Amendments to the Law on Utilization of Renewable Energy Sources

Author: Vojinović B. Milan, Attorney-at-Law from the Law Firm “VUK Tax Attorneys”

Date: 17th July 2023

Serbian National Assembly passed the Amendments to the Law on Utilization of Renewable Energy Sources (hereinafter: the “Amendments to the Law on RES”), on 28th April 2023, and which amendments entered into force on 7th May 2023. Even though the primary version of the Law on Utilization of Renewable Energy Sources (hereinafter: the “Law on RES”) was passed in April, 2021, certain problems concerning implementation of this were identified in practice, so the Ministry of Mining and Energy (hereinafter: the “Ministry”) estimated that these problems could be resolved exclusively by the amendments to the valid Law on RES. Further in the text, we will present the issues which predominantly caused the Amendments to the Law on RES, and analyse the new regulatory solutions in that regard.

Namely, before passing the Amendments to the Law on RES, formerly valid version of the Law on RES, enabled potential investors to file the enormous number of requests for connection of solar and wind powerplants to the system, without special restrictions. According to the data of the Ministry, for less than one and a half years since start of implementation of the Law on RES, the total capacity of power plants which would utilize RES, and for which the requests for connection are filed, amounts to cca. 20 GW, which is two and a half times more than the total capacity of all powerplants in Serbia. Consequently, due to extremely large numbers of said requests, the Serbian Transmission System Operator, Joint Stock Company “Elektromreža Srbije” (hereinafter: “EMS”) was compelled to suspend further process upon filed requests, because this could expose EMS to high and unplanned costs, and to cause instability of the power system due to unavailable reserve for balancing of the system. We point out that said numerous requests for grid connection are suspended, but not dismissed, so EMS should proceed in line with the new regulatory solutions, and the by-laws which will follow the Amendments to the Law on RES.

The legislator decided to resolve the above presented problem by passing the Amendments to the Law on RES, aiming to protect the power system and the interest of the key market participants, and particularly EMS and the Joint Stock Company “Elektroprivreda Srbije” (hereinafter: “EPS”) which operates as the guaranteed supplier, predominantly by amendments of provisions related to assuming the balancing responsibility and by introduction of provisions related to postponement of grid connection procedure for the powerplants using variable renewable energy sources (wind energy, solar energy, etc.).

Assuming the balancing responsibility

According to allegations of the Ministry, stated in the Proposal for the Amendments to the Law on RES, the previous solution from the Law on RES was a huge risk for EPS, because it was defined that all RES producers may transfer its balancing responsibility to the guaranteed supplier. Hence, EPS was compelled to assume the balancing responsibility for all RES projects including commercial projects, but anyway temporarily, i.e. until the set-up of the liquid organized intra-day power market. Therefore, the Amendments to the Law on RES define now, that obligation to assume the balance responsibility by the guaranteed supplier is kept as the temporary measure, but only for the privileged producers which are in the incentive system, while the commercial projects must individually regulate the balance responsibility on the commercial basis, all aiming to protect EPS as the guaranteed supplier. Regarding the subject amendments, the Serbian Government passed the Decree on Assuming Balancing Responsibility and Model of the Balancing Responsibility Contract which came into force on 3rd June 2023, while for this purpose the provisions of the Energy Law which define the balancing responsibility concept are applicable.

Postponement of the grid connection procedure

Amendments to the Law on RES introduce the solutions by which EMS, as the transmission system operator is obliged to perform an analysis of production and transmission system adequacy as a part of preparation of the transmission system development plan. If the adequacy analysis shows that it is not possible to ensure reserves for balancing of the system, EMS together with the distribution system operator, applies postponement of the grid connection measure for the powerplants using variable renewable energy sources, until reserve system balancing of the system is provided. On the other hand, Amendments to the Law on RES enable producers using variable renewable energy sources to ensure, by themselves or through the other market participants, new/extra capacities for supply of auxiliary services to the transmission system operator which include system secondary frequency regulation and power exchange services (battery storage and other storages), and if they ensure these new capacities, postponement of the grid connection measure will not apply to them. Regulatory solutions that will enable producers to prove fulfilment of conditions for avoiding postponement of the grid connection measure, will be specifically elaborated with by-law which will be enacted by the Ministry.

