Serbia to switch from FIT to feed-in premiums and auctions

Addressing a conference on energy efficiency in Belgrade, Milos Banjac, assistant to Serbia's Minister of Mining and Energy, has announced the feed-in tariff scheme introduced in 2009 will expire by the year’s end and be replaced by feed-in premiums and competitive tendering procedures, heralding Serbia’s transition to new renewable energy support mechanisms. 

The current FIT program applies to solar, with rates ranging from €0.124 ($0.15) to €0.146/kWh for rooftop arrays depending on system size, and €0.09/kWh for ground-mounted installations, all under a 12-year PPA. The quota assigned to PV is low – a mere 10 MW by 2020.

Describing the FIT scheme as outdated, Banjac failed to provide further detail on the new incentive models for renewable energy.

“Renewables are still more expensive than the conventional energy sources. Even if Serbia would manage to unlock 100% of its renewable energy potential, that would not cover all of its energy needs,” said Mr Banjac, adding the country would continue to rely on coal as its primary energy source.

To emphasise the point, the Serbian government plans to introduce as much as 700 MW of new coal-fired power capacity by 2025 – 350 MW of it by 2020 – on top of its current thermal generation fleet, with many plants over 25 years old.

Stressing the ministry’s immediate priority will be to establish an energy efficiency fund with an annual budget of €30-40 million – up from the €1.2 million currently allocated for the purpose – Banjac underlined Serbia had managed to harmonize its legislature with EU law – although a different opinion was heard last year from the Energy Community, a body working to extend the EU internal energy market to South East Europe, with complaints fundamental changes would need to be made to the Balkan nation's Energy Law.

The latest announcement however, seems at least partially aligned with suggestions made by the Energy Community aimed at bringing Serbia closer to EU standards in terms of renewable energy development, such as launching a competitive tendering procedure, introducing contract for differences for successful bidders, abandoning the status of temporary privileged power producer, new incentive measures in the form of a premium, introducing balancing responsibility for privileged producers, and establishing a renewable energy operator.

Renewable energy auctions are an emerging trend in the region. A few weeks ago, Montenegro announced its first tender for large-scale solar, exceeding 200 MW. Last year Kosovo, Serbia’s ethnic Albanian majority southern province whose 2008 declaration of independence has been recognized by most UN nations, announced it would introduce an auction scheme. 

To support the launch of auction mechanisms for large-scale renewable energy projects in southeastern Europe, the Energy Community Secretariat and the European Bank for Reconstruction and Development (EBRD) recently released guidelines for transparent, open and predictable renewable energy actions.

While there is still no official consultation on the new subsidy model in Serbia, Aleksandar Macura of the RES Foundation, a Belgrade-based NGO dedicated to facilitating the development of renewable energy, says not even an unofficial debate on the topic is expected any time soon.

“Renewable energy policy in Serbia emerged pretty much in response to the need to comply with the requirements of the Energy Community Treaty and without broader, transparent public consultations,“ Mr Macura tells pv magazine.

Hindrances to solar

Serbia's current, uneven FIT scheme allocates a quota of just 10 MW for PV while giving wind 500 MW. 

Last month, Serbian Energy Minister Aleksandar Antic announced 250 MW of new renewable energy capacity will be deployed this year – including 247 MW of wind capacity – with it unclear why solar is being sidelined, given the nation's high irradiation and PV's falling costs.

“It is difficult to guess the reasoning behind the preference, but what is worth mentioning is that the policy we implement today was designed some 10 years ago, which is ancient history for today’s renewables,” says Mr Macura.

Commenting on the main hindrances to PV uptake in Serbia, Mr Macura says a relatively low end-user price and the lack of a level playing field for different energy sources are problematic, and the country risk premium is still relatively high.

“In addition, there are abundant regulatory obstacles to the increased deployment of small scale solar,” added Mr Macura. “The removal of these regulatory obstacles – simplified construction and connection procedures, net billing – seems to be the first move that does not require additional resources.”

According to the Serbian government’s energy strategy, cumulative PV capacity is expected to increase to 10 MW in 2020, 100 MW in 2025, and 200 MW in 2030, but for now the question mark remains over how this will happen.

“The program that should operationalize the strategy in the period up to 2023 does not mention solar much, apart from one 10 MW project developed by the state electric utility. However, the government is interested to take a closer look at the current regulatory obstacles and possibilities [with the aim of] their removal,“ says Mr Macura, noting there is still no precise information on Serbia’s renewable energy policy beyond 2020.