Commercial prosumers – solution for companies to decarbonize, secure stable power supply

How companies can secure stable and inexpensive electricity supply and decarbonize their business was the key issue discussed at the third panel at the conference Serbian Companies on the Changing Power Market. Panelists talked about options available for businesses to become commercial prosumers and produce their own electricity, models for investing in renewable energy, as well as billing schemes and grid connection procedures.

The third panel at the conference Serbian Companies on the Changing Power Market offered answers to the question Serbian businesspeople had been asking for quite some time, especially since the onset of the energy crisis that had pushed electricity prices to all-time highs: What does a company need to know before making a decision to build a solar power plant for self-consumption?

Consultant Dejan Stojadinović, who moderated the panel, initiated a discussion about Serbian companies’ interest in decarbonization, the bigger picture of that process, and the problems businesspeople face along that path.

Although solar power plants are clearly seen as a lifesaving solution amid the energy crisis, with many power plants for self-consumption already installed across the country, Serbia still does not have a single commercial prosumer or an agreement signed with state-owned power utility Elektroprivreda Srbije (EPS) as a supplier.

The panelists talked about the reasons why the situation is like this even though the necessary regulations were adopted a year ago. The discussion also covered the procedures for installing solar power plants and connecting them to the grid, as well as how the prosumer status is regulated.

The conference Serbian Companies on the Changing Power Market, organized by Balkan Green Energy News, was opened by Artur Lorkowski, Director of the Energy Community Secretariat, Urs Schmid, Ambassador of Switzerland to Serbia, and Zorana Mihajlović, Serbia’s Deputy Prime Minister and Minister of Mining and Energy.

Categories of electricity producers

Miroslav Lutovac, Advisor to the President of the Chamber of Commerce and Industry of Serbia (PKS), explained the difference between four categories of renewable electricity producers according to existing regulations.

Two categories are supported with state subsidies – market premiums and feed-in tariffs. The third category are zero-subsidy producers, who assume risks associated with the open market, according to Lutovac.

These three categories cover all those who intend to produce electricity professionally and the companies that consider power generation their core business.

Companies showing strong interest in becoming commercial prosumers

Businesses are mostly interested in acquiring the status of a commercial prosumer, because it allows them to produce electricity for self-consumption, said Lutovac.

The state has made a good step forward by introducing the status of prosumer, but it should be kept in mind that this is not explicitly in the interest of EPS or government-controlled distribution system operator Elektrodistribucija Srbije (EDB), according to Lutovac.

Growing prosumer numbers may harm EPS’s and EDB’s revenues, but they could also generate electricity surpluses that could be exported at market prices.

Contractors on the market

Aleksandar Vajs from engineering firm ENEL PS talked about what companies need to know about stages in the realization of a solar power plant project. With 27 years of experience on the market and over 100 employees, ENEL PS also provides service support for solar power plants.

Following an initial client inquiry, the company replies within 24 hours, sending a team of engineers to visit the location within seven to ten days, Vajs explained. They often identify the best solution for the project during the visit to the location, he said, adding that this is followed by a feasibility study and an agreement with the client.

The ENEL PS team of experts is available at all times, and after the installation of a solar power plant and the expiry of the warranty period, it provides the necessary service support, according to him.

Corporate solar – a new model on the market

Đorđe Popović, Country Director at Resalta in Serbia, talked about decarbonization models available on the Serbian market. Headquartered in Ljubljana, Slovenia, Resalta operates in eight countries of Southeastern and Central Europe.

Popović explained the concept of corporate solar, which involves financing projects from energy savings achieved through implemented measures. More broadly, he explained, this involves supplying the energy that increases energy efficiency as well as switching to cleaner, greener, and lower-emissions alternatives.

As an accredited partner of CDP, a global organization that measures and reports on carbon emissions, Resalta offers its clients a reliable and transparent measuring of their emissions and, in the next step, proposals how to reduce the emissions, according to Popović.

Resalta has recognized decarbonization planning as a great opportunity, he said and estimated that 2022 would see a solar boom in Serbia.

