Serbia: New Energy Law Adopted in Serbia

On 29 December 2014, the Serbian Parliament adopted a new Energy Law (OJ no 145/2014) in the short and urgent procedure establishing the legal framework necessary for the full market opening as of 1 January 2015. Foremost goal of the Energy Law is full implementation of the third energy package in Serbia.

Apart from the amendments regarding the electricity wholesale and retail market, the Energy Law also introduces significant framework changes in the field of energy grids and renewable energy sources. In regard to electricity wholesale and retail market the term Public Supplier has been replaced with the term Guaranteed Supplier with the possibility that regulated prices for public supply will be abolished after May 2017. From July 2015, the right on guaranteed supply can be granted only to small and household customers with annual electricity consumption not exceeding 30.000 kWh. In terms of grid development and in line with Article 10 of the Directive 2009/72/EC, the Serbian Energy Agency (SEA) is appointed as a body in charge for certification of Transmission System operator (TSO). Furthermore, in terms of connection to the transmission grid, in Article 118 the Energy Law allows investors to construct tailor-made connection points on behalf of TSO. Parallel with existing distribution system operators (DSOs) new Closed Distribution System Operators may be established in free or economic zones in order to distribute electricity towards system operator or its affiliated companies without possibility of distributing to the household customers.

The Energy Law for the first time provides for priority dispatching of electricity generated from renewable energy sources and also for the obligation of TSO and DSOs to ensure priority access or RES producers to the grid and off-take of total generated electricity, unless the safety of the system operations is endangered. The Energy Law brings forward substantial changes with regard to privileged producers. Articles 70 and 71 of the Energy Law introduce three special categories of electricity producers: (i) privileged producer; (ii) temporary privileged producer; (iii) RES producer (using part of RES in overall production). The first two categories are entitled to enter a Power Purchase Agreement (PPA) and the third one is only entitled to acquire guarantees of origin. Furthermore, in accordance with Article 71, the validity of the temporary status of privileged producer is extended from two to three years (except for solar power producers for witch the time remained one year) with an option to be extended for another year with presentation of evidence that facility is constructed. Unlike the previous law, the Energy Law provides for only one model of PPA whose mandatory content is set forth in Article 76.

Temporary privileged producers may sign the PPA in which case it would be an agreement with delayed effect (under Feed-in Tariff applicable on the date of the status acquired). The Energy Law is expected to bring more investments in the RES sector in the next few years due to flexible deadlines and bankable PPA.

by Vuk Stankovic

Rokas - International Law Firm