As a potential member of the European Union, Serbia needs to take concrete and appropriate measures towards more sustainable energy consumption. In accordance with Directive 2009/28/EC of the European Union, also used to calculate renewable energy targets for EU member states, Serbia has so far committed to a “very ambitious binding target” of 27% of energy generated from renewable sources by the year 2020. As it stands, approximately 21% of the final energy consumed in Serbia is from renewable sources, with some increases in the past few years.
While areas such as transportation and heating consume large quantities of energy (and, in Serbia’s case, could be far more sustainable), the most effective area to target in order to reach this goal is Serbia’s electricity sector, where, in spite of pledges towards increased sustainability, systematic changes are needed to reach full compliance with the EU standards. As will be discussed, despite some progress, other efforts have been misguided and/or lacking in their impacts. As 2020 grows ever closer, according to the European Commission’s annual report, Serbia is not on course to achieve its renewable energy targets. It is therefore important to assess what more effective promotion of a sustainable electricity market in Serbia should look like.
EPS and energy at large in Serbia
Almost all of Serbia’s electricity (approximately 97%) is generated by one company, Elektroprivreda Srbije (EPS), which is fully state-owned. Out of the electricity generated by EPS, approximately 21% came from hydro power plants, constituting the most important source of renewable energy used in Serbia. However, at large, Serbia’s renewable energy sector “is in its early phase of development.” EPS, as will be discussed later on, has increasingly expressed support for the development of the renewable energy sector in Serbia, but has made little recent progress: hydro power plants that have existed for decades represent the companies only notable renewable energy resources.
EPS relies on lignite-fired power plants to supply the majority of the electricity it produces, an approximate 64% of Serbia’s energy, constituting an unsustainable, highly polluting and inefficient energy source. EPS’ lignite-fired Nikola Tesla Thermal Power Plant alone produces some 50% of Serbia’s electricity. In any case, Serbia depends on lignite coal for a reason; of the country’s energy reserves, oil and gas constitute a largely symbolic less than 1%, with different types of coal constituting the remaining 99%, of which lignite represents approximately 95%.
While plentiful, lignite represents an especially unsustainable energy source: it is the least energy-dense form of coal, requiring higher volumes of consumption and therefore producing more carbon dioxide emissions per energy generated. Serbia, however, remains a country powered by lignite: EPS itself manages a number of mines, providing lignite for its thermal power plants in a system which leaves it as the “basic energy resource in Serbia for electricity generation.”
There are strong arguments and precedents for using coal in Serbia. Coal reserves, in many cases owned and managed by EPS and directly linked with thermal power plants, constitute a large source of domestically-available energy for which a great deal of infrastructure already exists, with high energy production at the lowest possible costs.
Worryingly, however, it seems that with governmental support coal will continue to be the dominant power source in Serbia. In the recently published Energy Sector Development Strategy it is noted that coal represents a “realistic basis for further long-term development of the energy sector in general and particularly for the electricity generation.” Throughout this document an emphasis is given to the potentials of “clean coal” to address Serbia’s energy needs.
In fact, while there is a focus on decreasing emissions and pollutants, large sums are being invested into the expansion of coal-fired plants in Serbia. At EPS’s Kostolac plant, for instance, a new 350-megawatt coal-fired unit is being built, and a nearby mine expanded, with a loan of almost $600 million from the Export-Import Bank of China. While coal remains a plentiful and well-developed resource in Serbia, efforts should be focused on moving away from it instead of towards increased consumption.
Renewable energy in Serbia today
There have, in fact, been some notable efforts to develop renewable energy in Serbia in recent years. Hydropower remains by far the best developed source of renewable energy; the second largest source is the “traditional way” of using biomass. A number of projects, undertaken at both the private and public levels, have been developed to harness various other sources of renewable energy in recent years as well. Since 2009, Serbia’s Government has supported the development of renewable resources with feed-in tariffs, paying higher prices paid for renewably-generated energy, anywhere from 8 to 20 euro cents per kilowatt hour over the base power price. These feed-in tariffs benefit and encourage numerous “privileged producers,” supplying energy from sources such as wind farms, hydropower plants, solar cells, biogas power plants, landfill waste power plants, geothermal plants, and biomass power plants.
However, while a number of projects in many areas of renewable energy have so far received the status of “privileged producers,” there is a question of the quality and effectiveness of many such chosen projects. Looking over the list of privileged producers published by Serbia’s Ministry of Mining and Energy, many of them are small companies and entrepreneurs, often involved in other industries and, in some cases, likely with little interest in and knowledge of the implications and requirements of renewable energy. Especially controversial are proposed small hydro power plants, with more than 800 sites (often in or near protected areas) having been designated for such projects, despite potentially posing environmental risks. In fact, Serbia’s Minister of Environmental Protection has recently come out against a number of these projects, noting that in some areas, if such projects are developed, “the nature will be destroyed.” Such projects in the Balkans pose a massive threat to biodiversity as well the potential to water flows and physical space in many protected areas.
Other areas in renewable energy, potentially with lower levels of environmental impact, show low levels of development. As mentioned previously, aside from the large hydro power plants run by EPS, Serbia’s largest other source of renewable energy is biomass, used, often, by individuals in rural parts of the country. Utilization of other renewable sources of energy, such as wind, solar, and geothermal, is marginal. For an example, out of the total energy produced by privileged producers in Serbia in 2016, solar energy accounted for approximately 1/20th the amount of energy produced by hydro power. The development of wind power has gone further than that of solar, with plans for an approximate 500 megawatts in coming years. Despite this goal, however, actual construction of wind plants has been lower than expected, with numerous supposedly-confirmed projects delayed (this lack of follow through has been attributed to recent “very bad experiences” of developers as well as “overestimated political risk”). Despite the lack of development in these areas, they represent great potential for Serbia, which registers more sunny days than many European countries with robust solar energy programs, and has strong and frequent winds, particularly in the Vojvodina region.
Serbia, it seems, is hoping to rely on private producers to increase the country’s share of renewable energy. At the same time, the vast majority of electricity in the country is produced by EPS, controlled by the government, which is largely focused instead on the development and improvement of its coal-fired power plants. While in annual reports EPS is careful to note that priorities include the “development of wind farms and solar power plants,” its actual actions in this regard are minimal. While citing a number of potential projects in reports and on its websites, EPS has yet to actually construct any wind or solar power plants of its own. At the same time, however, EPS has been criticized for non-transparent practices, and close, and potentially unfair, collaboration with the Serbian government, as well as electricity tariffs too low to support necessary reforms.
Under current circumstances, reaching the goal of 27% renewable energy in Serbia seems to be a difficult prospect. Serbia has, so far, hedged it bets on subsidizing private producers who have proven unreliable. On the other hand, EPS, by far the largest producer and supplier of electricity in the country, continues to rely on (as well as recently expand) coal-fire thermal plants, creating vast amounts of cheap yet environmentally harmful energy. As by far the most important energy producer in Serbia, EPS should be working to become a major player in other areas of renewable energy, continuing to develop its portfolio beyond hydro power. In any case, it is unfortunate that the largest player in Serbia’s energy market has taken what appears to be a backseat role in meeting the government’s (effectively its owners’) energy goals. As private producers are implicated in scandals over environmental impacts (particularly in proposed small hydro power plants), and EPS and private producers both display a general lack of follow through in planned renewable energy projects, Serbia seems to be falling behind its goals. Action needs to be taken, in any case, to speed up and encourage a responsible and durable shift in how Serbia generates electricity.
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