Energy efficiency at the top of the Serbian legislative agenda

Energy efficiency at the top of the Serbian legislative agenda

Since last April, we’ve seen Serbian legislators put energy efficiency and rational energy use at the top of their legislative agenda, enacting new legislation and amending existing legislation in the Energy Act and the Mining and Geological Explorations Act.
Climate-friendly economic development is becoming an international trend, and Serbia is joining in.

Aside from expanding the powers of the Energy Agency and Geodetic Authority, and introducing new technologies like e-energy, e-mining, e-auctions, and many others, the term “prosumer” has been coined to describe people who want to install solar panels and other energy-generating equipment on their own property for their own personal use.

A legal framework for net metering was also put in place at the same time, with bylaws adopted by the Ministry of Mining and Energy in Serbia.

The recent decisions of the competent authorities, however, in our humble opinion, might be harmful and potentially jeopardize the entire procedure, thereby significantly decreasing investors’ interests for participation. There are two important points to note: First, there is a maximum premium set by the Energy Agency at 55.7 EUR/MWh; this is not among the highest premiums in the region; and second, the market premium agreement has been structured as a contract for difference, meaning that if a selected most favorable bidder offers a lower price than the market price, they will have to pay for it. These commercial decisions could deter investors and delay the long-awaited development of the local renewable energy market in light of the current volatility in electricity prices. It is yet to be seen, however, if and how the market will react to all of the latest developments, whether this will create much additional stimulus for investors to take first steps towards entering into first (virtual) corporate PPAs in Serbia.

Our Energy and Natural Resources practice will be happy to assist our clients in all energy-related legal matters, and we sincerely hope that the Serbian renewable energy market will continue to grow and prosper.

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