The Energy Community recognized the Republic of Serbia as a leader in energy reforms in the region in 2023. Key steps have been taken to improve the legislative framework and set strategic goals for the future of the energy sector, which will contribute to the acceleration of the green transition and enhance the security of energy supply. We spoke with Dubravka Đedović Handanović, Minister of Mining and Energy, about the energy transition, investments in renewable energy sources (RES), boosting energy efficiency, and support for energy-challenged households.

Q: How is Serbia’s energy transition developing? What are the next steps in reforming the energy sector?

A: I believe that it will be best to talk about Serbia’s progress in the green energy transition in the previous two years with the help of numbers. The number of prosumers has increased from 400 to 3,000, the capacities of wind farms will be increased by nearly 40 per cent by the year’s end, and for the first time, we have exceeded 100 MW of solar capacity. We have a three-year auction plan for the allocation of market premiums, which provides for 1,300 MW, and we have already achieved 715 MW of electricity produced by wind farms and solar power plants (of which 425 are included in the incentive system). Every day, we work diligently to reduce consumption in the household sector, so in the space of just one year, around 10,000 households received state grants for boosting energy efficiency in their homes. If we look only at the results achieved through the Clean Energy Programme last year, energy savings were equaled to the production of the Niš heating plant, which is among the largest such plants in Serbia.

Our ambition is to improve the legislative framework further. This, in addition to amending the Energy Law, implies the adoption this year of already prepared strategic documents, such as the Integrated National Energy and Climate Plan and the Energy Development Strategy.

As a large investor, the state plays an active role in the energy transition process. Key investments in the energy transition that we are implementing in cooperation with the Electric Power Industry of Serbia (EPS) include the construction of self-balancing solar power plants with a capacity of 1 GW, the Kostolac wind farm (66 MW) that will be included in the power grid next year, as well as the new reversible hydropower plants Bistrica and Đerdap 3. In late April, we commissioned a flue gas desulphurization plant in TENT A, the largest environmental project implemented in thermal power plants in Europe at the moment. We decided to conduct auctions and award market premiums as a key incentive for privately funded projects, which the EU also recognized as one of the key tools for increasing the share of renewable energy sources.

Our strategic documents say that we will consume more energy in the future, and we need stable energy sources when renewable energy, solar, and wind are unavailable. Therefore, we seriously and thoroughly considered using nuclear energy, which is the only type of energy that can generate electricity, while adhering to the zero CO2 emission concept. If we know that we now get more than 60 per cent of our energy from coal, it is clear that we cannot replace that amount of energy overnight. On the other hand, there are many uncertainties regarding the basic capacities that meet the condition of carbon neutrality, and we are aware that projects involving gas are exposed to numerous risks, from geopolitical and the willingness of international institutions to finance them to a possible change in the treatment of this energy source in the EU taxonomy. That is why we started to consider the option of including Serbia in the group of countries that use nuclear energy to generate electricity.

The energy sector reform began with transforming the Electric Power Industry of Serbia (EPS), the largest company in our country, which supplies all citizens and the largest part of the business sector with electricity. This process, which we started amid the energy crisis, is very complex and implies several challenges, which I believe we have adequately solved so far. Our goal is to protect workers in the energy transition, especially miners, and to create better conditions for employees.

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Q: Last year, we had the first auctions for allocating market premiums for renewable energy sources. How satisfied are you with these auctions, and when will the second round be announced?

A: By adopting a three-year auction plan covering the period from 2023 to 2025, we will provide at least 1,300 MW of new energy capacities generated from RES through private investments, auctions, and market premiums. Last year, we conducted the first auction for the allocation of market premiums, the result of which were nine new power plants, the achieved price of electricity twice lower than the market price at that time, a new 715 MW of electricity (of which 425 MW is included the incentive system) and more than a billion euros of private investments to be spent on the development of wind farms and solar power plants. This clearly indicates that Serbia has created an excellent environment and regulatory framework for the development of RES. We expect around 115 MW of wind and solar energy from auctions to be included in the power grid by the year-end.

The second round of auctions for around 400 MW of new green energy will be launched at the end of this year, as soon as we assess that the market is ready and that there are mature projects that can compete for incentives, which is something we analyze daily. Through auctions, we plan to encourage investors to keep the produced green energy in Serbia, which our citizens and the business sector will use. We will pay special attention to promoting the construction of solar power plants, and we will work to achieve the best possible price through good competition.

Q: The household energy renovation program is continuing this year, too. What is included in this program, and what awaits us by the year’s end?

A: We, in Serbia, consume three and a half times more energy compared to the European average, which is why we support individuals in their effort to improve energy efficiency in their households to achieve energy savings between 25 and 30 per cent, increase comfort and reduce the emission of harmful gases. We recently concluded contracts with 137 local governments, including municipalities from Kosovo and Metohija, to which we gave about two billion dinars for subsidies for about 12,000 households this year alone. Individuals will be able to apply for subsidies as early as June, as soon as the local governments launch relevant tenders, which, depending on the package of measures, can go up to 65 per cent of the total investment value for the replacement of doors, windows insulation, facades, roofs, inefficient boilers and installation of solar panels and collectors. All these measures actively involve citizens in the energy transition process. So far, about 30,000 households have received state subsidies, while by the end of 2027, we will have rehabilitated more than 70,000 households across the country. In cooperation with the World Bank, we provided 50 million dollars for subsidies to citizens.

Q: The household energy rehabilitation program has given special attention to financially vulnerable households. How is the project implementation going?

A: For now, those customers who are at risk can apply for subsidies in 44 towns. They are significantly higher than the other subsidies for citizens and amount to up to 90 per cent of the energy rehabilitation value. Thanks to minimal investments, energy-challenged customers will improve the comfort of their homes and significantly reduce their electricity bills. Translated into money, if the household changes doors and windows alone, for which a subsidy amount of, for example, 100,000 dinars is allocated, then the household is obligated to provide 10,000 dinars. We are dedicated to supporting the most vulnerable citizens, so this project is an excellent opportunity to remind all interested parties that they can apply to their local governments throughout the year to obtain this status.

Interview by Milica Radičevič