Renewables

Using solar energy is getting easier in Serbia – what you need to know to produce your own electricity

solar power plants prosumers serbia

Photo: Balkan Green Energy News

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December 30, 2020

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Published:

December 30, 2020

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If a household or business in Serbia decides to install solar panels and start producing electricity for self-consumption – to become a prosumer – it is not a mission impossible. It is, actually, very simple. Things get a bit more complicated when a prosumer wants to sell electricity produced in this way, but that is not impracticable either. So, if you are thinking about engaging in solar energy production, just go for it!

Balkan Green Energy News published an article two years ago outlining the challenges faced by would-be prosumers in Serbia, but things have since become much clearer when it comes to options available in the solar power sector, and the situation is now relatively better than it was two years ago.

However, this is not because the state has made an effort to regulate this field or provide financial support to citizens or businesses for solar projects, as is the case in Romania, Italy, Croatia, and the rest of Europe, where the production of clean and green energy is being incentivized as part of the energy democratization process. It is rather because the solar market has been developing unstoppably on its own.

Solar panels reduce monthly electricity bills and contribute to a cleaner and healthier environment

There are two reasons why households or firms decide to install rooftop solar photovoltaic panels. The first reason is economy, given that such an investment will reduce monthly electricity bills as well as increase businesses’ competitiveness and efficiency. The other reason is ecology, as both individuals and firms are increasingly keen to contribute to a cleaner and healthier environment by producing clean energy from renewable sources.

The price of installing solar panels has dropped by about 90% over the past 10 years or so

Solar energy has been used for heating water for decades, but it has become interesting in power production only in the past several years thanks to declining costs of solar technology. The price of installing solar panels and supporting equipment has dropped by about 90% over the past 10 years or so, resulting in an increase in solar capacities worldwide from 40 GW to 578 GW over the same period.

Even with fewer sun hours, Germany has nearly 50 GW in installed solar capacity, or as much as 5,000 times more than Serbia

In most of Serbia, the number of sunlight hours is higher than in many European countries. Germany, for example, produces about 1,000 kWh of electricity per 1 kW of installed solar panels, while the figure in Serbia is between 1,200 kWh and 1,400 kWh per 1 kW of installed solar capacity. However, even with fewer sun hours, Germany has nearly 50 GW in installed solar capacity, or as much as 5,000 times more than Serbia, which has a mere 10 MW!

Even though Serbia lacks rules to regulate the status of prosumers or encourage their development, things are moving forward – several hundred solar power stations have been installed so far, supplying green electricity to individuals and businesses.

Investment in solar by households pays off in 6 to 8 years

conseko miodrag vukovic solar energy prosumers

We have talked about solar energy in Serbia with Miodrag Vuković, founder and owner of solar energy solutions provider Conseko. Vuković is a pioneer in solar project development and application in Serbia, with 12 years of experience in this field.

Two main options for both individuals and legal entities

Many people and businesses, according to him, are interested in installing solar panels, and they should first know the difference between two main options for both individuals and legal entities. The first option is for a solar power system to produce energy that is consumed within the household or firm only (there are two possibilities here – a system with an energy storage battery and a system without storage). The second option includes the possibility to sell the amount of electricity that is not consumed with the household or firm, by feeding the surplus into the grid of state power utility Elektroprivreda Srbije (EPS).

The first option, Vuković explains, involves a photovoltaic system with a hybrid inverter with batteries, which is not connected to the EPS network. The amount of electricity that is produced can be consumed, while surpluses can be stored in batteries. If the solar panels do not generate enough energy and the batteries are empty, then the system switches to the EPS grid, ensuring unimpeded supply. This type of system is capable of providing electricity even during grid outages.

This kind of solar power station is ideal for owners of facilities that are not connected to the EPS network because it can ensure energy supply for them.

Individuals who opt for such systems normally install between 2 kW and 15 kW, because bigger capacities are not economically viable due to high costs of larger batteries. Since such systems are not connected to the grid, they are not legally required to obtain a permit, pursuant to Article 144 of the Law on Planning and Construction. Things get complicated if an individual does not want to have batteries, in which case the photovoltaic system must be synchronized to EPS’ grid and certain permits are required.

An individual prosumer installing a PV system needs to invest an average of EUR 700 per kW of installed capacity

The second option for individuals is to combine production, consumption, and sale, but this process is quite lengthy and complex. The state has yet to regulate this segment in order to make it easier for individuals to opt for this type of system.

An individual prosumer installing a photovoltaic system needs to invest several thousand euros, or an average of EUR 700 per kW of installed capacity. The investment pays off in 6 to 8 years, and the cost is EUR 500 lower if no batteries are installed.

