“Energy Crisis and Climate Change – Challenges for Politics and Business in South East Europe”Evangelische Akademie Tutzing, 28 March 2009.

Republic of Serbia - Ministry of Mining and EnergyDejan Stojadinovic, Assistant Minister

Serbia

Enhancing Energy Efficiency and use of Renewable Energy Sources

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Legal Framework

• Energy Law (OJ RS 84/04) provides the overall foundation for development of renewable energy sources and energy efficiency

• Energy Law has established Serbian Energy Efficiency Agency, with the mission to promote and enhance rational use of energy and use of renewable energy sources - in order to ensure sustainable energy development through promotion and information dissemination, technical advices and demonstration projects

• Energy Sector Development Strategy of Republic of Serbia by 2015. (2005) emphasize importance of utilization of renewable energy sources for distributed heat and power generation and recognize Serbian Energy Efficiency Agency, Energy Efficiency Fund and introduction of support schemes as the main instruments for the achievement of these goals

• Programme for Implementation of Energy Sector Development Strategy 2007-2012 (2007) elaborate Strategy in more details and define priorities for utilization of renewable energy sources. Programme is updated every two year, and next update will be prepared for the period 2009-2011

• Regulation on technical and other requirements of liquid biofuels (OJ S&M 23/06) defines technical requirements for biodiesel and biofuels

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Institutional Stakeholders – EE & RES

MINISTRY OF SCIENCE AND TECHNOLOGY

MINISTRY OF MINING AND

ENERGY

MINISTRY OF ENVIRONMENT AND SPATIAL

PLANNING

Renewable energy and energy efficiency policy development and implementation

National Programme for Energy Efficiency – technology dissemination and demonstration facilities

Building standards Some energy efficiency

provisions

NO INSTITUTIONAL MECHANISM TO COORDINATE POLICIES WITH FOCUS ON ENERGY EFFICIENCY AND RENEWABLES

Belgrade, Novi Sad, Nis, Kragujevac, Kraljevo

REGIONAL ENERGY

EFFICIENCY CENTRES

ENERGY EFFICIENCY

AGENCY

Sectoral energy efficiency programs

Training and public awareness campaigns

ENVIRONMENTAL PROTECTION

FUND

Financing some energy efficiency and renewable energy programs

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FINAL ENERGY SUPPLY IN 2009.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

COAL OIL GAS ELECTRICITY HEAT

M t

oe

INDUSTRY HOUSEHOLDS OTHERS

Energy production and consumption

PLANNED PRIMARY ENERGY SUPPLY IN 2009. – 17.794 M toe

PLANNED FINAL ENERGY SUPPLY IN 2009. - 8.915 M toe

10% THERMAL ENERGY

13% SOLID FUELS

40% LIQUID FUELS

11% GASEOUS FUELS

26% ELECTRICITY

55% PRODUCTION

45% IMPORT

Energy intensity 2005. (est.)0.41 toe per thousand USD of GDP2.7 times higher than average for OECD Europe

Technical potential for energy efficiency – 30%Economic potential for energy efficiency – 20%

Regulation under preparation

Law on Rational Use of Energy

Secondary legislation

Introduction of Energy Management

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Energy Balance 2009

2007. 2008. 2009.

Primary energy supply per capita (toe/capita) 2.228 2.395 2.416

Electricity supply per capita (toe/capita) (kWh/capita)

0.2953,429

0.3093,589

0.3143,654

Share of RES-E in total electricity generation 28% 27% 28%

Share of RE in final energy supply 13% 12% 11%

Production (toe)

Geothermal energy 4,700

Large Hydro 923,000

Small Hydro 4,300

Biodiesel 300

Fuel wood 163,000

TOTAL 1,095,300

Serbia 2009

Planned Production of Renewable Energy

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Potentials (Mtoe)

Biomass 2.40

SHPP 0.40

Solar 0.64

Geothermal 0.20

Wind 0.19

TOTAL 3.83

Serbia’s endowment of renewable energy resources is substantial - realization of these potentials require Government action

