Focus on Energy, 2010 - Karanovic & Nikolic

of investment in the RES, including special energy prices, tax incentives, customs incentives and other.Except for the general list of incentives which may be granted to the qualified producers, the Energy Lawdoes not provide any further provisions which would regulate in detail the incentive schemes for producersusing RES.Thus far, the only incentive provided to the qualified producers is the feed-in-tariff provided under thelong-awaited Government Regulation on the Incentives for Investment in the Production of Energy fromRenewable Energy Sources in Combined Heat and Power Plants (the “Incentives Regulation”) 5 .Under the Incentives Regulation, qualified producers of energy are entitled to conclude a 12-year contractwith a supplier of electric power (i.e. EPS) for the sale of electricity under the fixed prices prescribed by theIncentives Regulation. The Incentives Regulation sets a scale of guaranteed prices for qualified producers,depending on the type and the installed power of the facilities for the production of energy from renewableenergy sources.The electricity supplier, on the other hand, is required to conclude the contract with the qualified producer,at its request, within 30 days of the submission of such a request. Other terms of this contract are notdefined by the Incentives Regulation. It seems that the Regulation leaves these obligations to the electricitysupplier who should develop a model agreement for use when contracting with qualified producers(presumably to be used for each qualified producer) and then submit it to the MEM for its approval.On the other hand, the supplier is entitled to the compensation for the costs purchasing the electricityfrom the qualified producer. These are calculated in accordance with the methodology established bythe Incentives Regulation. An EPS is entitled to compensate these costs through the price of electricityto the tariff consumers. This essentially means that the final customers will eventually end up paying forthe subsidy.The regulatory framework for RES is by no means complete. Serbian energy laws and regulations containno rules which would guarantee it priority over other non RES producing qualified producers in relationto access to the transmission system. Also, while the Energy Law provides for the general possibility thatqualified producers be granted incentives which would stimulate investment in this sector of energy (suchas tax incentives and other), except for the feed-in-tariff, relevant Serbian laws and regulations provideno other incentives for the producers using RES. In fact, it is not clear from the Energy Law who shouldprovide these incentives and when these incentives should be provides it is also unclear under what termsthey should be provided.31FOCUS ON ENERGYSubsidies available under current regulations are available only to producers of electric energy, but thereare no incentives for other sectors, such as for example, the production of bio-fuels, which is an obligationwhich Serbia assumed through the Energy Treaty providing the obligation of the signatory states to implementthe EU Directive on the Promotion of the use of biofuels and other renewable fuels for transport.Serbian energy laws and regulations do not provide for a system of minimal mandatory quotas regardingthe participation of RES in the total supply of energy by energy producers, nor is there an accompanyingsystem for the issuance of certificates of origin or the so called “Green Certificates”.Serbia has not yet established a system to identify locations for the production of energy from renewableenergy sources. Accordingly, such locations are not included in relevant spatial planning acts. There areno licensing systems for the producers of equipment relating to the production of energy from renewablesources. The incentives for investment in this area are limited only to the feed-in tariff provided by theIncentives Regulation, but there are no incentives such as tax breaks under the Energy Law.5 The Incentives Regulation came into force on 1 January, 2010 and will remain in force by 31 December, 2012.