Postponement of the grid connection for powerplants that use variable renewable energy sources

Author: Attorney-at-law Vojinović B. Milan and Legal Trainee Stefan Mićić, from the Law Firm “VUK Tax Attorneys”

Date: 24th April 2024

On 29th March 2024, the transmission system operator “Elektromreža Srbije” a.d. Beograd (hereinafter: “EMS”) published on its website a Notification to all interested parties regarding occurrence of conditions for postponement of the grid connection procedure for powerplants that use variable renewable energy sources, due to existence of determined risk for stability of the power system caused by unavailability of reserve for balancing of the system (hereinafter: the “Notification”).

Before publishing the subject Notification, EMS drafted and filed to the Serbian Energy Agency (hereinafter: “AERS”) ten-year Transmission System Development Plan for 2023-2032 (hereinafter: the “Development Plan”), in accordance with the Law on Utilization of Renewable Energy Sources (hereinafter: the “Law on RES”) Integral part of the Development Plan is also Analysis on adequacy of production and transmission system (hereinafter: “Adequacy Analysis”) which is also conducted by EMS. The purpose of subject Adequacy Analysis is to determine assessment, methodologies, projects and active grid connection procedures, as well as potential risks that can jeopardize operation of power system, especially due to unavailability of reserve for balancing of the system. Moreover, the Law on RES defines that if Adequacy Analysis indicates risks which can jeopardize the operation of power system due to unavailability of reserve for balancing of the system, as well existence of justification for applying measures of postponement of the connection to the system, transmission system operator publishes on its website notification on occurrence of conditions for postponement of the grid connection procedure for powerplants that use variable renewable energy sources. As by conducting the Adequacy Analysis for needs of the Development Plan, EMS determined existence of risks which can jeopardize operation of power system, due to unavailability of reserve for balancing of the system, EMS published subject Notification on its website, upon obtaining consent for Development Plan from AERS.

The risks determined by EMS which could jeopardize operation of power system, are consequence of enormously large number of requests for connection of solar and wind power plants to the system, filed after the adoption and entering into force of the Law on RES. Namely, before the adoption and entering into force of the Amendments to the Law on RES on 7th June 2023, then applicable version of the Law on RES allowed to potential investors to file requests for connection of solar and wind powerplants to the grid, without particular restrictions. According to the data of the Serbian Ministry of Mining and Energy, for less than one and a half years since implementation of the initially enacted Law on RES, total capacity of powerplants that would utilize RES, and for which requests for connection were filed, amounts to cca. 20 GW, which is two and a half times more than total capacity of all powerplants in Serbia.

Consequently, due to extraordinary large number of subject requests, transmission system operator EMS suspended further processing of these requests, due to endangered safety of power system, and consequently published the Notification in accordance with amendments to the Law on RES. Namely, obligations of EMS for conducting the Adequacy Analysis and publishing the Notification, derive directly from the amendments to the Law on RES, because the uncontrolled and enormous number of requests for connection of solar and wind powerplants to the transmission system was caused by legal gap and lack of relevant legal restrictions for filling such requests for connection, wherein approving of all these requests would jeopardize operation of transmission system and safety of power system of the Republic of Serbia, bearing in mind the quantity of capacity which would be acquired by the power plants which utilize RES in the case at hand. The fact of large number of requests for connection of solar and wind powerplants to transmission system was also the reason for amending the Law on RES, as respective amendments defined additional obligations for EMS regarding grid connection procedures for powerplants which utilize RES, including obligation of drafting the Development Plan of Transmission System and Adequacy Analysis.

The postponement of the grid connection procedure does not apply to powerplants which utilize variable RES if the applicant for drafting connection study: (i) ensures new capacity for providing auxiliary secondary reserve services and offers this capacity to transmission system operator for systemic secondary frequency regulation and exchange services, or (ii) allocates new capacity from its existing production capacities providing auxiliary secondary reserve services and offers this capacity to transmission system operator for systemic secondary frequency regulation and exchange services, or (iii) ensures that another market participant, instead of applicant, ensure new capacity providing auxiliary secondary reserve services and offers this capacity to transmission system operator for systemic secondary frequency regulation and exchange services. The method of proving fulfilment of these conditions is defined in detail by the Rulebook on the Method of Proving of Fulfilment of Conditions for not Applying Postponement of Connection to the Transmission, Distribution, or Closed Distribution System for Powerplants that Utilize Variable RES.

Also, in accordance with the Law on RES, the postponement of the grid connection procedure does not apply to the facilities for which the Contract for Drafting the Connection Study has been concluded with EMS at the time of drafting the Adequacy Analysis. There were 27 such facilities in the Republic of Serbia at the time of drafting the Adequacy Analysis, and the list of these facilities is published in the Development Plan.

Finally, we point out that the postponement of the grid connection procedure for powerplants that utilize variable RES, ceases to apply when adequacy analysis of the production and transmission system shows that there is sufficient reserve for balancing of the system in the power system that allows all powerplants which are subject to restriction, to be connected to the power system without jeopardizing its safe operation. In this regard, next adequacy analysis of production and the transmission system within the ten-year transmission system development plan, is due to be conducted by EMS in 2026. However, the question remains open for investors who filed requests for connection for which postponement is applied, as the delay period until 2026 could significantly disturb their business plans, and it remains uncertain whether next Adequacy Analysis, that EMS is obliged to conduct, will enable continuation of the postponed grid connection procedures.

As always, our Law Firm will timely and closely monitor all upcoming activities in the energy market, in order to assist, through its considerable experience and expert analysis, its clients to eliminate all ambiguities and successfully realize investments in the field of RES.