Businesses opt for power stations of up to 150 kW or bigger ones, with a capacity exceeding 500 kW

solar-power-plant-50-kW-Philip-Morris-conseko
Solar power plantwith installed capapcity of 50 kW on Philip Morris facility in Niš (photo: Conseko)

When it comes to businesses, they most often opt for solar power stations that are connected, or synchronized, to the EPS grid. Firms usually install solar systems with a capacity of between 20 kW and 150 kW. Such systems can ensure production and consumption as well as sale, although sale requires an additional permitting period of about one year.

For capacities exceeding 160 kW, businesses must meet certain technical conditions defined by the distribution system operator (DSO) – EPS Distribucija. By and large, this refers to the installation of equipment that the DSO needs in order to be able to disconnect a power station remotely, in case of unforeseen circumstances. Such equipment increases the investment, making it less cost-effective for power stations of between 160 kW and 300 kW, according to Vuković.

The cost of installing a rooftop solar system for businesses is about EUR 600-650 per 1 kW of installed capacity

For this reason, business that consume large amounts of energy opt for power stations with a capacity of either up to 160 kW or over 500 kW (up to 2 MW). In Serbia, there are several such larger stations, and a few more are in the pipeline, he said, adding that Conseko is working on one of such projects. These projects are being developed at industrial facilities whose rooftops span 3,000 square meters or more.

The cost of installing a rooftop solar system for businesses is about EUR 650 per 1 kW of installed capacity for power stations of more than 30 kW and EUR 600 per 1 kW for those whose capacity exceeds 100 kW.

Firms can expect their investment in solar systems of between 30 kW and 150 kW to pay off in 6 to 8 years, while those exceeding 500 kW can pay off in five years, according to Vuković.

Turnkey installation of solar systems

rooftop pv solar systems types prosumersThe purpose of building a solar power station determines the project development process as well as the duration of the entire enterprise.

If individuals or legal entities only intend to produce and consume their own electricity, as well as to store energy in batteries, then the procedure is quite simple and the entire project is realized very quickly.

After analyzing a household’s or a firm’s characteristics – the surface area and orientation of the roof, as well as energy consumption – Conseko, the firm owned by Vuković, develops the optimal solution. Once a decision to invest is made, it normally takes between three to six weeks until the system starts producing electricity, according to him.

However, if individuals or legal entities wish to sell electricity surpluses, then they need to obtain a location permit, a building permit, and an approval to connect the system to the distribution network.

Individuals must become a member of the energy cooperative in order to sell electricity

When it comes to individuals, there are two stages. First, they must obtain all these permits, as well as other approvals. The second stage is becoming a member of an energy cooperative, because it is only possible to sell electricity through such a cooperative, not independently.

Selling electricity is feasible, but whoever wants to do it must be patient, says Vuković. As an example of an energy cooperative, he highlights Elektropionir, with which Conseko collaborates.

One of the founders of the cooperative was Ana Džokić, an architect, who has faced difficulties with installing solar panels. Elektropionir is the second energy cooperative in Serbia. The first one, called Sunny Roofs, was founded in Šabac.

According to Džokić, Elektropionir was established about a year ago with the aim of demonstrating that it is possible to produce and consume your own energy, but also sell it.

Businesses can sell their surpluses into the grid through a power purchase agreement signed with a privately-owned electricity supply firm

Džokić says that the process of obtaining the necessary paperwork for her own solar station is under way, and that she is currently taking the third of a total of 13 steps. Once the paperwork is completed, she will conclude a power purchase agreement through the cooperative, rounding off the process that individuals must undergo if they want to become true prosumers – which means to be able to sell electricity, in addition to producing and consuming it. She also says that she will then share her experience with everyone who may be interested.

When it comes to businesses, the situation is somewhat less complicated. The proof of this is car repair shop Cubi in Novi Sad, whose 144 kW solar power station is generating electricity for self-consumption, as well as for sale.

The installation of the power station and all the administrative procedures were handled by Conseko. According to Vuković, Cubi feeds its surpluses into the grid through a power purchase agreement signed with a privately-owned electricity supply firm.

The entire procedure in Cubi’s case lasted a year, he says, adding that Conseko offers its clients not only technical expertise, equipment procurement, and installation, but also the service of obtaining all necessary permits and approvals as well as advice on ways to sell electricity.

solar power plant 144 kW Cubi Novi Sad conseko
Solar power plant with installed capacity of 144 kW on the roof of the Cubi Novi Sad (photo: Conseko)

The financial sector rolls out products to support increasing interest in solar power

Several banks in Serbia have rolled out credit lines to finance the purchase and installation of solar panels. One of the first to do so is ProCredit Bank, which is offering interest-free loans for renewable energy projects, but also for small and medium sized enterprises, households, and agricultural households to help them improve energy efficiency.

