The Law on the Use of Renewable Energy Sources

 

In order to increase the share of electricity production from renewable energy sources the National Assembly of the Republic of Serbia adopted the Law on the Use of Renewable Energy Sources (the “Law“). The Law was published in the Official Gazette of RS no. 40/2021 and entered into force on 30 April 2021.Renewable Energy

This Law regulates:

  • use of energy from renewable sources;
  • targets for the use of energy from renewable sources;
  • method of determining the share of renewable energy sources of the Republic of Serbia in the gross final energy consumption;
  • integration of energy from renewable sources into the market;
  • incentive systems for the production of electricity from renewable sources;
  • guarantees of origin of electricity;
  • production of electricity from renewable sources for own consumption;
  • use of renewable energy sources in the field of thermal energy and traffic;
  • special procedures related to the construction and connection of energy facilities using renewable energy sources;
  • basics of mechanisms of cooperation with other countries in the field of renewable energy sources;
  • supervision over the implementation of this Law;
  • as well as other issues of importance for renewable energy sources.

The Law prescribes that the use of energy from renewable sources is in the public interest and of special importance to the Republic of Serbia.

The construction of hydroelectric power plants in protected areas is prohibited. However, if it is a project of public and general interest, or projects of special or national importance for the Republic of Serbia, the Government may under specific conditions allow construction of a hydropower plant.

Incentives for the production of electricity from renewable sources are implemented in a certain period through a system of market premiums and a system of feed-in tariffs. Incentives can be obtained for the types of power plants using renewable energy sources which must be newly built or reconstructed.

Incentive measures may be acquired for the entire capacity or part of the capacity of the power plant.

A power plant under construction cannot be the subject of incentives.

Systems of incentives

Market premium is a new type of operating state aid that is a supplement to the market price of electricity which market premium users deliver to the market and is determined in eurocents per kWh in the auction process. In this way, the Law introduces the market-formed-fee for producers of electricity from renewable sources as well as the competition between them which all lead to decrease of the costs of renewable energy for both, the economy and the citizens.

A feed-in tariff is a type of operating state aid that is granted in the form of an incentive purchase price guaranteed per kWh for electricity delivered to the electricity system during the incentive period. This type of incentives can only be acquired for small plants and demonstration projects.

The incentive period lasts for 15 years starting from the day of first payment of the market/feed-in premium.

The right to incentives is acquired in the auction procedure which is initiated and conducted on the basis of a public invitation. The Ministry of Mining and Energy conducts auctions based on available quotas prescribed by the Government. For this purpose, the Energy Agency of the Republic of Serbia determines in advance the maximum market premium or feed-in tariff, the figure which auction participants cannot exceed with their bids at the auction. Therefore, bids that exceed the predetermined maximum figure are not considered.

In the auction process, participants compete with their bids according to the criterion of the lower market/feed-in premium compared to the maximum market/feed-in premium. In the end of the competition, participants are ranked from the lowest to the highest figure of the offered market/feed-in premium and in that order fill in the quota.

When the sum of the capacities of all power plants for ranked bids reaches the level of the prescribed quota, the quota is filled.

The Prosumer and the Renewable Energy Community

Production of electricity from renewable energy sources for own consumption is introduced through the institute of prosumer.

The prosumer has the right to:

  • produce electricity and to store electricity for its own consumption
  • deliver the surplus produced electricity to the electricity system for sale.

However, he may not be the beneficiary of incentives in the form of market premiums and feed-in tariffs.

Natural persons, legal entities, local self-government units and other types of local self-government can form a community of renewable energy sources. The Renewable Energy Community (the „Community“) is a legal entity established on the open and voluntary participation of its members. The primary goal of establishing the Community is to use renewable energy sources to meet the energy needs of community members in a sustainable way that encompasses environmental, economic or social benefits for members as well as the local community and society.

Other novelties

Energy entities that perform the activity of production, distribution and supply of customers with thermal energy in an energy efficient manner, may acquire incentive measures if they use highly efficient cogeneration, waste heat or renewable energy sources. This incentive measures can also be acquired by households and the Community. This type of incentives, conditions and procedure for acquiring incentives are prescribed by the local self-government unit which also grants the incentives.

In order to increase the use of energy from renewable sources, early development technologies that use new renewable sources, such as renewable hydrogen and other energy sources, can be encouraged. Renewable hydrogen can be used in the field of thermal energy, traffic and natural gas in accordance with the provisions of this Law and the law governing energy.

For the first time a public tender for the selection of a strategic partner is being introduced which enables Serbia to attract new and additional investments in the field of renewable energy sources.

The Law enables the complete digitalization of all procedures before the Ministry of Mining and Energy.

The Ministry of Mining and Energy supervises the implementation of this Law. Finally, there are penal provisions that prescribe penalties for economic offenses and misdemeanors.

Conclusion

The adoption of the Law aims to ensure combating climate change, environment protection, energy transition, reduction of citizens’ costs, simplification and acceleration of procedures as well as creating a legal framework for more dynamic investments in the field of renewable energy sources.