Strategic Partnership according to the provisions of the new Serbian Law on the Use of Renewable Energy Sources

26.04.2021.

On 20 April 2021 the Parliament of the Republic of Serbia adopted the Law on the Use of Renewable Energy Sources (“the Law“). The Law comes into force on 30 April 2021.

Introduction

The Law regulates the use of energy from renewable sources, goals of the use of energy from renewable sources, the method of determining the share of renewable energy sources of the Republic of Serbia in the gross final energy consumption, integration of energy from renewable sources into the market, incentive systems for electricity production from renewable sources, guarantees of origin of electricity, production of electricity from renewable sources for own consumption, use of renewable energy sources in the field of heat and transport, special procedures related to the construction and connection of energy facilities using renewable energy sources, basics of cooperation mechanisms with other countries in the field of renewable energy sources, supervision over the implementation of the Law, as well as other issues of importance for renewable energy sources.

The provisions of the law governing the field of energy shall apply to all issues in the field of energy related to renewable energy sources that are not regulated by this Law.

Renewable energy sources are non-fossil energy sources such as: watercourses, biomass, wind, solar, renewable hydrogen, biogas, landfill gas, gas from sewage treatment plants, geothermal energy sources and other renewable energy sources (“RES“);

The Law is set to achieve in particular the following goals: environmental protection, the fight against climate change, reducing costs for citizens, energy transition, as well as simplifying and speeding up of relevant procedures.

The Law with relevant bylaws should create legal certainty for investment in three key energy sectors that are important for the field of RES: the electricity sector, the heating and cooling sector and the transport sector.

One of the new institutes introduced by the Law is the institute of Strategic Partner.

Strategic partnership

If it is established that the application of the system of incentives for electricity production established by the Law did not sufficiently provide for new production capacities for electricity production from renewable sources that are necessary to achieve the planned growth dynamics of electricity production from RES and the achieving of national goals defined by the Integrated National Energy and Climate plan or when new generation capacities for electricity production from RES are needed to achieve the goals of energy transition or the fulfillment of international obligations, on the proposal of the Minister responsible for energy, the Government of the Republic of Serbia (“Government“) may decide to implement construction projects, with or without the management and maintenance of the RES plants, by carrying out the selection of a strategic partner (“Decision”).

Power plants that use renewable energy sources (“Power Plant“) are considered to be:

• Hydroelectric power plants;
• Biomass power plants;
• Biogas power plants;
• Wind farms;
• Solar power plants;
• Geothermal power plants;
• Biodegradable waste power plants;
• Landfill gas power plants;
• Gas power plants powered by municipal wastewater treatment plants and
• Power plants that uses other renewable energy sources.

A reversible hydroelectric power plant is not considered a power plant that uses renewable energy sources.

The Decision shall contain in particular:

• Content and description of the project request and needs;
• Determining of the persons/entities who/which will be the owner and investor, i.e. who/which will exercise the investor rights regarding the construction of the Power Plant;
• Basic characteristics of the Power Plant, such as capacity and/or expected annual output etc., and/or location where the facility will be built and manner in which the location will be used;
• Type of RES;
• Method of production and conditions for taking over electricity;
• Conditions related to environmental protection;
• Conditions related to the protection of cultural monuments if they exist at the location where the facility will be built;
• Conditions relating to energy efficiency;
• Conditions related to the termination of the work of the facility, the deadline for project implementation and the period for which the contract can be concluded;
• Bid evaluation system;
• Appointment of a working group to conduct the selection of a strategic partner;
• Other elements relevant to the implementation of the strategic partner selection process.

A strategic partner (“Strategic partner“) may be an entity that will be selected in accordance with the Law to construct a Power Plant to be used for production or to construct a Power Plant and which is obliged to carry out the following actions:

• Prepare and / or partially or fully finance relevant studies if they are necessary for the realization of the Power Plant and
• Prepare and / or partially or fully finance the relevant technical documentation necessary for the realization of the Power Plant and
• Construct a Power Plant if:

(1) Partially and / or in full finances the Power Plant construction project

or

(2) Mediates in securing or is securing funds from international financial institutions, banks and other sources of financing for the implementation of the project.

In addition to these conditions, the Strategic Partner must perform one or more of the following actions:

• Provide innovative technologies and/or equipment and/or raw materials for the Power Plant and/ or
• Provide management and/or maintenance services regarding the Power Plant and/or
• Develop and / or manage the Power Plant and/or
• Undertake other actions aimed at achieving the objectives of the Law, which will be determined in the Decision.

The procedure for the selection of a Strategic Partner prescribed by the Law includes:

• Preparation of a public call for applications;
• Publishing of a public call;
• Receiving, opening and evaluating applications;
• Submission of proposals to the Government on the selection of the Strategic Partner by the working group;
• Decision-making on the selection of the Strategic Partner by the Government
• Carrying out the negotiations with the selected Strategic Partner