Biomass63%

SHPP10%

Solar17%

Geothermal5%

Wind5%

RES Technical Potential

Clear technical potential of renewable energy - insufficient information about the economic potential

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Biomass

Most promising utilization options for biomass:

•Space heating in households and buildings using biomass pellets or briquettes

•Co-firing or total replacement in district heating plants firing heavy oil or coal in south Serbia, where natural gas is not available yet

•Production of electricity utilizing agricultural and wood wastes

Forest biomass

Fuel Wood

7 million m³

unofficial

--------------------

1.6 million m³

official

(55% from State forest)

Wood residues

5 million m³

TOTAL 12 million m³

Fruit growing residues

Biomass residues

(1,000 tones)

Plum 393.5

Apple 36.2

Cherries 55.0

Pear 14.0

Peach 35.1

Apricot 15.5

Walnuts 55.0

Grapes 515.0

TOTAL 1,119.3

Crop farming residues

1/3 available for Energy Use

Total residues (1,000 tones)

Residues for Energy Use

(1,000 tones)

Wheat 2,905 1,365

Barley 295 180

Rye 15.5 4.4

Corn 5,310 1,140

Sunflower 705 240

Soybean 320 130

Rapeseed 7.8 1.6

TOTAL 9,560 3,060

Wood

biomass

1 Mtoe

Agriculture

biomass

1.4 Mtoe

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Small Hydro Power Plants

Number of locations for the construction of SHPP according to potential

installed capacity

22

273

173

104

72

46 4839

50

31

9

100-200 kW200-300 kW

300-400 kW400-500 kW

500-600 kW

600-800 kW

800-1000 kW

>5 MW: 9 locations2-5MW: 30 locations (average 3 MW)<1 MW :largest number of locations

1,500 GWh/year

Number of SHPP in Serbia – 60(50% out of operation)

Revitalization

Construction

SHPP Cadastre (1987)856 locations 500 MW

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Small Hydro Power Plants

No of SHPP locations

Potential power installed (kW)

Potential Annual Generation (MWh)

Municipality

64 34,300 121,203 Ivanjica

35 33,284 109,692 Raška

40 25,925 94,026 Pirot

40 23,458 78,394 Kraljevo

47 18,800 73,971 Prijepolje

9 17,576 60,210 Zaječar

22 17,045 72,212 Crna Trava

20 15,825 55,100 Novi Pazar

8 15,690 58,850 Bela Palanka

8 11,216 25,850 Despotovac

30 10,974 45,391 Brus

19 10,706 30,180 Đa

32 10,185 38,438 Vranje

22 10,141 38,985 Kuršumlija

16 9,875 35,318 Priboj

30 9,800 36,099 Trgovište

13 9,785 30,937 Valjevo

10 9,305 27,419 Tutin

16 8,945 24,380 Žagubica

17 8,675 34,553 Bosilegrad

No of SHPP locations

Potential power installed (kW)

Potential Annual Generation (MWh)

Municipality

19 8,625 32,877 Čajetina

17 8,320 29,720 Leskovac

21 8,310 36,832 Nova Varoš

27 8,170 32,543 Surdulica

13 7,990 28,262 Vlasotince

19 7,640 27,395 Bajina Bašta

12 7,070 27,500 Niš

8 6,740 20,050 Boljevac

12 5,346 17,928 Užice

15 5,325 19,862 Ljubovija

7 4,730 10,230 Negotin

11 4,690 16,578 Vladičin Han

6 4,655 20,283 Arilje

14 4,515 19,459 Babušnica

1 3,000 13,700 Novi Sad

1 850 4,700 Vrbas

1 620 2,270 Bečej

1 1,220 8,190 Bela Crkva

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Solar

MONTHTotal Year

Average DailyI II III IV V VI VII VIII IX X XI XII

Beograd 1.40 2.20 3.35 4.85 6.00 6.45 6.75 6.00 4.65 3.05 1.60 1.15 1,446.80 3.96

