the white book of pe eps

2 THE WHITE BOOK OF THE ELECTRIC POWER INDUSTRY OF SERBIA

Published by: PE Electric Power Industry of Serbia Public Relations Sector 2 Carice Milice St., Belgrade, Serbia www.eps.rs, [email protected]

For the publisher: Dragomir Marković, general manager

Authors: Dragomir Marković, Bratislav Čeperković, Aleksandar Vlajčić and Stefan Ressl

Design: Reakcija, Belgrade

Printed by: Portal, Belgrade

Circulation: 1000

3THE WHITE BOOK OF THE ELECTRIC POWER INDUSTRY OF SERBIA

1. INTRODUCTION 7

2. ABOUT US 11

3. LEGISLATIVE 19

EU legislative framework and aspects of EU policy indication . . . . . . . . . . . . . . . . . 21The EU roadmap for low carbon 2050 strategy (8 .3 .2011) . . . . . . . . . . . . . . . . . . . . . . . 25

Renewable Energy Road Map (2007): Renewable energies in the 21st century: building a more sustainable future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Directive 2009/28/EC (23 .04 .2009) on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC . . . . . . . . . . . . . . . . 42

Stock taking document (06 .05 .2010): Towards a new Energy Strategy for Europe 2011-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Energy 2020 - A strategy for competitive, sustainable and secure energy (10 .11 .2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Renewable Energy Progress Report (31 .01 .2011): Progressing towards the 2020 target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Communication of EC on energy efficiency (8 .3 .2011): Energy Efficiency Plan 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Interpretative note on Directive 2009/72/EC concerning common rules for the internal market in electricity and Directive 2009/73/EC concerning common rules for the internal market in natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Comment on EU Emission Trading System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Use of renewable energy in Serbia legal framework . . . . . . . . . . . . . . . . . . . . . . . . . . 67Strategies of energy development in the Republic of Serbia until year 2015 . . . . . . . . . 67

Incentive measures of the Serbian Government for privileged producers of electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Privileged producer of electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Legal form of investment in the construction of energy facilities producing electricity from renewable sources in order to acquire the status of privileged producer -The proposal of a simple model- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Contents


4. PE EPS TOWARDS EC COMMUNICATION ON ENERGY EFFICIENCY, SAVINGS AND RENEWABLE ENERGY ROAD MAP 79

EC communication on efficiency in heat and electricity . . . . . . . . . . . . . . . . . . . . . . . 81

Savings for consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

PE EPS Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85Efficiency increasment in generation sector 2000-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . 85

New thermal high efficiant generation capacities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Renewables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97Wind mills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

Solar Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101

Small hydro power plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105

Waste to Energy and Biomass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154

Large Hydro power plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .171

Smart Grids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .181Main drivers of a new flexible power system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .181

Bringing customers on board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .181

DSOs as key enablers for Smart Grids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .181

Incentivising investment & cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .182

What is a Smart Grid? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183

Telecommunication System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .186

Smart metering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .193

Literature 197

About authors 201


ANNEXES

1 . Directive 2009/28/EC (23 .04 .2009)

2 . Stock taking document (06 .05 .2010): Towards a new Energy Strategy for Europe 2011-2020

3 . Energy 2020 - A strategy for competitive, sustainable and secure energy (10 .11 .2010)

4 . Renewable Energy Progress Report (31 .01 .2011): Progressing towards the 2020 target

5 . EU Emission Trading System How the EU ETS works according to the UK environment agency

6 . Legal framework on waste to energy in EU and Republic of Serbia

7 . Alternative Energy Dictionary – English - Serbian

Introduction


The White Book of the Electric Power Industry of Serbia, along with the Green Book, published in 2009, complements a set of documents identifying the company’s position in relation to:

y a set of legislative instruments and communications of the European Commission and United Nations covering the broad area of sustainable development and energy with a view to reaching the set targets by 2050;

y laws and other regulations of the Republic of Serbia per-taining to sustainable development, energy efficiency and renewable energy sources;

y development processes of the South-East Europe (SEE) regional energy system.

The inevitable conclusion is that the process of finding the right development path towards non-carbon-emitting industry in the EU Member States is several years ahead of the actual situation in the Republic of Serbia. The documents state clearly what steps the Electric Power Industry of Serbia took between 2000 and 2010 towards achieving the mandatory objectives of the Treaty Establishing the Energy Community of South-East Europe.

The EPS management and staff are fully aware of the impor-tance and necessity of comprehensive monitoring and imple-mentation of the policy endorsed by the European Union and the international community in general in the interest of reducing the impact of energy generation on climate change. The company adheres to principles of sustainable national development, by adopting, at its own initiative, all standards and regulations of the European Union and the international community in the area of reducing climate change effects.

In view of the complexity of reducing climate change effects and the lengthy process of enacting a unified set of binding instruments at the United Nations level, PE EPS has decided to follow and implement the best international practices and state-of-the-art technology in this field.

Applying the global best available practices has been the company’s business decision, and setting the development path has been informed by the nature of the national energy resources. Since about 70 percent of electric power is generated from domestically-sourced lignite and the national potential for economic sustainability is limited, steps have been taken towards identifying other solutions, other energy sources.

Introduction

The key categories presented in the White Book of the Electric Power Industry of Serbia are: energy efficiency in genera-tion and consumption; expanding the portfolio to include renewable energy sources; gradual restructuring of the base potential, such as preparing for more intensive utilisation of natural gas and/or nuclear power in electric power genera-tion; implementing smart networks; developing electric power market and regional cooperation through joint projects with other companies.

Document purpose and aimThe White Book of the Electric Power Industry of Serbia, as a programme document, presents the priority activities aimed at reducing the impact of heat and power generation on climate change.

The document is based on the existing strategic framework and specific medium-term objectives, and covers projects whereby those objectives should be achieved.

Among the priority objectives is ensuring the required level of international support through public presentation of projects, which would accelerate the achievement of the desired results and thus also the achievement of strategic objectives of the company, the Republic of Serbia and the region as a whole. This is particularly important in view of the inherent link between these objectives and the objectives of the European Union and the broad international community.

The Electric Power Industry of Serbia particularly empha-sises that, by this document, it commits to assisting the wider community in the Republic of Serbia and South-East Europe in developing the required strategic and legal documents to involve all stakeholders in the power supply chain, from gener-ation to consumption, and to improve their efficiency. At the same time, the company will not wait for all these documents to be developed and adopted – instead, with its actions, it is moving one step ahead towards achievement of common objectives.

The company understands that this is the fastest way of raising national and regional awareness of the necessity and urgency of taking action to counter climate change, in spite of economic and social limitations, which are – to a greater


or lesser extent – common to all state parties to the Treaty Establishing the Energy Community of South-East Europe. In addition, the company launches a major initiative for preparing projects, in particular those concerning the use of renewable energy sources, for speedy implementation, since loss of time directly lessens the possibility for exploiting the available potentials. This is especially true for local governments, which are key partners to the Electric Power Industry of Serbia in implementing the defined projects. This document, amongst other things, invites all interested investors to co-fund those projects, which is of particular importance for providing prerequisites for opening up both the electricity market and the market for equipment and services for the construction and maintenance of distributed generation capacities and smart networks.

The programmes presented in this document are expected to provide clear orientation to international partners in deter-mining their strategic choices in terms of priorities and aims of their support to the energy sector of the Republic of Serbia and the entire South-East Europe region, since some projects can be realised only through collaboration of several states. It need not be stressed that the Electric Power Industry of Serbia is fully committed to these processes and willing not only to participate in development projects, but also to make its knowledge and experience available to all interested investors, in particular to Energy Community members through the Energy Community Secretariat.

Document contentsContent development of a programme document such as this has been decisively influenced by the situation regarding strategic and legal documents, both in the Republic of Serbia and in the European Union. At this stage, the development of most documents is the subject of intensive communication whose contents should shortly be endorsed through laws or EU directives, as appropriate. The authors of this document have faced a considerable challenge in making references to contents of documents that are still being developed and have not been adopted yet. This is the reason why only brief quotes from some directives that are being drafted have been included in the introductory remarks and conclusions, which outline the essential points and will not lose relevance even when these documents are finally adopted. In the interest of coherence, full contents or key quotes from these highly complex and comprehensive works in progress are available in annexes provided on DVD.

To provide a programme framework, this document presents an overview of the results achieved to date, in particular in the area of energy efficiency in the generation capacities of the Electric Power Industry of Serbia, as well as an overview of the current situation, medium-term objectives and priority action programmes between 2010 and 2020.

The second half of the book outlines priority projects and key areas in which international assistance is required in the forth-coming period.

About us


Public Enterprise “Electric Power Industry of Serbia” (PE EPS) was incorporated under the Serbian Government Decision, which entered into force on 1 July 2005.

PE EPS is a vertically integrated company, fully owned (100%) by the Republic of Serbia, entrusted under its Articles of Incor-poration with the duty of electricity generation for the needs of tariff customers. If relatively small electricity generation by the industrial plants is disregarded for their own needs, it may be considered that PE EPS is at this moment the only electricity generator in Serbia.

PE EPS mission is the secure electricity supply to all customers, under the most favourable market conditions, with the constant service quality upgrades, environmental preser-vation and the community welfare improvement.

PE EPS vision is to be a socially responsible, market-oriented and profitable company, competitive within the European market, with a significant regional influence, recognised as a reliable partner of the domestic and international companies.

PE EPS business activities involve the following:1. Electricity generation;2. Electricity distribution;3. Distribution system control;4. Electricity trade;5. Coal production, processing and transport;6. Steam and hot water generation in combined processes;7. Water utilisation and management;8. Solid, liquid and gaseous fuels wholesale including similar

products , metals, metal ores and other trading;9. River and lake traffic services;10. Research and development;11. Designing, construction and maintenance of energy,

mining and other facilities;12. Engineering.

The current employee count is some 29.900 (34.130 employees with the Kosovo and Metohija employees). PE EPS has as a parent company under the Serbian Govern-ment decision incorporated 11 affiliated companies; it has 7 departments and 2 independent sectors.

About us


PE EPS operates the installed capacities of 7.124 MW (Kosovo and Metohija capacities excluded), with the following structure:

In addition, PE EPS operates three power plants, total capacity of 461 MW, not owned by it.

In 2010, PE EPS generated some 35.855 GWh of electricity and some 37.2 million tons of coal, mostly used by its own

1. Coal-fired thermal power plants (18 units of various capacity) 3,936 MW

2. Gas and liquid fuel fired combined heat and power plants (6 units) 353 MW

3. Run-of-river hydropower plants (31 units) 1,850 MW

4. Reservoir hydropower plants (17 units) 371 MW

5. Pumped-storage hydropower plants (2 units) 614 MW

power plants. The Kolubara, Kostolac and Kosovo and Metohija mining basins are located close to the thermal power plants. PE EPS supplies electricity to about 3.5 million customers (Kosovo and Metohija excluded).

Generation structure in 2010 (Kosovo and Metohija not included)

PE EPS installed capacities

Legislative


This chapter should bring detailed information on the EU intention with respect to future development of energy policy trends, renewable energy use and other aspects affecting energy companies. Several communications or papers of various legal status of the EC are included to demonstrate the reasoning and directions authentically (however shortened in several occasions where less effective on the electricity companies).

To start with, some slides from January 2011 of Ms. Nyitrai and Mr. Schramm from EC ENER Directorate B serve to give an overview of the major topics.

3.1 EU legislative framework and aspects of EU policy indication

Renewable energy policy is quite recent and was introduced roughly in 1997. Since then the EC and ultimately all EU insti-tutions made important steps to position a resource efficient Europe as a prime policy goal of the European Union. Major elements of this strategy consist of the fostering of renewable energy production and the efficient use of energy. In recent years major progress has been achieved and the following chapters highlight the various efforts in this sense.

Energy Policy development

Factually, since 2007 this became a top level priority and the various initiatives can be seen above. It is clear that the topic is rather complex, thus this report does not pretend to be complete. From EC side there is the ambition to coor-dinate the policy development in a way which tries to reflect political possibilities on one hand and a reduction of inconsis-tencies on the other hand, bridging topics like national fossil fuel subsidies, European competitive liberalized markets and enhanced use of new low carbon dioxide technology, like renewable energy.

