It isn’t hard anymore to talk about renewable energy in Serbia

There were massive changes in the renewable energy market since the last Hard Talk with Serbia, participants concluded in an online debate and commended the government for a quick and inclusive introduction of a comprehensive legal framework. The sector is now being mainstreamed and the authorities can move on to other challenges, where the priority is to complete the auction design, among other secondary legislation, they said.

The United Nations Economic Commission for Europe – UNECE and its partner organizations brought investors in renewable energy, decision-makers, and experts together at its second Hard Talk with Serbia. The two-day virtual event focused on net metering and government support for projects and the introduction of auctions.

A large number of participants discussed the important factors for the further development of the market after the government introduced four important laws and several bylaws. They agreed the new legal framework is mainstreaming the renewable energy sector and pointed to the need to move on to other challenges, like completing the auctioning system and regulating several other market segments.

Investors and analysts urged the authorities to create conditions for the skilled workforce to grow and for grid capacity to expand as demand for wind power and photovoltaic systems is rapidly rising.

Serbia is strongly committed to becoming green society

The Government of Serbia is preparing to hold an electronic auction for electricity from wind power projects. It is planning a roundtable and workshops for investors to get acquainted with the system, which is expected to be ready by early next year, according to State Secretary in the Ministry of Mining and Energy Jovanka Atanacković.

“We have seen that in a very few years there’s been a lot of progress, and also a strong commitment for making big changes towards a green society and therefore towards an increase in the uptake of renewable energy,” said Gianluca Sambucini, Secretary of the Group of Experts on Renewable Energy (GERE) at the UNECE Sustainable Energy Division.

The government estimates the auctioning system would be prepared early next year or even before that

The participants in the discussion on the first day of the event highlighted the need for education programs, training, and certification schemes for installers of photovoltaic systems, but they also pointed out bankers would need to be trained to provide financing for renewable energy projects, Sambucini asserted.

Hard Talk is an opportunity for key stakeholders to openly share their concerns and analyze bottlenecks and look for solutions, he said. The dialogue should result in concrete recommendations for government institutions after the stakeholders submit their final inputs after the Hard Talk event, Sambucini stressed.

Huge rooftop solar potential

The main topic on the first day of the event was government support for renewable energy deployment, particularly net metering. The participants agreed that a major consensus in society is required for the transition to clean sources and the coal phaseout and that it implies sharing knowledge and raising awareness.

The available rooftop area in Serbia, 600 square kilometers, is sufficient for the production of 74 TWh of electricity per year from solar energy or more than twice the current annual consumption, renewable energy expert Dejan Stojadinović said and added the unused solar potential of Serbia was the key driver for the introduction of net metering.

The Government of Serbia has simplified the procedure for prosumers so they don’t need a construction permit to set up a photovoltaic system on their roof, Stojadinović noted.

Net metering for households to become less favorable in 2024

A net billing system is applied for companies and public institutions that become prosumers. Electricity suppliers still have no net billing packages in their offer, Stojadinović pointed out. He explained that in net metering, households can draw 1 kWh back for each 1 kWh of the surplus that they deliver to the grid and that they pay surcharges only for the electricity that they didn’t produce.

The calculation for net billing is different as companies pay all the charges, so they can effectively get back half of what they delivered to the power network. However, it depends on the contracts between companies and suppliers, Stojadinović underscored and estimated the scheme would spur competition among suppliers. Stojadinović said the rules for households would be changed at the end of 2023 and that net metering would become less favorable.

Two-way CfDs are fair for both sides

The second day of Hard Talk with Serbia was dedicated to international practices and experiences that can be utilized in the development of renewable energy auctions. Investors mostly spoke of the unknowns in the auction design and the government’s strategy for the sector. They agreed that the proposal to make two-way contracts for difference (CfDs) in electricity prices is fair for both renewable energy developers and consumers.

There are still unknowns about the government’s strategy for renewable energy deployment

The participants expressed concern about Serbia’s ability to develop the grid fast enough to withstand an increased uptake of renewables. Investors said they need information on possible geographic limitations for solar and wind projects, particularly with regard to environmental protection and land use.

Turković: Grid still can’t cope with renewables in pipeline

The Ministry of Mining and Energy made “tremendous improvements in legislation,” particularly the Law on the Use of Renewable Energy Sources, said Maja Turković, Senior Vice President of GWP Global in charge of development in Europe. There has never been such an inclusive process in the country, she underscored.

There are still no utility-scale solar power plants in Serbia, so it’s a learning process

As for the constraints, she said the network “literally can’t cope” with the development of projects and that investors applied for grid connection of more than 7 GW, but added not all are feasible.

On the other hand, in her view, it’s a learning process, as there are still no utility-scale solar power plants in Serbia. The average size of wind power projects exceeds 100 MW, Turković stressed. She said the law enables developers to opt to apply a part of a project for the auction and leave the rest to operate independently on the market.

“USAID is supporting the Government of Serbia in meeting its renewable energy goals. Auctions are a powerful tool for scaling up renewable energy in line with Serbia’s climate ambition. The definition of a quota for the first wind auction by the Government of Serbia is a positive step in this direction and sends a clear signal to investors,” said Ana Amazo, Managing Consultant at Guidehouse and researcher under the AURES II project.

“Going forward, defining a multi-year auction schedule (see AURES II report on RE financing and auction design) and auction volumes adjusted to the expected level of project supply can enable project pipeline development and support competition, which is key in ensuring cheap prices for consumers,” she added.

A round of Hard Talk events on renewable energy topics is being held under the UNECE RE-Uptake Project 2021 with the participation of the key players in Albania, Serbia, Kazakhstan and Georgia.

It is jointly undertaken by the United Nations Economic Commission for Europe (UNECE), Renewable Energy Policy Network for the 21st Century (REN21), and the German Energy Agency (dena), supported and commissioned by the German Federal Ministry for Economic Affairs and Energy (BMWi). The Hard Talk with Serbia is made possible through close cooperation and support of the Ministry of Mining and Energy Serbia (MoME).