Despite facing numerous challenges, Serbia remains committed to decarbonizing its energy sector, as demonstrated by amendments to the Energy Law and significant investments in renewable energy sources. We spoke with Rade Mrdak, Advisor to the Minister of Mining and Energy for Renewable Energy Sources, about the significant steps Serbia has taken in its energy transition and its plans for the future.
Q: Amendments to the Energy Law were adopted recently, but the public is still not fully informed about the details. What are the most important new provisions, and how will they affect citizens and the economy?
A: The amendments to the Energy Law represent a significant step towards modernizing our energy sector and aligning it with European regulations. Firstly, the decades-long ban on building nuclear power plants has been lifted, opening the possibility for nuclear energy to be reconsidered as a legitimate and stable source, particularly important in the decarbonization process. Furthermore, key European regulations related to electricity market integration have been transposed into national law. This sets the conditions for linking our market with neighboring and broader European markets, which means greater competition, more secure supply, and better conditions for end-users.
It is also important to highlight the introduction of European mechanisms for crisis cooperation, such as rules on risk preparedness and emergency coordination. In times of energy instability, such regional coordination means we will not be isolated but part of a wider energy security system. The law also recognizes new roles for consumers. The concept of the active customer and citizen energy communities has been introduced, encouraging more active public participation in the energy transition. Additionally, for the first time, the law defines the concept of energy poverty and introduces protection mechanisms for vulnerable groups, giving it an important social dimension.
Finally, the law introduces a legislative framework for the use of hydrogen and recognizes the potential of biomethane as a key factor in decarbonizing the gas sector. All these changes contribute to a just and sustainable energy transition while ensuring a secure and reliable supply for citizens and businesses.
Q: At the Kopaonik Business Forum, you announced that Serbia plans to reach 3.5 GW of capacity from renewable energy sources by 2030. What are the main steps and strategies outlined to achieve this goal?
A: Serbia is already well on its way to achieving this goal, with the key strategies being:
Private investment through auctions – through the auction system, we plan to activate at least 1,300 MW of new capacity. The first two auctions have already secured 1,200 MW, which is significantly more than the planned 850 MW for those two rounds. This approach ensures competitiveness and encourages new private investments in the renewable energy sector.
EPS as a key player – Elektroprivreda Srbije (EPS) has a central role in greening the energy sector. We are currently working on major projects, including 1,000 MW of self-balancing solar power plants with a 200 MW battery storage system, as well as the Morava and Kolubara solar plants, which have a combined capacity of 120 MW. The first wind and solar capacities are also nearing completion, such as the Kostolac wind farm (66 MW) and the Petka solar plant (10 MW).
Citizen and business capacity – we also count on installations by individuals and businesses. Currently, we have approximately 95 MW of private production, and we estimate that this could increase to at least 300 MW by 2030.
By combining these factors, along with potential commercial projects and a third auction round, we believe we will achieve the goal of 3.5 GW from renewable sources by 2030.
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Q: The second round of renewable energy auctions has been successfully completed. What is your assessment of the results, and when can we expect the third round of auctions? Also, are higher quotas planned compared to previous ones?
A: The second round of renewable energy auctions was very successful. A total of 645 MW was awarded across 10 new power plants, significantly exceeding the previous quotas. It is imperative to note that this round saw the successful implementation of a mixed auction model for the first time, where not only the price but also the investor’s readiness to offer capacity to the guaranteed supplier for public supply needs was taken into account. This approach ensured that all electricity supported through these auctions remains on the domestic market, further strengthening Serbia’s energy security.
The bids were highly competitive, with prices ranging from 53.59 to 68.25 euros/MWh for wind farms and from 50.9 to 58 euros/MWh for solar power plants, indicating strong interest and market seriousness. We also managed to attract investors not only from Serbia but also from countries such as China, Spain, and France, which further confirms that Serbia has laid the foundations for a long-term and sustainable energy transition.
The third auction round has not yet been officially announced, but we can expect it to proceed in line with our energy transition targets. As for quotas, we are guided solely by the three-year incentive plan, which will determine future auction quotas.
Q: With increasing renewable capacity, there is a growing risk of the cannibalization phenomenon, where surpluses of green energy lead to falling prices. How does Serbia plan to respond to this threat and protect market stability and investment?
A: Serbia is not yet seriously affected by market cannibalization, but early signs of this phenomenon are already emerging, particularly during weekends and days with a high number of sunshine hours when system demand is low. At such times, there is a surplus of electricity from solar power plants and a short-term drop in prices, which could impact the sustainability of investments in renewables.
