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Serbia: Wind electricity PPA and subsidies cap vs low cost coal TPP electricity

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Investors are ready to build, but provided that the wind electricity purchase agreement is such that it guarantees security to them. In other words, it should guarantee that the electricity generated in the wind power plans will be taken over by the transmission system operator and paid in accordance with the agreement.

Any foreign investor, who has built a wind farm in Serbia, could not sell this electricity to a consumer on the free market, because the state owned power utility EPS’s electricity is incomparably cheaper.

ЕPS has been able to buy electricity on the exchange at 35.16 euros per megawatt in 2015, whereas the electricity from the wind would be sold at 92 еuros, almost three times more expensive! EPS is obliged to purchase the electricity from the wind from investors in the following 12 years, but so that the end users bear all the costs, only because Serbia has undertaken to reduce the emission of harmful gases in the atmosphere until 2020, whereas at this, one half of schools in Serbia have not solved the problem of toilets.

It is interesting that this idea has not been abandoned even at the time when Spain and Portugal stopped this program according to the World Bank recommendation, because it is too great a burden on their budgets, whereas Romania is still putting off the beginning of implementation of green energy generation. Meanwhile, Poland still obtains 99 percent of its energy from thermal power plants. Serbia cannot compare with Germany which has 30.000 megawatts of installed capacity of green energy.

Experts agree that the investments in Serbia are welcome, but local consumers groups wonder why the citizens would pay this expensive electricity via EPS, if they have their own cheap electricity and if even the imported electricity is two and a half times cheaper than the green electricity. Electrical faculty professors argue that they dont not understand why HPP Đerdap is not recognized as a renewable resource in Brussels, because this is what it is.

When it comes to the price of electricity from the wind, its subsidization is defined by the Energy Law on one hand, whereas on the other hand, in accordance with the European Community Directive, Serbia has committed to a 27 percent participation of renewable energy resources in its gross final electricity consumption in 2020. It is impossible to fulfil this objective without the wind energy considering that the energy capacities of the Sun and the biomass and the hydropower plants are insufficient.

It should be taken into account that the technology that uses renewable energy resources is more expensive than the conventional. The price is 9.2 eurocents per kilowatt hour, but only the part that represents the difference between the market price and the price prescribed by the Regulation on Incentive Measures is subsidized.

Already for years, investors have had problems with the legislation and the complicated procedures in Serbia. Some have given up, but the most persistent, with the best projects and with the most money, have remained.

To this day, investors have invested around 30 million euros in the wind energy in Serbia through the development of their projects, but they still have not started the construction. Of this, more than 90 percent of funds have gone directly into the Serbian economy through the engagement of domestic design companies to prepare technical documentation, for geotechnical testing etc.
It is realistic that, in the following several years, Serbia should be full of wind farm construction sites, as well as that, by 2020, all 500 megawatts should be commissioned. Should this happen, one billion euros of direct foreign investments could pass through the Serbian economy. Everything else would be deceiving the investors who have been patient for years already, whereas the fulfilment of international obligations would be called into question.

Investors are ready to build, but provided that the wind electricity purchase agreement is such that it guarantees security to them. In other words, it should guarantee that the electricity generated in the wind power plans will be taken over by the transmission system operator and paid in accordance with the agreement.

Serbia cannot compare with the developed EU countries behind which it is lagging at least two decades when it comes to the development of wind farms. We should compare ourselves to those similar to us, with Montenegro, for example, which does not have any wind farms the same as us, but it will probably exceed us, because the construction of the wind power plant Krnovo has begun.

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