Energy Sector Development Strategy of Republic of Serbia up to 2025 with projections to 2030 –...

Energy Sector Development Energy Sector Development Strategy of Republic of Serbia up Strategy of Republic of Serbia up to 2025 with projections to 2030 – to 2025 with projections to 2030 – Draft Draft

Prof. dr Dejan IvezicUniversity of Belgrade – Faculty of Mining and Geology

Republic of SerbiaRepublic of SerbiaMinistry of Energy, Development and Environmental ProtectionMinistry of Energy, Development and Environmental Protection

Project realization:

- Analysis of previous Strategy realization

- Energy resources and energy potentials of the Republic of Serbia

- Scenarios of development

- Energy balances by fuels (oil and oil derivartes, natural gas, coal, electricity, heat and RES) for 1990-2010

- Total energy balances for 1990 – 2010 period

- Energy Sector Development Strategy of Republic of Serbia up to 2025 with projections to 2030 – Draft

Team for project realization

doc. dr Marija Živković dr Branislava Lepotić Kovačević prof. dr Nenad Đajić prof. dr Petar Đukić doc. dr Jovan Mikulović prof. dr Vladimir Pavlović prof. dr Dušan Danilović prof. dr Dragan Ignjatović doc. dr Snažana Grujić Aleksandar Vučetić, dipl.ecc. doc. dr Miloš Tanasijević doc. dr Vesna Karović Maričić Aleksandar Madžarević, MSc. Miroslav Crnogorac, MSc

Energy Sector Development Strategy of Republic of Serbia up to 2025 with projections to 2030

Content:

I Introductory Considerations

II Energy Resources and Potentials of the Republic of Serbia

III Basic Assumptions of Serbian Energy Sector Development

IV The Strategic Priorities of Serbian Energy Sector Development

V The Development of Energy Sectors

VI Legal, Institutional and Socio-Economic Framework of Serbian Energy Sector Development

VII Serbian Energy Sector after 2030

Annex 1 – Total Energy Balances and Energy Indicators

I Introductory Considerations

Energy and economy development Driver and a key element of economic change Base for economy development Reduction of energy intensity, but increasing of energy

consumption

Sustainability as a challenge for energy development Energy efficiency Renewable energy Less negative consequences for the environment The principle of user/polluter pays Economic efficiency and energy market Social acceptability

Geological reserves of fossil fuels, (mill. toe)

Energy ResourceProved and Probable Geological Reserves

Total geological reserves and

resources

Hard coal 2,77 4.02

Brown coal 37,7 45.17

Brown-lignite coal 134,25 193

Lignite 1.583 (780*) 3.698

Oil 10,1450

Natural gas 3,37

Oil shale 0 398**

**Kerogen

* Without AP Kosovo and Metohija

II Energy Resources and Potentials


RES (mill. toe/year)Available TP in use

Unused available TP

Total, available TP

Biomass 1,054 2,351 3,405

Agricultural biomass 0,033 1,637 1,67

Wooden (forestry) biomass 1,021 0,509 1,53

Biodegradable communal waste 0 0,205 0,205

Hydroenergy 0,909 0,770 1,679

Wind energy ≈0 0,103 0,103

Solar energy ≈0 0,240 0,240

Geothermal energy 0,05 0,175 0,180

Biodegradable waste 0 0,043 0,043

RES TOTAL 1,968 3,682 5,65

TP – technical potential


Fossil energy resources in Serbia have not been sufficiently explored (except coal) and the data are not conclusive.

Geological reserves of the primary energy sources (coal, oil, natural gas, oil shale) are still, an important basis for the development of production and their use in the future for the energy sector of Serbia.

Renewable energy sources (excluding large hydropower plants) are at an early stage of development.

