PROJECT: REDUCING BARRIERS TO

ACCELLERATE THE DEVELOPMENT OF THE

BIOMASS MARKET IN SERBIA

Regional Chamber of Commerce Niš

Niš, 18 June 2015

Contents:

• UNDP in Serbia

• GEF

• Basic Project information

• Project examples and project partners

• Project context

• The new Law on Energy

• Expected Project outcomes

UNDP IN SERBIA

• The United Nations Development Programme (UNDP) acts

in line with objectives identified in the Country Programme

Document –CPD and the Country Programme Action Plan

– CPAP for the period 2011-2015. Both documents were

developed in 2010 in partnership with the Government of

the Republic of Serbia and are aligned with the national

strategic documents.

• Energy efficiency and renewable energy sources are

among the priority areas of action.

UNDP SERBIA – THE ENERGY PORTFOLIO

• Established in September 2011

• Portfolio activities are related to the following

areas:

o Renewable energy sources and

o Energy efficiency

• Sources of funding

o Own sources;

o Combined – pooled funding with the Government of the Republic of Serbia

or municipalities;

o The Global Environmental Facility - GEF;

UNDP acts as the implementing agency of the Global Environmental Fund

providing in full capacity the assistance to the Serbian Government in

preparation and implementation of GEF projects;

o Other donors (EU, bilateral donors, foundations, etc.).

UNDP SERBIA – THE ENERGY PORTFOLIO

GLOBAL ENVIRONMENTAL FUND – GEF

• GEF is a financial mechanism for the following UN

conventions:

o United Nations Framework Convention on Climate Change - UNFCCC;

o Convention on Biological Diversity - CBD;

o Stockholm Convention on Persistent Organic Pollutants - POPs;

o UN Convention to Combat Desertification - UNCCD;

o Minamata Convention on Mercury.

• States are eligible to use GEF funds for projects if

they:

o fulfill criteria identified by the Conference of Parties – COP under the

specific convention and if they are members of the convention;

o fulfill loan criteria for the World Bank (IBRD and/or IDA);

o are entitled to technical assistance from the UNDP through country

programmes.

GLOBAL ENVIRONMENTAL FUND – GEF

GEF PROJECT

• The UNDP, as GEF implementing agency, in cooperation

with the Government oft he Republic of Serbia, developed

the Project: “Reducing Barriers to Accelerate the

Development of the Biomass Market in Serbia”

• In January 2014 the GEF Secretariat endorsed the project

proposal and approved funds for its financing

POLITICAL PARTNERS IN THE PROJECT

• The political partners who have signed the Project

Document are:

o The Ministry of Mining and Energy (MME) – as the lead partner,

signed also the joint implementation agreement with the UNDP

and

o The Ministry of Agriculture and Environmental Protection (MAEP).

OTHER PROJECT PARTICIPANTS

• Institutions and organizations participating in the

project

o The Serbian Chamber of Commerce and Industry;

o Institute for Standardization;

o Standing Conference of Towns and Municipalities of Serbia;

o Regional Development Agency Srem.

KEY INFORMATION ABOUT THE PROJECT

• Title: Reducing Barriers to Accelerate the Development of the Biomass Market in

Serbia

• Project goal: to increase the share of energy from renewable sources in energy mix

of Serbia

• Total value of the Project: USD 30,475,000 as follows

o The Global Environmental Fund (GEF): USD 2,845,000

o United Nations Development Programme (UNDP) : USD 310,000

• Other project participants: USD 27,630,000 (institutions of the RS and investors)

• Project implemented by:

o UNDP (4 components) and

o Ministry of Mining and Energy (1 component) in cooperation with the Ministry of

Agriculture and Environmental Protection.

• Project duration: 2014 – 2018

PROJECT PREPARATION

• 2011: Project proposal submitted to GEF

• 2012: Project proposal endorsed by GEF and grant approved of USD 80,000

for project preparation

• 2012-2013: Project preparation

Project preparation and additional project funding amounting to USD 160,000

was provided by UNDP in cooperation with the MME

• January 2014: Project approved by GEF

• May 2014: MME and MAEP signed the project document

• November 2014: After the inception workshop, project implementation formally

began

PROJECT CONTEXT

• Availability of great volumes of biomass in Serbia:

o 61% of the total potential of renewable energy sources

o Agriculture: 1.7 Mtoe

o Forestry: 1 Mtoe

• As member of the Energy Community, Serbia has undertaken to

harmonize its legislation with the EU, which means specifically

the application of the Directive 2009/28/EC on renewable energy

sources:

o The share of renewable energy in gross final energy consumption is to

increase to 27% by 2020, compared to 21.2% in 2009.

o In 2013 the National Action Plan for RES of the Republic of Serbia was

adopted defining objectives and measures, with biomass playing an

important role

PROJECT CONTEXT

• Incentives in Serbia for power producers from RES:

o Decree on incentives for privileged power producers;

o Decree on conditions and procedures for the acquiring the status of

privileged power producer, etc.