The most effective way to mitigate the effect of cannibalization at this stage is by increasing the flexibility of the power system, primarily through the development of storage capacities. Serbia has already recognized this need and, through recent amendments to the Law on the Use of Renewable Energy Sources (ZKOIE), has introduced an obligation for investors who do not wish to wait for grid connection to provide storage capacities equivalent to 10 percent of their plant’s installed capacity. This encourages the development of infrastructure that supports system balancing.
Furthermore, the construction of large pumped-storage hydroelectric plants is planned, primarily the Bistrica RHPP, with a capacity of around 650 MW, which will be a key facility for balancing production from large new RES capacities and ensuring energy stability.
Alongside this, we are developing a project for a large solar park with a capacity of 1 GW and 200 MW of battery storage. These investments will enable Serbia to use surplus solar energy during critical hours after sunset, when demand spikes, directly alleviating the effects of cannibalization.
Of course, storage is not the only solution. Flexible consumption, meaning increased consumer involvement in system balancing, can also help mitigate this effect. Work is already underway on this, and further efforts will continue through the development of active consumers and aggregators, who will play a key role in adapting consumption to market conditions.
Q: At recent press conferences, you noted that the Energy Development Strategy for the first time explicitly recognizes the importance of hydrogen. The Energy Law amendments also foresee the adoption of a special program for its development and use. What is the outlook for hydrogen in Serbia, and what are the Ministry’s next steps?
A: The Energy Development Strategy to 2040, with projections to 2050, for the first time explicitly recognizes hydrogen as an important part of Serbia’s future energy system. The document outlines the key development directions, and the next step is to draft a dedicated program for the development and use of hydrogen, which will elaborate on the strategic goals, propose concrete measures, and set out an implementation timeline.
The Ministry of Mining and Energy has already taken significant steps in this direction. Technical assistance has been activated through the EU’s IPA program, and the process is underway to obtain European Commission approval for comprehensive regulatory support. This support will enable the preparation of all necessary regulations, standards, and planning documents required to integrate hydrogen into Serbia’s energy and industrial systems.
Currently, the hydrogen market in Serbia remains small and is in its early stages of development. It is mainly produced by companies like NIS and Messer for their own use, primarily from fossil sources. Technologies for producing, storing, and distributing hydrogen, mostly green hydrogen, remain very expensive, limiting their wider application.
That is why the current focus is on creating regulations that will enable pilot projects and commercial development when conditions are right, as well as encouraging the domestic scientific community and innovation sector to engage in developing technologies that could secure Serbia a place in this value chain.
In the long term, Serbia sees hydrogen as an important tool for decarbonizing industry and transport, as well as for balancing a system with a high share of renewables. However, this is a process that requires a clear vision, gradual development, and international cooperation- and that is precisely the path we are taking.
Q: Besides solar and wind, which are currently the dominant topics, what are the Ministry’s plans regarding other renewable sources such as geothermal energy or biomass? How does Serbia plan to diversify its energy mix in the coming period?
A: Biomass for heating, especially wood biomass, remains the most prevalent renewable energy source in Serbia and accounts for more than half of total RES consumption in the country. It is mainly used in households for individual heating, but it is increasingly recognized in district heating systems.
In this context, the Ministry, together with international partners, particularly with support from KfW Bank, has already implemented projects to convert heating plants from fossil fuels to biomass in several municipalities, such as Priboj, Mali Zvornik, Novi Pazar, Majdanpek, and others. These projects have significantly reduced harmful gas emissions and improved energy efficiency in local communities.
Additionally, the Ministry has adopted a Rulebook on technical and other requirements for solid fuels from wood biomass placed on the Serbian market, which is an important step in consumer protection. Standardizing the quality of pellets, briquettes, and firewood enables households to know what they are purchasing, get more energy per unit of volume, and achieve significant savings during the heating season.
Regarding biogas and biomethane, the Ministry is working on establishing a regulatory framework for developing the renewable gas market. The focus is on introducing certification, defining sustainability, and creating conditions for injecting biomethane into the existing gas grid. These sources will be significant in rural and agricultural regions.
The goal is for Serbia to develop a diverse and more resilient energy mix by the end of the decade, incorporating a wider range of RES technologies, with biomass, as a locally available and cost-effective resource, playing an essential role.
Interview by Milena Maglovski
