The transition to clean energy in South-Eastern and Eastern Europe, the Caucasus, and Central Asia necessitates a comprehensive overhaul of power systems, with investment needs estimated at $150 billion by 2030. However, by embracing digitalization across all sectors - from generation and transmission to distribution and end-use - and integration with renewable energy, these countries could reduce their carbon emissions by up to 70% and energy costs by as much as 80%, subject to system-wide optimization, outlines the UNECE study "Integrating twin transition with legacy energy systems"
The study analyses opportunities and challenges for a digital transformation of energy systems in Albania, Belarus, Georgia, Kyrgyzstan, North Macedonia, Republic of Moldova, and Ukraine, where about 60% of the total energy mix today comes from natural gas and coal.
The study underscores that digital solutions and innovations such as Artificial Intelligence, Internet of Things, Digital Twins, and Virtual Power Plants, offer significant opportunities in managing and integrating distributed, often variable renewable energy-based resources. It also highlights potential to optimize legacy systems and enhance both cybersecurity and grid resilience.
This will require robust policy measures and initiatives to boost investments in advanced, resilient grids. It will also necessitate increased support for innovation and research, strategic planning and massive professional training.
Overcoming challenges
The study identifies key challenges to be addressed in the region's largely outdated energy systems:
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Ageing energy infrastructure, much of which was built during the Soviet era. For example, in Belarus, over 60% of the thermal power plants are over 30 years old, resulting in high maintenance costs; in Georgia, the average age of electricity transmission lines exceeds 30 years, resulting in transmission losses estimated at 12%.
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Energy security risks due to dependence on fossil fuel imports. For example, the Republic of Moldova imports approximately 70% of its electricity, primarily from Romania and Ukraine; in Belarus, about 50% of energy needs are met through natural gas imports from the Russian Federation.
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Regulatory barriers hinder the adoption of renewable energy (RE) technologies and slow down investment in new infrastructure.
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Limited financial resources to invest in modernizing energy systems. For instance, Albania has struggled to secure funding for proposed solar and wind projects totalling approximately $300 million; in Belarus only about 5% of the necessary investments have been secured for planned RE installations; financial constraints limit modernization of ageing hydropower infrastructure in Kyrgyzstan.
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Lack of skilled workforce. For example, in Georgia, around 30% of energy sector professionals lack formal training in RE technologies.
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Climate and health impacts. For instance, Belarus emits approximately 8 million tonnes of CO2 annually from its energy sector alone, with coal-fired plants being significant contributors. North Macedonia's reliance on coal contributes to air pollution levels among the highest in Europe.
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Dependence on critical raw materials for renewable energy technologies and digitalization. UNECE tools including the UN Framework for Classification of Resources and UN Resource Management System can support their more sustainable management.
Key strategies identified in the study include:
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IoT-enabled retrofitting of buildings and industries could yield energy savings of up to 80 per cent;
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Natural gas can serve as a transitional fuel, particularly when supported by hydrogen-ready infrastructure and AI-based management systems;
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Cross-border infrastructure projects, such as Trans-Caspian high-voltage direct current lines, are vital for enhancing regional energy trade and digital connectivity;
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Programmes such as the Caspian Sea Digital Twin offer advanced modelling to inform data-driven planning and investment;
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Strengthened international collaboration and capacity-building are essential to replicate successful models and ensure inclusive access to digital technologies.
The report identifies three priority action areas: (1) scaling energy efficiency through retrofitting that embraces digital technologies; (2) promoting hybrid energy models that combine gas with hydrogen; and (3) advancing smart grids, standardization, and regional integration.
Importantly, the study promotes a human-centered approach to digitalization that balances innovation with ethical considerations and prioritizes equity, social considerations, and long-term sustainability for a just transition.
From research to action
The study was showcased during a workshop "Assessing the readiness of the energy sector to implement smart digital energy-efficient technologies in Belarus in view of climate change mitigation" held in Minsk, Belarus, and online on 22 May 2025. The hybrid workshop, organized by UNECE in cooperation with UNDP Belarus and the Department of Energy Efficiency of the State Committee for Standardization of the Republic of Belarus, brought together over 100 participants including government officials, energy sector representatives, and international experts, to explore how smart digital tools can support energy efficiency, clean mobility, and climate action in Belarus.
