Numerous New Features in Regulations Regarding RES and Energy Efficiency in Serbia – Draft Laws Presented

The Draft Law on Renewable Energy Sources (RES) and the Draft Law on Energy Efficiency (EE) and Rational Use of Energy were the topic at the public discussion during which the new features of the regulations pertaining to both producers and consumers of electrical energy were presented.

Draft Law on Renewable Energy Sources

The Draft Law on Renewable Energy Sources has 115 articles, whereby numerous new features are to be implemented for the first time. The use of RES is defined as a public interest, of special importance for the Republic of Serbia.



For the first time, the law guarantees the stability of incentives and introduces market premiums, which will expose producers from RES to the impact of the market and the competition. This will reduce the costs for the citizens and the companies compared to the current system of incentives, based on feed-in tariffs.

Feed-in tariffs were introduced in 2015. They managed to incite big investments in RES. Nevertheless, of the planned 1,092 MW in new power plants in 2020, feed-in tariffs only managed to incite the realization of 800 MW (514 MW of which is already built, whereas 303.6 MW is still under construction).

The premiums are a transitory phase to the full inclusion of producers from RES in the market. A feed-in tariff is provided for small facilities (below 500 kW, or 3 MW for wind farms) and demonstration projects (non-commercial innovative projects) under an auction system identical to that under which market premiums are obtained.

Incentives can be obtained for a power plant that uses renewable energy sources (wind, sun, hydro, biomass, biogas, geothermal, biodegradable waste and others). Incentives are provided for electrical energy produced at newly built or reconstructed power plants that use RES.

The market premium is an addition to the market price of electricity. It is denominated in eurocents per kWh in an auction process. The incentive period is 12 years, and the Government of Serbia sets the quotas in MW of installed power in power plants.

Based on a set methodology, the Energy Agency of the Republic of Serbia sets the initial price under which investors compete in an auction process. By placing a public call, the Ministry of Mining and Energy initiates an auction process, forms a commission for the carrying out of the auction, reaches the decision on the best bids and, accordingly, the decision on awarding/refusing the right to a market premium. The commission conducts the auction process until the decision on the best bids is made.



A decrease in the price of electrical energy produced from renewable sources is cited as an advantage of auctions, because lower prices mean lower compensations paid by the citizens and the economy.

The status of a temporary preferred producer is obtained in an auction process through the adoption of the decision on the awarding of the right to a market premium. The status lasts for three years and can be extended by a year.

For the first time, households and the industry can become purchasers-producers (RES self-consumers), and citizens can form an association of renewable energy sources. Households and the industry can install RES in their facilities and use RES for their own consumption, either delivering the surplus energy to the network or storing it for later use.



The law recognizes green hydrogen as an energy source the use of which should be incited and developed. Green hydrogen can be used in the fields of heating energy, transport and natural gas.

The digitization of administrative procedures (e-energy) is implemented.

For the first time, a public tender for the selection of a strategic partner which enables Serbia to attract new and additional investments in RES is implemented.

The law explicitly obliges preferred producers to comply with the regulations pertaining to water management and the environment, with a proscribed inspection supervision in these fields. To obtain the status of a preferred producer, a water permit is required for hydro power plants, whereas, for power plants fueled by biodegradable waste, an integrated permit, that is, a permit for waste management and use, is required.

Energy subjects which carry out the activities of production, distribution and supply of heating energy can obtain incentives if they use heat pumps and RES (solar energy, geothermal, biomass etc.).

Fuel suppliers are obliged to secure that the share of RES in the final consumption of energy in transport is in line with the obligations set by the government.

Draft Law on Energy Efficiency and Rational Use of Energy

The expected effects of the law are: the increase of the competitiveness of the economy, the reduction of the environmental impact of the use of fossil fuels and contribution to the fight against climate change, energy security and the reduction of dependence on the import of energy sources, the creation of new jobs and development of entrepreneurship in the field of energy efficiency and the inciting of regional development, the increase of the citizens’ standard and the savings in 2030 equivalent to the annual production at Kostolac A and B.

A new feature in the law is the founding of the Administration for the Financing and Inciting of Energy Efficiency, which will award incentives for EE, prepare draft projects for financing, run a register of entities, monitor the calculation and payment of the fee for an energy efficiency upgrade and so on.

