1. What electricity storage projects have been commissioned in your jurisdiction to date?
Recently electricity storage has started to attract attention from both state-owned incumbents and mid-size to large private industry players, especially in the area of renewable projects and technologies, a sector also relatively new and just starting to operate in Serbia (wind projects predominantly, but to some degree also solar farms and small hydro-power plants).
Noting this and additionally other prospective areas of stakeholders’ interest (such as battery technologies), it may generally be expected that in the following couple of years the energy storage sector will start to develop in Serbia.
2. What electricity storage projects are anticipated in your jurisdiction in coming years?
In late 2015, the state-owned electricity incumbent Elektroprivreda Srbije (“EPS”) announced its plan to develop a new 680 MW pumped-storage Bistrica hydro-power plant, in the vicinity of the existing Bistrica hydro-power plant (Southern Serbia). The importance and role of the Bistrica pumped-storage project would be particularly prominent on the regional energy market, in particular owing to the existence of upstream storage reservoirs on the Uvac river (Kokin Brod and Uvac), whose regulated water could be used for peak operation, together with the existing Bistrica hydro-power plant, with installed capacity of 104 MW. The first design documents are reportedly being prepared, and the investment is estimated at EUR 553 million. EPS is planning to implement the project by the end of 2020, and to fund it either from its own funds or through a loan. Similar projects of comparable scale are also announced and expected throughout Serbia in the coming years.
Apart from pumped-hydro projects, other renewable projects (being still in the nascent phase) are expected to result in electricity storage technologies being implemented. This particularly relates to the deployment of privately owned wind farms, which is expected to reach a capacity of 500 MW in total by the end of 2017.
In the area of energy efficiency, there are a number of energy performance contracting projects being prepared currently, mostly in the public lighting sector, with the arrangement typically being implemented through a public-private partnership between the relevant public entity (a city, a municipality or other public entity) and a private partner (typically, an ESCO company). In some of these projects (including the major one in Northern Serbia), various project’s modalities are being examined at present, some of them include the prospects for implementing pioneering electricity storage facilities to support the project, raise public awareness and test actual functioning of such facilities.
Battery technologies and electric vehicles are also generally expected to start developing in the following couple of years in Serbia. Some notable private companies have unofficially expressed their interest to enter the Serbian market in this specific sector (Phillips and Abengoa being examples). It has yet to be seen, however, whether the necessary changes to the existing regulatory framework would follow and actually allow for full feasibility of such market developments.
3. Is there any specific legislation/regulation or programme that relates to energy storage in your jurisdiction?
At present, there is no specific legislation governing electricity storage in Serbia. As a result, the general regulatory regime would apply to electricity storage projects, which in most instances would principally be sufficient for the projects to be feasible. However, further regulatory support and adoption of incentive schemes appears to be essential to address challenges relating to some specific sub-sectors, such as electric vehicles (as highlighted below).
4. Please give examples of challenges facing energy storage projects in your jurisdiction and how current projects have overcome these challenges.
As energy storage – and electricity storage in particular – is currently a non-regulated sector in Serbia, there are, expectedly, many challenges ahead, including the following:
- raising awareness – the overall awareness of the main regulators governing the sector, including the Government of Serbia, regulatory agencies, system operators and the competent ministries, needs to keep up with the changing market. This equally relates to a need to adapt regulatory practices to novel solutions and to include such novel solutions in the projects involving the public sector (which are numerous and include the above mentioned pumped-hydro storage, PPPs in the area of energy efficiency, etc.);
- specific regulations – while most of the matters relevant for electricity storage are governed by the existing energy regulations, there are still a few areas where adoption of specific regulations would be needed in order for this sector to start developing in Serbia. Examples include regulations applicable to system operators and access to network as well as regulation of completely new technologies, such as electric vehicles. The latter is a good example as until very recently it was legally impossible to even register an electric vehicle in Serbia; and
- incentive schemes – incentives are very much needed for opening up of some specific sectors and markets. For instance, unlike in some other countries in the CEE region (e.g. Croatia and Slovenia), there are currently no governmental incentives for projects involving electric vehicles.
As for other energy sectors, further (legal and ownership) unbundling is needed to foster market development. This particularly relates to the natural gas sector, where the storage function is not fully unbundled yet and Srbijagas is still the incumbent in the transportation, distribution, storage and trade of natural gas.
5. What are the main entities in the electricity sector and what are their roles or expected roles in relation to energy storage?
