Belgrade Serbia seeks to unblock investment in renewable energy after adopting legislation that opens gas and power markets in line with European Union guidelines.
The parliament in Belgrade approved today a law implementing the EU’s Third Energy Package that fosters competition and helps regional integration of energy markets. The law, prepared in cooperation with Energy Community, a policy group for aspiring EU members, improves terms for investment in Serbian projects, Energy Minister Aleksandar Antic said.
The legislation guarantees “that the same conditions will apply from the start to the end,” Antic said during the debate. “It opens the door for energy investment, one of the most promising sectors that attracts huge interest.”
Serbia is struggling to bring energy consumption from renewables to 27 percent of the total by 2020 from 21 percent recorded two years ago when it made the pledge to the EU, even as it offers feed-in tariffs as an incentive. A net electricity importer, the Balkan nation saw its power output shrink after record rains in May flooded the main lignite mine supplying the largest thermal plant.
Legislative changes include streamlined power purchasing agreements for wind farms and other renewables to make such projects profitable, according to Antic.
“The floods exposed vulnerability of the whole system,” Ana Brnabic, a project director at Continental Wind Partners, said by phone. “It’s finally understood that there’s a need to diversify.”
Continental Wind wants to build a 280 million-euro ($341 million) wind farm of around 150 megawatts in eastern Serbia. The company came to Serbia in 2009 with a plan for a 300 megawatt facility.
“We put the second phase on hold,” Brnabic said, as potential investors wouldn’t accept only a non-binding power purchasing agreement before construction works began.
The new law sets the framework for “acceptable contracts” and “guarantees that entire output from renewable sources will be bought,” Antic said.
The amended rules don’t provide a complete guarantee of a reliable access to the power grid, according to Slobodan Ruzic of Belgrade-based consultancy Energy Saving Group.
Additional laws are needed to set deadlines for grid repairs and other disruptions when plant operators are unable to sell electricity to the state-run utility Elektroprivreda Srbije, Ruzic said by e-mail. Investors also need assurances they’ll be able to sell power in Serbia at market rates beyond the initial 12-year period of guaranteed tariffs, he said.
“Financing wind farms, or other big projects, won’t begin without resolving this,” Ruzic said.
Copyright 2014 Bloomberg.
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