Although it may not seem like it at first glance, the adoption of new quotas for solar and wind power plants in Serbia, which are lower than the maximum prices offered at last year’s auctions, shows the government’s readiness to stimulate the green energy market. This creates an environment for healthy competition among potential suppliers, says energy expert Mr. Nebojša Lapčević, M.Sc. Electrical Engineering.
Although the decision by the Serbian government to reduce auction prices for solar and wind power plants triggered strong reactions from the Renewable Energy Sources Association, since the new price proposals are significantly lower than the maximum prices offered at last year’s auctions—105 euros per megawatt-hour (MWh) for wind and 90 euros for solar—energy expert Mr. Nebojša Lapčević explains that this is actually a result of the government’s careful approach to stimulating the green energy market.
According to the Renewable Energy Sources Association (OIE) of Serbia, the decision adopted by the Serbian government also determined that the maximum auction price for wind power plants in upcoming auctions for market premiums will be 79 euros per MWh, while for solar plants it will be 72 euros/MWh.
To remind, at last year’s auctions, the lowest accepted price was 64.48 euros per MWh for wind power plants, and the highest was achieved for solar plants at 89.8 euros per MWh.
Lapčević says that due to the complexity of the issue, it is difficult to pinpoint specific reasons for the proposed quotas.
Government’s decision to stimulate the green energy market
“Although it may not seem that way at first glance, the adoption of new quotas for solar and wind power plants in Serbia, which are lower than the maximum prices offered at last year’s auctions, actually shows the government’s willingness to stimulate the green energy market. At the same time, a clear signal is being sent that the focus in the coming years will be on developing renewable energy sources, as well as projects that will be financially sustainable and profitable. This creates an environment for healthy competition among potential suppliers,” says Lapčević.
He adds, “It should also be noted that the prices of so-called ‘hardware’ for this type of production are constantly declining on the global market, which should (along with the reduction in production costs) send a positive signal to future investors. All of this is in direct correlation with modern European trends, such as reducing carbon dioxide (CO2) emissions and increasing the share of renewable energy sources in the country’s energy production portfolio.”
When discussing whether and how this government decision affects renewable energy producers and whether it could lead to a reduction in new investments in renewable energy, Lapčević says that, theoretically, all successful renewable energy investments (including solar and wind) require financial stability and potential predictability.
“If the new quotas for solar and wind power plants are set below the maximum prices from previous auctions, it could somewhat reduce the attractiveness of these projects for investors and potentially encourage interested parties to conduct new cost-benefit analyses. Long-term contracts could also be one solution. However, what is most important is that the conditions are clearly, transparently, and precisely defined, so the market competition can begin,” explains Lapčević.
Proposed quotas and prices still attractive
Serbia plans to ensure that by 2030, 45% of its energy production comes from renewable sources. The goal is also to produce an additional 3.5 gigawatt-hours of electricity from wind and solar capacity by that time.
“My opinion is that the proposed quotas and prices are still attractive enough and in line with the current situation in the electricity market. The proposed conditions should be appealing to future investors, which I hope the upcoming auctions will confirm. It is crucial that the process is implemented transparently, as quickly as possible, and that Serbia continues its policy of aligning its energy sector with modern European trends in energy,” says Lapčević.
Last year, the first round of auctions for market premiums was successfully completed. These were the largest auctions ever held in the region. Conditions were created for over 715 megawatts of new capacity from renewable energy sources and more than one billion euros in new investments.
This summer, Serbia had around 390 plants connected to the grid using renewable energy sources, with a total capacity of 753 MW. Another 750 MW of new renewable energy capacity is under construction. By 2026, Serbia is expected to have 1,500 “green” megawatts connected to the grid, 33 times more than in 2012, said the Minister of Mining and Energy of Serbia, Dubravka Đedović Handanović.