Thanks to this, incentives will for the first time become available to citizens as well, for an upgrade of EE residential buildings, the procurement of energy efficient devices and special programs for energy-affected populace. Substantial sums from various funds are also to be attracted thanks to this.

The digitization for the purpose of a facilitated monitoring of energy consumption in the public sector and the monitoring of the implementation of the policy of EE and the Energy System Management are also highlighted as new features.

Another new feature is the obligation of owning/displaying a certificate of the energy properties of the building, as well as the control of the heating and air-conditioning systems.

The concept of an energy service is introduced, which may pertain to energy checks, designing, construction, reconstruction, energy repairs, facility maintenance, delivery of heating energy, management and supervision of the use of energy and other activities.

Non-financial incentives for highly efficient cogeneration (VEFK) and new participants in the market are introduced as well.



Energy tagging (for products which have an impact on energy consumption and pneumatic products) and requirements pertaining to eco-design (for products which have an impact on energy consumption for which eco-design requirements are proscribed) is also presented as a new feature.

Strategic interest – change of mindset

According to Miroslav Lutovac of the Chamber of Commerce of Serbia, the discussion has been taking place for more than a year, and the comments provided by companies have enabled certain propositions to be presented to the Ministry of Mining and Energy. He especially highlighted the ability of legal, but also natural, persons, to install lower-power RES in their facilities:

– For example, the price for setting up a solar power plant of a production capacity of 50 kW is EUR 30,000, the period of a return on the investment is seven years for legal entities.

Yngve Engstroem, a representative of the EU Delegation to Serbia, noted that the need to fight climate change was urgent and that the EU had set very ambitious requirements accordingly, adding that Serbia could follow them too.

– It’s not just about environmental preservation, but also economic growth and investments in green technologies, which can help in the recovery from the crisis caused by the pandemic – he said and added that it would also increase the living standard through the gradual reduction of costs.

Serbian Minister of Mining and Energy Zorana Mihajlovic noted that the strategic interest was to change the overall mindset within the society and pointed out that, in Serbia, four times as much electricity was consumed compared to the average consumption in EU states.

– The aim is to increase energy efficiency in the next 10 years, so that we would get closer to the EU level, and to have 30-40% of energy produced from RES – Mihajlovic said.



Milos Colic, the vice president of the Group for RES at the Chamber of Commerce of Serbia (CCIS) and the director of the New Energy Solutions company, said that the team of the Ministry of Mining and Energy had made an excellent effort by preparing the Law on Renewable Energy Sources in such a short amount of time:

– In February 2020, at a round table dedicated to measures against air pollution, I proposed an initiative for the adoption of the Law on Renewable Energy Sources. That initiative entered the record as a long-term recommendation for the Government of Serbia, and most of my colleagues believed at the time that anything of the sort was difficult to achieve, perhaps even impossible, and now, less than a year later, there’s a draft law being publicly discussed. This is great news for our country, because this law opens the possibility of Serbia being a state with a healthy environment and green jobs. To cite Deputy Prime Minister Zorana Mihajlovic, “we want a green Serbia”.

He pointed out that the time was right to move on from the incentive system to auctions and that he was glad that State Secretary Jovanka Atanackovic had already accepted some propositions during the constructive public discussion, which should facilitate operations in the economy.

– In addition to how fast the business operations are, it is also important how secure they are, so it’s especially encouraging that the proposition for the government to proscribe a model of the premium agreement, instead of having an authorized party to the contract (the guaranteed supplier) proscribe it, was accepted immediately. The ministry, that is, the Government of Serbia, is neutral in relation to the parties to the contract, which provides additional security for all – Colic told eKapija.

Aleksandra Kekic

New Energy Solutions d.o.o. Beograd

Agencija za energetiku Republike Srbije

Ministarstvo rudarstva i energetike Republike Srbije

Privredna komora Srbije

Delegacija Evropske unije u Republici Srbiji Beograd

Draft Law on Renewable Energy Sources

Draft Law on Energy Efficiency and Rational Use of Energy

Miroslav Lutovac

Yngve Engstroem

Zorana Mihajlović

Miloš Colić

Jovanka Atanacković

renewable energy sources

RES

incentives

market premiums

feed in tariffs

auctions

temporary preferred producer

purchasers producers

Administration for the Financing and Inciting of Energy Efficiency

certificate of energy properties of a building

control of systems for heating and air conditioning

energy service

energy tagging

eco design

solar power plant

green technologies

green economy