Renewable energy production in Serbia – the general framework of the Energy Law

Like all EU member states, Serbia as a candidate follows newest trends in the field of environmental protection and fight against climate changes, and more specifically in the area of renewable energy sources. There is a rising number of foreign companies and investors that are interested in investing into hydropower, solar power and biogas plants as well as wind parks. In that sense, Government of the Republic of Serbia enacted several acts in the field of renewable energy sources such as:

Regulation on the requirements and procedure of acquiring the status of a privileged producer, preliminary privileged producer and producer from renewable energy sources (https://www.mre.gov.rs/doc/efikasnost-izvori/Uredba%20o%20uslovima%20i%20postupku%20sticanja%20statusa%20PP%20PPP%20i%20POIE%20ENG200916.PDF)Regulation on incentive measures for the production of electricity from renewable sources and from high-efficiency electricity and thermal energy cogeneration (https://www.mre.gov.rs/doc/efikasnost-izvori/Uredba%20o%20podsticajnim%20merama%20ENG20092016.PDF) andRegulation on the power purchase agreement (https://www.mre.gov.rs/doc/efikasnost-izvori/OIE_Uredba%20ugovor%20o%20otkupu%20elektricne%20energije%20ENG%20-%20c2-200916.pdf)
which are all in accordance with the Energy Law (https://www.mre.gov.rs/doc/efikasnost-izvori/EnergyLaw.doc), as the most general law on the topic. Also, Ministry of Mining and Energy in cooperation with the United Nations Development Program (UNDP) made a new Investor’s guide for projects relating to renewable energy sources (https://www.mre.gov.rs/doc/efikasnost-izvori/Guide%20RES%202016%20A4.pdf), that focuses on the realization of projects using renewable energy sources as a complex process which requires obtaining variety of documents, permits, licenses, approvals, opinions. The Guide also includes information on preparing project documentation and other actions which are to be undertaken by the investor for the purpose of realization of power plant construction, especially concerning those for which there is the greatest interest amongst investors – hydropower plants, solar power plants and biogas plants.

Projects relating to renewable energy sources are very complex, their realization requires multiple intricate steps, and thus also warrants very elaborate legislation.

In this blog post we will try to explain some of the key concepts of the legal framework in this area, concentrating primarily on the Energy Law.

As mentioned above, the Energy Law is the basic and most general law in this area. Section V (articles 65 – 87) is dedicated to renewable energy production.

Articles 65 – 70 contain some general administrative provisions on the work of the ministry, such as the national objectives and the plan for the use of renewable sources.
– Articles 70 – 75 regulate the status of a privileged electricity producer, temporary status of a privileged electricity producer, and the status of an electricity producer from renewable energy sources; this includes conditions for acquiring that status and cases in which this status can be lost/taken (article 74).

– Articles 76 – 77 include the incentive measures for privileged electricity producers, which are:

1) the obligation of purchasing electricity from a privileged producer;

2) prices at which such electricity is purchased;

3) the validity period of the electricity purchase obligation;

4) undertaking balance responsibility and

5) other incentive measures prescribed by the act, as well as by other laws and regulations governing taxes, customs and other duties, environmental protection and energy efficiency.

It is further prescribed that the incentive measures may be used by an energy entity that has acquired the status of a privileged producer according to this Law. A privileged producer shall be entitled to incentive measures by the conclusion of an agreement on electricity purchase with a guaranteed supplier. Article 77 regulates the terms and conditions for use of the incentives for temporary privileged producer.

– Article 78 regulates obligations of the guaranteed supplier referring to the purchase of electricity from privileged producers. This article stipulates that guaranteed supplier shall

1) conclude an agreement on electricity purchase in accordance with the Law;

2) take over rights and obligations of the previous guaranteed supplier within the deadline, in the manner and under conditions determined by the public tender under this Law;

3) keep a registry of agreements on electricity purchase, and publish them on its website;

4) undertake balance responsibility under the provisions of this Law;

5) submit to the Ministry the data needed for establishing compensation as an incentive measure for privileged electricity producers and

6) keep a separate account for transactions related to incentive measures and guarantees of origin, pursuant to this Law.

– Articles 79 – 81 regulate incentive funds, which refer to the plan how the government is going to obtain funds for the incentives for renewable energy producers. Put briefly, all end customers of electricity shall pay a fee for supporting privileged electricity producers, except in cases stipulated by this Law and the Government shall prescribe the method of calculation, payment and collection of funds based on the fee for incentive measures, as well as the method of allocation of the collected funds based on the fee for incentive measures.

– Articles 82 – 87 regulate a guarantee of origin for electricity generated from renewable sources.

In the upcoming blog posts we shall go into more specific details concerning the incentive measures for the producers, as well as into specific fields of renewable energy production: hydro and solar power, and biogas plants. These fields as well as incentive measures are of most interest for investors and therefor are worthy of a closer look.

Iva Zivkovic