The energy and climate package consists of: y Proposal for new Renewables energy Directive; y Proposal for new Emissions Trading Directive; y Proposal for a CCS Directive; y Proposal for a Decision on effort-sharing to achieve the

emissions reductions.

One of the major pieces of energy legislation was the entry into force of the so called “renewable energy directive” (see details in the respective chapter) which for the first time made some renewable energy policy goals binding, like the 20% use of renewable energy production in the total energy mix or the 20% decrease of greenhouse gas emissions! This is an ambitious target and has paramount consequences on the whole of European energy business. This is why also EPS lays emphasis on learning about the coming changes and adopting to it in a profitable way.


The 20-20-20 EU policy By 2020

The January 2009 gas crisis and its impact (6-20 January 2009)

The so-called 20-20-20 energy policy to be fulfilled by 2020 (although the 20% savings in absolute energy consumption is not binding) and it remains to be seen whether this can be achieved in real terms. However, as is stated on several occasions, the EC and policy makers state that they are aware that for investments to happen the regulatory framework needs to be stable, foreseeable and non-discriminatory. In

addition, the magnitude of this energy investments needed as well as the time period envisaged stretches for more than average political calculations and memory periods. For the sake of clarity this report takes it for granted that EU Member States’ leaders will adhere to the path and not reverse the direction on the way.


On the way, the political process has to take into account the objectives of security of supply, competitiveness and sustain-ability. As has been seen in recent years, the security of supply for fossil fuels like natural gas, which is imported from non-EU countries to its majority, is not granted. The picture above shows the consequences of the January 2009 gas crises and the countries affected. Serbia was heavily affected as well. During gas crisis PE EPS played the role to stabilize security

of supply not only for Serbia but also for whole region. During that period extra ordinary experience is earned. For EPS, security of supply and thus the supply diversity are key priori-ties. EPS uses domestic resources and envisages introducing also renewable electricity production as a means to enhance security of supply. With stronger European interconnection it is also clear that EPS is evaluating various options for importing further needed resources.

EU strongest variable renewable energy potentials

There is a huge potential of renewable energy resources within Europe. It is clear that not everywhere the same type of energy resource is equally attractive. Renewable energy production is inherently a local optimization issue, having as a second benefit shorter transportation ways to the consumers and being thus more efficient. At the same time, renewable energy based electricity production tends to be more volatile than thermo-electrical power plants, particularly talking about wind and solar energy. Hence, a strong pan-European network intercon-nection is necessary as well as local competences and means to cope with production volatility. The means include physical capabilities like flexible pump-hydro storages or flexible gas turbines (best as combined cycles and co-generation

eventually) and financial or market based flexibility, meaning a “real-time” price indicator for producers, suppliers, traders as well as for consumers, giving an indication about the real financial value of the electricity in a given time period. Like this consumer awareness can be easily raised and demand side electricity consumption management is a natural result. This is a tendency within the European Union, pushed by EU legisla-tion like the mandatory need to install smart meters before 2020 in every household etc. Serbia is at its beginning but can avoid several mistakes other countries (by learning) have made and thus progress faster and more effectively using already best practices made elsewhere, as appropriate.


European infrastructures priorities – electricity by 2020

This pictures shows network priorities of the EU, including a better connection of Central and South East Europe.

In the following pages the efforts of the EC can be seen explaining the motivation and justifications for the policy proposals. It has been tried to mention the most relevant initiatives and the most recent ones.

A short summary: y 08.03.2011: The EC adopts a Roadmap for transform-

ing the European Union into a competitive low carbon economy by 2050. The Roadmap describes the cost-effective pathway to reach the EU’s objective of cutting greenhouse gas emissions by 80-95% of 1990 levels by 2050. Based on the cost-effectiveness analysis under-taken, the Roadmap gives direction to sectoral policies, national and regional low-carbon strategies and longterm investments.

y 10.01.2007: Communication of the renewable energy road map; paves the way for the substantial introduction of the renewable energy legislation.

y 23.04.2009: EU Renewable energy Directive 2009/28/EC; establishes binding targets on the introduction of renewable energy production, the reduction of green-house gas emissions and the reduction of energy con-sumption by 2020. It is also called 20-20-20 Directive. It also establishes a binding target for use of renewables in transport (10%). It also imposes the establishment of national action plans, the issuing of Guaranties of Origin, international cooperation methods for ease of compliance and other crucial components.

y 06.05.2010: Stock taking document; Towards a new Energy Strategy for Europe 2011-2020; invites the Member States and stakeholders to give input for further legislation and policy directions and to issue the 2020 energy strategy.

y 10.11.2010: The EC adopts the Communication “Energy 2020 – A strategy for competitive, sustainable and secure energy”; this document identifies the 5 top priorities with respect to energy policy until 2020. This is consistent and inherent for the low carbon strategy.

y 31.01.2011: The EC presents its progress report com-munication: “Renewable energy: Progressing towards 2020 target” stemming from its reporting requirements. It presents an overview of the renewable energy indus-try in Europe, its prospects to 2020 and addresses the outstanding challenges for the development of the sector. Thus this is “operational” document of relevance for renewable energy industry.

Related topics: y 08.03.2011: The EC adopts its communication “energy

efficiency plan 2011”; Energy efficiency is at the heart of the EU’s Europe 2020 Strategy for smart, sustainable and inclusive growth and of the transition to a resource efficient economy. Energy efficiency is one of the most cost effective ways to enhance security of energy supply, and to reduce emissions of greenhouse gases and other pollutants.

y 22.01.2009: Retail Markets Common Rules, Interpretative note on Directive 2009/72/EC and Directive 2009/73/EC, Internal Rules for Market in Electricity and Natural Gas. Document put a stress on Customer protection bringing the Customer “on board” enabling direct communication between distributed productin capacities, DSO and Cus-tomer. Chapter 4 of this Document define necessary tech-nical preconditions and common standards in obtaining the full benefit of Smart Grid inmplementation.

y Emission Trading System: A document explaining the Emission Trading System. The EU Directive 2009/29/EC itself has not been included due to its size.


The EU roadmap for low carbon 2050 strategy (8.3.2011)

1. Europe’s key challengesThe EU provides its Member States with a long-term framework for dealing with the issue of sustainability and the cross-border effects of phenomena that cannot be dealt with at the national level alone. Climate change has long been recognised as one such long-term shaping factor where coherent EU action is needed, both inside the EU and internationally.

The Commission recently proposed the Europe 2020 flagship initiative for a resource-efficient Europe and within this framework it is now putting forward a series of long-term policy plans in areas such as transport, energy and climate change. This Communication sets out key elements that should shape the EU’s climate action helping the EU become a competi-tive low carbon economy by 2050. The approach is based on the view that innovative solutions are required to mobilise investments in energy, transport, industry and information and communication technologies, and that more focus is needed on energy efficiency policies. The Europe 2020 Strategy for smart, sustainable and inclusive growth includes five headline targets that set out where the EU should be in 2020. One of them relates to climate and energy: Member States have committed themselves to reducing greenhouse gas emissions (GHG) by 20%, increasing the share of renewables in the EU’s energy mix to 20%, and achieving the 20% energy efficiency target by 2020. The EU is currently on track to meet two of those targets, but will not meet its energy efficiency target unless further efforts are made. Hence, the priority remains to achieve all the targets already set for 2020.

In order to keep climate change below 2ºC, the European Council reconfirmed in February 2011 the EU objective of reducing greenhouse gas emissions by 80-95% by 2050 compared to 1990, in the context of necessary reductions according to the Intergovernmental Panel on Climate Change by developed countries as a group. This is in line with the position endorsed by world leaders in the Copenhagen and the Cancun Agreements. These agreements include the commit-ment to deliver long-term low carbon development strate-gies. Some Member States have already made steps in this direction, or are in the process of doing so, including setting emission reduction objectives for 2050.

Together with the White Paper on Transport and the Energy Efficiency Plan, this Communication is a key deliverable under the Resource Efficiency Flagship. It presents a Roadmap for possible action up to 2050 which could enable the EU to deliver greenhouse gas reductions in line with the 80 to 95% target agreed. It outlines milestones which would show whether the EU is on course for reaching its target, policy challenges, investment needs and opportunities in different sectors, bearing in mind that the 80 to 95% reduction objective in the EU will largely need to be met internally.

2. Milestones to 2050The transition towards a competitive low carbon economy means that the EU should prepare for reductions in its domestic emissions by 80% by 2050 compared to 1990. The Commission has carried out an extensive modelling analysis with several possible scenarios showing how this could be done, as explained below.

This analysis of different scenarios shows that domestic emission reductions of the order of 40% and 60% below 1990 levels would be the cost-effective pathway by 2030 and 2040, respectively. In this context, it also shows reduc-tions of 25% in 2020. This is illustrated in Figure on p. 26. Such a pathway would result in annual reductions compared to 1990 of roughly 1% in the first decade until 2020, 1.5% in the second decade from 2020 until 2030, and 2 % in the last two decades until 2050. The effort would become greater over time as a wider set of cost effective technologies becomes available.

The following figure illustrates the pathway towards an 80% reduction by 2050, shown in 5 year steps. The upper “reference” projection shows how domestic greenhouse gas emissions would develop under current policies. A scenario consistent with an 80% domestic reduction then shows how overall and sectoral emissions could evolve, if additional policies are put in place, taking into account technological options available over time.


EU GHG emissions towards an 80% domestic reduction (100% - 1990)

Emissions, including international aviation, were estimated to be 16% below 1990 levels in 2009. With full implementa-tion of current policies, the EU is on track to achieve a 20% domestic reduction in 2020 below 1990 levels, and 30% in 2030. However, with current policies, only half of the 20% energy efficiency target would be met by 2020.

If the EU delivers on its current policies, including its commit-ment to reach 20% renewables, and achieve 20% energy effi-ciency by 2020, this would enable the EU to outperform the current 20% emission reduction target and achieve a 25% reduction by 2020. This would require the full implementa-tion of the Energy Efficiency Plan presented together with this Communication, which identifies measures which would be necessary to deliver the energy efficiency target. The amount of currently allowed offsets would not be affected.

The analysis also shows that a less ambitious pathway could lock in carbon intensive investments, resulting in higher carbon prices later on and significantly higher overall costs over the entire period. In addition, R&D, demonstration and early deployment of technologies, such as various forms of low carbon energy sources, carbon capture and storage, smart grids and hybrid and electric vehicle technology, are of paramount importance to ensure their cost-effective and large-scale penetration later on. Full implementation of the Strategic

Energy Technology plan, requiring an additional investment in R&D and demonstration of € 50 billion over the next 10 years, is indispensable. Auctioning revenue and cohesion policy are financing options that Member States should exploit. In addition, increasing resource efficiency through, for instance, waste recycling, better waste management and behavioural change, as well as enhancing the resilience of ecosystems, can play an important role. Also, continued effort to strengthen research on climate mitigation and adaptation technologies will be required.

3. Low carbon innovation: a sectoral perspective

The Commission’s analysis has also explored pathways for key sectors. This analysis looked at a range of scenarios assuming different rates of technological innovation and different fossil fuel prices. They produced largely convergent results with respect to the magnitude of reductions needed in each sector in 2030 and 2050 as indicated by the ranges presented in Table on p. 27. The development of sectoral policy options will have to go into greater depth on costs, trade-offs, and uncertainties.


GHG reductions compared to 1990 2005 2030 2050

Total -7% -40 to -44% -79 to -82%

Sectors

Power (CO2) -7% -54 to -68% -93 to -99%

Industry (CO2) -20% -34 to -40% -83 to -87%

Transport (incl. CO2 aviation, excl. maritime) +30% +20 to -9% -54 to -67%

Residential and services (CO2) -12% -37 to -53% -88 to -91%

Agriculture (non-CO2) -20% -36 to -37% -42 to -49%

Other non-CO2 emmissions -30% -72 to -73% -70 to -78%

Sectorial reductions

A secure, competitive and fully decarbonised power sectorElectricity will play a central role in the low carbon economy. The analysis shows that it can almost totally eliminate CO2 emissions by 2050, and offers the prospect of partially replacing fossil fuels in transport and heating. Although elec-tricity will increasingly be used in these 2 sectors, electricity consumption overall would only have to continue to increase at historic growth rates, thanks to continuous improvements in efficiency.

