Serbia’s draft Economic Reforms Program for the 2022-24 period set out a bold vision for renewables development, with targets for 8.3GW of solar and 3GW of wind capacity. The draft is prepared every year by the Serbian Ministry of Finance for the European Union’s scrutiny and as part of the country’s laborious path to joining the bloc.
As part of €17 billion ($19.2 billion) of investment for the energy and mining sector, €12 billion will be set aside for wind farms, PV plants and hydropower facilities. Utility-scale PV projects could be built on 200,000 hectares of neglected, low-value agricultural land that could host 2GW of solar, according to the draft. As part of the plan, a cooperation agreement was signed in August 2021 between the Serbian Ministry of Mining and Energy and Chicago-based UGT Renewables for the construction of 1GW of solar spanning more than 2,000 hectares across a dozen locations.
The draft also envisages the construction of around 300MW of PV plants, valued at €200 million, on land owned by state-owned power utility EPS, primarily on its coal ash dumps. Last year, the utility announced a tender to analyze conditions for the construction of two solar power plants with a capacity of 9.9MW each on the ash dumps of TPPs Morava and Kolubara. EPS has previously unveiled plans to build a 9.95MW solar array on the landfill site of the former Cirkovac Mine and a 97.2MW PV plant on an existing ash and slag dump owned by Srednje Kostlačko Ostrvo. However, little progress has been made on these projects, even though they have been discussed for a long time.
Most of the solar capacity envisaged under the 2022-24 draft is supposed to come from rooftop PV. Last year, Serbia started promoting prosumer concepts and identified 600 square kilometers of rooftops as suitable for the installation of solar panels. According to the draft, installing PV on 10% of those surfaces would equate to 6GW of installed capacity and an annual output of 7TWh, which is around 20% of the total energy production in the country. The total installed capacity of state-owned projects would thus amount to 8.3GW deployed to the tune of EUR6.2 billion, the draft states.
According to the International Renewable Energy Agency, Serbia had an installed PV capacity of 29MW at the end of 2020. Around 10 MW of this installed power comes from an expired feed-in tariff scheme, which granted rates ranging from €0.124 to €0.146/kWh for rooftop PV arrays, depending on system size, and €0.09/kWh for ground-mounted installations, all under 12-year power purchase agreements.
“The solar sector in Serbia has been a major failure so far,” Marijan Rancic, director of business development at New Energy Solutions and a member of the Association of Renewable Energy Sources of Serbia, told pv magazine. He pointed to the onerous red tape around rooftop PV and a lack of access to financing.
Last year, Serbia introduced the much-anticipated Law on the Use of Renewable Energy Sources, the country's first such law intended to facilitate deployment of renewables in the country. The law envisages market premiums awarded in auctions and feed-in tariffs only for some small projects (such as those with a capacity below 500 kW and below 3MW for wind projects) and demonstration projects, and introduces the long-awaited legal framework for prosumers.
To take advantage of the net metering regime, which will allow households and businesses to sell excess power to the state utility EPS, Serbia announced rebates last August, covering up to 50% of the cost of installing and deploying rooftop PV. Under the new regulations, EPS will be compelled to connect a PV system within five days after its owner has secured connection approval.
“We expect that in the next few years we will have a rooftop PV boom as the prosumer model becomes more simplified in practice,” Rancic said, adding that this applies particularly to the C&I market segment. “This will move the needle and permanently reshape the energy sector in Serbia in favor of solar.”
On the utility-scale front, however, things do not look so bright.
“Although there appears to be more predictability in the primary legislation than it used to be in the past, in terms of balancing responsibility for the utility-scale solar projects there is still some work ahead of us that will determine bankability of the future framework,” Rancic said, pointing to the use of agricultural land and grid issues as the main obstacles to PV deployment.
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