Popović said that Resalta has introduced the ESCO concept in energy efficiency and applied it to the solar segment as well. He explained that corporate solar is a business model where an energy provider, following a thorough analysis, assumes the entire project risk – from design to construction, installation, and commissioning.

The provider also undertakes the project financing, sparing the client the burden of borrowing. The project is financed through monthly fees paid after the facility is put in operation over a period of 10 to 25 years, he said, adding that the clients pay a predetermined fixed price of electricity over the entire contracted period.

Grid connection procedures

Dušan Đukić, head of the electricity department at state-owned distribution system operator EDS, explained the grid connection procedures for renewable energy power plants.

The procedures differ depending on the plant’s capacity. Solar power plants of up to 10.8 kW are subject to a streamlined procedure, identical to the grid connection procedure for households, said Đukić, adding that more detailed information is available on the EDS website.

For power plants of between 10.8 kW and 50 kW, prosumers are not required to obtain a construction permit, while those of over 50 kW require a permit in line with the Law on Planning and Construction.

It is significant that there are no restrictions when it comes to generation capacity, and a prosumer may install 50 MW or 60 MW. The only limitation is imposed on the available supply capacity, according to him.

First prosumer contracts yet to be signed

Even though the regulations on prosumers have been adopted, they have not yet been fully implemented and no contract has been signed. Requests submitted to EPS have not yet been processed due to unresolved issues regarding the application of value-added tax (VAT).

Even though the regulations on prosumers were adopted last year, they have not yet been fully implemented due to unresolved issues regarding the application of VAT

Bratislav Džombić, Director of Market Development at EPS, explained that the decree envisaging the application of VAT to the prosumer’s net energy – the difference between the energy withdrawn from the grid and the energy injected into the grid – came into force last September. However, this method is not in accordance with the Law on VAT.

EPS is looking for a solution and the right method to apply the tax on prosumers in cooperation with the Ministry of Mining and Energy and the Ministry of Finance, said Džombić, adding that he believes this will be resolved very soon.

There are two methods of billing a prosumer: net metering and net billing. Net metering applies to households and residential buildings, while businesses will be subject to net billing, he explained. Under this model, VAT is charged on energy withdrawn from the grid.

The price at which the supplier offtakes electricity from the prosumer is not necessarily equal to the price the prosumer pays for electricity taken from the supplier, and that is the key difference between net metering and net billing, according to Džombić.

Project financing and the banking sector

Danijel Stojanović, Large Customers Division Director at Komercijalna banka, said the bank views investments in energy transition as the only possible way to achieve sustainable development. Komercijalna banka has been a member of the NLB group since the end of 2020.

With sustainability principles at the heart of all of its core decisions, the lender has created a platform that prioritizes financing which supports the environmental, social and governance (ESG) standards, according to Stojanović.

Komercijalna banka wants to be proactive in this segment and lay the foundation for the upcoming investment wave, according to Stojanović. Serbia has an ambitious agenda to increase the share of renewables from 26% to 50% by 2040, which he said will require some EUR 35 billion in investments according to preliminary estimates.

Prosumers and production in line with own needs

Bratislav Džombić said that the offtake price will most likely be a percentage of the electricity purchase price, adding that when concluding an agreement with a prosumer, the supplier will assume the balancing responsibility as well.

This means that there will be no single offtake price and that EPS will negotiate prices with each prosumer individually.

Prosumers should have special treatment on the market since their output is limited, as are their options for selecting a buyer for their electricity

Miroslav Lutovac believes that prosumers should have special treatment on the market since their output is limited, as are their options for selling their electricity given that EPS commands 97% of the market. This, after all, is not about trading on the market, but about energy storage and balancing, according to him.

If this had been the perception from the beginning, there would be no problem with VAT, according to Lutovac.

There used to be a lot of confusion about the concept of prosumers, and many saw in it an opportunity to profit. However, the idea is for prosumers to produce electricity to cover their own needs. A different set of rules and different models apply to commercial electricity producers from renewable sources, while prosumers should optimize their production capacities in accordance with their own consumption needs, according to him.