The Serbian government has extended the decree on incentives for the production of electricity from renewable energy sources and high-efficiency heat and power cogeneration until the end of 2019. Experts say that the extension of the decree, which was set to expire on December 31, 2018, is good for all ongoing renewables projects, but that it will not encourage new ones, especially new solar and wind energy projects.
The past few months have been marked by uncertainty concerning the regulatory framework and state incentives for renewable energy sources. The existing decree was passed in 2016 and was set to expire on December 31, 2018. Only a little over a month before it did, on November 22, the Serbian government adopted a decision to extend it by 12 months.
Turković: Why the wait, and what happens with solar, wind?
Maja Turković, a sustainable energy expert, tells Balkan Green Energy News that this is good news for frustrated investors, noting that she does not understand why such a long wait was necessary.
“It’s good news for all technologies not subject to quotas, such as biogas, biomass, small hydropower plants, and cogeneration, but everyone is still waiting for the new scheme for wind and especially solar, whose dramatic reduction of cost makes it the technology of the future,” she says.
The decree’s extension sends the signal to ongoing small projects not subject to quotas that the investment can continue and that nothing will change.
“On the other hand, a year is not enough to complete a project, and so the decree’s extension will not result in new projects,” adds Turković.
Turković believes that it would be good for projects not subject to quotas if the decree were to be extended even beyond 2019, with a possible change of purchase prices, as these projects’ share in the overall energy generation is small and they would not be able to affect the electricity price paid by end-users or the functioning of the power system.
“The extension of the decree does not mean that there will be no developments concerning solar and wind energy through the end of 2019. Auctions are supposed to be introduced, and the extension has only bought some time for the line ministry. At the same time, regulations to introduce prosumers and energy cooperatives are also expected,” she says.
Ružić: Excellent decision – preparations for solar and wind auctions under way
Slobodan Ružić, CEO of Energy Saving Group, also believes that the extension of the decree is good for all ongoing projects – wind farms, small hydropower plants, several biogas plants, including one in Vinča, and one biomass facility.
“It’s also good for all those who have secured building permits or are close to doing so, but have not yet started construction. This is good for everyone, for Serbia’s energy sector,” Ružić tells Balkan Green Energy News, adding that the government made the right and timely decision.
He believes that the extension of the decree has averted major problems for investors and the banking sector in Serbia, demonstrating that the state intends to consistently implement its declared policy.
“When it comes to solar and wind energy, a project is about to kick off to prepare the system of auctions for these facilities. It should be completed by mid-2019, which would be followed by the adoption of implementing regulations. There will be no new incentives for wind farm and solar power plant operators for at least 6 months, probably a year. But work on the matter is under way,” he says.
Renewables share at 20.9% at end-2016, 27% targeted by 2020
The decree on incentives for the production of electricity from renewable energy sources and high-efficiency cogeneration and the decree on the terms and manner of gaining status of a privileged producer are at the core of Serbia’s regulatory framework for renewable energy sources. Privileged producers are getting state subsidies in the form of feed-in tariffs over 12 years. The existing quotas for solar (10 MW) and wind (500 MW) have been awarded.
In June 2017, the Energy Community Secretariat called on Serbia to change regulations in order to enable the introduction of auctions for renewable energy sources. The Energy Community Secretariat and the European Bank for Reconstruction and Development (EBRD) have published Policy Guidelines to help countries design and implement competitive selection procedures to support renewable energy.
Several months later, Miloš Banjac, assistant energy minister for renewables and energy efficiency, said that feed-in tariffs are obsolete and that the next step will be the introduction of feed-in premiums and auctions. Serbian Prime Minister Ana Brnabić also said that the construction of new wind farms will primarily depend on bids in tenders.
Serbia has pledged to raise the share of renewables in gross final energy consumption to 27% by 2020. At end-2016, the share stood at 20.9%, down from the planned 23.8%, according to data from the Energy Community Secretariat’s Annual Implementation Report.