Following the expiry of the Regulation on Incentive Measures for the Production of Electricity from Renewable Sources and from High-Efficiency Electricity and Thermal Energy Cogeneration on 31 December 2019, the previously applicable feed-in tariff-based incentives are no longer available to the power producers who acquired status of a privileged power producer based on request submitted after 31 December 2019. In line with the request from the Energy Community Secretariat, the Government of the Republic of Serbia decided to start to develop an auction-based incentives model, which is already in place at some other members of the Energy Community, such as North Macedonia, Albania and Montenegro.
Although the new regulation in RES sector was expected to enter into force by the end of 2020, the year-end brought only some hints of long-awaited developments in the field of renewable energy in Serbia in the form of guidelines for the upcoming draft law on renewable energy sources adopted by the Ministry of Mining and Energy which were available for the public debate until 12 January 2021 (“Guidelines”). These Guidelines, coupled with the Serbia’s taking over of the Presidency of the Energy Community in 2021 and adoption of the Decree on Amount of Special Incentive Fee for Privileged Power Producers in 2021 (where the fee for support in RES development payable by the end-users in 2021 was increased almost five times in comparison to the fee applicable in 2020), seem to send solid signals to the market that the RES incentive schemes will be regulated in due course in line with the requirements from the Energy Community. Further, such developments are expected to bring new investors to the Serbian market and also unlock development of already announced major RES projects, primarily in the wind sector.
Overview of the Guidelines
The Guidelines describe the current status of renewables in Serbia, the goals to be achieved by new law on renewables, and define the main principles for arranging status of and relationships between various stakeholders in the renewable sector – producers, consumers, authorities – and thus represent the basis for further discussions in the course of drafting of a new law on renewables, which will effectively carve out the regulation of a number of RES elements from the Energy Law that is currently in force.
According to the Guidelines, some of the principles for use of the renewable energy are mitigating the impact of the fossil fuels on the environment, encouraging the development of new technologies and contribution to local community, integration of renewable energy to the electricity market, as well as granting support through auctions organized in a public, transparent, competitive, economic, and non-discriminatory manner. The Guidelines also define topics which new draft law on renewables will be regulating. Key topics are further elaborated below:
Support scheme for RES power producers
As expected, the main novelty suggested by the Guidelines is the regulation of incentive prices for electricity produced from RES. Namely, two different incentive pricing schemes will be considered during drafting of the law on renewables: (i) premiums – fixed or sliding (one-sided or two-sided), and (ii) feed-in tariff for small facilities.
The key element for application of the premium is defining the reference market price which is currently proposed to be weighted average price on the organised day-ahead market in the Republic of Serbia in the certain calculation period (day, week or month). Premiums shall apply to power plants that do not fall into category of the small power plants (i.e., power plants with capacity 500 kW and higher and 3MW and higher for wind power plants).
Feed-in tariff shall continue to be available to small power plants (i.e., power plants with capacity below 500 kW and below 3MW for wind power plants). The Guidelines note that the aforementioned thresholds the aforementioned thresholds for installed capacity of the power plants are in line with the EU rules on state aid, however, the scale of the power plant will be further discussed in the course of drafting of the law.
Additional support measures also include the following:
Premium-based incentive measures are planned to be granted through conclusion of physical or financial (CfD) agreements, and feed-in-based incentive measures are planned to be granted through the conclusion of a PPA, as is already the case.
Status of preliminary privileged power producer, status of privileged power producer and status of power producer from renewable resources
The assumption under the Guidelines is that the preferred bidders in an auction procedure will acquire the status of preliminary power producer on the day of the finality of the decision on their confirmation as the preferred bidders issued by the Ministry of Mining and Energy. Such status will last three (3) years, with the exception of the solar plants where the status will last for one (1) year, and may be extended for one (1) additional year in case the plant has been constructed as well as for a period necessary to remedy unforeseen circumstances in case such circumstances occur.
For small facilities, the status of preliminary privileged power producer and status of privileged power producer is considered to be acquired on the day of registration of such producer in the Central Registry of Small Producers which is to be organized and operated by a local authority. For small facilities, it is proposed that the status of preliminary privileged power producer is valid for two (2) years and can be extended on the grounds of extension of the connection approval.
Guarantee of origin
The current proposal under the Guidelines is that the exiting Energy Law will be the basis for regulation of this field. Additionally, requirements of the RED II Directive should be considered. The envisaged system operates in the following manner:
Status of prosumer
Introduction of this concept should enable end-users who produce energy for their own needs to connect to the grid and sell the excess electricity to their supplier. The new law on renewables will define the manner of price calculation of excess electricity and minimising the electricity bill on such basis.
Renewable energy communities
The basic idea is to define the concept of renewable energy communities and introduce more relaxed procedure for their construction and connection to the grid. The main idea is to give to the renewable energy communities the status of energy subject and to regulate the energy specific matters in the draft renewable law, while the matters related to the general corporate structure, incorporation, and governance will be governed by separate rules on cooperatives. The relevant rules will be formulated with the view of motivating households and small producers to group into communities.
Additional uses of RES
The Guidelines also contain proposals for additional uses of the RES in the fields of cooling, heating, and transportation. The draft law should regulate the competency for issuance of the privileged status of heat producers from RES and incentive measures for entities which are active in production, distribution, and supply of heating and cooling energy by using industrial waste heating energy, heat pumps, solar energy, geothermal energy, biodegradable waste energy, biomass, and other sources.
In addition, the Ministry of Mining and Energy is proposing that share of renewables in transportation is increased by imposing obligations to the fuel suppliers to ensure use of renewables in transportation to some extent. It should also be considered how hydrogen and biogas could be used in transportation.
More efficient procedures for construction and connection to the grid of the power plant using RES
Pursuant to the Guidelines, the Ministry of Mining and Energy proposes various manners in which the procedure for construction and connection to the grid of the power plant using RES can be made more efficient. For example, the idea is to establish a separate authority in order to monitor construction and connection of the power plants using RES and suggest to the Government more efficient procedures in this respect; introduce digitalisation of the procedure for connection of the power plants using RES to the grid; and possibility to replace approval for connection with the agreement on connection. Further, the intention is to establish a one-stop shop through which citizens and investors may obtain all the information and permits necessary for construction and connection to the grid of the power plant using RES.
 Official Gazette of the Republic of Serbia, Nos. 56/2016, 6020/17 and 91/2018.
 Official Gazette of the Republic of Serbia, No. 152/2020.
 E.g., Maestrale Ring Wid Park, near Subotica, with the planned capacity of 599.2 MW, to be developed by Fintel Energija AD; Crepaja Wind Farm near Kovacica, with capacity of 220 MW to be developed by New Energy Solutions, and Crni Vrh Wind Farm near Bor, with capacity of 50MW, to be developed by the SPV Crni Vrh Zagubica doo.
 Official Gazette of the Republic of Serbia, Nos. 145/2014 and 95/2018.
 Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources.