Serbia, Investors in wind farms and energy ministry, the issue of incentive tariffs

16. November 2012. / News Serbia Energy

Investors in renewable energy sources are eagerly waiting for the state to finally pass a new regulation that will define “feed-in” tariffs. According to information from the Ministry of Energy, the incentives for the production of electricity from renewable energy sources will be changed, but officials do not want to elaborate on what specific changes would happen. SEWEA has its own opinion but also the Serbian Energy Minister Ms.Mihajlovic. Alstom offers its turbines.

– Some of the countries in Europe completely abolished the “feed-in” tariffs, because it cost far more than what the state can accept, and many countries have reduced the “feed in” tariffs. In Serbia, the “feed in” tariffs are not low,  for the wind farms they are 9.5 euro cents per kWh, and for the solar energy from 25 to 27 euro cents. The new government has realized that it is in an economic crisis as well as the whole of Europe. We started to question the amount of “feed in” tariffs. Prices for some renewable energy sources can be higher, for example, biomass, and in some places it may be lower – said Zorana Mihajlovic, Minister of Energy at last night’s gathering of businessmen from Slovenian Business Club.

Mihajlovic said that the new list of “feed-in” would be published before the New Year, and the ministry will strive to meet the investors’ interests, but the interests of the state “must come first”.

– Now, we are doing research, and we have engaged two consultants from the EBRD and IFC, precisely to determine what the real situation is, and to avoid comments that we have made changes because of politics or something else. We want to meet investors, so their planned investments are really paying off, but on the other hand we have to take into account the state’s interest because it is not easy to allow high “feed-in” tariffs.

The Wind Energy Association SEWEA, whose members are “Continental Wind Partners”, “Energowind”, “MK Fintel Wind”, “Kelag” hope that “feed-in” tariffs will remain unchanged, at least when it comes to wind power .

– We are concerned that new regulation has not been adopted yet, but we are optimistic. We expect that for the wind farms “feed-in” tariffs of 9.5 euro cents will remain the same, as well as the guaranteed period – says Maja Turkovic, from SEWEA.

After the announcement of the Minister Mihajlovic that these tariffs will be reviewed some investors have announced withdrawal from the Serbian market.

Mark Crandall (Mark Krendal), president of “Continental Wind Partners” (CWP), said there is a possibility that the company withdraws from the construction of a wind farm in Kovin, if they reduce the “feed-in” tariff for purchase of electricity. He explained that this could happen in case the foreign investment banks estimates that the project is not viable and refuse to issue loans.

– It’s not about whether CWP decides whether or not to give up. Our company will invest 30% of the project value in the form of equity, which is about 90 million. For the remaining 70%, or about 210 million Euros, we’ll take a loan from international banks – specified Crandall.

Experts from the energy sector agree with the Investor that incentives for the production of electricity from renewable energy sources should not be changed.

– “Feed-in” tariff is not as stimulating – at the level of the cost of production. Probably there will not be any changes in the “feed-in” tariffs, even though other states in the neighborhood changed their prices. For investors, administrative barriers are a big issue, as well as the legislation which does not provide investment security – said Miodrag Mesarovic, general secretary of the National Committee in the World Energy Council and advisor to the “Energoprojekt Entel” .

Companies that manufacture equipment for renewable energy sources are also interested in these new incentives for production of electricity .

– We are interested in what is going on with the movement of “feed in” tariffs, because it determines the level of investment in this area. Price in Serbia is not bad when you look at the situation in Europe and the world, but a period of 12 years is not absolutely favorable to investors. In other countries that have much more installed capacity the period is 20 years. If you reduce the price or shorten the period of guaranteed prices, investors will need to assess whether their investments are profitable or there are markets where they could invest their money better- said Miodrag Jelisavcic, general manager of the company “Alstom” in Serbia for “eKapija”. He added that the turbine “Alstom” ECO122, which is in the process of certification, is ideal for conditions in Serbia, and in particular for the wind in the Banat.

The first windmills in 2013?

Although setting up of wind farms has been announced for years, not a single windmill started spinning in our country.

The Serbian Wind Energy Association points out that members of the association are ready to set up the first wind farms next year.

– Electricity from wind farms of 300 MW could be obtained by the end of 2013, because wind farms are installed quickly – says Maja Turkovic, from SEWEA and adds that investors have been delayed because a contract for the purchase of electricity from the privileged producer did not get signed and without it they could not get any loans from banks.

Members of SEWEA have asked the ministry to index the “feed-in” tariffs to the rate of inflation in the euro zone, and not in our country for them to be able to finance wind farms.

Many companies that are interested in investing in wind farms await further moves from the state in order to have a real picture of our market.

Italian company “Gascom Renew”, which has been operating in our country since April this year under the name “Gascom Balkans”, has started the construction of a solar power plant near Kursumlija and announced investments in four other similar facilities across Serbia, as well as investments in biomass power plants. However, although the Italian company invests in wind farms and hydro power plants, they say for our portal that they have no specific projects in Serbia in these segments of renewable energy, but they are considering the business climate.

– We are getting informed about the possibility of investing in wind farms in Serbia however, for the moment we do not plan such investments. There is a series of permits issued, but not  a single wind farm projects has been implemented yet. We will wait with investments in wind energy, until we can clarify what the problems are. Also, we are considering the construction of mini hydro power plants – said Ermanno Friso, manager for projects in Serbia of “Gascom” .

He believes that the situation in the energy sector in Serbia in 2013 will be similar to this year’s situation.

– We are sure to continue investments in Serbia next year. If current “feed-in” tariffs remain unchanged in the next year we’ll be very happy.

Our country is bound to increase the share of renewable energy in total energy consumption from 21.2 to 27% by 2020, and according to the announcements from the investors a large part of it could be from wind energy.

Source Serbia Energy Magazine

Download as PDF :

Download PDF