III Basic Assumptions of Serbian Energy Sector Development

Serbian energy sector in 2010

Projections of final energy consumption

SWOT analysis of Serbian energy sector

Serbian energy sector in 2010Final energy consumption 9,696 Mtoe

By sectors of consumption By energy sources

Industry 24.7%

Transport 23.1%

Agriculture 1.8%

Household 32.5%

Non-energy consumption

8.3%

Other consumers 9.6%Biomass 10.6% Oil Products 33.7%

Natural gas 11.9%

Coal 10.5%

Heat 8.8%

Electricity 24.5%

Serbian energy sector in 2010Primary energy consumption

15,531 Mtoe

By energy sources

Biomass 6.7%

Coal 50.7%Oil 23.7%

Natural gas 12.2%

Hydro energy 6.7%

Coal 64.1%

Natural gas 1.4%

Hydro energy 34.5%

Consumption for electricity generation

Serbian energy sector in 2010

Primary energy consumption structure in region

Primary energy consumption per capita

Romania29.7% Bulgaria15.2%

Serbia 13.3%

Hungary 21.9%

Albania 1.8% Bosnia and Herzegovina 5.5%

Croatia 7.3%

FYR Macedonia 2.5%

Montenegro 2.8%

Montenegro

Serbia

Bulgaria

Hungary

Romania

World

OECD

Croatia

Albania

FYR Macedonia

Bosnia and Herzegovina

toe/capita

Serbian energy sector in 2010Primary energy consumption per GDP in 2010

Electricity consumption per capita

Montenegro

Serbia

Bulgaria

Hungary

Romania

World

OECD

Croatia

Albania

FYR Macedonia


kWh/capita

Montenegro

Serbia

Bulgaria

Hungary

Romania

World

OECD

Croatia

Albania

FYR Macedonia


toe/1000$2005

Projections of Final Energy Consumption

Middle level of fertility is assumed for demographic projections

Average economy growth 3%

Baseline scenario („business as usual”)

Scenario with energy efficiency measures (maximal introduction of energy efficiency measures in all phases of energy cycle)

Serbian Energy Sector Model

-1

0

1

2

3

4

5

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Рас

т Б

ДП

(%

)

- Household

- Industry

- Transport

- Agriculture

- Construction

- Other consumers

- Non-energy sector

Укупно становништво Србије за три варијанте демографских пројекција: средњи, ниски и високи фертилитет

5500

6000

6500

7000

7500

8000

2002 2007 2012 2017 2022 2027 2032 2037 2042 2047 2052

пројекциони период

укуп

на п

опул

ациј

а у

хиљ

адам

а

Варијанта средњег фертилитетаВарјанта ниског фертилитета

Варијанта високог фертилитета

GDP projection

Demographic projections

Projections of Final Energy Consumption

Tables “by consumption sectors” and “by energy sources”

Baseline scenario Scenario with energy efficiency measures (EE)

Difference in 2020 is

0.920 Mtoe


1.359 MtoeMillion

s t

oe


Strength (existing):

Tradition and experience in the previous Serbian energy sector development

Available resources and potentials Energy infrastructure systems

technically in relatively preserved conditionRatification and entry into force of the Treaty establishing the Energy Community

Signing of the Stabilization and Association Agreement between Serbia

and the EU

Weaknesses (internal):

High external energy dependence Non-economic energy prices and disparities

in prices of energy and fuels Irrational use of energy Technological obsolescence of existing and

the lack of new facilities The inefficiency of energy public companies The legacy of nature devastation and

excessive pollution Underdevelopment of the internal electricity

and natural gas market Lack of strategy for economic and social

development of the country The lack of transparency in energy policy

making Lengthy and complex procedures to obtain

permits and licenses Underdevelopment and the inadequacy of

energy statistics


Options (development potential):

Integration of the Republic of Serbia into the EU

Raising the overall economic competitiveness of energy systems

Improving energy efficiency Introduction of cleaner production

principles in the energy sector Construction of South Stream pipeline

Construction of gas interconnections with systems in neighboring countries

Upgrade of existing and construction of new natural gas storage

Construction of new facilities for the power transmission

Building a new system for transport and storage of oil and oil products


Unfavorable demographic trends and population aging

Political opportunism and lack of readiness for depoliticization and professionalization in energy sector