The share of low carbon technologies in the electricity mix is estimated to increase from around 45% today to around 60% in 2020, including through meeting the renewable energy target, to 75 to 80% in 2030, and nearly 100% in 2050. As a result, and without prejudging Member States’ preferences for an energy mix which reflects their specific national circum-stances, the EU electricity system could become more diverse and secure.

A wide range of existing technologies will need to be widely deployed, including more advanced technologies, such as photovoltaics, that will continue to become cheaper and thus more competitive over time.

Energy specific scenarios and the means of achieving such decarbonisation, while ensuring energy security and competi-tiveness, will be examined in the Energy 2050 Roadmap. This will build on the established EU energy policy and the EU 2020 Strategy.

The EU ETS will be critical in driving a wide range of low carbon technologies into the market, so that the power sector itself can adapt its investment and operational strategies to changing energy prices and technology. For the ETS to play this role on the identified pathway to 2050, both a sufficient carbon price signal and long-term predictability are necessary. In this respect, appropriate measures need to be considered, including revisiting the agreed linear reduction of the ETS. Other tools, such as energy taxation and technological support may also be appropriate to ensure that the power sector plays its full part.

Given that the central role of electricity in the low carbon economy requires significant use of renewables, many of which have variable output, considerable investments in networks are required to ensure continuity of supply at all times. Investment in smart grids is a key enabler for a low carbon electricity system, notably facilitating demand-side efficiency, larger shares of renewables and distributed genera-tion and enabling electrification of transport. For grid invest-ments, benefits do not always accrue to the grid operator, but to society at large (with co-benefits for consumers, producers, and society at large: a more reliable network, energy security and reduced emissions). In this context, future work should consider how the policy framework can foster these invest-ments at EU, national and local level and incentivise demand-side management.

Sustainable mobility through fuel efficiency, electrification and getting prices rightTechnological innovation can help the transition to a more efficient and sustainable European transport system by acting on 3 main factors: vehicle efficiency through new engines, materials and design; cleaner energy use through new fuels and propulsion systems; better use of networks and safer and more secure operation through information and communi-cation systems. The White Paper on Transport will provide a comprehensive and combined set of measures to increase the sustainability of the transport system.

Up until 2025, the main driver for reversing the trend of increasing greenhouse gas emissions in this sector is likely to remain improved fuel efficiency. Emissions from road, rail and inland waterways could in fact be brought back to below 1990 levels in 2030, in combination with measures such as pricing schemes to tackle congestion and air pollution, infra-structure charging, intelligent city planning and improving public transport, whilst securing affordable mobility. Improved efficiency and better demand-side management, fostered through CO2 standards and smart taxation systems, should also advance the development of hybrid engine technolo-gies and facilitate the gradual transition towards large-scale


penetration of cleaner vehicles in all transport modes, including plug-in hybrids and electric vehicles (powered by batteries or fuel cells) at a later stage.

The synergies with other sustainability objectives such as the reduction of oil dependence, the competitiveness of Europe’s automotive industry as well as health benefits, especially improved air quality in cities, make a compelling case for the EU to step up its efforts to accelerate the development and early deployment of electrification, and in general, of alter-native fuels and propulsion methods, for the whole transport system. In this respect, it is not surprising to see also automo-tive industries in the US, Japan, Korea and China increasing their investments in battery technology, electric vehicles and fuel cells.

Sustainable biofuels could be used as an alternative fuel espe-cially in aviation and heavy duty trucks, with strong growth in these sectors after 2030. In case electrification would not be deployed on a large-scale, biofuels and other alternative fuels would need to play a greater role to achieve the same level of emissions reduction in the transport sector. For biofuels this could lead, directly or indirectly, to a decrease of the net greenhouse gas benefits and increased pressure on bio-diversity, water management and the environment in general. This reinforces the need to advance in 2nd and 3rd generation biofuels and to proceed with the ongoing work on indirect land use change and sustainability.

The built environment

The built environment provides low-cost and short-term opportunities to reduce emissions, first and foremost through improvement of the energy performance of buildings. The Commission’s analysis shows that emissions in this area could be reduced by around 90% by 2050, a larger than average contribution over the long-term. This underlines the impor-tance of achieving the objective of the recast Directive on energy performance of buildings that new buildings built from 2021 onwards will have to be nearly zero-energy buildings. This process has already started, with many Member States implementing stricter energy performance standards for buildings. On 4 February 2011 the European Council, taking account of the EU headline target, decided that from 2012 onwards all Member States should include energy efficiency standards in public procurement for relevant public buildings and services. By the end of 2011, the Commission will present a Communication on “Sustainable Construction” setting out a strategy on how to boost the competitiveness of this sector while improving its environmental and climate performance.

Efforts will need to be strengthened significantly over time. Today, new buildings should be designed as intelligent low- or zero-energy buildings. The extra cost of this can be recovered through fuel savings. A greater challenge, however, is the refur-bishment of the existing building stock, and in particular how to finance the necessary investments. Some Member States

are already pro-actively using structural funds. The analysis projects that over the next decade investments in energy-saving building components and equipment will need to be increased by up to € 200 billion. Several Member States have already implemented smart financing schemes, such as prefer-ential interest rates for leveraging private sector investments in the most efficient building solutions. Other private financing models must be explored. As in the transport sector, shifting energy consumption towards low carbon electricity (including heat pumps and storage heaters) and renewable energy (e.g. solar heating, biogas, biomass), also provided through district heating systems, would help to protect consumers against rising fossil fuel prices and bring significant health benefits.

Industrial sectors, including energy intensive industriesThe Commission’s analysis shows that GHG emissions in the industrial sector could be reduced by 83 to 87% in 2050. The application of more advanced resource and energy efficient industrial processes and equipment, increased recycling, as well as abatement technologies for non-CO2 emissions (e.g. nitrous oxide and methane), could make a major contribution by allowing the energy intensive sectors to reduce emissions by half or more. As solutions are sector-specific, the Commis-sion sees a need to develop specific Roadmaps in cooperation with the sectors concerned.

In addition to the application of more advanced industrial processes and equipment, carbon capture and storage would also need to be deployed on a broad scale after 2035, notably to capture industrial process emissions (e.g. in the cement and steel sector). This would entail an annual investment of more than € 10 billion. In a world of global climate action, this would not raise competitiveness concerns. But if the EU’s main competitors would not engage in a similar manner, the EU would need to consider how to further address the risks of carbon leakage due to these additional costs.

As the EU develops its climate policy framework, there will be a need to continue to monitor and analyse the impacts of these measures on the competitiveness of energy-intensive indus-tries in relation to efforts by third countries, and to consider appropriate measures where necessary. The Commission’s analysis confirms earlier findings that the current measures provide adequate safe-guards in the current context and notes the findings on options for addressing carbon leakage as set out in the Communication of May 2010, including on the inclusion of imports into the ETS. The extent to which the existing, adequate safeguards are sufficient will continue to be kept under close review in relation to efforts by third countries. The Commission remains vigilant in order to maintain a strong industrial base in the EU. The Commission will continue to update the list of sectors at risk of carbon leakage as foreseen in the EU ETS Directive. Clearly, the best protection against the risk of carbon leakage would be effective global action.


Raising land use productivity sustainably

The Commission’s analysis shows that by 2050 the agricul-ture sector can reduce non-CO2 emissions by between 42 and 49% compared to 1990. The sector has already achieved a significant reduction. More reductions are feasible in the next two decades. Agricultural policies should focus on options such as further sustainable efficiency gains, efficient fertiliser use, bio-gasification of organic manure, improved manure management, better fodder, local diversification and commer-cialisation of production and improved livestock productivity, as well as maximising the benefits of extensive farming.

Improved agricultural and forestry practices can increase the capacity of the sector to preserve and sequester carbon in soils and forests. This can be achieved, for instance, through targeted measures to maintain grasslands, restore wetlands and peat lands, low- or zero-tillage, to reduce erosion and allow for the development of forests. Agricultural and forestry are also providing the resources for bio-energy and industrial feedstocks, and this contribution is bound to increase further.

The above elements will be further addressed in the Common Agriculture Policy legislative proposals for 2013, of which the positive impacts have not yet been taken into account in the analysis, as well as the forthcoming Bio-economy Communication.

After 2030, the rate of emission reductions in the agricul-tural sector could slow down, in part because of increased agricultural production due to the growing global popula-tion. However, it is important to note that, by 2050, agricul-ture is projected to represent a third of total EU emissions, tripling its share compared to today. Its importance in terms of climate policy is, therefore, set to increase: if it does not achieve the projected emissions reductions, other sectors would need to reduce even more, which would come at a high cost. The farming sector is also potentially at some risk of carbon leakage, so changes in production and trade patterns should not in the longer-term undermine global reduction of emissions. The analysis also considers implications for the agricultural and forestry sector in a global perspective. In 2050, the world will have to feed around 9 billion people. At the same time, tropical forests will have to be preserved as an essential component of tackling climate change and preserving world biodiversity. In addition, mitigation efforts are expected to increase demand for bio-energy alongside existing and increasing demand for feed for animals, timber, paper production and bio-industries. The dual challenges of global food security and action on climate change need to be pursued together. In order to cope with these increased land use requirements in the EU and on a global scale sustainable increases in the productivity delivered by diverse agricultural and forestry systems (both intensive and extensive) will need to continue at rapid pace, not least in developing countries. Any negative impacts on other resources (e.g. water, soil and biodiversity) will need careful management. Accelerating climate change could endanger these productivity improve-ments in a world of insufficient action on climate change.

This also underscores the need to consider all land uses in a holistic manner and address Land Use, Land Use Change and Forestry (LULUCF) in EU climate policy. The Commission is preparing an initiative on this issue later this year. In addition,

paper and wood products should be reused and recycled more to reduce pressure on land use. The analysis took account of global trends towards a greater share of animal products in nutrition. Reversing existing trends of food waste and re-orienting consumption towards less carbon intensive food would be desirable.

4. Investing in a low carbon future

A major increase in capital investments

Various forms of low carbon energy sources, their supporting systems and infrastructure, including smart grids, passive housing, carbon capture and storage, advanced industrial processes and electrification of transport (including energy storage technologies) are key components which are starting to form the backbone of efficient, low carbon energy and transport systems after 2020. This will require major and sustained investment: on average over the coming 40 years, the increase in public and private investment is calculated to amount to around € 270 billion annually. This represents an additional investment of around 1.5% of EU GDP per annum on top of the overall current investment representing 19% of GDP in 2009. It would take us back to the investment levels before the economic crisis. Investments today will determine the future competitiveness of economies. In this context, it is interesting to note the much larger shares of GDP allocated to investments in China (48%), India (35%), and Korea (26%) in 2009, showing emerging economies’ need to build up infrastructure but also the potential in leapfrogging towards a competitive, low carbon economy.

Unlocking the investment potential of the private sector and individual consumers presents a major challenge. While most of this extra investment would be paid back over time through lower energy bills and increased productivity, markets tend to discount future benefits, and disregard long-term risks. A key question is, therefore, how policy can create the framework conditions for such investments to happen, including through new financing models. In the implementation of the 20% energy efficiency target, the Commission will have to monitor the impact of new measures on the ETS in order to maintain the incentives in the ETS rewarding low carbon investments and preparing the ETS sectors for the innovations needed in the future. In this respect, appropriate measures need to be considered, including recalibrating the ETS by setting aside a corresponding number of allowances from the part to be auctioned during the period 2013 to 2020 should a corre-sponding political decision be taken. This would also ensure that the contribution to the energy efficiency target would be made in a cost efficient manner in both, the ETS and non-ETS sectors.

Additional public private financing mechanisms are key in order to overcome initial financing risks and cash flow barriers. Public finance through innovative financing instruments, such as revolving funds, preferential interest rates, guarantee schemes, risk-sharing facilities and blending mechanisms can mobilise and steer the required private finance, including for SMEs and consumers. In this way, limited public finance


can leverage a multitude of private sector investments. The European Investment Bank, the European Bank for Recon-struction and Development, as well as dedicated funding in the next Multi-Annual Financial Framework should play a role in providing additional financing for energy efficient and low carbon technologies.

