The project for the construction of biomass heating plant in Kladovo, capital investment of the municipality of Kladovo funded by the Public Investment Management Office of the Government of Serbia is worth 3.5 million euros without VAT, from design, construction, procurement of equipment to installation, is carried out by a consortium led by Austrian company Polytechnik. The contractor is local company Termomont.
A heating plant on wood chips Pemci 1 with a capacity of 2 x 3 MW is being built in the northwestern part of Kladovo. The capacity of the plant could later be increased to 8 MW. Kladovo has a district heating system with two heating plants managed by local heating utility, of which one uses coal and the other fuel oil. The new heating plant will help the city to get better and more efficient district heating service, which is also cheaper and more environmentally friendly.
In June 2017, Serbian Minister of Energy and Mining Aleksandar Antic has signed a loan and donation agreement with the representatives of German KfW Bank and Swiss Government that will enable ten heating plants in Serbia to switch from using fossil fuel to renewable energy sources, namely biomass. Total worth of the project is 27 million euros, which also includes a 2 million euros grant from KfW Bank and 5 million euros grant from Swiss Government. The agreements on financing the transition of district heating companies from fossil fuel to biomass are part of the project Stimulating Renewable Energy – the Development of the Biomass Market in Serbia (DKTI) which was launched in Serbia back in 2012 with a feasibility study for Subotica district heating company. The signing of the agreement marked the start of first stage of that project, with total value of 108 million euros. The loan was approved under very favorable conditions which include a low interest rate of 1.1 %, five year grace period and a ten year deadline for the municipalities which get the loans to repay the money. The aim is to convert as many heating plants as possible from fossil fuels to biomass or other renewable energy sources. The first stage will include heating plants in the municipalities of Mali Zvornik, Nova Varos, Novi Pazar, Prijepolje, Bajina Basta, Valjevo, Priboj, Kladovo and Majdanpek, while the municipality of Becej has already launched two projects – one to convert a part of its heating plant to biomass and the other aimed at using geothermal energy.