Backwardness and slow technological development of energy systems, due to the unfavorable economic situation

Lack of harmonization of standards and regulations with the EU, or failure in implementation

The adverse effects of climate change to the energy sector

Threats (to development):

Energy crisis in the world and the possibilities of new energy "shocks"

New sudden increases in energy demand in the world, or creation of a new crisis areas

Global disagreement about climate change policy and "cleaner" energy strategies

Deepening social and economic crisis, growing poverty, indebtedness and slow economic development of the country

Falling behind changes in energy policy in the region due to unresolved social and political issues


- Providing conditions for promoting energy efficiency in carrying out energy activities and energy consumption- Creating economic, commercial and financial conditions for generating energy from RES and combined heat and electricity generation- Creating conditions for use of new energy sources- Promoting environmental protection in all energy related areas- Creating conditions for investments into the energy sector

- Reliable, safe and quality supply of energy and energy sources- Creating conditions for the safe and reliable energy systems operation and sustainable development

- Energy market competition based on the principles of non-discrimination, publicity and transparency- Energy and energy sources’ customers protection- Electricity and natural gas market development and their connecting with the regional and internal market of the EU-Connecting the energy system of the Republic of Serbia with the energy systems of other countries

ENERGY SECURITY

ENERGY MARKET

SYSTAINABLE ENERGY


Security of Supply

Reliability of Supply

Quality of Supply

National & RegionalMarket

Energy Efficiency

Renewable Energy Sources

Environmental Protection


Serbian energy development should be with minimal effect to the environment.

Serbian energy sector have to be market-based and economically efficient to the extent that generate its own development, but also to be generator and secure base for the development of the country.

Activities:

More intensive exploration of energy resources; The development of the energy market based to the principles of

competition, transparency and non-discrimination; The construction of new energy facilities or the rehabilitation and

modernization of existing ones; A comprehensive and coordinated approach to the rationalization of energy

consumption and the overall increase of energy efficiency; The establishment of adequate regulatory and organizational requirements

and simplifying and accelerating the procedure for obtaining approvals and permits;

The extensive use of renewable energy sources, including of renewable energy sources in the energy plans of cities and local communities as part of a local energy strategy;

The reorganization and restructuring of the companies in energy sector Further harmonization of existing regulations with EU regulations and

standards


Measures:

Raising capacity of financial institutions to finance energy efficiency measures and production and placement of the best available energy technologies and equipment;

Development of innovative financing mechanisms for energy services sector (ESCO concept, etc..)

Encourage the development of domestic industries to follow the planned development of the energy sector

Analysis of climate change impact to the energy sector and the adoption of appropriate adaptation plans;

Systematic capacity building of scientific and educational institutions related to energy sector;

Complete and timely information to the public about the state of the sector; Education and awareness raising.


V Energy Sectors Development

Electric Power Sector

District Heating Systems


Coal

Oil

Natural Gas

Efficiency of Energy Use

Electric Power Sector Strategic Objectives

- Security of electricity supply of domestic market - Development of national and regional electricity market-Increasing of transmission capacities / corridors over the Republic of Serbia with regional and pan-european importance- Decreasing of distribution loses - Creation of opportunities for net electricity export

Current State - Growth in net electricity import

- Outdated and inefficient production capacities

- Dominant share of coal in electricity production

-Market liberalization process has started, but with strong influence of "social" component

-Low and inadequate electricity price

Strategic Activities

- Revitalization of existing electric power facilities: - Adaptation of existing facilities to obligations as Contracting Party in Energy Community - Revitalization and modernization of existing HPPs- Construction of new power plants fired by conventional fuels - Increasing of RES (hydro, wind, biomass, solar energy) use for electricity production - Revitalization of existing and construction of new transmission capacities- Modernization and construction of distribution systems- Liberalization of electricity market according to Energy Law and market price determination- Sector reorganization for more efficient operation of companies and attraction of investments- Capacity development of engineering companies for greater participation in the construction of power plants and infrastructure


