Serbia Enhancing Energy Efficiency and use of Renewable Energy Sources

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 Energy Dejan Stojadinovic, Assistant Minister

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

Institutional Stakeholders EE & RES

MINISTRY OF MINING AND ENERGY

Renewable energy and energy efficiency policy development and implementation

ENVIRONMENTAL PROTECTION FUND

Financing some energy efficiency and renewable energy programs

MINISTRY OF SCIENCE AND TECHNOLOGY

National Programme for Energy Efficiency technology dissemination and demonstration facilities

ENERGY EFFICIENCY AGENCY

Sectoral energy efficiency programs Training and public awareness campaigns

MINISTRY OF ENVIRONMENT AND SPATIAL PLANNING

Building standards Some energy efficiency provisions

REGIONAL ENERGY EFFICIENCY CENTRES

Belgrade, Novi Sad, Nis, Kragujevac, Kraljevo

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

Energy production and consumption

10% THERMAL ENERGY 55% PRODUCTION 13% SOLID FUELS 40% LIQUID FUELS 45% IMPORT 11% GASEOUS FUELS 26% ELECTRICITY
FINAL ENERGY SUPPLY IN 2009.
4.0 3.5 3.0 2.5

PLANNED PRIMARY ENERGY SUPPLY IN 2009. 17.794 M toe

PLANNED FINAL ENERGY SUPPLY IN 2009. - 8.915 M toe

Energy intensity 2005. (est.) 0.41 toe per thousand USD of GDP 2.7 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

M toe

2.0 1.5 1.0 0.5 0.0 COAL OIL INDUSTRY GAS HOUSEHOLDS ELECTRICITY OTHERS HEAT

Introduction of Energy Management

Energy Balance 2009

2007. Primary energy supply per capita (toe/capita) Electricity supply per capita (toe/capita) (kWh/capita) Share of RES-E in total electricity generation Share of RE in final energy supply 2.228 0.295 3,429 28% 13% 2008. 2.395 0.309 3,589 27% 12% 2009. 2.416 0.314 3,654 28% 11%

Production (toe) Geothermal energy Serbia 2009 Planned Production of Renewable Energy Large Hydro Small Hydro Biodiesel Fuel wood TOTAL 4,700 923,000 4,300 300 163,000 1,095,300

RES Technical Potential

Serbias endowment of renewable energy resources is substantial - realization of these potentials require Government action
Wind 5% Geothermal 5%

Potentials (Mtoe)
Biomass SHPP Solar Geothermal Wind TOTAL 2.40 0.40 0.64 0.20 0.19 3.83
SHPP 10% Biomass 63% Solar 17%

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

Biomass
Crop farming residues 1/3 available for Energy Use Total residues (1,000 tones) Wheat Barley Rye Corn Sunflower Soybean Rapeseed TOTAL 2,905 295 15.5 5,310 705 320 7.8 9,560 Residues for Energy Use (1,000 tones) 1,365 180 4.4 1,140 240 130 1.6 3,060 Fruit growing residues Biomass residues (1,000 tones) Plum Apple 393.5 36.2 Fuel Wood Forest biomass 7 million m unofficial -------------------1.6 million m official (55% from State forest) 5 million m 12 million m

Cherries
Pear Peach Apricot Walnuts Grapes TOTAL

55.0
14.0 35.1 15.5 55.0 515.0 1,119.3 Wood residues TOTAL

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

Wood biomass 1 Mtoe

Agriculture biomass 1.4 Mtoe

Small Hydro Power Plants

SHPP Cadastre (1987) 856 locations 500 MW

>5 MW: 9 locations 2-5MW: 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

Small Hydro Power Plants

No of Potential power SHPP installed (kW) locations 64 35 40 40 47 9 22 20 8 8 30 19 32 22 16 30 13 34,300 33,284 25,925 23,458 18,800 17,576 17,045 15,825 15,690 11,216 10,974 10,706 10,185 10,141 9,875 9,800 9,785

Potential Annual Generation (MWh) 121,203 109,692 94,026 78,394 73,971 60,210 72,212 55,100 58,850 25,850 45,391 30,180 38,438 38,985 35,318 36,099 30,937

Municipality Ivanjica Raka Pirot Kraljevo Prijepolje Zajear Crna Trava Novi Pazar Bela Palanka Despotovac Brus a Vranje Kurumlija Priboj Trgovite Valjevo

No of SHPP locations 19 17 21

Potential power Potential Annual installed (kW) Generation (MWh) 8,625 8,320 8,310 32,877 29,720 36,832

Municipality ajetina Leskovac Nova Varo

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13 19 12 8 12 15 7 11 6 14 1 1 1 1

