Kosovo’s Electricity Sector Challenges and Opportunities

Abstract

Since the start of the war in Ukraine, electricity prices in Europe have increased and become more volatile. This coupled with unreliable domestic electricity supply has led to significant stress for Kosovo’s energy sector and budget. This paper presents several scenarios characterized by alternative assumptions for European electricity prices and domestic electricity production in 2023 in order to gauge their potential impact on the budget and the economy. It also discusses the medium-term benefits, including in terms of increased energy security and reduced emissions and pollution, of diversifying domestic electricity generation away from lignite. RECOMMENDED CITATION: Di Bella, Gabriel and Thaci, Selim. Kosovo’s Electricity Sector Challenges and Opportunities. IMF Selected Issues Paper (SIP/2023/025). Washington, D.C.: Internationa Monetary Fund. JEL Classification Numbers: Q41, Q42, Q43, Q47, Q48