Key Amendments to Serbia’s Law on the Use of Renewable Sources of Energy: Addressing Challenges and Enhancing Market Efficiency

Serbia’s Law on the Use of Renewable Sources of Energy (“Law on RES”) has faced challenges since its implementation, prompting the Ministry of Mining and Energy (“Ministry”) to propose crucial amendments. The National Assembly of the Republic of Serbia adopted these amendments in April 2023, aiming to achieve several goals and resolve existing issues in the renewable energy market.

The key goals of the Amendments to the Law on RES are:

• regulation of balance responsibility which encourages investments in RES, while ensuring protection of the guaranteed supplier and end users;

• establishment of a mechanism to protect the operation of the electric power system considering the expected high degree of integration of RES;

• establishment of the competent authority for determining the maximum offered prices at auctions;

• limiting the maximum installed power for buyers-producers;

• limitations when connecting to the distribution system.

Revising Balance Responsibility

Previously, all renewable energy producers had the right to transfer their balance responsibility to the guaranteed supplier, regardless of their inclusion in the incentive system. However, to mitigate risks associated with excessive renewable energy capacity, the amendments reserve the right to transfer balance responsibility exclusively for manufacturers within the incentive system (Beneficiary Manufacturers). Furthermore, a new calculation method for balance deviations introduces fees based on the percentage of the maximum offered price at auction, independent of the direction of the deviation from the guaranteed supplier’s balance.

Production Forecasting and Compliance

The amended Law on RES emphasizes the obligation of Beneficiary Manufacturers to accurately forecast electricity production and adhere to good forecasting practices. Failure to meet this obligation may result in additional fees imposed by the guaranteed supplier.

Enhancing Power System Safety

To safeguard the power system, the amendments require the Transmission System Operator (TSO) to conduct an adequacy analysis of the production and transmission system within the system’s development plan. If the analysis indicates a lack of reserve capacity for balancing the system, the connection of renewable power plants to the transmission system may be postponed. However, renewable energy producers can expedite the connection process by providing additional capacities for ancillary services like frequency regulation and power exchange through storage facilities.

Streamlining Auction Procedures

Previously, the Energy Agency of the Republic of Serbia determined the maximum offered prices at auctions, while the Ministry was responsible for auction implementation. Recognizing potential inefficiencies, the amendments grant the Ministry the authority to determine maximum offered prices, ensuring greater accountability and efficiency in the auction process.

Limits on Buyers-producers

Under the original Law on RES, buyers-producers had unrestricted access to the power network, absolving them of any system responsibilities, including balancing. This resulted in a surge of connection requests. The amendments address this issue by introducing limits on the maximum installed power for buyers-producers, specifically 6.9 kW for households and 150 kW for non-household buyers-producers.

Conclusion

The recent amendments to Serbia’s Law on RES aim to overcome challenges observed in the renewable energy market. By regulating balance responsibility, enhancing market incentives, ensuring power system safety, streamlining auction procedures, and imposing limits on buyers-producers, Serbia strives to create a more efficient and sustainable renewable energy sector. These amendments reflect the government’s commitment to balancing the interests of stakeholders while driving the transition towards a greener energy future.