Serbia’s new electricity market rules bring important changes

The new Electricity Market Rules in Serbia introduce significant changes aimed at improving the balancing market, according to Nikola Tošić, Market Division Manager at the country’s transmission system operator, Elektromreža Srbije (EMS). Key updates include the introduction of auctions for procuring balancing capacity, the inclusion of new market participants through the creation of a framework for active buyers, aggregators, and renewable energy producers, the introduction of negative pricing on the balancing market, and the establishment of a framework for demand-side management.

In line with the Energy Law, Elektromreža Srbije (EMS), as the TSO, issues the Electricity Market Rules, which govern the electricity balancing market, the balancing responsibility of market participants, and imbalance settlement for balancing groups. The company periodically issues amendments to the rules to align them with market participants’ initiatives and changes in legislation.

The most recent amendments took effect on December 26, 2025.

The primary reason for amending the rules is alignment with the latest changes to the Energy Law, Nikola Tošić, Market Division Manager at TSO EMS, explained. The most significant updates involve the implementation of new market developments.

New terminology

New terminology has been introduced throughout the rules in line with the law, particularly regarding ancillary services. These are now clearly divided into ancillary services for balancing purposes (frequency containment reserve – FCR, automatic and manual frequency restoration reserve – aFRR and mFRR) and non-frequency ancillary services (voltage regulation, black start, and islanding).

Additionally, a larger number of abbreviations are now used in formulas, Tošić added.

The glossary has been significantly expanded with terms such as aggregator group, balancing capacity procurement calendar, and terms related to the methodology for determining the maximum price of balancing capacity. Some existing terms have been further elaborated, while obsolete ones have been removed.

Balancing responsibility

In the area of balancing responsibility, a new concept has been introduced – imbalances arising from scheduled exchange blocks in cases of operational limitations. Furthermore, the logic of dual balancing responsibility has been applied to both the delivery point and the balancing energy bid at that point.

“Accordingly, the rules introduce balancing responsibility exclusively for participation in the balancing market, with clearly defined roles for new and existing balancing service providers (BSPs), aggregators, and renewable energy sources. Bid imbalance settlement for balancing service providers has also been defined,” Tošić underscored.

Records for aggregator groups and balancing service providers have been established, requiring pre-qualification. Additionally, the establishment of independent aggregators and aggregator groups has been enabled.

A risk value registry has been introduced for balancing service providers. The risk value will be determined based on futures rather than historical data.

Ancillary services

The chapter on the types and scope of ancillary services has been completely revised, requiring the signing of three separate contracts for these services.

“Auctions have been introduced for procuring balancing capacity, featuring a clearly defined procedure and a merit order for accepting bids – from the lowest to the highest price – up to the required capacity,” Tošić stressed.

Billing is conducted exclusively for secured capacity, while failure to provide capacity is penalized. The transfer of capacity obligations to another pre-qualified participant is now permitted.

For the first time, a downward capacity payment for the manual frequency restoration reserve (mFRR) is being introduced.

Balancing market

Changes to the balancing market include the introduction of demand response as a resource for providing balancing services.

An obligation to provide ancillary services for balancing purposes has been introduced for producers and aggregators with generation units in their portfolio. A Register of Balancing Service Providers has been established, and European bid price caps have been applied, allowing for negative prices.

“Starting April 1, the price of activated balancing energy is determined as the price of the last activated bid in a specific direction for each settlement interval, in accordance with obligations under the Energy Law,” emphasizes Tošić.

A new chapter governs the settlement of balancing services, particularly in demand-side management and the relationship between suppliers, active buyers, and aggregators.

The new rules introduce negative prices

A key new feature is the introduction of a baseline consumption profile, which is determined methodologically by the BSP to ensure neither the consumer nor the supplier is disadvantaged. This includes maintaining separate settlement records and defining the technical conditions for participation in demand-side management.

Financial settlement for balance responsible parties (BRPs) has been updated to reflect the new dual responsibility logic, with the introduction of imbalance adjustments to reduce imbalances for which a party is not responsible. Negative prices and clearly defined payment directions have also been implemented, Tošić explained.

Specifically, the treatment of imbalances arising from redispatching and operational constraints in the distribution system has been regulated, as well as the exemption from imbalance settlement for imposed exchange blocks.

The settlement coefficients for imbalances exceeding the acceptable imbalance of the balancing group have also been amended.

Entry into force

The transitional and final provisions have been adapted to these amendments. Special attention is paid to the rules’ entering into force on the day of publication to accommodate limited implementation timeframes.

The procurement of balancing capacity for the trading day January 1, 2026, began earlier, requiring timely preparatory activities. During this period, it was necessary to submit requests for exemptions from certain provisions (such as the maximum price for balancing capacity) and to conclude contracts for ancillary services, framework agreements for balancing capacity procurement, and balancing mechanism participation agreements.

“Due to the urgency and interdependence of these steps, the rules took effect on the day of publication to ensure continuity of operations and timely preparation for the new regime,” Tošić explained.

A new methodology for calculating the maximum price for balancing capacity reservation has also been introduced, based on opportunity costs, with a cap on price growth over the coming years.