Serbia: Electricity price could rise again due to CO2 taxation

26. February 2020. / News Serbia Energy

Director of the Energy Community Secretariat Janez Kopac said that the price of electricity in Serbia will have to increase because coal-based electricity production is getting more expensive due to the taxation of CO2 emissions. Kopac noted that the prices of electricity has always been politically sensitive issue in Serbia, but it is obvious that the price paid by residential consumers in no way reflects the real price of production, which is just not sustainable in the long-term. However, this is not just the problem of consumers, but of mining areas as well, because coal-based electricity production, at least in the EU, is becoming extremely expensive due to the taxation of CO2 emissions, which will reflect on Serbia sooner or later.
He also reminded that the new EU budget envisages substantial amounts for the Just Transition Fund, which should help restructure the mining regions, adding that Serbia should establish such an instrument as soon as possible, because the restructuring will happen sooner or later and someone has to pay for it. A similar fund on a national level would be a good argument for asking for additional funds from the EU for that purpose.
Although Serbian officials denied the possibility of price hikes in 2019, the price of electricity for households in Serbia increased by 3.9 % as of 1 December. The price for industrial consumers remained unchanged. Serbian Energy Agency (AERS) approved the price hike due to demands by energy companies, increased electricity production from renewable sources since three large-scale wind farms have been introduced recently, as well as the rise of electricity price on the regional market. He reminded that the last significant price hike was in 2015, with minor increases in 2016 and 2017. In July, Head of the International Monetary Fund (IMF) mission in Belgrade Sebastian Sosa said that the price of electricity in Serbia should be increased by at the least the amount of inflation, which would keep the state-owned power utility EPS and the country’s energy system stable, adding that the price was not changed in the past two years. He said that in short-term electricity prices need to be increased, while in the medium-term the prices should be gradually increased to acceptable level. He also added that Serbia has to switch from coal, as the main energy source, to a much “greener” source. However, the switch, as well as the increase in electricity prices, will have to be introduced gradually, taking the socio-economic implications in the account.

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