Serbia is responding to European pressure to accelerate its energy transition to cleaner fuels by allocating 12 billion euros for wind, solar and hydropower facilities over the next two years.
The draft Economic Reform Program of Serbia for the period 2022-2024 sets out a bold vision for the development of renewable energy sources, with targets for 8.3 thousand megawatts of solar and 3 thousand megawatts of wind power. The project is prepared every year by Serbia's finance ministry for review by the European Union and as part of the country's laborious path to joining the bloc.
As part of 17 billion euros ($19.2 billion) of investment for the energy and mining sectors, 12 billion euros will be set aside for wind farms, photovoltaic plants and hydropower facilities. Utility-scale solar projects could be built on 200,000 hectares of neglected, low-value farmland that could host 2,000 megawatts of solar power, according to the project. 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 to build a thousand megawatts of solar power covering more than 2,000 hectares in a dozen different locations.
The project also calls for the construction of around 300 megawatts of solar power plants worth 200 million euros on land owned by the state-owned electricity transmission company EPS, mostly on its coal ash dumps. Last year, the company announced a tender for the analysis of the conditions for the construction of two solar power plants with a capacity of 9.9 megawatts each at the "ash dumps" of the Morava and Kolubara TPPs. EPS previously revealed plans to build a 9.95 megawatt solar plant on the former Cirkovac mine dump and a 97.2 megawatt photovoltaic plant on an existing ash and slag dump owned by Srednje Kostlačko Ostrvo. However, little progress has been made on these projects, although they have been discussed for a long time.
Most of the solar capacity projected in the 2022-2024 project is assumed to come from rooftop PV. Last year, Serbia began promoting concepts for consumers and designated 600 square kilometers of rooftops as suitable for installing solar panels. According to the project, the installation of photovoltaic energy on 10% of these surfaces would equal 6 thousand megawatts of installed power and an annual production of 7 million megawatt hours, which is about 20% of the country's total energy production. In this way, the total installed capacity of state projects will amount to 8.3 thousand megawatts in the amount of 6.2 billion euros, the project states.
According to the International Renewable Energy Agency, Serbia had an installed PV capacity of 29 MW at the end of 2020. About 10 MW of this installed capacity came from an expired tariff scheme that provided tariffs ranging from €0.124 to €0.146/kWh for rooftop PV arrays, depending on the size of the system, and €0.09/kWh for ground installations, all under 12-year PPAs.
"The solar sector in Serbia has been a big 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 burdensome red tape surrounding the rooftop solar panel and the lack of access to financing.
Last year, Serbia introduced the long-awaited Law on the Use of Renewable Energy Sources, the first such law in the country, designed to facilitate the deployment of renewable energy sources in the country. The law provides for market premiums awarded at tenders and feed-in tariffs only for certain small projects (such as those below 500 kW and below 3MW for wind projects) and demonstration projects and introduces the long-awaited legal framework for consumers.
To take advantage of the net metering regime, which will allow households and businesses to sell excess power to state utility EPS, Serbia announced rebates last August covering up to 50 percent of the costs of installing and deploying rooftop solar. Under the new regulations, EPS will be forced to connect a PV system within five days of its owner receiving approval to connect.
"We expect that in the next few years we will have a boom in rooftop PV systems as the consumer model becomes more and more simple in practice," Rancic said, adding that this is especially true for the C&I market segment. "This will permanently change the energy sector in Serbia in favor of solar energy."
From a utility point of view, however, things don't look so positive.
"While there appears to be more predictability in the primary legislation than in the past in terms of balancing liability for utility-scale solar projects, we still have work to do that will determine the bankability of the future framework," Rancic said , citing agricultural land use and grid issues as major barriers to PV deployment.
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