Our goal is to have at least 40% of energy coming from renewable sources by 2040.
According to the Deputy Prime Minister and Mining and Energy Minister, Zorana Mihajlović, energy in Serbia has been dormant for a long time, but it did not stagnate but rather regressed. Following her appointment as Mining and Energy Minister, she announced major reforms and investments in this area. We talked with Minister Mihajlović about that, as well as about the new laws and plans for the mining and energy sectors.
What is the current energy situation in Serbia like and what is your starting position for reforms?
Energy has been dormant for a long time, and when energy is at a standstill, it causes many problems and adversely affects the security of supply. That is why this year is, in many ways, crucial for Serbia’s energy future. On the one hand, projects, that will be implemented fast, have been launched which should ensure energy security for the country, while, on the other hand, we are adopting a new regulation and starting to draft strategic documents that will give a new direction to our energy policy. Today, Serbia needs an investment boom in the energy sector, i.e. investments in the amount of billions of euro in the next few years in order to catch up with other European countries that have invested faster than us, and further advanced in decarbonisation, increasing energy efficiency and facilitating greater use of renewable energy sources. Our goal is to have at least 40% of energy coming from renewable sources by 2040 and 50% by 2050.
In addition to the new laws we are passing, this year we are also starting to draft strategic documents. They focus on the integrated national plan for climate and energy until 2030, which should be completed by the year-end, as well as the new strategy for energy development until 2050.
Earlier this year, you announced major reforms in the mining and energy sectors. What exactly will they entail and what will be the focus of investments?
The new investment plan, that we are putting together, includes projects that cover all segments of the sector worth close to 16 billion euro and reflects our strategic goals. Nothing more can be done in the field of energy and mining and no decision can be made without involving the Ministry of Environmental Protection and without fulfilling the highest environmental protection standards. In terms of electricity production, the planned investments will amount to around 6.6 billion euro, in mining around 3 billion euro, and around 3.4 billion euro of renewable energy resource projects, primarily in solar power plants and wind farms. The plan is also to invest over half a billion euro in the gas sector, more than 200 million euro in the crude oil sector, and about 400 million euro in the thermal energy and energy efficiency sector.
The investment plan directly relates to the energy transition that Serbia has been undergoing, because our energy security will depend on the construction of new large and medium-sized hydropower plants, gas power plants, and the use of RES. That is why this plan is both a plan for green energy and for green Serbia, which bases its future development on clean energy and is focused on development that is climate neutral.
We will soon put all these projects in one place, in the project book, where all interested investors will be able to see what our priorities are, which public investments we plan to make, and where we expect active participation of the private sector.
In addition to legislative changes, reforming the most important public energy companies has begun, with the approval of reorganization plans for Srbijagas and the Electric Power Industry of Serbia (EPS). In the electric power industry, the production of electricity is already separated from the management of the power distribution system. It is also important to mention that in the gas sector the transmission system operator has become independent from Srbijagas, which had to be done in line with the relevant Serbian and European laws.
This year is crucial for Serbia’s energy future.
Four new mining energy laws have been passed. What will these laws change?
Two of those laws are completely new – one of them is the law that regulates the use of RES, which will, for the first time, allow all of us who consume electricity to become its producers. By installing solar panels on the roofs, each of us will be able to produce electricity for our own needs, and thus reduce our electric bill. For the average household, a 3 kW solar panel costs between 2,500 and 3,000 euro and it only takes 8 to 10 days for the investment to pay for itself after which the household will start saving both energy and money. We will also simplify the procedure to the maximum and it will take only several steps to complete it.
These steps include obtaining technical documentation, getting approval to commence works instead of obtaining the standard building permit, the installation of panels and two-way electricity meters and signing a contract with Elektrodistribucija Srbije and the supplier. Also, the new law on the use of RES introduces market premiums instead of the current feed-in tariffs, which means that we will have more competition and lower costs for individuals and businesses. Another important novelty is that this law also introduces a ban on the construction of hydropower plants of any type and power in protected areas.
