Hydropower in the Balkans

The name of KfW Group is often brought up in connection with plans for 2,700 new hydropower plants in southeastern Europe. KfW has no further knowledge of these plans. As far as we are aware, most of the plans for new hydropower plants in the region stem from the time of the Socialist Federal Republic of Yugoslavia. We assume that only a very small fraction of these plans can actually be implemented today in accordance with current ecological, economic and technical standards.

KfW Group is currently financing a total of six new hydropower/run-of-river power plants in southeastern Europe in partnership with KfW Development Bank and its subsidiary DEG. The hydropower plants which KfW is financing, or plans to finance, do not pose any risk to their natural surroundings. KfW always complies with all customary international standards as a minimum, and subjects all projects to a comprehensive assessment with respect to their environmental and social impact in particular. KfW's activities in southeastern Europe are also based on the principles of the European Water Framework Directive, which specifies much stricter standards for the conservation of nature than the standards of the World Bank, for example.

More details on the individual projects:

The new hydropower plants being financed by KfW Development Bank in southeastern Europe comprise the following two projects:

Bosnia and Herzegovina – Janjici run-of-river power plant (14 MW): This section of river is already in heavy use (including for agriculture and as a transport corridor), as a result of which its ecological condition is already being impacted. No conservation areas are affected. A comprehensive study on the project's environmental and social impact has been carried out, and did not identify any fundamental objections to the project. The project can be implemented and the impact on the environment can be kept within acceptable limits thanks to a large range of compensation measures.

Bosnia and Herzegovina – Vrilo pumped storage hydropower plant (66 MW): Very small parts of the project are situated in a "Ramsar" conservation area. Extensive ecological framework data is currently being collected by a syndicate selected by means of an international bidding process. In combination with the existing environmental and social impact information, this data will be used as the basis for deciding whether the project can be implemented and what ecological offsetting measures may be required. This will keep the impact on the environment as low as possible. A comprehensive balancing of interests will be carried out.

DEG project:

The project financed by DEG in Macedonia involves very small run-of-river power plants with no significant reservoirs and outputs of between 0.6 and 1.4 MW.

Environmental impact studies were carried out for all implemented projects. Agreements were reached with the licensing authorities and national park administrations in cases where the implementation of the projects had an impact on conservation areas. The impact on conservation areas is very small in terms of surface area.

Investment in conservation areas is not fundamentally ruled out (please refer to section 20 of IFC Performance Standard 6). However, it requires a particular duty of care since a higher level of biodiversity may be expected as a result of the conservation area status. Each individual case will be assessed, especially with respect to habitats that are in particular need of protection ("natural or critical habitats" – please refer to Performance Standard 6) and the impact of the investment on them. When assessing these projects it is necessary to ensure that the nature conservation authorities are consulted and their approval is obtained. In the case of the run-of-river power plants in Macedonia, the authorities were consulted and the procedure agreed on.