Amendments related to the prosumer

Amendments to the Law on RES introduce novelties related to the prosumers, and as it is explained again, aiming to protect the power system, so these novelties now precise the parameters for the installed power of the prosumer’s production facility i.e. maximum capacities for installed power of the consumer’s production facility. In accordance with said novelties, installed capacity of prosumer’s production facility cannot exceed: (i) equivalent power corresponding to current of 10 A, if connection to the system is not three-phase; (ii) 10.8 kW if prosumer is a household, and (iii) 150 kW if prosumer is not a household.

Hence, the Amendments to the Law on RES define limits for households and other end-consumers aiming to reconcile the interest of power system stability and interests of prosumers, primarily for the purpose of installing solar panels and usage of solar energy. In that regard, households could install solar panels up to 10.8 KW, and other consumers up to 150 kW by keeping priority access to the system, without balancing responsibility.

By adoption of the Amendments to the Law on RES, the transitional period has been considered, so the commercial entities can install solar panels with capacity of up to 5 MW by 1st July 2024 in accordance with the Law on RES (initial provisions before the amendments) without application of the afore stated limits. However, regardless of the postponement related to the industry which can install solar panels with capacity of up to 5 MW, the limit of 150 kW which is now introduced, is significantly less than 5 MW, therefore it is really questionable how the new restrictions will contribute to the development of the solar energy in the Republic of Serbia, particularly in the commercial sector, wherein numerous companies show interest to acquire status of prosumers, and consequently to increase usage of solar energy.

Even after 1st July 2024, it will be allowed to commercial entities to install solar panels with the capacity of over 5 MW, but without priority access to the system, and with obligation to individually regulate their balancing responsibility. However, we will see how this would be implemented in practice, especially for the commercial entities which want to install significantly larger capacities than 5 MW.


We believe that the legislator, by passing the Amendments to the Law on RES, tried to create the balance between interests of a large number of investors (domestic and foreign) who want to participate in the initiation and development of projects in the field of RES, on the one hand, and the protection of the power system of the Republic of Serbia and the interests of EPS and EMS as the largest participants at the market, on the other hand. However, although "vulnerability of the system” was recognized as the key problem that caused changes to the Law on RES, in the Proposal for Amendments to the Law on RES, or by the expert community, and especially from addresses of the key market participants (EPS and EMS), it was not explained in the best manner how a larger number of solar and wind powerplants can jeopardize the stability of the Serbian power system, while it is not known at all, which requests filed for connection to the grid, in the current theoretical capacity of cca. 20 GW can even be considered justified and realistic. Also, it should be taken into account that, according to the data of the European Environmental Agency, in 2021, 22% of the consumed energy in the European Union (EU) was produced from RES, and that this trend is still developing both in the EU and in the region. In our opinion, the state should intensify investments in increasing the capacity of the power system in order to ensure the acceptance of power produced from RES, and not to limit the real and feasible production capacities which utilize RES.

Also, we believe that the application procedure for grid connection should have been conditioned by the stricter regulatory rules in terms of proving, at least, the future ownership or usage right to the land on which installation of the capacity for production of power from RES is planned. Namely, one of the main reasons why requests for an enormously large capacity of cca. 20 GW from RES, are filed so far, is because the applicants were not required to prove the existence of any right on the land. It is clear that there is no serious investor who is ready to simply buy or lease dozens of hectares of land for the RES project, without knowing whether the grid connection will be approved, but it is still possible to prove and ensure the conditional use of such land if such approval is issued, e.g. by conclusion of a binding pre-contract.

Anyway, our Law Firm will timely and closely monitor all upcoming activities regarding the implementation of the Law on RES, as well as the introduced amendments on the market, in order to assist, through its considerable experience and expert analysis, its clients to eliminate all ambiguities.