Baseline scenario Scenario with energy efficiency measures (EE)


3000 GWh


3600 GWh

Priority Actions: Reconstruction of TPPs according to LCP Directive

Construction of new, coal fired TPPs 700 MW until 2025(350 MW until 2020)

Construction of RHPP Bistrica

Construction of 450 MW CHP fired by natural gas until 2020

Construction of transmission and distribution infrastructure

Electric Power Sector - Production

Projection of electricity generation

Existing Thermal power plants

Existing Hydro power plants

New RES power plants

New Thermal power plants with conventional fuels

Existing Thermal power plants



New Thermal power plants with conventional fuels

Construction of new facilities

Electric Power Sector - Production

* Total power of few CHP (Pancevo, Beograd, Nis, …)** Total power of few HPPs in cascade*** Law on Ratification of the Agreement between the Government of the Republic of Serbia and the Government ofRepublic of Italy on cooperation in energy sector defined the joint implementation of these projects.

ProjectNominal Power

Estimated Time for Project

Realization

Approximate Investment

Value(mill. €)

TPP Nikola Tesla B3 750 MW 4-6 years 1600

TPP Kolubara B 2 x 375 MW 6 years 1500

TPP Kostolac B3 350 MW 4 years 450

TPP Novi Kovin 2 x 350 MW 6 years 1330

TPP Stavalj 300 MW 5 years 650 – 750

CHP Novi Sad 340 MW 2-3 years 400

CHPs – natural gas 860 MW* 4 years (realization in phases)

1500

HPP Velika Morava 147,7 MW* 3-7 years (realization in phases)

360

HPP Ibar*** 117 MW** 2-7 years (realization in phases)

300

HPP Srednja Drina*** 321 MW** 5-9 years (realization in phases)

819

PSHPP Bistrica 4 x 170 MW 5 years 560

PSHPP Djerdap 3 (I phase)

2 x 300 MW 5 years 400

Small HPPs 387 MW 6 years (191 locations)

500

Electric Power Sector - – Transmission and Distribution

Strengthening of internal transmission capacity and the capacity of the regional corridors - 400 kV transmission network in the direction of northeast - southwest

Strengthening of internal transmission capacity and the capacity of the regional corridors - 400 kV transmission network in the direction of east-west

Strengthening of strategic directions in 110 kV transmission capacity

Modernization and investments in distribution systems

Market opening until 2015

The growth of in electricity prices Why?

maintenance of existing infrastructure investment in new infrastructure environmental costs

Leads to a short-term increase in the cost of production and services Encourages the implementation of energy efficiency measures The use of other forms of energy to substitute, and where it is justified

own production Careful planning of continuing real growth in regulated electricity prices

to reach the level of prices in the region

Reorganization of energy companies based on market principles.

Electric Power Sector – Market

Electric Power Sector Challenges:

Required resources

Year Until 2020 Until 2025 Until 2030

Reconstruction of TPPs according to LCP Directive

634 - -

Modernization of existing HPPS 200 100 100

Construction of new TPPs fired by conventional fuels

1100 500 500

Construction of PSHPP 360 300 300

Construction of RES plants 2323 520 750

Investments in transmision systems 200 170 -

Investments in distribution systems 500 250 250

Cumulative investment (million €) 5317 7157 9057


Challenges:

Limit in СО2 emission and ETS

Electric power resources and projects at AP Kosovo and Metohija

Rights for RES use and “green energy” export

District Heating SystemsStrategic Objectives

Priority Actions:

Strategic Activities- Security of heat supply with strictly respect of environmental

limits in heat production

- Increasing of energy efficiency in production, trasport, distribution and use of heat

- Increasing RES use for heat production

- Sustainable operation of district heating companies

- System based only to fossil fuels (natural gas 48%, coal 23%, 29% oil derivates)

