In a school in Banja Luka, winter no longer means cold classrooms. Energy efficiency renovations have cut energy use by nearly half, making the building warmer, brighter, and easier to maintain while improving daily life for more than a thousand students and staff.

These changes may seem small, but they signal something larger. A deeper transformation is underway across Bosnia and Herzegovina, where energy is shaping how people live, learn, and whether they stay.

Globally, the direction is clear. Around 90% of new utility-scale solar and wind is now cheaper than fossil fuel alternatives, and clean energy investment reached $2.2 trillion in 2025, double that of fossil fuels. Yet more than 3,000 gigawatts of renewable capacity remain stuck in grid connection queues. The constraint is no longer technology, but systems such as grids, storage, flexibility, and coordination.

Recent geopolitical disruptions have exposed this vulnerability, affecting nearly 20 percent of global energy flows and already driving higher energy bills and broader economic costs. For Bosnia and Herzegovina, where imported fuels remain tied to transport and industry, this underscores a simple reality. Resilience must be built into the system.

For over three decades, partners such as the United Nations Development Programme have worked alongside national and local institutions. The lesson is clear. Progress does not come from imported models, but from solutions that are grounded in national priorities, adapting global knowledge to local realities and building ownership.

The question is not whether the transition will happen, but how to shape it to deliver real benefits for people and the economy. The direction forward is already becoming clear.

First, Strengthen the Governance to Unlock Finance in Renewables.

Important steps are already underway. The Electricity Law and the National Energy and Climate Plan, which are at final stage of approval, confirm and provide the vision that a just energy transition is an opportunity for transformative changes of the economy and the society of the country. Bosnia and Herzegovina’s energy transition will require over $6 billion in investment, with the grid at the center. The challenge is not only to mobilize capital, but to structure it through bankable pipelines, innovative financing, and targeted de-risking. 

The International Financial Institutions have committed to support the plan of the national authorities in financing and strengthening electricity distribution, transmission systems, including digital technologies for grid operations. These investments are essential to unlock renewable capacity, reduce bottlenecks, and support industrial competitiveness. 

Second, Transform Coal Regions into Jobs, Skills, and Growth.

While coal still remains central to the economy, employing 15,000 to 20,000 people directly and supporting more than 150,000 jobs across related sectors, a just energy transition represents a major opportunity for jobs creation and skills.

Repurposing coal assets offers a clear pathway. In Zenica, Banovići, and Kreka, mine land is in process to be converted into renewable energy sites, linking land rehabilitation with solar deployment. Plans to install around 27 MWp of solar capacity, generating over 30 GWh annually, show how existing infrastructure can be turned into productive economic assets. 

However, to accelerate this transition and move from isolated pilots to systemic decarbonization pathways, there is a need to build a strong national innovation ecosystem. This means connecting policy frameworks with financing instruments, research and development and human capital development—aligning reskilling programmes, vocational training systems, private sector engagement, and investment pipelines. Only by creating these integrated linkages can countries scale solutions, attract investment, and ensure that the transition delivers sustained economic transformation and inclusive job creation.

Third, Harness Data, AI and Digital Innovation to Scale Energy Efficiency.

Energy efficiency is already delivering immediate gains. Through UNDP’s Green Economic Development programme, public buildings have reduced energy use by 30 to 50 percent, lowering municipal costs and improving comfort for users. This is critical in a country where buildings account for more than half of total energy demand.

Scaling this impact depends on better data and smarter systems. Digital tools and AI can improve planning, optimize energy use, and enhance efficiency across the system. They can also strengthen resilience, reducing outages by up to 50 percent and improving reliability and affordability for communities and businesses. For example, the country has already deployed 20% over the 80% target of smart meters.  Accelerating the deployment and full utilization of features of the smart meters, represents a major untapped opportunity: beyond billing, they can generate real-time consumption data to better manage demand, reduce losses, and optimize load across the grid. This data can also enable more innovative and dynamic electricity tariffs—reflecting time-of-use, incentivizing efficiency, and improving affordability for consumers while strengthening system stability. 

The shift is also beginning to connect sectors. Electric mobility is linking energy and transport, opening space for cleaner cities and new economic activity. While still at an early stage, it reflects a broader trend toward more integrated energy systems. 

Regional experience shows what is possible. In Montenegro, rooftop solar programmes have connected around 65 MWp across 6,500 households and businesses, while creating local jobs in installation and maintenance. For coal-dependent communities such as Pljevlja, this model demonstrates how a utility can move from reliance on lignite to a more diversified and resilient energy system.

Turning the Transition into Opportunity

Bosnia and Herzegovina is well positioned to turn this transition into a competitive advantage. With strong regional interconnections through the European grid, growing renewable potential, and a strategic role in supplying critical raw materials, the country can position itself as a reliable provider of low-carbon energy and industrial output.

Bosnia and Herzegovina not only navigates this transition, but to lead in the region – leveraging its industrial base, infrastructure, and renewable potential to shape a more competitive, low-carbon Western Balkans.

Progress is already visible. Even in complex circumstances, Bosnia and Herzegovina has shown that change is possible. The transition now builds on that foundation, moving step by step, grounded in institutions and driven by people. 

What we are discussing is not a single reform. It is a system transformation—unfolding across Bosnia and Herzegovina’s multi-level governance landscape, and requiring coordination across institutions and sectors.

But transitions of this scale require continuity, trust, and partnership. For partners such as UNDP, the role is to support this process by connecting policy, finance, and technology, and by helping translate ambition into implementation.

Because this is more than an energy shift. It is a shared development opportunity to build a more resilient economy, create jobs, and improve quality of life, while positioning Bosnia and Herzegovina as a country leading in the next generation of energy innovation.