Vršac 1.00 2.00 3.35 4.40 6.00 6.40 6.55 6.85 4.60 3.00 1.55 1.00 1,424.75 3.90

Palić 1.30 2.10 3.45 5.00 6.15 6.25 6.35 5.85 4.30 2.85 1.40 1.15 1,407.40 3.80

Novi Sad 1.45 2.35 3.20 4.65 5.80 6.20 6.35 5.75 4.40 2.90 1.45 1.20 1,392.65 3.82

Niš 1.75 2.60 3.45 5.00 6.10 6.35 6.70 6.15 5.35 3.45 1.85 1.50 1,531.40 4.20

Kuršumlija 2.15 3.00 3.60 5.05 5.85 6.05 6.55 6.10 5.30 3.50 2.00 1.75 1,550.50 4.25

Peć 1.85 2.95 3.70 4.85 5.95 6.15 6.75 6.15 4.90 3.65 2.25 1.60 1,546.25 4.24

Priština 1.85 2.90 3.70 5.25 6.30 6.60 6.95 6.30 5.10 3.35 1.90 1.60 1,578.25 4.32

Vranje 1.70 2.70 3.65 5.15 6.15 6.40 6.50 6.35 5.25 3.45 1.85 1.50 1,543.40 4.23

Loznica 1.50 2.30 3.05 4.35 5.30 5.75 6.15 5.60 4.30 2.80 1.45 1.20 1,333.50 3.65

Kragujevac 1.50 2.40 3.35 4.80 5.85 6.10 6.45 5.90 4.85 3.30 1.70 1.30 1,447.85 3.97

Negotin 1.35 2.05 3.25 4.85 6.05 6.60 6.95 6.25 4.75 2.90 1.45 1.20 1,453.35 3.98

Zlatibor 1.50 2.30 3.10 4.35 5.10 5.85 5.90 5.35 4.30 2.75 1.60 1.30 1,316.40 3.61

AVERAGE DAILY SOLAR IRRADIANCE ON HORIZONTAL SURFACE IN kWh/m²

Average daily value about 3.8 kWh/m²

Average yearly insolation in Serbiaabout 1,400 kWh/m²

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Solar

Most promisin utilization options

•Sanitary water heating•Space heating

If each housing unit (2.65 million units) would install average 4 m² of collectors

Equivalent to some saving potential of7,420 GWh

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Geothermal

Use of geothermal potential is mainly for balneological purposes, sports and recreation

Prospects for expanding geothermal energy for agricultural heat and water heating are reasonably good

Potential for larger scale geothermal electricity is limited - requires water temperatures above 100°C.

Average geothermal flow density in Serbia is higher than 60 mW/m³

There are 160 natural resources of geothermal waters (excluding Panonian basin) with temperature above 15ºC

Highest temperatures recordedVranjska spa - 96ºCJošanička spa - 78ºCSijarinska spa - 72ºC

Total flow rate of geothermal water resources is 4000 l/sec

60 locations are in the water reservoirs up to 3000 m depth

Installed thermal power (MWt)

Produced heat (TJ/year)

Residential and commercial areas 18.5 575Spas and recreation 36.0 1,150Gain drying 0.7 22Greenhouses 8.4 256Fishing and cattle breeding 6.4 211Industrial processes 3.9 121Heat pump heating 12.0 80Total 86.0 2,415

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Wind

Wind data based on 10 metre heights extrapolated to 50 metre heights

2,300 GWh

1,300 MW of capacity

at sites with minimal average wind speeds of 5 m/s

Best locations in Serbia (extrapolated)

Midzor 7.66 m/s

Suva Mt. 6.46 m/s

Vrsacki breg 6.27 m/s

Tupiznica 6.25 m/s

Krepoljin 6.18 m/s

Deli Jovan 6.13 m/s

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Wind Case Study: Popadija wind farm

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Barriers for wider use of RES

Institutional barriers

•Lack of experienceNeed for the experience of how a private sector renewable energy project can work in Serbia

Absence of “first set” of projects

•Transition IssuesMany industrial companies are in transition – both with regard to structure and ownership, and managements are not yet ready to consider measures to rationalize energy activities

