law, feed-in tariffs were also granted for solar PV but as the country fulfilled the target set in the previous Decision of the Government, a new scheme has been introduced for feed-in premiums for solar PV. The customs tariffs set by North Macedonia are updated yearly. The listed tariff in 2021 for wind-powered generating sets is 0%. In 2022, there are exceptions for solar thermostats and solar water heaters and reductions for optical glass used in solar systems. No further reductions or exemptions are available.

Power prices and costs

Macedonia historically has lower power prices than neighboring countries such as Serbia and Kosovo, and when compared to EU member states. Electricity prices are still subsidized for households considered to be vulnerable energy consumers. North Macedonia has to import a substantial portion of its electricity to meet demand. Power producers are allowed to seek their own prices for electricity produced. Due to cross-subsidies on electricity, household electricity consumers pay substantially less than the actual cost of generation, while other consumers pay more to compensate. Rates per megawatt hour (MWh) rose from $123.11, and $455.75 in 2020, to $179.59 and $61.56 in 2021 for commercial and wholesale consumers, respectively. Industrial and residential tariffs were also raised slightly from $97 and $92.11 in 2020 to $115.44 and $99.43 in 2021.

Power market

The electricity market in North Macedonia was fully liberalized in 2019. All electricity consumers now have the right to choose the supplier and the terms at which they obtain their power. North Macedonia has regulated and unregulated energy markets and is in the process of establishing its day-ahead market and coupling this market with its neighbor Bulgaria. The electricity transmission authority in North Macedonia, MEPSO, is still state-owned, but generation and retail have been privatized. Renewable energy generators are classified as preferential producers, and the market operator is obligated to purchase all electricity from such producers. Commercial and Industrial (C&I) customers that apply to be "qualified consumers" are allowed to negotiate their own power purchase agreements with producers.

North Macedonia relies heavily on lignite for its electricity, along with large and small hydro. Solar PV, onshore wind, and biomass have been added, but they make up a small portion of total energy generation. However, auctions for wind power have been held recently, in addition to those for solar PV. Procedures in the region regarding renewable energy development are still complex and nascent, which has led to uncertainty and investment concerns. The European Bank for Reconstruction and Development has lent to the state-owned electric company to transform a sidelined coal power plant into a solar one. Germany’s KfW has played an important role in financing wind power in the country.

In 2021 renewables represented 45% of the country’s installed capacity, rising from 41% in 2017 and 34% in 2010.

Doing business and barriers

Gas network development and expansion is underway in North Macedonia. Macedonia only receives gas imports via an inlet from Bulgaria currently. The proposed network would connect to Greece and other neighbors. Despite network constraints, 100% of North Macedonians have access to electricity. Renewable energy expansion is focused on increasing solar and wind energy developed and connected to the grid, as opposed to storage or other technologies. Policymakers are focusing on energy alternatives and environmental impact assessments as environmental concerns mount regarding hydropower.

Access to land is the biggest challenge for new generation projects, with the exception of small hydro. There are a number of local regulations that need to be followed. These can lead to prolonged delays in the project. Small hydro is developed using consistent procedures, but the hydrological studies that are the basis for new development are considered outdated.

The highest barrier in North Macedonia to the expansion of renewable energy is political. New government regimes and turnover have led to lags and contributed to uncertainty on new solar and wind projects. North Macedonia is extremely dependent on Russian natural gas. Volatility in the market is expected if supply is cut. The construction of a gas interconnector with Greece is expected as North Macedonia tries to steer away from Russian dependency. There is also an unstable legal and regulatory regime alongside lack of transparency on prices and other issues. Some of these have been diminished by the country’s efforts to join the European Union and expand renewable energy in support of that objective. Power purchase agreements are of sufficient duration, and offtaker risk is low. Additionally, curtailment is not a problem.

EV market

North Macedonia does not have an active EV market.

EV policy

North Macedonia’s 2021 NDC targets 10% final energy consumption in transport from Renewable Energy by 2030.

Buildings market

North Macedonia does have low carbon heat market incentives.

Buildings policy

North Macedonia's energy efficiency plan intends to save up to 51.8% of primary and 27.5% of final energy by 2040. North Macedonia does not have a minimum performance standard, but for existing buildings classified as C (90 kWh/m2), there is an annual renovation rate of 2% for retrofit.