• The New Law on Energy, adopted in December 2014,

introduced a number of improvements with respect to use of

RES and opened new potential for investing in the free

market.

PROJECT CONTEXT

• Biomass – types of plants of privileged producers:

Biomass plants

Installed capacity

R (MW)

Incentive feed-in tariffs

(c€/kWh)

Up to 1 13.26

1 - 10 13.82 – 0.56*P

Over 10 8.22

Biogas plants

Up to 0.2 15.66

0.2 – 1 16.498 – 4.188*R

Over 1 12.31

Plants using biogas of animal origin 12.31

0

2

4

6

8

10

12

14

0 1 2 3 4 5 6 7 8 9 10 11 12

CHP Biomass plants

EURc

MW4

6

8

10

12

14

16

18

0 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1 1,2 12,4

CHP Biogas plants

EURc

MW

PROJECT CONTEXT

• Despite the incentives for generation of power from biomass,

the number of built plants is relatively small considering the

biomass potential.

• The share of RES in gross final energy consumption did not

increase (Progress report on implementation of NAPRES,

December 2014.)

THE NEW LAW ON ENERGY

• The status of temporary privileged producer for all future privileged

producers, whereby investors ensure the existing incentives before

construction;

• Deferred effect contract right after receiving the status of temporary

privileged producer ensuring easier contracting of loan agreements for

investment;

• The status of temporary privileged producer extended from 20 to 3 years,

with a possibility of extention for another year (except for solar 1);

• New status introduced: “status of producer from RES” enabling the

implementation of the guarantee of origin systems, relevant to plants

producing energy from RES not covered by the system of incentives;

• Uncertainties related to connection to the grid have been resolved.

THE NEW LAW ON ENERGY

• Bylaws

o Deadline for adoption 12 months, to be submitted successively in

„packages“

• Three packages of bylaws in the field of RES:

1. On incentives for privileged power producers (Feed-in Tariffs);

2. On guarantees of origin;

3. On biofuels.

Until the adoption of new bylaws, the previously adopted acts shall remain in

effect and shall be implemented in the part which is not contrary to the new

Law.

EXPECTED PROJECT OUTCOMES

• Improved capacity of investors to identify, develop, fund and

manage bankable biomass projects for energy generation:

o Training modules developed for local governments on developing biomass

project proposals;

o New courses introduced on biomass energy generation in the curricula at the

universities in Belgrade and Novi Sad;

o Advanced web platform developed for online trading in biomass;

o National campaign undertaken in order to raise awareness of biomass use;

o Regional seminars organized on use of biomass for energy generation;

o Annual conference organized on use of biomass for energy generation.

EXPECTED PROJECT OUTCOMES

• Improved institutional and legal framework for investments in

biomass use projects

o Inter-sectoral Biomass Support Unit (BSU) established to support projects using

biomass within the Ministry of Mining and Energy;

o Technical standards and regulations adopted in the field of use of biomass for energy

generation;

o Policies and regulations adopted and implemented in the field of use of biomass for

energy generation;

o Policies and regulations adopted and implemented in the field of improving the supply

and sustainability of supply and use biomass for energy generation;

o Relevant licensing procedures developed and established.

• Successful operation of BSU

o National programme for support to biomass utilization projects developed;

o Training delivered for interested investors and banks for identification and

development of projects using biomass for energy generation.

EXPECTED PROJECT OUTCOMES

• Successfully funded, constructed and operational 6 to

8 heat and power co-generation plants using

biomass/biogas

o Grant-based project support mechanism applied using project

funds;

o The supported projects are operational by the project expiration

period.

• At least another 12 projects supported by the BSU

o Financing development of feasibility studies and/or parts of

technical documentation.

Thank you for your attention

Maja Matejić, Portfolio Manager - Energy

United Nations Development Programme

e-mail: maja.matejic@undp.org

www.undp.org.rs

http://biomasa.undp.org.rs