The World Bank has turned down the Kosovo government’s request for risk guarantees that would have unlocked cheaper financing for a new €1-billion (US$1.15-billion), 500-megawatt coal plant, the Balkans’ first major energy project in more than 20 years.

The bank had signaled in June that it was reconsidering its support for the Kosovo C lignite-fired power station, the only coal power plant project left on its books. This week, during meetings in Bali, Indonesia, World Bank President Jim Yong Kim said the institution had made “a very firm decision” not to go forward with it.

“We are required by our bylaws to go with the lowest-cost option, and renewables have now come below the cost of coal,” he told a Kosovo civil society representatives, during a session carried live on the bank’s website. “So without question we are not going to do that.”

It’s now unclear how the country will proceed with a project “which environmentalists say could lock Kosovo into a future powered by lignite,” writes investment site London South East. “With around 14 billion tonnes of proven lignite reserves, the fifth-largest in the world, the country is struggling with power shortages,” and Kosovo C was designed to meet about half of its electricity demand.