With the Law on Energy Efficiency and Rational Use of Energy, we want to raise energy efficiency to the level of a national project, because Serbia today consumes about four times more energy than the EU average for the same unit of GDP. The most important novelty is the establishment of the Directorate for Financing and Facilitating Energy Efficiency that will work under the Ministry of Mining and Energy, which will make it easier for people to obtain subsidies for the replacement of windows, doors, get front wall insulation and heating systems in their households. They will have up to 50% of their costs covered through a subsidy from their local authorities and will have to pay the 50% themselves. Incentives will be allocated through public calls for citizens, and they also could be used for the installation of efficient biomass and gas boilers, which should help reduce the pollution that comes from individual fireplaces.
After these measures are implemented, energy in Serbia will no longer be the same. Green Serbia is our vision, and all of us, as citizens of this country, can contribute to its realization while working in their best interest.
In addition to these two new laws, amendments to the Law on Energy are being adopted, which are important for harmonization with EU regulations and security of energy supply, as well as the amendments to the Law on Mining and Geological Research.
Serbia bases its future on clean energy and climate-neutral development.
When can we expect digitalization in the mining and energy sector to take place, i.e. the implementation of e-energy and e-mining?
NALED has declared an electronic building permit, created by the Ministry I helmed before, as the reform of the year. Thanks to this reform, Serbia advanced from 186th to 9th place on the World Bank’s Doing Business List in the segment of building permits.
When I took over the Ministry of Mining and Energy, I saw that many permits and notices have been waiting for more than six months to be issued. Therefore, we have decided to digitize procedures through amendments to the relevant law and the adoption of new laws, so we could also minimize the time needed to obtain all kinds of permits, consents and other documents issued by the Ministry. In addition to creating a legal basis, this year, we will work on securing finances and procuring software for the implementation of these reforms, and we believe that next year we will have e-mining and e-energy up and running.
Also, the amendments to the Law on Mining and Geological Research have created the foundation for the introduction of electronic business in this area, which will contribute to more transparent and efficient procedures. The approval procedure has also been simplified and shortened from the current 150 to an average of between 15 to 20 days.
What are Serbia’s goals when it comes to connecting with the region in the gas sector and diversifying suppliers?
The main goal in the gas sector is to have a safe energy supply. To have that, we need to diversify not only gas routes but also suppliers. Earlier this year, Serbia got an additional gas supply route, but our goal is to diversify sources and to be linked via gas interconnections with all neighbouring countries. Serbia-Bulgaria, i.e. the Niš-Dimitrovgrad gas pipeline, is the first interconnection we are going to build. The construction should start his year and the interconnection should become operational by 2023. This gas pipeline will allow Serbia to get natural gas from other suppliers – from LNG terminals in Greece and the TAP and TANAP gas pipelines which are part of the Southern Gas Corridor that transports gas from the Caspian and the Middle East region. In the future, and after the completion of the Eastern Mediterranean project, it will be possible to receive gas from the coastal reserves of the Leviathan field in Cyprus and Israel, which is important for Serbia and the region’s energy security.
Mining is our great chance. What are Serbia’s mining potentials like and how are we going to develop and use them?
The value of the confirmed mineral reserves of Serbia is more than 200 billion U.S. dollars, and the goal of the amendments to the Law on Mining and Geological Research is for the state to better care for this natural wealth.
It’s in Serbia’s best interest to have a modern mining sector, in which the interests of the state will be protected, and the management of mineral resources will be sustainable and efficient. One of the expected effects of this law will be an increase in the share that mining has in the national GDP. The sector’s current share is only 1.9 percent, and we believe that it can go up to 4-5 percent in the next five years.
We should be much more mindful of environmental protection, both by improving the work of inspectors and regulations, as well as by reacting to every piece of information that the environment is being abused somewhere. We don’t want to allow in the 21st century is for someone to alarm people by spreading rumours and half-information about projects that have not yet begun, without a decision on their implementation, even being made and without all relevant studies completed. Even the people who tell such untruths are aware of that.