“Our intention is to step up investment in renewable energy sources over the coming period, but also to provide more comprehensive support to all those interested in this kind of investment. In cooperation with our business partners, and importers and distributors of solar systems, we have prepared a very attractive offer for the procurement of equipment and installation of smaller solar power stations, which is intended for businesses and agricultural households as well as individuals. The offer refers to our bank’s interest-free loans which enable anyone wishing to invest in solar panels to do so,” says Ivan Smiljković, a member of ProCredit Bank’s executive board.

Smiljković says that entrepreneurs have so far shown the greatest interest for change, as well as savings that come with the installation of solar panels, but he is convinced that households, too, will recognize the numerous benefits, which are not just of a financial nature. At the time when air pollution in Belgrade, as well as other large cities, is in the spotlight, ProCredit Bank, according to him, wants to set an example and encourage others to follow in its footsteps.

UniCredit Leasing’s offers, as part of its cooperation with GEFF Serbia Leasing, leasing agreements to finance the construction of solar power stations

UniCredit Leasing’s offer is no less interesting. As part of its cooperation with GEFF Serbia Leasing, a financing facility of the European Bank for Reconstruction and Development (EBRD), UniCredit Leasing has rolled out leasing agreements to finance the construction of solar power stations. This model is particularly suitable for small and medium sized enterprises, as well as registered agricultural household, whose access to the capital market is, as a rule, limited.

Agriculture and the food industry are best positioned to benefit from solar energy

Domestic firms in the agriculture sector and the food and food processing industry are currently best positioned in Serbia to benefit from installing solar panels, mainly thanks to good financial offers, according to Vuković.

For the purpose of cutting irrigation and electricity costs, these companies can get refunds of up to 60% of the investment in solar panels under the IPARD program. Serbia’s Development Fund also provides financing and refunds of as much as 15-20% of the investment.

IPARD program secures refunds of up to 60% of the investment in solar panels

“Besides cleaner air and less harmful emissions, solar technology brings savings to businesses because it reduces electricity costs, helping Serbian companies to become more competitive both in the country and abroad. Add to that the subsidy of up to 60%, and it becomes clear enough that this is an excellent opportunity,” says Vuković.

If you factor in the CO2 tax that the EU plans to introduce soon, which will push up the prices of goods exported from Serbia, it is clear that installing solar panels to produce energy for self-consumption will be the best solution for the economy to cut costs and avoid new ones.

What regulatory changes are needed?

Solar power plant 50 kW Obilicev venac parking garage conseko
Solar power plant with installed capacity of 50 kW on the roof of the Obilicev venac parking garage (photo: Conseko)

How can the state make it easier for people and businesses to produce and consume its own energy, as well as to sell surpluses?

For a start, according to Vuković, it is essential to streamline the procedures so that citizens and firms can install solar panels without serious obstacles in order to be able to consume electricity they produce.

One of the solutions is to scrap the requirement to obtain a location permit and EPS’ approval for power stations of up to 10 kW, as this capacity is much smaller than the existing 17.25 kW ceiling for connection to the grid.

Introduction of net metering could facilitate the sell of electricity for prosumers

To facilitate supplying (i.e. selling) electricity to the grid, Serbia could introduce the net metering mechanism, which is automatically approved for capacities of up to 11 kW in neighboring countries, and up to 40 kW in Poland.

Basically, Serbia, too, has to create space for gaining the status of a prosumer, says Vuković.

Most EU countries have already done that, but they have also gone a step further, by introducing incentives for this type of investment.

To facilitate and speed up the drafting of regulations on prosumers and introducing incentives to increase their numbers in Serbia, but also other countries in the region, the Energy Community Secretariat has recently prepared Policy Guidelines on Integration of Renewables Self-Consumers.

Elsewhere, things have gone so far that in the Netherlands, for example, citizens interested in gaining the prosumer status for a solar power station need only to apply via a website, by entering their name and the capacity of the system – and that’s it. In 2019 alone, the country got 200,000 new prosumers. Imagine they all had to undergo the procedure for obtaining a location permit and approval for connection to the grid.

That, of course, would have been impossible.

In Serbia, however, the procedure is the same for a few kilowatts and for a hundred kilowatts, Vuković noted.

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