- Average age of facilities is 25 years - High specific energy consumption- Absence of market, inconsistent and inadequate method of payment

- Continual modernization of existing district heating systems

- Creation and application of uniform tariff system for heat production, distribution and supply

- Institutional connection of DH companies

- Expansion of existing DHS

- Promotion of fuels swich and their more efficient use:

- Less share of oil derivatives and coal

- Higher share of biomass (including co-firing in existing heat plants)

- Higher share of communal waste

- Increased use of sanitary hot water

- CHP in heat plants

- Capacity building in municipalities related to market regulation

Reduction of energy losses in the networks

Introduction of heat consumption measurement and payment according to energy consumed

Current State

District Heating Systems

Oil products

Natural gas

Coal

Biomass

Projected changes in the structure of energy sources for heat production

Year 2020 2025 2030

Reconstruction, modernization and building of district heating plants

85 45 65

Rehabilitation of the distribution network 95 45 65

Rehabilitation of heating substations 40 25 30

Cumulative investment (million €) 220 335 485


Strategic Objectives

Current State


Priority Actions:

- Share of RES in gross final

consumption is 20.1%

- Dominant share in consumption has traditional biomass use and large HPPs

- Feed/in tariff was

introduced

- Increase in RES use for less dependence of energy import and increasing energy security

- Adoption and implementation of National renewable

energy action plans- Determination of national targets for RES utilization and monitoring of realization: - RES use for electricity production - RES use for heat production and in final consumption: - Substitution of fossil fuels (coal, oil derivatives and natural gas) in heating - Substitution of electricity in sanitary hot water preparation - Introduction of RES in building sector (primary in public buildings) - RES use in transport- Development of distributive network for connection of small electricity producers- Production and use of equipment for more efficient RES use-Informing and education of the public

Realization of National renewable energy action plan until 2020

Hydro power plants (<10 MW)

Hydro power plants (>10 MW)

Solar power plants

Wind power plants

Geothermal power plants

Biogas power plants

Biomass power plants


Projection of new capacitiesfor electricity production using RES

Projection of energy consumption from RES



Final consumption

District heating plants

thousand toe

CoalStrategic Objectives

Current State


Priority Actions:

- Secure and reliable supply of thermal

power plants

- Ensuring necessary amounts of coal for final consumption and heat production

- Old facilities and equipment, revitalization needs- Problems with expropriation of land necessary for opening new open pit mines-Underground coal mining is unprofitable and its operation depends of state suport

- Intensification coal deposits exploration on the territory of Serbia -Opening of new open pit mines for the replacement of the existing ones and for operation of new TPPs

- Optimization and concentration of underground coal production in profitable mines

- Introduction of systems for coal quality control

Opening of new open pit mines in Kolubara basain

Increase of Drmno open pit mine capacity

Coal

Basin Kolubara Tamnava - West Field, Fields C and D, displacement of Vreoce - 470 mil. € Field E opening (replacement of Field D) - 532 million € Field G opening (replacement of Veliki Crljeni) - 161 million € Opening Radljevo open pit mine - 600/1.232 million €

Basin Kostolac Open pit mine Drmno 100/230 million €

Basin Kovin - € 500 million Underground coal mining - € 330 million

Thermal power plants

District heating plants

Final consumption

thousand toe

OilStrategic Objectives

Current State


Priority Actions:

- Security of supply with oil derivatives with quality that matches EU standards

- Decrease of import dependence

- Ensure of new directions for crude oil supply

- High import dependence- The dominant import from one direction- Oil Industry of Serbia is joint stock company with majority share of foreign partner

-Provision of required reserves of oil and oil products (reconstruction of existing and building of new storages)

- Exploration aimed at finding new deposits

- Maintaining the high level of crude oil production in the country

- Refineries modernization

- Ensuring of more efficient oil product transport by pipelines

- Competition in the sector for ensuring the most favorable prices for the consumers

