At the end of last year, the state proposed to the Electric Power Industry of Serbia a single price of electricity for the economy of 75 euros per megawatt hour. This decision should be valid for the supply period until June 30, 2022, and as this deadline approaches, the public is increasingly mentioning that the current price is not sustainable in the long run and that additional price increases will follow.
The question is how much would the new, higher price of electricity cost the economy? Will companies be able to survive at additional costs or will this be a significant blow to their business?
As the president of the ITM system, Toplica Spasojevic, says in a conversation with Biznis.rs, a possible new price increase would be a reality caused by objective circumstances to which everyone will have to adjust. He also says that the state must still have the function of mitigating the price increase – “otherwise we will all have problems”.
According to him, this scenario occurred partly because the state and the Electric Power Industry of Serbia (EPS) were inactive in the past period, and that they should have relied more on domestic electricity production, primarily from hydro potential, wind energy, such as and solar energy which is more cost effective.
That is why he estimates that at some point both interested parties “fell asleep” – both the state and the economy. But he also adds that the economy is rational and that he will attribute any change in input to the price of final products. The state, on the other hand, missed certain opportunities.
“The state and EPS had the potential to invest and that had to be done, and the opportunity was given.” We had several large hydro projects that were not realized, and which would completely change the situation, “Spasojevic reminds.
According to our interlocutor, the production of electricity from hydro sources costs 20 to 30 euros per megawatt hour, and we have recently imported electricity at a price of 200 to 250 euros. In his opinion, that “proves the short-sightedness of the state”.
However, in addition to that, Spasojevic sees a chance in installing solar panels on the roofs, with the intensification and acceleration of the process of obtaining permits for companies that would deal with this business, as well as for the use of wind energy. At the same time, it would be a step towards resolving our obligations under international agreements such as the Paris Agreement and the Sofia Declaration, and the culmination of that process would be for Serbia to be a “carbon free” country by 2050. All this, he says, is a very demanding and challenging endeavor.
“In that process, which will last for ten or even 20 years, the state will have to be a shock absorber, so that the economy does not close.” So, if the price of electricity is 150 or 170 euros, I think that half of the economy will not be able to work “, our interlocutor points out.
According to Toplica Spasojevic, businessmen certainly have a conditional solution in the form of raising prices, but there is a problem if competitors from other countries do not do that, because we will lose the market. He also reminds that the price of electricity jumped last year, and that now we have a war in Ukraine which poses a danger to the supply of gas and oil, with an unenviable position of Serbia before the decision to impose sanctions on Russia.
According to him, it is now realistic for electricity prices to jump, but last year there was no justification for such a thing.
“I think that even then, energy transformation and switching to higher energy prices was being prepared. So, we entered a higher layer with prices to include some renewable sources, to include LNG (Liquefied Natural Gas), which has not been competitive with Russia so far, “Spasojevic emphasizes.
In the long run, Serbia, he says, is facing a great conversion from the existing thermal capacities, which we will have to completely forget by 2050 and switch to renewable ones. However, due to the war in Ukraine, the market has led to the fact that leading countries such as Germany are turning to thermal power plants, which is the case with Greece as well.
Despite such tendencies, Toplica Spasojevic says that the process of decarbonization awaits us, as well as that every detail must be determined when it comes to energy efficiency, which will save 20 to 30 percent of energy in households.
In addition, he reminds of the bills of the Ministry of Energy and Mining, which say that we can cover 10 gigawatts of energy if we install solar panels on the roofs, which, he adds, is equivalent to the energy produced in five Djerdap hydroelectric power plants.
“Legislation is going in that direction, a lot has been done, but it must be simplified and incentives must be given to companies and individuals,” Spasojevic concludes, Biznis writes.
