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ss could be completed, and an investor selected, by the end of 2004, or early in 2005. The financing package, to be determined after the tender is resolved, may or may not include International Financial Institutions – who could potentially offer equity, debt or guarantees – as required by the investor.

In order for the CHP project to be viable, it is highly likely that the strategic investor would need to be able to benefit from related carbon credits, which in turn would require that Macedonia signs the Kyoto protocol. In addition, a baseline emission analysis should ideally be carried out prior to the tender process; this would clarify the quantity of potential carbon credits related to the project.

It is likely also that project viability would require a reduction from the current gas price in Macedonia. Either the Government of Macedonia/or Makpetrol should negotiate to this end, or the tender process should be organized to give the selected investor an incentive to negotiate a lower gas price. In addition, gas pipeline ownership issues (discussed in section 3.4 below) should be resolved as a matter of priority.

Investment in power distribution

The power distribution network in Macedonia suffers from a lack of investment in previous years. Aging equipment is partly responsible for distribution system losses estimated to be 17 percent of power available. This is a figure which is high by western European standards. Failure to remedy this situation - through investments to rehabilitate and upgrade the distribution network - would result in increasing losses and declining system reliability, particularly in a context of demand growth. Conversely, investment in the distribution network should help to reduce the capacity imbalance in Macedonia (because the electricity would no longer be lost but could be used).

A feasibility study for distribution investments was undertaken for ESM by Harza consultants. The study suggested that a US$60 million investment would yield a loss reduction equal to 4 percentage points, or around 300 GWh of power annually. The associated economic rate of return is in excess of 20 percent - significantly higher than returns associated with generation projects – makes investment in power distribution a priority for the power/energy sector.

In addition, distribution loss reduction would have associated environmental benefits in the form of reduced emissions (sulfur dioxide, nitrogen oxide and greenhouse gasses) relative to a counterfactual of higher thermal power generation to maintain energy balance.

Recognizing this, the Government of Macedonia and ESM are working together with the World Bank to develop an energy project which will include a significant power distribution loss reduction component.

Energy efficiency

Macedonia has a considerable untapped energy conservation potential, unlocking of which would help to maintain energy balance. The strongest indication of this potential is to compare the energy intensity expressed as total primary energy production divided 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。