In a previous fact-finding study conducted on natural gas networks and markets in the Western Balkans we found that the WB6 has strong ambitions in gas network development. The rationale for these gas network development infrastructure plans was the prognosis of substantial gas demand in all consumption sectors outlined in the countries’ national plans. The growth in gas demand in their view would originate on the one hand from coal to gas switching in electricity generation, and on the other the expected increase for buildings and industry sector heat demand.
Natural gas infrastructure development and the switching of heating mode in the building sector would create a considerable lock-in effect for several years. For this reason, it should be considered whether gas is the best option from total cost perspective for the building sector (including network development and individual household investment, fuel and O&M costs), as well as from a climate perspective (based on the long-term decarbonization strategies).
The first part of the study estimates the cost of building the transmission and distribution network in the WB6 to support gasification of the household heating sector.
In the second part of the study the full cost of switching to gas (including the system cost, gas cost and the investment needed on the household side) is compared to other heating alternatives. With the help of a simplified model that builds on datasets available on the building stock important drivers of the total cost (cost of fuels, underheating, learning curves of technologies) are tested as sensitivities to assess the potential level of gas demand of the household sector in the WB6.