Before the adoption of the Law on the Use of Renewable Energy Sources (RES), which would fully regulate this area, only a few articles in the Law on Energy were dedicated to renewable energy sources.
As the use of RES is of great importance for the Republic of Serbia, in addition to the fact that it is obliged to regulate this area because it is a member of the Energy Community, it was decided that the Law on the Use of RES will enter into force on March 30, 2021.
The regulation of the use of RES aims, among other things:
1. in the first place, reducing the use of fossil fuels and increasing the use of RES for environmental protection;
2. long-term reduction of dependence on energy imports i
3. creation of new jobs and development of entrepreneurship in that area
n order to achieve the stated goals and to attract investors in this sector, certain incentives have been prescribed that would contribute to greater and faster production of RES. Thus, the Law on RES foresees the following incentives that are implemented in a specific incentive period, namely:
The right to a market premium is acquired in the auction process conducted by the Ministry on the basis of quotas prescribed by the Government.
The auction process is initiated and conducted based on a public call and consists of three phases:
-The qualification phase is an elimination phase, in which the registered participants are selected based on the conditions prescribed in art. 19 paragraph 1 of the Law on RES.
-The bidding phase implies that the participants who were selected in the qualification procedure compete with their bids according to the criterion of which bid offers a lower market premium in relation to the maximum market premium, that is, a lower purchase price in relation to the maximum purchase price. Offers that exceed the maximum purchase price will not be considered.
-The last stage in the auction process is the selection of the best offer. The participants of the auction process are ranked depending on the offer they made, from the lowest to the highest offered price, and they fill the quota according to that order.
The market premium is a type of operational state aid that represents an addition to the market price of electricity that users of the market premium deliver to the market and which is determined in eurocents per kWh in the auction process.
-Users of the market premium sell the above-mentioned electricity on the electricity market.
-It can be acquired for all or part of the power plant’s capacity, which must amount to at least 70% of the power plant’s approved power.
-It is paid on a monthly basis for the electricity supplied by the power plant to the power system.
-In case it is acquired for part of the power plant’s capacity, the electricity for which the market premium is paid is obtained by multiplying the percentage of the power plant’s capacity that entered the quota with the electricity delivered to the power system during the accounting period.
-If it is determined depending on the reference market price, and the market price of electricity, which is the basis for calculating the reference market price, is negative, the market premium is not paid for the period of negative market price of electricity.
The incentive period lasts 15 years.
Feed – in tariff:
The feed-in tariff is a type of operational state aid that is awarded in the form of an incentive purchase price guaranteed per kWh for electricity supplied to the power system during the incentive period.
-It can only be acquired for small plants and demonstration projects.
-Demonstration projects are RES projects in which a technology is demonstrated as the first of its kind and represents a significant innovation that greatly exceeds the highest level of existing RES technology and has the status of an innovation project in accordance with the law regulating innovation activity.
-This characteristic distinguishes the feed-in tariff from the market premium.
-It is calculated and paid on a monthly basis.
-It can be acquired for all or part of the power plant’s capacity.
-The Ministry assigns the right to the feed-in tariff in the auction process based on the available quotas prescribed by the Government.
-We have already explained the auction procedure once in the part related to the market premium.-
-In the event that it is acquired for part of the power plant’s capacity, the electricity for which the feed-in tariff is paid is obtained by multiplying the percentage of the power plant’s capacity that entered the quota with the electricity delivered to the power system during the accounting period.
The incentive period lasts 15 years.
Buyer – producer:
-It can produce energy for its own consumption.
It can store electricity for its own needs.
-It can deliver excess electricity to the transmission system, distribution system, or closed distribution system.
-It cannot use incentive measures in the form of a market premium or feed-in tariff, nor have the right to a guarantee of origin
Taking over the balance responsibility:
The guaranteed supplier is obliged to assume the balance responsibility for the privileged producers who are in the market premium system. This duty lasts 6 months from the date of the merger of the organized intraday market of the Republic of Serbia with the single European organized intraday market or 30 months from the date of establishment of the organized intraday market in the Republic of Serbia, depending on which period expires first.
The privileged producer has the right to transfer the balance responsibility to another party responsible for the balance in accordance with the law.
The guaranteed supplier assumes balancing responsibility and bears the balancing costs for favoring producers who are in the feed-in tariff system until the end of the incentive period, for power plants whose approved power is less than 400 kW, that is, from January 1, 2026, for power plants whose approved power less than 200 kW.
Priority access to the transmission or distribution system:
The operator of the transmission or distribution system is obliged to prioritize electricity produced from renewable sources in demonstration projects, in power plants with an approved power of less than 400 kW, i.e. for power plants that are connected to the grid after January 1, 2026, with an approved power of less than of 200 kW, regardless of whether it is in the incentive system.
This does not apply if the operational safety of the transmission or distribution system is threatened. If this is the case, the operator is obliged to inform the Agency for Energy and the producers whose work is affected by the measures taken, as well as to inform about the measures that need to be taken in order to prevent possible future restrictions.
Finally, it is important to note that the Amendments to the Law on Value Added Tax prescribes a more favorable calculation of VAT for customers – producers of electricity.
Namely, the Law on Value Added Tax stipulates that when an electricity supplier carries out sales to a producer of electricity from RES, the basis is the amount of compensation for used electricity determined in accordance with the law regulating the use of RES, excluding VAT.
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