8,170
7,990 7,640 7,070 6,740 5,346 5,325 4,730 4,690 4,655 4,515 3,000 850 620 1,220

32,543
28,262 27,395 27,500 20,050 17,928 19,862 10,230 16,578 20,283 19,459 13,700 4,700 2,270 8,190

Surdulica
Vlasotince Bajina Bata Ni Boljevac Uice Ljubovija Negotin Vladiin Han Arilje Babunica Novi Sad Vrbas Beej Bela Crkva

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16 17

9,305
8,945 8,675

27,419
24,380 34,553

Tutin
agubica Bosilegrad

Solar
AVERAGE DAILY SOLAR IRRADIANCE ON HORIZONTAL SURFACE IN kWh/m MONTH I Beograd Vrac Pali Novi Sad Ni Kurumlija Pe Pritina Vranje Loznica Kragujevac 1.40 1.00 1.30 1.45 1.75 2.15 1.85 1.85 1.70 1.50 1.50 II 2.20 2.00 2.10 2.35 2.60 3.00 2.95 2.90 2.70 2.30 2.40 III 3.35 3.35 3.45 3.20 3.45 3.60 3.70 3.70 3.65 3.05 3.35 IV 4.85 4.40 5.00 4.65 5.00 5.05 4.85 5.25 5.15 4.35 4.80 V 6.00 6.00 6.15 5.80 6.10 5.85 5.95 6.30 6.15 5.30 5.85 VI 6.45 6.40 6.25 6.20 6.35 6.05 6.15 6.60 6.40 5.75 6.10 VII 6.75 6.55 6.35 6.35 6.70 6.55 6.75 6.95 6.50 6.15 6.45 VIII 6.00 6.85 5.85 5.75 6.15 6.10 6.15 6.30 6.35 5.60 5.90 IX 4.65 4.60 4.30 4.40 5.35 5.30 4.90 5.10 5.25 4.30 4.85 X 3.05 3.00 2.85 2.90 3.45 3.50 3.65 3.35 3.45 2.80 3.30 XI 1.60 1.55 1.40 1.45 1.85 2.00 2.25 1.90 1.85 1.45 1.70 XII 1.15 1.00 1.15 1.20 1.50 1.75 1.60 1.60 1.50 1.20 1.30 Total Year 1,446.80 1,424.75 1,407.40 1,392.65 1,531.40 1,550.50 1,546.25 1,578.25 1,543.40 1,333.50 1,447.85 Average Daily 3.96 3.90 3.80 3.82 4.20 4.25 4.24 4.32 4.23 3.65 3.97

Negotin
Zlatibor

1.35
1.50

2.05
2.30

3.25
3.10

4.85
4.35

6.05
5.10

6.60
5.85

6.95
5.90

6.25
5.35

4.75
4.30

2.90
2.75

1.45
1.60

1.20
1.30

1,453.35
1,316.40

3.98
3.61

Average yearly insolation in Serbia about 1,400 kWh/m

Average daily value about 3.8 kWh/m

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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 m of collectors Equivalent to some saving potential of 7,420 GWh

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Geothermal
Average geothermal flow density in Serbia is higher than 60 mW/m There are 160 natural resources of geothermal waters (excluding Panonian basin) with temperature above 15C Highest temperatures recorded Vranjska spa - 96C Joanika spa - 78C Sijarinska spa - 72C Total flow rate of geothermal water resources is 4000 l/sec 60 locations are in the water reservoirs up to 3000 m depth 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 100C.

Residential and commercial areas Spas and recreation Gain drying Greenhouses Fishing and cattle breeding Industrial processes Heat pump heating Total

Installed thermal power (MWt) 18.5 36.0 0.7 8.4 6.4 3.9 12.0 86.0

Produced heat (TJ/year) 575 1,150 22 256 211 121 80 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.
Vrsacki breg Tupiznica Krepoljin Deli Jovan

6.46 m/s
6.27 m/s 6.25 m/s 6.18 m/s 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 experience Need for the experience of how a private sector renewable energy project can work in Serbia

Absence of first set of projects

Transition Issues Many 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 mechanism Renewable 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 support Difficulty to secure long term loans appropriate for small renewable energy projects Electricity tariff Low 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 standards Despite 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 utilization Low 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 inventory Update and development of Small Hydro Cadastre Wind monitoring programe with wind speed measurements at 50 meters needed

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Legal regulation under preparation

Purpose: to promote investments in renewable energy projects

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

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.

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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 INCENTIVES In 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 CREDITS A 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 ASSETS This 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 INCENTIVES The law on foreign investments stipulates free import of goods that are the foreign investors 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!

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