Reconstruction of existing and building of new storages

The increase in refinery processing depth

Oil

Sub-sector ActivitiesInvestments

(mill. €)

Exploration and production of oil and natural gas

Exploration in the country and in the region aimed at finding new depositsApplication of new technologies and methods of exploitation

800

Refinery processing

The increase in processing depth and further modernization of refinery in Pancevo and Novi Sad

750

Trade of oil derivatives

Modernization of gas stations and building of new onesConstruction of storage capacitiesModernization of filling stationsProcurement of new transport facilities

160

Transport of crude oil and oil products

Construction of pipeline network for oil product transport

170

Oil and oil derivativesBiofuels

Thousands toe

Natural GasStrategic Objectives

Current State


Priority Actions:

- Ensuring security of supply of domestic market- Establishment of national and regional natural gas market

- Single supply route with technical import limits- Underground storage meets the current consumption- Inadequate natural gas prices of public supply

- Research in the country with the aim of discovering new deposits of natural gas, (including unconventional gas)- The use of natural gas as a substitution for electrical energy consumption for heating purposes- The use for the combined production of electric and heat energy in industry and cities- Participation in international projects for natural gas supply- Regional interconnection

South Stream pipeline construction

Establishment of at least two regional interconnections up to 2020

Completion of the gasification of Serbia

Natural Gas

ProjectUntil 2020

Until 2025

Until 2030

South Stream pipeline 1700 - -

Regional interconnection 120 60 20

New gas storages 100 100 100

Completion of the gasification of Serbia and rehabilitation of existing system

500 500 200

Cumulative investment (million €)

2420 3080 3400

Efficiency of Energy UseStrategic Objectives

Current State


Priority Actions:

Enhancing energy efficiency in all consumption sectors

Energy indicators in 2010:- energy intensity 0,452 kg oe/€2005

- ratio of primary energy consumption and GDP, adjusted to the purchasing power parity 0,223 kg oe/$2005

- Primary energy consumption per capita 2.140 kg oe

- Consistent implementation of the Law on efficient energy use- Adoption and implementation of the National Action Plans for Energy Efficiency - definition of national energy saving targets, total and by sector, and monitoring of realization- The use of combined electric and Heat energy production in industry- Introduction of energy management- Capacity building of energy statistics- Informing and public education

Energy intensity

Introduction of energy management in the public sector

Energy reconstruction in the building sector

Ratio of primary energy consumption and GDP,

adjusted to the PPP

Primary energy consumption per capita

SerbiaEUindex= 100

VII Legal, institutional and socio-economic framework

The impact of international obligations

Development of institutional framework

Legal and market framework of energy sector

Social and economic aspects of planned development

Energy and related sectors – horizontal harmonization

The impact of international obligations

The Energy Community Treaty

The Stabilization and Association Agreement

Agreement with Russian Federation on cooperation in the oil and gas sector

United Nations Framework Convention on Climate Change

Other regulations

Development of institutional framework

Capacity building of the Ministry in charge for energy sector

Establishment of the Institute for Energy in Serbia

Coordination with the Ministry in charge for Science and Education

Capacity building of Energy Agency

Co-ordination with the Statistical Office of Serbia

Legal and market framework of energy sector

Electric Power sector

Natural gas sector

Oil and oil derivates sector

Heat energy sector

RES

Energy efficiency

Social and economic aspects of planned development

Energy development in the function of social growth Faster development of existing branches of economy New economic and service activities Employment increase

Energy sector based on market principles Prices of energy Influence on the budget deficit reduction Reductions in material and energy intensity of the economy

Local Economic Development

Social aspect Social dialogue Delicate and socially vulnerable groups of consumers

Energy sector and related sectors – horizontal harmonization

Environment and climate change

Participation of the public in decision-making

The concept of "public goods"

The principle of competitiveness and state aid

Energy sector in Serbia after 2030

“Energy Roadmap 2050”

Energy efficiency


“Clean coal” technologies

Thank you!

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