The Serbian electricity sector is primarily regulated by the Ministry of Mining and Energy (“Ministry”), including its relevant departments and sub-departments, and the Energy Agency of Republic of Serbia (“AERS”). Of course, when it comes to adoption of laws and by-laws, the National Assembly and the Government of the Republic of Serbia (“Government”) are the competent authorities.
The National Assembly of the Republic of Serbia (“National Assembly”) is responsible for the adoption of the National Energy Sector Development Strategy (“Strategy”), the main strategic act to be enacted for a period of at least 15 years, which includes: (i) long term goals for generation capacity development that serve to ensure safe supply; (ii) transmission and distribution system development proposals; (iii) electricity market development proposals; (iv) sources and manner of providing the required quantities of energy and energy sources; (v) development strategy for using energy from renewable sources and improving energy efficiency; and (vi) finance estimates necessary for the Strategy’s implementation.
The Government is actively involved in setting the direction of the electricity sector. It prepares the Strategy’s draft, approves the Strategy’s Implementation Plan and the annual Energy Balance. The Government supervises the energy pricing policy and approves the price of energy as set by the energy generators and additionally: (i) prescribes terms and conditions for electricity supply and as well as the measures which are applied in case of endangered electricity supply to the customers due to energy system operations disruptions or market disruptions; (ii) enacts national action plans; (iii) enacts conditions for acquiring the status of privileged electricity generator and therefore the entitlement to receive state subsidies; (iv) sets the incentive measures for renewable energy electricity generation; (v) prescribes criteria, protection mode, conditions, deadlines and procedure for the establishment of protected energy consumer status; (vi) replaces energy operators in case a licence is revoked; (vii) adopts measures on electricity shortage; and (viii) decides on public tenders for the construction of electricity generating stations.
The Ministry is responsible for implementing the energy policy as set by the Government and the National Assembly and performs related administrative, regulatory and supervisory functions. The Ministry prepares the Strategy’s Implementation Plan and the annual Energy Balance as well as drafting proposals for and enacting the regulations necessary for the implementation of energy laws. The Ministry is also in charge of issuing the energy permits required to comply with environmental protection regulation, as well as to construct new generating stations. The Ministry monitors compliance with energy regulations through the Energy Inspectorate of the Republic of Serbia and supervises the design, construction and maintenance of the electricity generating stations as well as the quality of the electricity supply.
AERS is the key regulator and is responsible, amongst other things, for issuing licences, establishing tariff systems for the electricity prices and monitoring the application of these tariff systems. AERS also regulates the operation of the transmission and distribution networks including deciding on disputes in relation to third party access to such networks.
DSOs and TSO
In addition to above mentioned authorities, the electricity system operators, notably the transmission system operator(“TSO”) function is currently conferred to Public Company Elektromreža Srbije (“EMS”). In its capacity as the operator of the transmission grid, EMS regulates third-party access and connection to the transmission grid. It is also responsible for the allocation of the cross-border transmission capacities. The main obligations of EMS as the TSO include: (i) maintenance and development of the transmission grid; (ii) provision of non-discriminatory access of third parties to the grid; (iii) issuance of a grid code and rules on the awarding of interconnection capacities; (iv) issuance of a ten-year plan for development of the transmission grid; (v) acquiring sufficient energy for covering the losses in the transmission grid; (vi) establishing fees for connection and access to the transmission grid; (vii) complying with technical regulations; and (viii) implementation of appropriate health and safety measures within the transmission system.
The distribution system operator (“DSO”) function is performed by EPS, which operates the national distribution grid through its fully-owned subsidiaries for five regional centres including Belgrade, Novi Sad, Kragujevac, Kraljevo and Niš. The main obligations of the relevant DSOs include: (i) the maintenance and development of the distribution system; (ii) the provision of non-discriminatory third-party access to the distribution system; (iii) the issuance of a distribution grid code; (iv) the issuance of a ten-year plan for the development of the distribution grid; (v) acquiring sufficient energy to cover any losses in the distribution grid; (vi) establishing fees for connection and access to the distribution grid; and (vii) the implementation of appropriate health and safety measures within the distribution system.
All said, and noting that the electricity storage is a completely new sector in Serbia, it seems that the main regulators mentioned above, particularly the Government, the Ministry and AERS, are expected to be the main drivers in this sector until its starts to operate. The DSOs’ and TSO’s support is also very much needed in order for the projects to be feasible.
In addition, the existing private investors on the overall electricity market, notably the renewable developers and the private companies involved in the energy efficiency projects (e.g. ESCO companies) as well as the private companies supplying technology, are expected to contribute significantly in proper communication of the most imminent issues to the regulators, mostly via professional associations.