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Serbia urged to adjust NECP renewables, energy efficiency goals to Energy Community’s targets

serbia necp energy community assessment renewables

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November 14, 2023

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Published:

November 14, 2023

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Serbia is invited to bring its 2030 targets regarding renewables and energy efficiency into line with the Energy Community’s 2030 targets and to step up its efforts in the area of just transition to facilitate a smooth, inclusive, and fair transition, the Secretariat of the Energy Community said in its recommendations on Serbia’s draft National Energy and Climate Plan.

Serbia’s Ministry of Mining and Energy submitted its draft National Energy and Climate Plan (NECP) to the secretariat for review on June 29. The Secretariat has assessed the draft NECP and issued its recommendations.

It has been recommended to Serbia to match the level of ambition – i.e. 40.7% instead of a mere 33.6% – in the planned minimum share of renewable energy in gross final energy consumption by 2030 to the decision of the Energy Community Ministerial Council, or explain the specific national circumstances to justify the gap.

The achievement of the 2030 target in renewable energy is legally binding upon Serbia.

The secretariat recalled that the Energy Community contracting parties are obliged to develop draft NECPs setting out objectives in line with the Energy Community 2030 targets and policies and measures in the five dimensions of the Energy Union (greenhouse gas emissions reduction, renewables, energy efficiency, internal energy market, and research and innovation).

Decarbonization – there is no information related to the introduction of an emission trading system

According to the assessment, the share of coal in electricity generation is planned to be reduced by not more than 25% in 2030 compared to the status in 2019 in the policy scenario, but it will still account for approximately half of total power generation by 2030. The complete phase-out of coal in the electricity mix is expected to take place by 2050 in the policy scenario.

Concentrating the majority of the ambition in the post-2030 period will require an accelerated closure of coal-based generation capacities between 2030-2050 coupled with an extremely ambitious investment in new generation capacities, which will pose challenges to the economic feasibility and fairness of the green transition, the document said.

The lack of consistency raises serious doubts about the ambition of fossil fuel phase-out in the electricity sector

The draft plan also claims that all “fossil fuel thermal power plants are expected to completely stop generation of electricity by 2050.”

This not only puts in question the achievement of the 2030 GHG emissions reduction target, but it is also not underpinned by the figure below the referred statement because natural gas still appear in the electricity mix in 2050, the secretariat said, adding that this lack of consistency raises serious doubts about the ambition of fossil fuel phase-out in the electricity sector.

According to the secretariat, no economy-wide climate neutrality is planned to be reached by 2050. The most ambitious policy scenario with additional measures (“WAM”) achieves 75% of net emission reductions on the level of the overall economy from 1990 to 2050.

There is no information related to the introduction of an emission trading system

A carbon tax is included among the policies and measures, albeit only in the form of facilitating its introduction, without any concrete action planned. A footnote in the draft NECP points to a potential introduction of such a tax from 2027 at a low rate of EUR 4/ton and an increase to either EUR 40/ton (in Chapter 5) or to EUR 70/ton (in Annex II) in 2030, the document reads.

The secretariat said that there is no information related to the introduction of an emission trading system (ETS), which could be instrumental for securing an exemption from the European Union’s CBAM Regulation and thus for preserving any market coupling in electricity.

Compared to the prominent role of coal at least until 2030 and the plans related to the modernization of the coal mining industry, detailed planning of the policies and measures to prepare the Serbian society and economy to manage the phase-out – i.e. just transition – are largely absent, according to the document.

serbia necp target assessment

Renewables – the potential for 3.58 GW of solar, but the target is 1.73 GW

Solar and wind energy are expected to take over the place of coal in electricity generation, however, the growth in renewables follows a slow trend until 2030 and is forecasted to accelerate substantially only between 2030 and 2050.

The overall 2030 renewable energy target is subdivided into sectoral targets for electricity (45%), transport (7%), and heating and cooling (41.4%). Trajectories for each sectoral target are provided, but there is a lack of clear annual breakdowns, which makes monitoring the progress challenging, according to the document.

“IRENA’s study ‘Renewable Energy Prospects for Central and South-Eastern Europe Energy Connectivity (CESEC)’, indicates that Serbia possesses twice the potential to cost-efficiently harness solar PV for electricity generation by 2030 compared to what is proposed in the draft plan (3.58 GW compared to the proposed 1.73 GW). There is no explanation in the draft NECP regarding the solar PV potential, which could justify such a significant level of difference,” the secretariat said.

There are measures planned for self-consumption and energy communities, however, in the absence of tangible targets in this respect, it will be difficult to track the progress.

Energy efficiency – the country falls short of complying with the level of final energy consumption

The achievement of the 2030 target in energy efficiency is legally binding upon Serbia under the Ministerial Council Decision. This requires that Serbia pursues the same level of ambition – i.e. maximum of 9.54 Mtoe instead of 9.7 Mtoe19 – in the planned total maximum level of final energy consumption by 2030, according to the document.

District cooling is not considered an option in the period until 2030. The draft NECP also does not reflect the status of fulfilling the obligation to carry out a comprehensive assessment of the potential for the application of efficient heating and cooling.

The draft plan does not provide any details regarding the implementation of consumption-based billing, which is currently only partially applied, the secretariat said.

Energy security – self-sufficiency will be costly

The secretariat said that self-sufficiency is the central guiding principle, without taking regional cooperation and the regional dimension into account. This will significantly increase the costs of the transition, according to the assessment.

A balanced mix of diversification measures with policies that enhance cross-border energy trade, in particular coming from sustainable renewable energy, could result in a lower level of necessary investments while reaching the same level of energy security in a low-carbon manner, the secretariat recommended.

Thee draft plan is not aligned with the TYNDP 2023-2032 of the TSO Elektromreža Srbije

Most policies and measures regarding energy security rely on fossil fuels including coal-fired units, weakening the development of a sustainable energy sector and not reflecting the objective of the draft NECP to phase down lignite by up to 25% in 2030.

The modernization of the coal mining industry represents a measure with significant investment needs (1.5 times higher than the costs of all measures dedicated to GHG emissions reduction combined) which calls into question the impact of the planned actions in the decarbonization dimension, the secretariat said.

It also stressed that the draft plan is not aligned with the TYNDP 2023-2032 of the electricity transmission system operator (TSO) Elektromreža Srbije (EMS), which foresees a significantly higher potential of integrating renewables in the transmission network than the value indicated in the draft NECP.

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