Financial barriers

•Absence of a price support mechanismRenewable energy projects are not bankable without a price support mechanism

RES cannot compete with fossil electricity generation based on lignite (whose price does not reflect their environmental damage costs)

•Debt Financing supportDifficulty to secure long term loans appropriate for small renewable energy projects

•Electricity tariffLow electricity tariff does not stipulate domestic, commercial and industrial consumers to use renewable energy - current average price is under 5 €cents/kWh

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Barriers for wider use of RES

Technical barriers

•Absence of technical standardsDespite the existence of manufacturers of heating equipment and biomass fuel (briquettes and pellets), production standards are not regulated

Equipment for biomass energy utilization need clear information about technical specification and performance characteristics

•Barriers to biomass utilizationLow electricity price, which decrease motivation to install biomass firing boilers

No developed market for biomass fuel and biomass utilisation facilities

•Absence of a renewable energy resources inventoryUpdate and development of Small Hydro Cadastre

Wind monitoring programe with wind speed measurements at 50 meters needed

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Regulation on privileged power producers will be the definition of what types of renewable energy producers qualify for privileged status

Deadline for adoption: 1 July 2009.

Feed-in tariffs as the price support mechanism

Deadline for adoption: 1 July 2009.

Legal regulation under preparation

Amendments to the Energy Law drafting

•Production, transporting, storaging and trading of biofules is recognized as energy activity

•Definition of renewable energy sources is amplified and contains biofuels, biogas, landfill gas, sewage gas

•Definition of biomass reffer to biodegradable material developed in agriculture, forestry and accompanying industry for energy purposes

•Definition of privileged power producers includes all RES producers except hydro-power plants and biomass power plants larger than 10 MW

•Guaranteed grid access to a privileged power producers - through obligation of local distribution company to purchase all the electricity produced from RES

Purpose: to promote investments in renewable energy projects

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Assumptions for development of Feed-in tarriffs

a purchase price, expressed in c€/kWh, is guaranteed and fixed during the 12-year period. The level of a purchase price is set to provide invested capital returned in 12 years, with covering all operating costs incurred during the same period;

in case of power plants that have been in operation before the application of feed-in tariffs – proposed feed-in tariffs are valid for the shortened period of time

feed-in tariffs for old power plants that have been out of commission for at least five years are separately defined, in order to encourage revitalisation and re-entering in operation of these plants;

additional criteria for setting the feed-in tariff is to have the internal rate of return at least 14%, i.e. not below this percentage

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Investment incentives applicable to RES projects

INVESTMENT INCENTIVESIn case of investments in production facility, Government approve grant between 2000 and 5000 euros per new job creation, minimal investment value is within the range of 1 and 3 million euros, whereas the minimal number of new jobs is 50

An investor that invests in fixed assets, i.e. in whose fixed assets other entity invests over 600 million RSD (6.8 million EUR), and uses these assets for conducting business in Serba and during the investment period additionally recruit at least 100 people - shall be exempted from corporate profit tax payments for the period of 10 years proportionally with the investment made

TAX CREDITSA tax payer that made profit in newly established business unit in an underdeveloped area will receive a corporate profit tax reduction in the duration of two years, proportional to the share of such made profit in total profit of the company

ACCELERATED DEPRECIATION OF FIXED ASSETSThis incentive is provided for fixed assets that are used for the prevention of air pollution, water and soil pollution, noise reduction, energy savings, forestation, and collection and utilization of waste for industrial raw materials and fuels

FOREIGN INVESTMENTS INCENTIVESThe law on foreign investments stipulates free import of goods that are the foreign investor’s nominal capital (founding capital) – providing it fulfils acts regulating environment protection. Import of equipment as the founding capital of a foreign investor, except for passenger motor vehicles and game & gambling machines, is free from customs and other duties. Besides, a foreign investor and a company with foreign founding capital are entitled to tax and customs related deductions in line with the law

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THANK YOU FOR YOUR ATTENTION!