Increasing domestic investments provide a major opportunity for increased productivity, added value and output from a wide range of EU manufacturing industries (e.g. automotive, power generation, industrial and grid equipment, energy–efficient building materials and the construction sector), which are key industries for the creation of future growth and jobs. Beyond the reductions in greenhouse gas emissions, which are the key benefits of the shift to the low carbon economy, this transition will bring a number of other essential benefits.

Reducing Europe’s energy bill and its dependency on fossil fuel importsTaken over the whole 40-year period, it is estimated that energy efficiency and the switch to domestically produced low carbon energy sources will reduce the EU’s average fuel costs by between € 175 billion and € 320 billion per year. The actual cost saving depends on the extent to which global action on climate change is undertaken. In a scenario of global climate action, less fossils fuel would need to be imported into the EU and the cost of what would still be imported would decline.

If the rest of the world does not take coordinated action, however, a major benefit of EU action would be to protect the economy against high fossil fuel prices. The analysis, as well as the IEA World Energy Outlook 2010, clearly demonstrates that fossil fuel prices are indeed projected to be significantly higher in case of limited global action. This is not only a longterm issue. Even following the recession in the Western world, oil prices are about twice as high as in 2005. The IEA estimated that the EU has seen its import bill rise by $ 70 billion from 2009 to 2010, and that further rises in the foreseeable future are probable. As we experienced in the ‘70s and early ‘80s, oil price shocks can lead to inflation, increasing trade deficits, reduced competitiveness and rising unemployment.

In 2050, the EU’s total primary energy consumption could be about 30% below 2005 levels. More domestic energy resources would be used, in particular renewables. Imports of oil and gas would decline by half compared to today, reducing the negative impacts of potential oil and gas price shocks significantly. Without action the oil and gas import bill could instead double compared to today, a difference of € 400 billion or more per annum by 2050, the equivalent of 3% of today’s GDP.

New jobs

Investing early in the low carbon economy would stimulate a gradual structural change in the economy and can create in net terms new jobs both in the short- and the medium-term. Renewable energy has a strong track record in job creation. In just 5 years, the renewable industry increased its work force from 230 000 to 550 000. Also for the construction sector low carbon investment offers large short-term job opportuni-ties. With some 15 million employees in the EU, it was partic-ularly hard hit by the economic crisis. Its recovery could get a significant boost through a major effort to accelerate the renovation and building of energy efficient houses. The Energy Efficiency Plan confirms the large job creation potential from promoting investments in more efficient equipment.

In the longer-term, the creation and preservation of jobs will depend on the EU’s ability to lead in terms of the devel-opment of new low carbon technologies through increased education, training, programmes to foster acceptability of new technologies, R&D and entrepreneurship, as well as favour-able economic framework conditions for investments. In this context, the Commission has repeatedly emphasized the positive employment benefits if revenues from the auctioning of ETS allowances and CO2 taxation are used to reduce labour costs, with the potential to increase total employment by up to 1.5 million jobs by 2020. As industry takes advantage of the economic opportunities provided by the low carbon economy, the need to ensure a skilled work force, especially in the construction sectors, technical professions, engineering and research, becomes more pressing. This will require targeted vocational training of the existing work force towards “green-collar” job opportunities, addressing emerging skills bottle-necks and fostering these skills in education systems. The Commission is currently working on assessing the employ-ment effects of greening the economy, for instance through the implementation of the Agenda for New Skills and Jobs.

Improving air quality and health

Action to reduce GHG emissions would importantly comple-ment existing and planned air quality measures resulting in significantly reduced air pollution. Electrification of transport, and the expansion of public transport, could strikingly improve air quality in Europe’s cities. The combined effect of GHG reductions and air quality measures would bring about more than 65% lower levels of air pollution in 2030 compared to 2005. In 2030, annual costs of controlling traditional air pollutants could be more than € 10 billion lower, and in 2050 close to € 50 billion could be saved every year. These devel-opments would also reduce mortality, with benefits estimated up to € 17 billion per year in 2030, and up to € 38 billion in 2050. Moreover, public health would be improved, with a reduction in health care costs and damage to ecosystems, crops, materials and buildings. These gains will be important also in the light of the comprehensive review of the EU Air Quality Policy, foreseen for 2013 at the latest, where the aim is to maximise co-benefits with climate policy and minimise negative tradeoffs. In accordance with GREEN BOOK of EPS, all utilities intensivily perform programs of primary measures in prevention of traditional air pollution.


5. The international dimensionThe EU with little more than 10% of global emissions will not be able to tackle climate change on its own. Progress interna-tionally is the only way to solve the problem of climate change, and the EU must continue to engage its partners. By formu-lating and implementing ambitious domestic climate change policies for more than a decade, the EU has brought many other countries on board. The situation today is fundamen-tally different than at the end of 2008 when the EU unilaterally adopted its Climate and Energy Package. At COP15 in Copen-hagen, world leaders agreed that global average temperature should not rise more than 2°C. Today, countries representing more than 80% of global emissions have pledged domestic targets under the Copenhagen Accord and the Cancun agree-ments. For some countries, delivering on these pledges will require stronger action than currently envisaged. This concrete action, sometimes more ambitious than what countries would be ready to commit to internationally, is driven to a significant extent also by other domestic agendas: to accelerate inno-vation, increase energy security and competitiveness in key growth sectors and reduce air pollution. A number of Europe’s key partners from around the world, such as China, Brazil and Korea, are addressing these issues, first through stimulus programmes, and now more and more through concrete action plans to promote the “low carbon economy”. Standstill would mean losing ground in major manufacturing sectors for Europe. In the coming years, implementing these pledges will be a key step in globalising climate change policies. The EU should use this opportunity to strengthen its coopera-tion with its international partners, including to work towards a gradual development of global carbon markets to support efforts of developed and developing countries to implement low-emission development strategies, and ensure that all climate financing contributes to “climate proof” development opportunities.

However, swift implementation of the pledges made since Copenhagen would only achieve part of the reductions needed. A recent report by UNEP estimated that their full implementa-tion would reach 60% of the required emission reductions until 2020. If no firm global action is taken against climate change, temperatures might increase by more than 2°C already by 2050, and more than 4ºC by 2100. In order to avoid this scenario, science indicates that by 2050 global greenhouse gas emissions need to be reduced by at least 50% compared to 1990. With the preparation of this Roadmap, the EU is taking a new initiative to stimulate international negotiations in the run-up to Durban. In this way, the Roadmap is an integral part of a wider strategy to deliver on the objective to keep the global average temperature increase below 2ºC compared to pre-industrial levels. When cooperating with its partners, the EU should take a comprehensive approach intensifying bilateral and multilateral engagements on the broad range of aspects across sectors that touch upon climate policy.

6. ConclusionsThe Commission’s detailed analysis of cost-effective ways of reducing greenhouse gas emissions by 2050 has produced a number of important findings. In order to be in line with the 80 to 95% overall GHG reduction objective by 2050, the Roadmap indicates that a cost effective and gradual transition would require a 40% domestic reduction of greenhouse gas emissions compared to 1990 as a milestone for 2030, and 80% for 2050. Building on what has already been achieved, the EU needs to start working now on appropriate strategies to move in this direction, and all Member States should soon develop national low carbon Roadmaps if not already done. The Commission is prepared to provide some of the necessary tools and policies.

Second, the analysis also shows that with existing policies, the EU will achieve the goal of a 20% GHG reduction domesti-cally by 2020. If the revised Energy Efficiency Plan would be fully and effectively implemented meeting the 20% energy efficiency target, this would enable the EU to outperform the current 20% emission reduction target and achieve 25% reductions. This Communication does not suggest to set new 2020 targets, nor does it affect the EU’s offer in the inter-national negotiations to take on a 30% reduction target for 2020, if the conditions are right. This discussion continues based on the Commission Communication from 26 May 2010.

Third, as well as reducing the threat of dangerous climate change as part of ambitious global action, deep reductions in the EU’s emissions have the potential to deliver benefits in the form of savings on fossil fuel imports and improvements in air quality and public health. Fourth, the Roadmap gives ranges for emissions reductions for 2030 and 2050 for key sectors. To realise these milestones as cost-effectively as possible, and to maximise benefits for EU manufacturing industries, the imple-mentation of the Strategic Energy Technology Plan is of crucial importance. Considering the important labour market implica-tions, the New Skills and Jobs Agenda will need to support the transition process.

The Commission intends to use the Roadmap as a basis for developing sector specific policy initiatives and Roadmaps, such as the 2050 Energy Roadmap and the upcoming White Paper on Transport. The Commission will initiate the appro-priate sectoral dialogues. The Commission will continue to ensure that the EU ETS remains a key instrument to drive low carbon investments in a cost-efficient manner. It will also remain attentive to the risk of carbon leakage in order to ensure a level-playing field for industry. As part of the develop-ment of the next Multi-Annual Financial Framework, it will also examine how EU funding can support instruments and invest-ments that are necessary to carried out.

What does this mean for the renewable energy policy? What was the way chosen?


Renewable Energy Road Map (2007)Renewable energies in the 21st century: building a more sustainable future

1. IntroductionThe EU and the world are at a cross-roads concerning the future of energy. Climate change, increasing dependence on oil and other fossil fuels, growing imports, and rising energy costs are making our societies and economies vulnerable. These challenges call for a comprehensive and ambitious response.

In the complex picture of energy policy, the renewable energy sector is the one energy sector which stands out in terms of ability to reduce greenhouse gas emissions and pollution, exploit local and decentralised energy sources, and stimulate world-class high-tech industries. The EU has compelling reasons for setting up an enabling framework to promote renewables. They are largely indigenous, they do not rely on uncertain projections on the future availability of fuels, and their predominantly decentralised nature makes our societies less vulnerable. It is thus undisputed that renewable energies constitute a key element of a sustainable future.

The European Council of March 2006 called for EU leader-ship on renewable energies and asked the Commission to produce an analysis on how further to promote renewable energies over the long term, for example by raising their share of gross inland consumption to 15% by 2015. The European Parliament has by an overwhelming majority called for a 25 % target for renewable energies in the EU’s overall energy consumption by 2020.

This Road Map, an integral part of the Strategic European Energy Review, sets out a longterm vision for renewable energy sources in the EU. It proposes that the EU establish a mandatory (legally binding) target of 20% for renewable energy’s share of energy consumption in the EU by 2020, explains why it is necessary, and lays down a pathway for mainstreaming renewables into EU energy policies and markets. It further proposes a new legislative framework for the promotion and the use of renewable energy in the European Union. In doing so, it will provide the business community with the long term stability it needs to make rational investment decisions in the renewable energy sector so as to put the European Union on track towards a cleaner, more secure and more competitive energy future. The objectives set out can only be achieved by significantly increasing the contribution from renewable energy sources in all Member States in elec-tricity and transport and in the heating and cooling sector. The challenge is huge, but the proposed target can be achieved with determined and concerted efforts at all levels of govern-ment assuming the energy industry plays its full part in the undertaking.

Reaching the target will generate major greenhouse gas emissions savings, reduce annual fossil fuel consumption by

over 250 Mtoe by 2020, of which approximately 200 Mtoe would have been imported, and spur new technologies and European industries. These benefits will come at an addi-tional cost of between €10-18 billion per year, on average between 2005 and 2020, depending on energy prices. With a conducive regulatory framework, heavy investment has been made in the past in conventional energy sources, notably coal and nuclear energy. The time has now come to do the same for renewable energy sources.

Pursuing an ambitious Energy Policy for Europe, including a more vigorous and ambitious promotion of renewable energy sources, will require changes in policy. It will entail action at all policy and decision making levels. This Road Map sets out a framework for such action.

2. Current contribution of renewable energy

In 1997, the European Union started working towards a target of a 12% share of renewable energy in gross inland consump-tion by 2010 representing a doubling of the contribution from renewable energies compared with 1997. Since then, renewable energies have increased their contribution by 55% in absolute energy terms.

In spite of this progress, current projections indicate that the 12% target will not be met. The EU looks unlikely to reach a contribution from renewable energy sources exceeding 10% by 2010.

There are several reasons for this. Even though the cost of most renewable energy sources is declining - in some cases quite dramatically - at the current stage of energy market develop-ment renewable sources will often not be the short term least cost options. In particular, the failure to systematically include external costs in market prices gives an economically unjusti-fied advantage to fossil fuels compared with renewables.

