Serbia Energy Market Profile Report 2012: unbundling, regional coupling, electricity and gas market/trading, power generation and RES investment opportunities

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Energy market in Serbia is in the incentive phase of market unbundling. TSO unbundling and certain level of market opening is already achieved. Contracted obligations of Serbian state and energy stakeholders, as part of EU reform process, are projected to be completed until 2015. Price increase, division of production, transmission and distribution including the market liberalization measures are projected to be completed in 2013/2014. Complete market opening is planed for beginning of 2015.

The market report covers all energy market areas: market reform, actors, regulations and legislation, mechanisms for financing, projects overview and analysis and focuses on business opportunities and potentials for companies entrance and business development.

Serbia electricity market already exists, currently more focused on cross border exchange ( due to the current electricity price) but industrial consumers are obliged to take appropriate measures ( procurement tools and planning ) for further market opening in 2013. Considering the fact that most of the bigger industrial consumers are FDI companies, energy procurement planning (gas, electricity) is good practice in their domicile countries, they will surely initiate this process. Another potential advantage for market entrance and expansion is the fact that there are many German origin production companies in Serbia and that such trend is increasing.

Renewable energy developers ( bigger projects and bigger projected output capacities), also most of them are FDI, are exploring ways and channels to secure their energy transfer and delivery to final target markets in EU.

Regional markets are more or less with same sector related environment, unbundling and full liberalization is expected as per contracted obligations within EU energy regional market integration process.

Serbia is dependant on coal fired power generation, thermal power plants producing more than 60% of electricity, hydro power plants are producing 35-40% of remaining electricity consumption. RES suppliers and overall green energy balance is expected to increase the overall country energy balance for another 5-10% in coming years, dominantly hydro and wind power.

Lignite coal supply, estimated as quite significant for period of 50 years are located in Kolubara and Kostolac area, from where they supply power plants. Project for coal pits expansion and further exploration & supply of coal from Kolubara is already initiated with financial support of EBRD which guaranties the coal supply.

Projected industry demand for electricity is already a huge issue. Serbian energy strategy announced several big power gen projects, two new power plants in total output power of 1400 mw, coal fired power plants, both will be financed under certain strategic financing model ( PPP model) with Italian Edison GDF and Chinese Consortium.

German RWE Inoggi also entered a strategic partnership project with EPS ( Electric power of Serbia) for 350 MW hydro projects.

Serbia is dependant on gas imports, major supplier is Gazprom who also overtook Serbia Oil Industry company( major shareholder) South Stream project will also influence Serbia as gas relay location for all West Balkan region markets.

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