With its goals of environmental protection and mitigating climate change, the Law is mostly aimed at stimulating new investments in RES and increasing the share of renewable sources in the total energy produced by creating a modern, investment-friendly legal framework, which will enable energy transition and further development of the Serbian RES sector.

What’s new?

The Law sets forth an explicit ban on the construction of hydropower plants in protected areas, acknowledging the adverse impact of derivative small hydropower plants (SHPPs) on the environment. However, the Law still leaves room for the government to allow the construction of hydropower plants in protected areas subject to strict statutory conditions.

To encourage further investment in the sector and as a steppingstone towards fully market-driven and zero-subsidy projects, the Law provides for two incentive systems: a market premium; and a feed-in tariff for some small projects. The introduction of a market premium system as an incentive (to be performed through an auction process) is one of the major steps forward, primarily enacted with the aim of boosting the developing Serbian RES sector, while simultaneously making the development of RES projects more cost-friendly and predictable than ever before.

Defined as a form of operational state aid, the market premium is a supplement to the market price of electricity that market premium users deliver to the market and is expressed in Eurocents per kWh in the auction process. It can be acquired for all or part of the power plant’s capacity and is paid monthly for the electricity the power plant delivers to the grid. The right to a market premium is acquired in the auction procedure conducted by the Ministry based on available quotas prescribed by the government.

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