There are other important reasons why the EU will not meet its objectives for renewable energy. The complexity, novelty and decentralised nature of most renewable energy applica-tions result in numerous administrative problems. These include unclear and discouraging authorisation procedures for planning, building and operating systems, differences in standards and certification and incompatible testing regimes for renewable energy technologies. There are also many examples of opaque and discriminating rules for grid access and a general lack of information at all levels including information for suppliers, customers and installers. All of these factors have contributed to inadequate growth in the renewable energies sector.


The development recorded so far is made up of generally patchy and highly uneven progress across the EU, highlighting that national policies have been inadequate for achieving the EU target. While ambitious policies creating investor certainty have been adopted in some Member States, national policies have proven vulnerable to changing political priorities. The absence of legally binding targets for renewable energies at EU level, the relatively weak EU regulatory framework for the use of renewables in the transport sector, and the complete absence of a legal framework in the heating and cooling

sector, means that progress to a large extent is the result of the efforts of a few committed Member States. Only in the electricity sector has substantial progress been made, on the basis of the Directive on renewable electricity adopted in 2001, and the targets set will almost be met. The differences in the regimes for electricity, biofuels and heating and cooling established at EU level are reflected in the development of the three sectors: clear growth in electricity, the recent start of solid growth in biofuels, and slow growth rates for heating and cooling.

As a further explanation, it should be noted that energy effi-ciency has not been as high as expected and that overall energy consumption therefore has been higher than expected. A considerably bigger contribution from renewable energy sources to reach the 12% target, which is expressed as a percentage of overall energy consumption (as opposed to a share of overall energy production) is thus required. Also, the fact that the 12% objective is expressed as a percentage of primary energy, penalises the contribution of wind energy, a sector which has experienced by far the most significant growth during the period in question. A more detailed account of the situation in the various sectors is set out below.

2.1. Electricity

In accordance with Directive 2001/77/EC, all Member States have adopted national targets for the proportion of electricity consumption from renewable energy sources. If all Member States achieve their national targets, 21% of overall elec-tricity consumption in the EU will be produced from renewable energy sources by 2010. With current policies and efforts in place, and unless current trends change, the European Union will probably achieve a figure of 19% by 2010.

The contribution of renewable energy (electricity, transport and heat) 1990-2004 (Mtoe)

Non-hydro renewable electricity generation in EU-25 (1990-2005)


While this can only be considered a partial success, the European Union will nonetheless come close to its target for renewable electricity by 2010. Since the last Commission report two years ago, renewable electricity (non-hydro) has increased by 50%.

Nine Member States are now fully on track to reach their target, with some of them reaching the target early. Wind energy, in particular, has made good progress and has broken through the target of 40 GW by 2010 five years ahead of schedule. Biomass electricity has gone from a yearly growth rate of 7% in previous years to 13% in 2003 and 23% in 2005. Biomass in 2005 contributed 70 TWh, which means a saving of 35 Mt of CO2 and 14.5 Mtoe less fossil fuel consumption.

Notwithstanding the progress made, this is not the time for self-congratulations. The majority of Member States are still significantly lagging behind in their efforts to achieve the agreed targets. Much more needs to be done.

2.2. Biofuels

Biofuels are the only available large scale substitute for petrol and diesel in transport. Given the precarious security of supply situation for oil (and thus for the transport sector), in 2003 the EU adopted the biofuels directive (2003/30/EC), with the objective of boosting both the production and consumption of biofuels in the EU. Since then the Commission has set out a comprehensive strategy for developing the biofuels sector.

The biofuels directive established a reference value of a 2% share for biofuels in petrol and diesel consumptions in 2005 and 5.75% in 2010. This should be compared to their share of 0.5% in 2003. The indicative targets set by Member States for 2005 were less ambitious, equating to an EU share of 1.4%. The share achieved was even lower, at 1%. Progress was uneven, with only three Member States reaching a share of more than 1%. One Member State, Germany, accounted for two thirds of total EU consumption.

In addition to the cost factor, there are three main reasons for the slow progress. First, appropriate support systems were not in place in most Member States. Second, fuel suppliers have been reluctant to use bioethanol (which accounted for only 20% of total biofuel consumption) because they already have an excess of petrol, and the blending of bioethanol with petrol makes this worse. Third, the EU regulatory framework for biofuels is underdeveloped, particularly in relation to the need for Member States to translate their objectives into action.

Member States are due to adopt national indicative targets for 2010 in 2007. Some have already done so. Most of these have followed the reference value set in the directive (a 5.75% share). Nevertheless, taking into account the disparities between the targets that Member States announced for 2005 and the low shares that many achieved, the 2010 target is unlikely to be achieved with present policies.

From a trade perspective, the EU maintains significant import protection on some types of biofuels, notably ethanol which

has a tariff protection level of around 45% ad valorem. Import duties on other biofuels - biodiesel and vegetable oils - are much lower (between 0 and 5%). If it would appear that supply of sustainable biofuels to the EU is constrained, the EU should be ready to examine whether further market access would be an option to help the development of the market. In any event, the key EU trade policy challenge is to find ways to promote those international exports of biofuels that unambiguously contribute to greenhouse gas reduction and avoid rain forest destruction. In this respect, complementing the incentive/support system described in Section 3.5 below, certification schemes elaborated together with exporting trading partners or producers could be a way forward. But this requires further study and discussion.

2.3. Heating and cooling

The heating and cooling sector accounts for approximately 50% of overall EU final energy consumption and offers a largely cost-effective potential for using renewable energies, notably biomass, solar and geothermal energy. However, with renewables today accounting for less than 10% of the energy consumed for heating and cooling purposes, this potential is far from being exploited.

The Community has not so far adopted any legislation to promote heating and cooling from renewable sources. However, the 12% overall target for renewable energy sources set in 1997 created an implicit target for heating and cooling of an increase from approximately 40 Mtoe in 1997 to 80 Mtoe in 2010. Whilst the directive on the promotion of cogeneration (the CHP Directive) and the Energy Performance of Buildings Directive promote efficient heating, renewable energy in heating has grown only slowly. Biomass use dominates renewable heating consumption and the bulk of this is in domestic wood heating. Little growth has occurred in the use of efficient wood-burning stoves and boilers, or biomass CHP (for industrial use), despite their potential for reducing emissions. Several European countries have promoted other types of renewable heating, with some success. Sweden, Hungary, France and Germany make the greatest use of geothermal heat in Europe; Hungary and Italy lead with low-energy geothermal applications. Sweden has the largest number of heat pumps. Solar thermal energy has taken off in Germany, Greece, Austria and Cyprus. That said, policies and practices vary widely across the EU. There is no coordinated approach, no coherent European market for the technologies, and no consistency of support mechanisms. As a result of the inertia in the heating and cooling sector, even where some of the technologies are cost competitive, the lack of an appropriate policy including targets and the inability to remove administrative barriers and provide consumers with information on available technologies and inadequate distri-bution channels very little progress has been achieved in this sector. As a consequence, the contribution that the heating sector should have provided towards meeting the 12% overall renewable target in 2010 is insufficient.


2.4. Overall progress towards reaching the targets for renewable energy

The 12% target for the contribution from renewables to overall EU energy consumption by 2010 is unlikely to be met. Based on current trends, the EU will not exceed 10% by 2010. This can only be considered a policy failure and a result of the inability or the unwillingness to back political declarations by political and economic incentives. Furthermore, the progress that has been achieved is largely due to efforts made by a rela-tively small number of Member States. This is not equitable and risks distorting the functioning of the internal market.

The European Union has made most progress in the electricity sector. Here, with policies and measures currently in place, the European Union will probably achieve a share of 19% in 2010. However, progress has been uneven across the EU, with Member States with a stable regulatory framework performing best. In transport biofuels, there has been some progress, particularly since the adoption of the Directive, but not enough to reach the targets adopted. In the use of renewable energy sources for heating and cooling there has been hardly any progress since the 1990s.

3. THE WAY FORWARD For renewables to become the “stepping stone” to reaching the dual objective of increased security of supply and reduced greenhouse gas emissions, it is clear that a change in the way in which the EU promotes renewables is needed. Strength-ening and expansion of the current EU regulatory framework is necessary. It is, in particular, important to ensure that all Member States take the necessary measures to increase the share of renewables in their energy mix. Industry, Member States, the European Council and the European Parliament have all called for an increased role for renewable energy sources as stated in the introduction. This section explores a possible way forward to achieve this.

3.1. The principles

On the basis of the experience gained, a number of key prin-ciples for the future renewable energy policy framework need to be established. With a view to significantly increase the share of renewable energy sources in the EU’s energy mix, the Commission considers that such a framework should: – be based on long term mandatory targets and stability of the policy framework, – include increased flexibility in target setting across sectors, – be comprehensive, notably encom-passing heating and cooling, – provide for continued efforts to remove unwarranted barriers to renewable energies deploy-ment, – take into consideration environmental and social aspects, – ensure cost-effectiveness of policies, and – be compatible with the internal energy market.

3.2. An overall EU target

A policy on renewable energies is a cornerstone in the overall EU policy for reducing CO2 emissions. Since the 1990s the EU has taken various measures aimed at promoting renewable

energy, be it in the shape of technology programmes or specific policy initiatives. Policy measures have been adopted in the form of targets, either in a political context such as the 12% renewables target of 1997, or under sector-specific legisla-tion, such as the biofuels and renewable electricity Directives, which also provide a set of measures aimed at facilitating the achievement of the targets set. In many sectors of the economy, targets are used to provide clarity and stability to industry, to allow them to plan and invest with a higher degree of certainty. Providing targets at the European level augments this stabilising impact: EU policy generally has longer time horizons and avoids the destabilising effects of short term domestic political changes. To be effective, targets have to be clearly defined, focussed and mandatory. The “12% renew-ables” target is a good political target, but has proven insuf-ficient to develop the renewable energy sector. The Commis-sion believes that an overall legally binding EU target of 20% of renewable energy sources in gross inland consumption by 2020 is feasible and desirable. Such a share would be fully in line with the level of ambition expressed by the European Council and by the European Parliament.

3.3. A target for biofuels

Biofuels cost more than other forms of renewable energy. But they are currently the only form of renewable energy which can address the energy challenges of the transport sector, including its almost complete reliance on oil and the fact that greenhouse gas reductions in this sector are particu-larly difficult to obtain. Therefore the Commission proposes to include, in the new framework, legally binding minimum targets for biofuels. A clear indication of the future level of these targets is needed now, because manufacturers will soon be building vehicles that will be on the road in 2020 and will need to run on these fuels. The minimum target for biofuels for 2020 should, on the basis of conservative assumptions, related to the availability of sustainably produced feed-stocks, car engine and biofuel production technologies, be fixed at 10% of overall consumption of petrol and diesel in transport. To ensure a smooth implementation of this target, the Commission, in parallel, intends to propose the appro-priate modifications to the fuel quality directive (98/70/EC) including the means of accommodating the share of biofuels.

3.4. National targets and Action Plans; putting policy into practice

Given the largely national basis for support measures in renewable energy, the overall EU target will need to be reflected in mandatory national targets. The contribution of each Member State to achieving the Union’s target will need to take into account different national circumstances. Member States should have flexibility to promote the renewable energies most suitable to their specific potential and priori-ties. The precise way in which Member States plan to achieve their targets should be set out in National Action Plans to be notified to the Commission. These Action Plans should contain sectoral targets and measures consistent with achieving the agreed overall national targets, demonstrating substantial progress compared to the agreed 2010 renewable energy


targets. In implementing the national targets in practice, Member States will need to set their own specific objectives for electricity, biofuels and heating and cooling, which would be verified by the Commission to ensure that the overall target is being met. Proposals for legislation on the overall target and the minimum target for biofuels, together with provisions to facilitate a higher uptake of renewable energies in the three sectors, including the necessary monitoring mechanisms will be put forward in 2007. This process should ensure that the overall EU target is met in a fair and equitable manner and should clearly strengthen the existing political and legal framework.

“How do we get there?

The share of renewable energy in overall energy consumption has been growing, but too slowly. Having carefully examined the feasibility and the technical and economic potential including variant breakdowns between the renewable energy subsectors, the Commission has come to the conclusion that the overall objective of a 20% contribution of renewable energy to the EU energy mix is possible and necessary. Meeting this target will require a massive growth in all three renewable energy sectors, but it is feasible.

