Serbian Companies on the Changing Power Market: no time to delay energy transition

Serbia, as well as other countries in the region, has no time to hesitate over the energy transition, given that changes aimed at achieving climate neutrality are taking place very quickly in Europe and around the world. Achieving this goal, which is also a development opportunity, calls for changes across society, and changing people’s mindset will pose the greatest challenge. This in practice involves turning households and businesses from passive into active participants in the electricity market. Most importantly, the changes are necessary, not because of some external pressure, but for the benefit of everyone in the region. These are the main takeaways from the first panel held as part of the conference Serbian Companies on the Changing Power Market.

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.

The subject of the first of four panels was the organization and functioning of the electricity market in Serbia while the moderator was Dejan Stojčevski, Chief Operating Officer of the SEEPEX power exchange.

Jovanka Atanacković, State Secretary at the Ministry of Mining and Energy, said that the government might extend the freeze on electricity prices for businesses beyond June, but she noted this should not be a strategic solution.

Businesses must be ready to deal with high energy prices on their own, she said. The solution lies in investments, both public and private, to help everyone prepare for a climate-neutral growth that would not harm energy security, according to her.

Installing solar panels is one of the ways for businesses and individuals to take part in the energy transition, helping to achieve this climate-neutral growth and ensuring their own energy security and independence, she explained.

Atanacković: everything must change to ensure 2050 goals

The ministry, according to Atanacković, believes climate neutrality can be achieved through changes, such as the adoption of new regulations and a new investment plan, the implementation of new energy generation technologies, and reforms at public utilities. “Finally, we will have to change too,” she said.

She also said that targets for 2030 and 2040, and a vision for 2050, will be defined soon.

Jovanka Atanacković and Nikola Rajaković (photo: Đorđe Tomić)

Professor Nikola Rajaković of the Faculty of Electrical Engineering at Belgrade University, agreed that Serbia has no time to hesitate, but he added that the country also has no room for underperformance in the period until 2030.

Rajaković said that changes in the energy sector today are taking place very quickly, and that any hesitation is dangerous. He reiterated that pursuing decarbonization and renewable energy sources is undoubtedly the best course, but that they should not be idealized.

Apart from the state’s support, businesses must also find ways to help themselves, for example, by taking advantage of new regulations and forming balancing groups or virtual power plants.

Rajaković: the changes are necessary to ensure a cleaner environment and cheaper electricity

Rajaković said that Serbia’s energy sector has to change, not because of pressure from the European Union (EU) or the Energy Community, but in order to ensure a cleaner environment and cheaper electricity for this and future generations.

He repeated that the energy transition must be viewed as a development opportunity, which it is.

Zoran Vujasinović of the EU Agency for the Cooperation of Energy Regulators (ACER), said that the energy crisis has not changed the European Commission’s mind about the transition towards renewable energy. It has only helped identify shortcomings and find solutions, according to him.

Vujasinović: the energy crisis has not changed the EU’s decision to move towards renewable energy

The EU’s intention is for all market players to bear balancing responsibility, he said, adding that there are various ways to achieve this, including by forming balancing groups.

ACER will have a much greater role in the region going forward, either though the Energy Community or through direct cooperation with governments, according to him.

At the moment, there are two options for the integration of countries in the region into the European market, he explained. One option is for the region to unite itself first, and then be integrated into the EU, and the other is to integrate individual markets whenever a country is ready.

Clean Energy for all Europeans aims to encourage households and businesses to become active market participants

Nikola Rajaković, Jasmina Trhulj, Marko Janković, Milica Brkić Vukovljak, Zoran Vujasinović (photo: Đorđe Tomić)

Jasmina Trhulj, Head of the Electricity Unit at the Energy Community Secretariat, also believes that Serbia, as well as the region, has no time to waste.

The energy transition is not a goal in itself, but a means to reach a goal, and that goal is to modernize the electricity system, burdened by outdated power plants, as well as to introduce the latest, clean technologies, according to her.

She recalled that Serbia and all the other countries in the region are signatories to the Paris Agreement, the Green Agenda for the Western Balkans, and the Energy Community Treaty, which makes it their obligation to implement these measures.

Having completed the transposition of the EU’s third energy package, the Energy Community is now beginning the implementation of the fourth package – Clean Energy for all Europeans – which aims to include households and businesses in the energy transition process and ensure they eventually benefit economically as well as in terms of a cleaner environment, according to her.

According to Marko Janković, Director of the Directorate for the electricity market at state power grid operator EMS, current forecasts put electricity prices at upwards of EUR 140 per MWh in 2023 and at over EUR 100 per MWh in 2024.

The price could stabilize at about EUR 100 per MWh, he said.

Janković: forecasts put power prices at upwards of EUR 140 per MWh in 2023 and at over EUR 100 in 2024

He repeated that the unprecedented power price increases are caused by a disturbed balance between production and consumption, rising costs of CO2 emissions and natural gas, but also speculation on the market.

Marko Janković and Milica Brkić Vukovljak (photo: Đorđe Tomić)

He noted that the cost of electricity production in September 2021 was up 400% year-on-year. The cost electricity generation at gas-fired power plants was between EUR 120 and EUR 140 per MWh, which prompted the re-opening of coal power plants and, in turn, increased CO2 emissions, creating a vicious circle, according to him.

Serbia’s energy regulator AERS will impose rules to make energy suppliers improve the quality of services

Talking about speculation and abuses on the power market, Milica Brkić Vukovljak of the Energy Agency (AERS), said that Serbia’s first-ever decree on the prevention of manipulation on the power market was adopted in December 2021. However, the country cannot apply the EU’s Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) until the issue of jurisdiction between ACER and the Energy Community is resolved, she explained.

The decree applied in Serbia is the so-called light REMIT, which bans manipulation and attempted manipulation, and AERS will tighten the supervision of the electricity market, she said.

Brkić Vukovljak also announced that AERS will impose rules on the quality of energy supply in order to make suppliers invest in and improve the quality of their services. The penalty for failing to meet prescribed targets will be a reduction of the maximum allowed revenue, according to her.