The Serbian Association of Renewable Energy Sources (RES Serbia) has expressed concerns for the future of RES sector in Serbia after the setting of the maximum purchase price for electricity produced by wind farms, which, due to the model of two-way premiums, could make investors decide not to take part in auctions, whereas finance institutions and banks could decide not to finance projects.
Serbian Government recently adopted the Decree on Market Premium and Feed-In Tariffs by the model of a two-way floating premium, which means that the state will give premiums to investors when the price in the market is lower than the one reached at an auction, while investors will give premiums to the state when the price is higher than the one achieved at an auction.
Subsequently, the Energy Agency of the Republic of Serbia (AERS) adopted the decision on setting the maximum purchase price for the purposes of auctions for electricity produced by wind farms. The maximum purchase price for electricity produced in wind farms with an installed capacity of more than 3 MW is 5.57 eurocents/kWh.
RES Serbia said that the set price is one of the lowest in Europe. For example, in Albania, a maximum price of 7.5 eurocents per kWh was set last week. The Association points out that representatives of investors and finance providers, members and partners of RES Serbia, are extremely dissatisfied with the set price, which brings into question the purpose and a positive outcome of the carrying out of the first auction which is planned for the end of 2021, or the beginning of 2022.
According to RES Serbia, the goal and the purpose of the setting of the maximum price were certainly not supposed to be such as to make it minimal and cheapest from the start, because investors should achieve the lowest prices at auctions.
Instead, the highest level was supposed to be set, which the investors must not exceed. It is obvious that this price is a consequence of a wrong approach and the misunderstanding of the purpose of the setting of a maximum price for the purposes of auctions. This price will certainly not have a stimulative effect in the market. With this kind of a two-way floating premium model and this kind of a maximum price, which is in essence a minimum price, it is certain that Serbia will no longer be an attractive market for investors. The Association believes that there has been a misunderstanding of the concept and that all the announcements of support to the green energy sector will truly be realized and that the relevant actors will understand the consequences of these decisions.
RES Serbia says that they expect an explanation from AERS and the publishing of the parameters used in defining the maximum price and adds that there is still room to reconsider the decisions and prevent the organization of unsuccessful auctions.