Electricity production from renewables could increase from the current 15% to approximately 34% of overall electricity consumption in 2020. Wind could contribute 12% of EU elec-tricity by 2020. One third of this will more than likely come from offshore installations. This is feasible, for example, currently 18% of electricity consumption is covered by wind in Denmark. In Spain and Germany this is 8% and 6% respectively. The biomass sector can grow significantly using wood, energy crops and bio-waste in power stations. The remaining novel technolo-gies, i.e. photovoltaic (PV), solar thermal power, wave & tidal power, will grow more rapidly as their costs come down. PV costs, for example, are expected to fall by 50% by 2020. An illustration of a projection for the electricity sector is set out in the annex. To meet the overall target in 2020, the contribution from renewables in the heating and cooling sector could more than double, compared with the current share of 9%. Most of the growth could come from biomass and will involve more efficient household systems and highly efficient biomass-fired combined heat and power stations. The rest could come from geothermal and solar installations. Sweden for example has over 185 000 installed geothermal heat pumps, half of the total number installed in Europe. If the rest of the Union followed this rate of installation, geothermal sources would provide a further 15 Mtoe in Europe. Similarly, German and Austrian levels of solar heating installations applied across the EU could lead to a contribution of 12 Mtoe. In other words, a large proportion of the targets can be reached by applying current best practices.

Biofuels could contribute 43 Mtoe, corresponding to 14% of the market for transport fuels. The growth would come both from bioethanol (which in Sweden has already achieved a 4% share of the petrol market and in Brazil, the world leader, more than 20%) and from biodiesel, which in Germany, the world leader, has already achieved a 6% share of the diesel market. Domesti-cally grown cereals and tropical sugar cane would be the main ethanol feedstocks, later complemented by cellulosic ethanol from straw and wastes. Rapeseed oil, both domestically grown

and imported, would remain the main biodiesel feedstock, complemented by smaller quantities of soy and palm oil and later by second-generation biofuels, i.e. Fischer-Tropsch diesel mostly from farmed wood.”

3.5. Promotional policies and flanking measures

In addition to the legislative measures outlined above and their application by Member States, the Commission will take the following action:

– propose strengthening the legal provisions to remove any unreasonable barrier to the integration of renew-able energy sources in the EU energy system. Conditions for grid connections and extensions must be simplified. Some Member States have a panoply of permission pro-cedures to be complied with in order to construct renew-able energy systems. This must be reduced. Building codes normally ignore renewable energies. Red tape for innovative small and medium-sized enterprises must be eliminated. To this effect, the Commission will continue to stringently apply the Renewable Electricity Directive;

– propose legislation to address the barriers to growth in the use of renewable energies in the heating and cooling sector including administrative obstacles, inadequate dis-tribution channels, inappropriate building codes and lack of market information;

– take further action to improve the functioning of the inter-nal electricity market considering the development of renewable energies. Improved transparency, unbundling, higher interconnectors capacity, all improve the opportu-nity for new innovative renewable energy players to enter the market;

– re-examine, in 2007, the situation concerning Member States’ support systems for renewable energies with a view to assessing their performance and the need to propose harmonising support schemes for renewables in the context of the EU internal electricity market. While national schemes for renewable energy in electricity may still be needed for a transitional period until the internal market is fully operational, harmonised support schemes should be the long term objective;

– promote a proposal for an incentive/support system for biofuels that, for instance, discourages the conversion of land with high biodiversity value for the purpose of cul-tivating biofuel feedstocks; discourages the use of bad systems for biofuel production; and encourages the use of second-generation production processes;

– continue to promote the use of renewable energy sources in public procurement for fostering clean energies, in par-ticular with regard to transport;

– continue to pursue a balanced approach in ongoing free trade negotiations with ethanol produced countries/regions, respecting the interests of domestic produc-ers and EU trading partners, within the context of rising demand for biofuels;

– continue to co-operate closely with grid authorities, Euro-pean electricity regulators and renewable industry to enable a better integration of renewable energy sources into the power grid, with particular attention


paid to the special requirements related to much larger deployment of off-shore wind energy, notably as regards cross-border grid connections. Opportunities provided by the TEN-E scheme should be examined and work on a European offshore super-grid should be initiated;

– exploit fully the possibilities offered by the Community’s financial instruments notably the Structural and Cohe-sion funds, the Rural Development funds, and the financial support made available through the Community’s interna-tional co-operation programmes to support the develop-ment of renewable energy sources in the EU and beyond;

– continue to promote the exchange of best practices on renewable energy sources, using different information and debate platforms, such as the existing Amsterdam Forum. In the context of the Commission initiative on Regions for Economic Change, the Commission will also establish net-works of regions and cities to boost the sharing of best practices for sustainable energy use;

– continue to internalise external costs of conventional fossil energy (inter alia by means of energy taxation);

– reap all the opportunities offered for renewable energy by the result-oriented actions of the forthcoming European Strategic Energy Technology Plan (SET-Plan);

– promote the use of renewable energy sources in its exter-nal energy policies and favour opportunities for sustain-able development in developing countries;

– fully implement the Biomass Action Plan adopted by the Commission in December 2005. Biomass offers great potential and major benefits in other Community policies;

– continue to use the Intelligent Energy for Europe pro-gramme to help bridge the gap between successful dem-onstration of innovative technologies and effective market entrance to achieve mass deployment and to boost large-scale investment across the EU in new and best performing technologies and to ensure that renewable energy is given the highest priority in the sustained efforts to maximise the use of the EU research and technology devel-opment programmes in support of zero- or low carbon energy technologies whilst developing synergies with Member States involved in similar development. In addi-tion to these Commission initiatives, it should be under-lined that Member States, regional and local authorities have to make a significant contribution towards increas-ing the use of renewables. Currently, Member States use various policy tools to promote renewables, including feed-in tariffs, premium systems, green certificates, tax exemptions, obligations on fuel suppliers, public procure-ment policy and research technology and development. To make progress towards the proposed new targets, Member States will have to make further use of the range of policy instruments at their disposal, in compliance with the provisions of the EC Treaty.

Member States and/or local and regional authorities are in particular called upon to:

– ensure that authorisation procedures are simple, rapid and fair with clear guidelines for authorisation including as appropriate, appointing one-stop authorisation agencies responsible for coordinating administrative procedures related to renewable energy sources;

– improve pre-planning mechanisms whereby regions and municipalities are required to assign suitable locations for renewable energies;

– integrate renewable energies in regional and local plans.

4. Assessment of the impact of achieving the target for renewables

The impact assessment, which accompanies this Road Map, provides a detailed account of the various impacts of the measures set out above and compares the impacts of various alternative policy options.

This section of the Road Map provides a brief overview of the findings.

4.1. Impact on greenhouse gas emissions and other environmental impacts

The importance of climate change has never been greater. The Environment Council of 10 March 2005 concluded that “reduction pathways by the group of developed countries in the order of 15-30% by 2020 compared to the 1990 baseline envisaged in the Kyoto Protocol should be considered.” Greenhouse gas emissions, including CO2 emissions, from renewable energy sources are either low or zero. Increasing the share of renewables in the EU fuel mix will therefore result in significantly lower greenhouse gas emissions. The addi-tional renewable energy deployment needed to achieve the 20% target will reduce annual CO2 emissions in a range of 600-900 Mt in 2020. Considering a CO2-price of 25 €/per tonne, the additional total CO2 benefit can be calculated at a range of €150-€200 billion. Actual CO2 prices will depend on the future international climate regime. The breakdown of the CO2 emissions avoided is set out in the annex. Replacing fossil fuels also has generally positive air quality benefits. These are especially positive in the electricity sector.

4.2. Security of energy supply

Renewable energy contributes to security of supply by increasing the share of domestically produced energy, diver-sifying the fuel mix, diversifying the sources of energy imports and increasing the proportion of energy obtained from politi-cally stable regions. The EU will strengthen its position on all these measures of security of supply if it achieves the proposed share of renewable energy. Benefits are seen in all sectors and are particularly marked in transport. One way to sum up the benefits is to look at the quantity of fossil fuels displaced by renewable energies. Assuming the EU achieved 20% deploy-ment of renewables, the annual reduction in fossil fuel demand can be calculated to be 252 Mtoe from 2020 onwards. This figure is equivalent to the total combined energy consumption of the UK, Latvia and Lithuania. About 200 Mtoe of this saving would come from imports, including 55 Mtoe of oil and 90 Mtoe of gas, predominantly from the Middle East and CIS countries.


4.3. Cost and competitiveness

In contrast to conventional energy sources, there has been a continued and significant reduction in the cost for renewables over the last 20 years. As an example, the cost of wind energy per kWh has fallen by 50% over the last 15 years while at the same time the size of the turbines has increased by a factor of 10. Solar photovoltaic systems today are more than

60% cheaper than they were in 1990. Despite this, as stated in Section 2, the cost of renewable energies varies signifi-cantly according to the resource base and the technologies concerned, but generally still exceeds that of conventional energy sources at present. This is illustrated in the graph below.

Energy market price signals remain distorted in favour of non-renewable energy sources, in particular due to the continued failure to systematically internalise external costs. Although external costs are partially internalised through the EU’s Emission Trading System, fiscal instruments or support

frameworks for renewable energy sources, current market prices are still far from reflecting true cost. Figure below illus-trates how many renewable energy technologies would be more able to compete with conventional fuels if external costs were reflected in prices.

Average heating, transport and electricity cost (€/MWh)

Average heating, transport and electricity cost including external cost (€/MWh)


Reaching the target for renewable energy in the EU by 2020 will entail additional cost. The size of this will depend on the finance mix, the technology choices made and the degree of competi-tion in the sector. Above all, however, the cost will depend on international prices for conventional energy sources, notably oil. The annual additional cost of increasing the contribution of renewables to the proposed share by 2020 is defined as the total costs of generation of renewable minus the reference cost of conventional energy production. A balanced mix of renewable technologies, combined with low international oil prices ($48), will result in an additional average annual cost of achieving the proposed share of renewable energy of approxi-mately €18 billion. Strong research and development efforts will certainly lower the costs of renewable energies and thus the overall cost of this policy. The exact choice of the tech-nologies could reduce this average cost by approximately €2 billion per year.

“How much will society pay for a 20% share of renewable energies?

The cost of accelerated growth of renewable energy cited above should be seen in the context of projected total energy infra-structure investments before 2030, estimated at more than $2 trillion. Some of this will be financed from profits, some from taxes, and some must clearly come from consumers, i.e. from higher energy bills.

It is important to note, that the main factor influencing the cost of a renewable portfolio is oil price. Under a scenario with oil prices at $78/barrel by 2020, the additional average annual cost would fall to €10.6 billion. By comparison, the EU’s total energy bill is expected to be about €350 billion that year.

Bearing in mind the significant greenhouse gas savings that will occur as a direct consequence of an accelerated fuel switch from fossil fuels to renewable energies carbon prices of €25 per tonne combined with high oil prices (78$) would almost entirely cover the additional cost associated with reaching the proposed share of renewable energy.”

Marginal costs of renewable energies are often low compared to conventional energy sources, and therefore a gradual increase in renewable energies in the wholesale electricity market will reduce the wholesale market prices of electricity. The net effect on power costs to consumers is thus constituted of two counteracting effects. For the electricity sector, based on the assumption of a reference spot price of €48.6 per MWh for electricity, consumer electricity prices could be 5% higher due to the extra investment in renewable energy. Whether or not energy efficiency measures are applied is also of key importance and the range cited above assumes energy effi-ciency policies. Without these, the average annual additional cost would increase by more than €7 billion annually. Full details of the cost analysis can be found in the impact assess-ment report.

The European Council in March 2006 decided to refocus the Lisbon Strategy on jobs and growth. The renewable energy sector in the EU has achieved global leadership and has a turnover of €20 billion and employs 300 000 people. In order to maintain this role, the EU needs to continue to expand the deployment of renewable energy technologies in the EU. Studies vary in their estimates of the GDP impact of increasing

the use of renewable energy, some suggesting a small increase (of the order of 0.5%), and others a small decrease. Studies also suggest that support for renewable energy will lead to a small net increase in employment. Much of the economic activity generated by support for renewable energy is located in agricultural areas, often in peripheral regions.

