Solar podcast: Self-consumption solar projects are gaining ground among Serbian firms

Models for permitting, billing, and financing photovoltaic systems for businesses to produce their own electricity are being developed and worked out in Serbia. Participants in the fourth episode of solar podcast ‘Everything you wanted to know about solar panels, but didn’t have anyone to ask’ agreed that the market will keep expanding rapidly, but they also warned that growth requires predictable regulations and new solutions in the regulatory framework. The most important thing for a company planning to install solar panels is to adjust their capacity to its consumption needs, the experts stressed.

Industrial facilities that produce their own energy, or have direct access to an energy source through an arrangement with an investor, can hedge against price spikes and reduce risks to the security of supply. Photovoltaic systems have proven to be the best solution when it comes to electricity. There are vast areas available on the rooftops of factories and buildings, and the planned capacity can be adjusted to the consumption at a given location, but also to available funds.

Businesses in Serbia in all sectors recognize the benefits of installing solar panels, and so do households. Capacities connected to the grid are still very modest, but since last year’s regulatory changes – the introduction of prosumers and the subsidy scheme – the number of projects and requests for connection has been soaring.

Businesses in Serbia in all sectors recognize the benefits of solar panels, and so do households

This season’s final episode of solar podcast ‘Everything you wanted to know about solar panels, but didn’t have anyone to ask’ cleared up numerous doubts in this segment of the energy transition.

Talking about opportunities and challenges for businesses when it comes to solar power projects for self-consumption were financial consultant Aleksandar Savić, energy consultant Dejan Stojadinović, Country Manager for Serbia at Interenergo Siniša Janjušević and Specialist for Network Operation at state distribution system operator Elektrodistribucija Srbije (EDS) Dušan Vukotić.

The solar podcast, launched in early March, is produced by Balkan Green Energy News, with the support from the German cooperation project Promotion of Renewable Energy and Energy Efficiency in Serbia, implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) in partnership with the Ministry of Mining and Energy of the Republic of Serbia.

The podcast is hosted by Danko Kalkan, advisory services manager for ESG (environmental, social and governance) at consultancy Ernst & Young (EY). All four episodes are available on Facebook and YouTube.

In Europe, all medium-voltage metering points are remotely controlled

From the technical point of view, Dušan Vukotić, Specialist for Network Operation at Elektrodistribucija Srbije (EDS), explained that companies producing their own electricity should ensure flexibility. This, according to him, is only possible with a management system in place.

According to him, active customers in the European Union (EU) have additional points behind the meter for, among other things, consumption, storage, and electric vehicle charging, and the distribution system operator is responsible for these points. Those are advanced, intelligent grids, and there is no doubt that energy and information technologies should be integrated, according to him. In Europe, all medium-voltage metering points are already remotely controlled, Vukotić stressed.

Grid connections in factories must be modernized

New factory owners have connections that are up to 40 years old. In order to connect a power plant with a lifespan of 20 or 25 years, a manufacturer must modernize the connection. For EDS, automation is the primary direction, he added.

Active customers will have additional obligations

Starting from January 1, with the introduction of the category of active customer in Serbia, the restrictions will be purely technical, related to the size of the connection. But those entities will have new obligations, primarily balancing, Vukotić recalled.

According to the latest data, the status of prosumer was granted to 395 legal entities in Serbia, not including households and homeowner communities, he said. Of that number, 382 are for capacities below 50 kW, which involves a streamlined procedure and no building permit required, Vukotić explained. Given that 25 of them have approval for exactly 50 kW, they are likely to seek permission to expand their systems to 150 kW or 160 kW, he noted.

Vukotić warned that a company should first optimize its electricity consumption, and then decide how much it should produce to cover its own needs. If the potential of the roof area is greater than investors’ own needs, then they should install an additional connection for their role as producers only, he recommended.

One the price cap is lifted, businesses will negotiate a tariff for surplus electricity they deliver to the grid

For prosumers in the household category, there is a single procedure, and for businesses, there are three different procedures, depending on the size of the photovoltaic system, according to energy consultant Dejan Stojadinović. For systems of up to 10.8 kW, the procedure is very simplified, almost the same as for households, and from 10.8 kW to 50 kW, no building permit is required, he said.

Household prosumers are subject to net metering, which means they can withdraw from the grid as much electricity as they deliver to it. For companies, net billing is applied – the quantity of electricity is measured in money, and the amount is deducted from the monthly electricity bill.

“Currently, the price of electricity is the same for all companies, EUR 110 per MWh. Once that is over, each company will pay a different price, the one it contracts with the supplier, EPS Snabdevanje, and it will be tied to the market price. This also means that each company will separately negotiate the price that EPS Snabdevanje will pay them per kilowatt-hour they supply to the grid,” Stojadinović explained.

There were some teething troubles in compiling and processing requests for the prosumer status, but the system has since been largely standardized

The time has come for companies to pay much more attention to the energy they consume, because it greatly affects their business, he noted.

When applications for the prosumer status began to be accepted last year, there were delays. Such teething troubles in the early stages were only to be expected, and they were related to the connection procedure or the financing of such projects. There were also issues among local self-governments in the interpretation of regulations. “But we can say that it has largely been standardized,” he said, noting that it sometimes happens that the national regulation changes, leading to fresh delays.

On the other hand, Stojadinović explained that the third-party ownership model is not yet possible in Serbia, but that it requires only a minor change in regulations.

Companies cannot benefit much from selling surplus electricity from solar

Siniša Janjušević of Interenergo noted that legal entities in Slovenia have so far installed 90 MW of solar and that the state incentivizes investments in this segment with subsidies of 20%.

Under EU regulations, a third party can be a prosumer with a solar system on someone else’s rooftop, selling electricity to the owner of the roof and any surpluses to the utility, he added.

The idea is for an industry, for example food or tires, to invest in its core business, and to leave solar to someone who will invest in a photovoltaic system and operate it, explained Janjušević.

The contracted company is in charge of development, financing and, most importantly, maintenance and management, and assumes all financial and technical risks, he explained. In that case, it is in the contracted company’s interest to optimize the size of the future photovoltaic system, he concluded.

A partner firm installing a solar power plant on the roof of another company assumes all risks, as well as management and maintenance

This is extremely important for the owner of the roof, because that company’s goal is to satisfy its own needs, not sell electricity on the market, said Janjušević.

According to him, it is more profitable to save on electricity you buy than to sell electricity you produce.

Banks are willing to finance ESCO projects because they are paid off from savings

Consultant Aleksandar Savić provided an insight from the point of view of the financial sector. First, banks are willing to lend money for energy service company (ESCO) projects, where third parties are engaged, because they are repaid from savings on electricity expenses, he said. Further, financial institutions need to have a certain green share in their portfolio in order to meet ESG (environmental, social, and governance) targets, so these loans also include grants, and the interest rates are usually somewhat lower, he explained.

The “solar rush” began early last year, after a huge spike in electricity prices, and banks were awash with requests for financing solar systems, both for producers and for prosumers, he recalled. Prior to that, the interest in photovoltaic panels in the corporate sector was weak, according to Savić.