Serbia, Is 150 euros per MWh a realistic price for electricity for the economy?

, News Serbia Energy

The government’s recommendation that the Electric Power Company of Serbia increase the price of electricity for the economy from 75 to 95 euros per megawatt-hour (MWh) will have a major impact on all economic flows, according to businessmen. In an interview with Biznis.rs, the president of the ITM system, Toplica Spasojević, points out that energy is an input that goes into everything that is created, so the proposed increase in electricity for the economy will be felt by everyone in their budgets.

“The survival of industrial enterprises that consume a lot of electricity will be questioned.” I think the most important issue is future investments, because if you can’t count on relatively cheap energy inputs, for which we were recognized by foreign investors, the question is what will happen in the future. The inflow of investments, which last year was almost four billion euros, maintained our stability, budget and employment. If there is no such thing, everything will be much more difficult”, believes Spasojević and adds that we have to maintain the level of investment, which depends a lot on the price of energy sources and their availability.

That is why the question of the competitiveness of our economy arises, because the higher price of electricity is a brake on faster economic growth, especially of export-oriented companies.

“The increase in the price of electricity is an inevitability that has affected the whole of Europe. It is very important how much a country will do to help its economy, because in our country there are several factors that have influenced the increase in prices. The first is the global crisis and the significant import of electricity at historically high prices, from 350 to 600 euros per MWh. Another question is whether we in Serbia have done everything we could to produce electricity and not import it. The reasons are numerous: insufficient production, non-maintenance of mines, lack of investment, huge losses in transport, unpaid bills at the level of 13 to 15 percent and in normal countries it is up to five percent. Instead of becoming net exporters through investments in the last 20 years, unfortunately, what we had has led to the fact that we now have to import electricity, and at such high prices”, warns Toplica Spasojević.

Our interlocutor suggests that the state urgently make an investment plan in the electricity industry, because the current situation will last a long period of time.

“At the state level, it is necessary to start investments in EPS as soon as possible, because they last three to five years on average.” Hydropower plants, in compliance with legal procedures, wind and solar parks. Companies should be maximally stimulated to switch to solar energy, and private companies and private consumers should also be financially supported. Maybe the price of electricity on the market will not be 600 or 700 euros, but my forecast is that it is realistic that it will be around 150 euros per MWh, which is still very high compared to last year”, Spasojević assesses.

He warns that he can guess from previous experiences that now companies will try to incorporate new obligations into the price of products, which will start a spiral of inflation.

“The influence of the price of electricity on the value of the final product depends on the industry and amounts from two to over 10 percent.” We will have another blow to inflation, as we should expect new price increases, including oil and gas, as well as labor costs. It is very important that basic things such as energy are kept at a tolerable level for as long as possible”, concludes Toplica Spasojević, Biznis writes.