Further business opportunities will arise from the export of renewable energy technology. Traditionally the EU wind industry has held a position as the global market leader. It currently holds a 60% world market share. Other renewable technologies are currently experiencing spectacular growth, for example, solar thermal appliances, for which the Chinese market has taken off and currently accounts for more than 50% of global solar thermal installations. Of the employment created in Germany by the wind energy sector – evaluated at 60 000 full time jobs –half is due to the export market.

With a strong renewable energy strategy the EU would be well placed to maintain its leading role in renewable energy research, and would benefit from increased opportunities for renewable energy technology exports.

5. CONCLUSION With this Road Map the Commission sets out an important part of its strategic vision for the energy future of Europe. It seeks to significantly accelerate the growth in renewable energy, and proposes that the EU achieve a contribution of 20% of its energy mix from renewable energy sources by 2020. The Commission requests the Spring Council and the European Parliament to endorse this target. This will require a substantial strengthening of the EU regulatory framework. Most importantly, the Commission is convinced that a legally binding target for the overall contribution of renewables to the EU’s energy mix plus mandatory minimum targets for biofuels are now called for. This policy will be a major step along the road to sustainability.

Reaching this target is technically and economically feasible. Additional average costs compared to conventional supply options will depend on future innovation rates and conven-tional energy prices and would range between €10.6 to €18 billion per year. The additional renewable energy deployment needed to achieve the 20% target will reduce annual CO2 emission by approximately 700 Mt in 2020. The value of this significant reduction in greenhouse gas emissions would nearly cover the total additional cost under high energy prices. At the same time the EU will strengthen its position on security of supply reducing fossil fuel demand by over 250 Mtoe in 2020. Until this new legislation enters into force, the current legislative framework, notably for electricity and biofuels, will be vigorously enforced.

No-one can predict oil prices or gas prices over a 20 years period, but it would be imprudent not to start investing to reduce the uncertainties of the EU’s energy future. To put the principles and proposals set out in this Road Map into practice, it will be followed by proposals for new legislation in 2007. New legislation will build on and strengthen the existing legis-lative framework for the post 2010 period. Member States should engage in a process to share the overall target in a fair


and equitable manner, taking into account national circum-stances and choices, while at the same time indicating the way in which they intend to make progress in all three sectors in accordance with the agreed target. This policy aims to create a true internal market in which renewable technologies can thrive. It will provide the business community with the certainty and stability it needs to make its investment decisions while at the same time give Member States the flexibility they need to support this policy in line with their national circumstances.

The Road Map builds on the reputation and the leading role the EU renewable energy industry sector holds in the world. The objective is to confirm the EU as a world leader in this sector. In view of increased global competition and the fact that other

key players are putting in place vigorous promotional policies on renewables, meeting this objective involves significant challenges for Europe. Failing to rise to this challenge, through inaction or lack of vision, would seriously endanger our leader-ship in this field, the importance of which reaches far beyond the energy sector.

Most importantly, this Road Map provides EU citizens with the assurance they seek from their policy makers: that the serious problems of climate change and environmental degrada-tion and of security of supply are being given equally serious answers.

Several pictures give more detailed information:

Renewable energy source share of gross inland consumption in 2004 (Source: Eurostat)

Renewables growth: Electricity projections by 2020


Avoided CO2 emissions due to new RES deployment up to 2020 in the EU-25


A decisive directive has been adopted making parts of the renewable strategy issues legally binding:

Directive 2009/28/EC (23.04.2009)on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC

Before delivering the nearly integral text some short remarks:

The key targets the EU Member States have to comply with are shown in the next graph:

It shows the share of renewables of each Member State in 2005, the mandatory increase of 5,5% and other elements deriving from the Directive! If Member States will comply this has a land breaking effect!

This graph shows the shares of renewables in energy consumption in 2020 for each Member State.


The following is the text of the Directive, here included due to its outstanding importance with the respect to renewable electricity production in Europe (countries adhering to EU legislaton).

Whereas:1. The control of European energy consumption and

the increased use of energy from renewable sources, together with energy savings and increased energy efficiency, constitute important parts of the package of measures needed to reduce greenhouse gas emissions and comply with the Kyoto Protocol to the United Nations Framework Convention on Climate Change, and with further Community and international greenhouse gas emission reduction commitments beyond 2012. Those factors also have an important part to play in promoting the security of energy supply, promoting technological development and innovation and providing opportunities for employment and regional development, especially in rural and isolated areas.

2. In particular, increasing technological improvements, incentives for the use and expansion of public transport, the use of energy efficiency technologies and the use of energy from renewable sources in transport are some of the most effective tools by which the Community can reduce its dependence on imported oil in the transport sector, in which the security of energy supply problem is most acute, and influence the fuel market for transport.

3. The opportunities for establishing economic growth through innovation and a sustainable competitive energy policy have been recognised. Production of energy from renewable sources often depends on local or regional small and medium-sized enterprises (SMEs). The oppor-tunities for growth and employment that investment in regional and local production of energy from renewable sources bring about in the Member States and their regions are important. The Commission and the Member States should therefore support national and regional development measures in those areas, encourage the exchange of best practices in production of energy from renewable sources between local and regional develop-ment initiatives and promote the use of structural funding in this area.

4. When favouring the development of the market for renewable energy sources, it is necessary to take into account the positive impact on regional and local devel-opment opportunities, export prospects, social cohesion and employment opportunities, in particular as concerns SMEs and independent energy producers.

5. In order to reduce greenhouse gas emissions within the Community and reduce its dependence on energy imports, the development of energy from renewable sources should be closely linked to increased energy efficiency.

6. It is appropriate to support the demonstration and com-mercialisation phase of decentralised renewable energy technologies. The move towards decentralised energy production has many benefits, including the utilisation of local energy sources, increased local security of energy supply, shorter transport distances and reduced energy transmission losses. Such decentralisation also fosters

community development and cohesion by providing income sources and creating jobs locally.

7. Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market and Directive 2003/30/EC of the European Parliament and of the Council of 8 May 2003 on the promotion of the use of biofuels or other renewable fuels for transport established defi-nitions for different types of energy from renewable sources. Directive 2003/54/EC of the European Parlia-ment and of the Council of 26 June 2003 concerning common rules for the internal market in electricity estab-lished definitions for the electricity sector in general. In the interests of legal certainty and clarity it is appropriate to use the same or similar definitions in this Directive.

8. The Commission communication of 10 January 2007 entitled “Renewable Energy Roadmap — Renewable energies in the 21st century: building a more sustain-able future” demonstrated that a 20 % target for the overall share of energy from renewable sources and a 10 % target for energy from renewable sources in transport would be appropriate and achievable objec-tives, and that a framework that includes mandatory targets should provide the business community with the long-term stability it needs to make rational, sustainable investments in the renewable energy sector which are capable of reducing dependence on imported fossil fuels and boosting the use of new energy technologies. Those targets exist in the context of the 20 % improvement in energy efficiency by 2020 set out in the Commission communication of 19 October 2006 entitled “Action Plan for Energy Efficiency: Realising the Potential”, which was endorsed by the European Council of March 2007, and by the European Parliament in its resolution of 31 January 2008 on that Action Plan.

9. The European Council of March 2007 reaffirmed the Community’s commitment to the Community-wide development of energy from renewable sources beyond 2010. It endorsed a mandatory target of a 20 % share of energy from renewable sources in overall Community energy consumption by 2020 and a mandatory 10 % minimum target to be achieved by all Member States for the share of biofuels in transport petrol and diesel con-sumption by 2020, to be introduced in a cost-effective way. It stated that the binding character of the biofuel target is appropriate, subject to production being sus-tainable, second-generation biofuels becoming com-mercially available and Directive 98/70/EC of the European Parliament and of the Council of 13 October 1998 relating to the quality of petrol and diesel fuels being amended to allow for adequate levels of blending. The European Council of March 2008 repeated that it is essential to develop and fulfil effective sustainability cri-teria for biofuels and ensure the commercial availability of second-generation biofuels. The European Council of June 2008 referred again to the sustainability criteria and the development of second-generation biofuels, and underlined the need to assess the possible impacts of biofuel production on agricultural food products and to take action, if necessary, to address shortcomings. It also


stated that further assessment should be made of the environmental and social consequences of the produc-tion and consumption of biofuels.

10. In its resolution of 25 September 2007 on the Road Map for Renewable Energy in Europe, the European Parlia-ment called on the Commission to present, by the end of 2007, a proposal for a legislative framework for energy from renewable sources, referring to the importance of setting targets for the shares of energy from renewable sources at Community and Member State level.

11. It is necessary to set transparent and unambiguous rules for calculating the share of energy from renewable sources and for defining those sources. In this context, the energy present in oceans and other water bodies in the form of waves, marine currents, tides, ocean thermal energy gradients or salinity gradients should be included.

12. The use of agricultural material such as manure, slurry and other animal and organic waste for biogas produc-tion has, in view of the high greenhouse gas emission saving potential, significant environmental advantages in terms of heat and power production and its use as biofuel. Biogas installations can, as a result of their decentralised nature and the regional investment structure, contribute significantly to sustainable development in rural areas and offer farmers new income opportunities.

13. In the light of the positions taken by the European Parlia-ment, the Council and the Commission, it is appropriate to establish mandatory national targets consistent with a 20 % share of energy from renewable sources and a 10 % share of energy from renewable sources in trans-port in Community energy consumption by 2020.

14. The main purpose of mandatory national targets is to provide certainty for investors and to encourage continu-ous development of technologies which generate energy from all types of renewable sources. Deferring a decision about whether a target is mandatory until a future event takes place is thus not appropriate.

15. The starting point, the renewable energy potential and the energy mix of each Member State vary. It is there-fore necessary to translate the Community 20 % target into individual targets for each Member State, with due regard to a fair and adequate allocation taking account of Member States’ different starting points and potentials, including the existing level of energy from renewable sources and the energy mix. It is appropriate to do this by sharing the required total increase in the use of energy from renewable sources between Member States on the basis of an equal increase in each Member State’s share weighted by their GDP, modulated to reflect their start-ing points, and by accounting in terms of gross final con-sumption of energy, with account being taken of Member States’ past efforts with regard to the use of energy from renewable sources.

16. By contrast, it is appropriate for the 10 % target for energy from renewable sources in transport to be set at the same level for each Member State in order to ensure consistency in transport fuel specifications and availabil-ity. Because transport fuels are traded easily, Member States with low endowments of the relevant resources will easily be able to obtain biofuels from elsewhere. While it would technically be possible for the Community

to meet its target for the use of energy from renewable sources in transport solely from domestic production, it is both likely and desirable that the target will in fact be met through a combination of domestic production and imports. To this end, the Commission should monitor the supply of the Community market for biofuels, and should, as appropriate, propose relevant measures to achieve a balanced approach between domestic production and imports, taking into account, inter alia, the development of multilateral and bilateral trade negotiations, environ-mental, social and economic considerations, and the security of energy supply.

17. The improvement of energy efficiency is a key objec-tive of the Community, and the aim is to achieve a 20 % improvement in energy efficiency by 2020. That aim, together with existing and future legislation including Directive 2002/91/EC of the European Parliament and of the Council of 16 December 2002 on the energy performance of buildings, Directive 2005/32/EC of the European Parliament and of the Council of 6 July 2005 establishing a framework for the setting of ecodesign requirements for energy-using products, and Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use efficiency and energy services, has a critical role to play in ensuring that the climate and energy objectives are being achieved at least cost, and can also provide new opportunities for the European Union’s economy. Energy efficiency and energy saving policies are some of the most effective methods by which Member States can increase the percentage share of energy from renewable sources, and Member States will thus more easily achieve the overall national and transport targets for energy from renewable sources laid down by this Directive.

18. It will be incumbent upon Member States to make sig-nificant improvements in energy efficiency in all sectors in order more easily to achieve their targets for energy from renewable sources, which are expressed as a per-centage of gross final consumption of energy. The need for energy efficiency in the transport sector is imperative because a mandatory percentage target for energy from renewable sources is likely to become increasingly dif-ficult to achieve sustainably if overall demand for energy for transport continues to rise. The mandatory 10 % target for transport to be achieved by all Member States should therefore be defined as that share of final energy consumed in transport which is to be achieved from renewable sources as a whole, and not from biofuels alone.

19. To ensure that the mandatory national overall targets are achieved, Member States should work towards an indica-tive trajectory tracing a path towards the achievement of their final mandatory targets. They should establish a national renewable energy action plan including informa-tion on sectoral targets, while having in mind that there are different uses of biomass and therefore it is essential to mobilise new biomass resources. In addition, Member States should set out measures to achieve those targets. Each Member State should assess, when evaluating its expected gross final consumption of energy in its national renewable energy action plan, the contribution


which energy efficiency and energy saving measures can make to achieving its national targets. Member States should take into account the optimal combination of energy efficiency technologies with energy from renew-able sources.

20. To permit the benefits of technological progress and economies of scale to be reaped, the indicative trajectory should take into account the possibility of a more rapid growth in the use of energy from renewable sources in the future. Thus special attention can be given to sectors that suffer disproportionately from the absence of tech-nological progress and economies of scale and therefore remain under-developed, but which, in future, could sig-nificantly contribute to reaching the targets for 2020.

21. The indicative trajectory should take 2005 as its start-ing point because that is the latest year for which reli-able data on national shares of energy from renewable sources are available.

22. The achievement of the objectives of this Direc-tive requires that the Community and Member States dedicate a significant amount of financial resources to research and development in relation to renewable energy technologies. In particular, the European Institute of Innovation and Technology should give high priority to the research and development of renewable energy technologies.

23. Member States may encourage local and regional authorities to set targets in excess of national targets and to involve local and regional authorities in drawing up national renewable energy action plans and in raising awareness of the benefits of energy from renewable sources.

24. In order to exploit the full potential of biomass, the Com-munity and the Member States should promote greater mobilisation of existing timber reserves and the develop-ment of new forestry systems.

25. Member States have different renewable energy poten-tials and operate different schemes of support for energy from renewable sources at the national level. The major-ity of Member States apply support schemes that grant benefits solely to energy from renewable sources that is produced on their territory. For the proper function-ing of national support schemes it is vital that Member States can control the effect and costs of their national support schemes according to their different potentials. One important means to achieve the aim of this Direc-tive is to guarantee the proper functioning of national support schemes, as under Directive 2001/77/EC, in order to maintain investor confidence and allow Member States to design effective national measures for target compliance. This Directive aims at facilitating cross-bor-der support of energy from renewable sources without affecting national support schemes. It introduces optional cooperation mechanisms between Member States which allow them to agree on the extent to which one Member State supports the energy production in another and on the extent to which the energy production from renew-able sources should count towards the national overall target of one or the other. In order to ensure the effec-tiveness of both measures of target compliance, i.e. national support schemes and cooperation mechanisms,

it is essential that Member States are able to determine if and to what extent their national support schemes apply to energy from renewable sources produced in other Member States and to agree on this by applying the cooperation mechanisms provided for in this Directive.

26. It is desirable that energy prices reflect external costs of energy production and consumption, including, as appro-priate, environmental, social and healthcare costs.

27. Public support is necessary to reach the Community’s objectives with regard to the expansion of electricity pro-duced from renewable energy sources, in particular for as long as electricity prices in the internal market do not reflect the full environmental and social costs and ben-efits of energy sources used.

28. The Community and the Member States should strive to reduce total consumption of energy in transport and increase energy efficiency in transport. The principal means of reducing consumption of energy in transport include transport planning, support for public transport, increasing the share of electric cars in production and producing cars which are more energy efficient and smaller both in size and in engine capacity.

29. Member States should aim to diversify the mix of energy from renewable sources in all transport sectors. The Commission should present a report to the European Parliament and the Council by 1 June 2015 outlining the potential for increasing the use of energy from renewable sources in each transport sector.

30. In calculating the contribution of hydropower and wind power for the purposes of this Directive, the effects of climatic variation should be smoothed through the use of a normalisation rule. Further, electricity produced in pumped storage units from water that has previously been pumped uphill should not be considered to be elec-tricity produced from renewable energy sources.

31. Heat pumps enabling the use of aerothermal, geother-mal or hydrothermal heat at a useful temperature level need electricity or other auxiliary energy to function. The energy used to drive heat pumps should therefore be deducted from the total usable heat. Only heat pumps with an output that significantly exceeds the primary energy needed to drive it should be taken into account.

32. Passive energy systems use building design to harness energy. This is considered to be saved energy. To avoid double counting, energy harnessed in this way should not be taken into account for the purposes of this Directive.

33. Some Member States have a large share of aviation in their gross final consumption of energy. In view of the current technological and regulatory constraints that prevent the commercial use of biofuels in aviation, it is appropriate to provide a partial exemption for such Member States, by excluding from the calculation of their gross final consumption of energy in national air trans-port, the amount by which they exceed one-and-a-half times the Community average gross final consumption of energy in aviation in 2005, as assessed by Euro-stat, i.e. 6,18 %. Cyprus and Malta, due to their insular and peripheral character, rely on aviation as a mode of transport, which is essential for their citizens and their economy. As a result, Cyprus and Malta have a gross final consumption of energy in national air transport which


is disproportionally high, i.e. more than three times the Community average in 2005, and are thus dispropor-tionately affected by the current technological and regu-latory constraints. For those Member States it is there-fore appropriate to provide that the exemption should cover the amount by which they exceed the Community average gross final consumption of energy in aviation in 2005 as assessed by Eurostat, i.e. 4,12 %.

34. To obtain an energy model that supports energy from renewable sources there is a need to encourage strate-gic cooperation between Member States, involving, as appropriate, regions and local authorities.

35. Whilst having due regard to the provisions of this Direc-tive, Member States should be encouraged to pursue all appropriate forms of cooperation in relation to the objectives set out in this Directive. Such cooperation can take place at all levels, bilaterally or multilaterally. Apart from the mechanisms with effect on target calculation and target compliance, which are exclusively provided for in this Directive, namely statistical transfers between Member States, joint projects and joint support schemes, cooperation can also take the form of, for example, exchanges of information and best practices, as provided for, in particular, in the transparency platform estab-lished by this Directive, and other voluntary coordination between all types of support schemes.

36. To create opportunities for reducing the cost of achieving the targets laid down in this Directive, it is appropriate both to facilitate the consumption in Member States of energy produced from renewable sources in other Member States, and to enable Member States to count energy from renew-able sources consumed in other Member States towards their own national targets. For this reason, flexibility mea-sures are required, but they remain under Member States’ control in order not to affect their ability to reach their national targets. Those flexibility measures take the form of statistical transfers, joint projects between Member States or joint support schemes.

37. It should be possible for imported electricity, produced from renewable energy sources outside the Commu-nity, to count towards Member States’ targets. However, to avoid a net increase in greenhouse gas emissions through the diversion of existing renewable sources and their complete or partial replacement by conventional energy sources, only electricity produced by renew-able energy installations that become operational after the entry into force of this Directive or by the increased capacity of an installation that was refurbished after that date should be eligible to be counted. In order to guaran-tee an adequate effect of energy from renewable sources replacing conventional energy in the Community as well as in third countries it is appropriate to ensure that such imports can be tracked and accounted for in a reliable way. Agreements with third countries concerning the organisation of such trade in electricity from renewable energy sources will be considered. If, by virtue of a deci-sion taken under the Energy Community Treaty to that effect, the contracting parties to that treaty become bound by the relevant provisions of this Directive, the measures of cooperation between Member States pro-vided for in this Directive will be applicable to them.

38. When Member States undertake joint projects with one or more third countries regarding the production of elec-tricity from renewable energy sources, it is appropriate that those joint projects relate only to newly constructed installations or to installations with newly increased capacity. This will help ensure that the proportion of energy from renewable sources in the third country’s total energy consumption is not reduced due to the importation of energy from renewable sources into the Community. In addition, the Member States concerned should facilitate the domestic use by the third country concerned of part of the production of electricity by the installations covered by the joint project. Furthermore, the third country concerned should be encouraged by the Commission and Member States to develop a renewable energy policy, including ambitious targets.

39. Noting that projects of high European interest in third countries, such as the Mediterranean Solar Plan, may need a long lead-time before being fully interconnected to the territory of the Community, it is appropriate to facilitate their development by allowing Member States to take into account in their national targets a limited amount of electricity produced by such projects during the construction of the interconnection.

40. The procedure used by the administration responsible for supervising the authorisation, certification and licens-ing of renewable energy plants should be objective, transparent, non-discriminatory and proportionate when applying the rules to specific projects. In particular, it is appropriate to avoid any unnecessary burden that could arise by classifying renewable energy projects under installations which represent a high health risk.

41. The lack of transparent rules and coordination between the different authorisation bodies has been shown to hinder the deployment of energy from renewable sources. There-fore the specific structure of the renewable energy sector should be taken into account when national, regional and local authorities review their administrative procedures for giving permission to construct and operate plants and associated transmission and distribution network infra-structures for the production of electricity, heating and cooling or transport fuels from renewable energy sources. Administrative approval procedures should be stream-lined with transparent timetables for installations using energy from renewable sources. Planning rules and guide-lines should be adapted to take into consideration cost-effective and environmentally beneficial renewable heating and cooling and electricity equipment.

42. For the benefit of rapid deployment of energy from renewable sources and in view of their overall high sus-tainable and environmental beneficial quality, Member States should, when applying administrative rules, plan-ning structures and legislation which are designed for licensing installations with respect to pollution reduc-tion and control for industrial plants, for combating air pollution and for the prevention or minimisation of the discharge of dangerous substances in the environment, take into account the contribution of renewable energy sources towards meeting environmental and climate change objectives, in particular when compared to non-renewable energy installations.


43. In order to stimulate the contribution by individual citi-zens to the objectives set out in this Directive, the rel-evant authorities should consider the possibility of replacing authorisations by simple notifications to the competent body when installing small decentralised devices for producing energy from renewable sources.

44. The coherence between the objectives of this Directive and the Community’s other environmental legislation should be ensured. In particular, during the assessment, planning or licensing procedures for renewable energy installations, Member States should take account of all Community environmental legislation and the con-tribution made by renewable energy sources towards meeting environmental and climate change objectives, in particular when compared to non-renewable energy installations.

45. National technical specifications and other require-ments falling within the scope of Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a procedure for the provision of infor-mation in the field of technical standards and regulations and rules on Information Society services, relating for example to levels of quality, testing methods or condi-tions of use, should not create barriers for trade in renew-able energy equipment and systems. Therefore, support schemes for energy from renewable sources should not prescribe national technical specifications which deviate from existing Community standards or require the sup-ported equipment or systems to be certified or tested in a specified location or by a specified entity.

46. It is appropriate for Member States to consider mecha-nisms for the promotion of district heating and cooling from energy from renewable sources.

47. At national and regional level, rules and obligations for minimum requirements for the use of energy from renew-able sources in new and renovated buildings have led to considerable increases in the use of energy from renew-able sources. Those measures should be encouraged in a wider Community context, while promoting the use of more energy-efficient applications of energy from renew-able sources through building regulations and codes.

48. It may be appropriate for Member States, in order to facilitate and accelerate the setting of minimum levels for the use of energy from renewable sources in build-ings, to provide that such levels are achieved by incor-porating a factor for energy from renewable sources in meeting minimum energy performance requirements under Directive 2002/91/EC, relating to a cost-optimal reduction of carbon emissions per building.

49. Information and training gaps, especially in the heating and cooling sector, should be removed in order to encour-age the deployment of energy from renewable sources.

50. In so far as the access or pursuit of the profession of installer is a regulated profession, the preconditions for the recognition of professional qualifications are laid down in Directive 2005/36/EC of the European Parliament and of the Council of 7 September 2005 on the recognition of professional qualifications. This Directive therefore applies without prejudice to Directive 2005/36/EC.

51. While Directive 2005/36/EC lays down requirements for the mutual recognition of professional qualifications,

including for architects, there is a further need to ensure that architects and planners properly consider an optimal combination of renewable energy sources and high-effi-ciency technologies in their plans and designs. Member States should therefore provide clear guidance in this regard. This should be done without prejudice to the provisions of Directive 2005/36/EC and in particular Articles 46 and 49 thereof.

52. Guarantees of origin issued for the purpose of this Direc-tive have the sole function of proving to a final customer that a given share or quantity of energy was produced from renewable sources. A guarantee of origin can be transferred, independently of the energy to which it relates, from one holder to another. However, with a view to ensur-ing that a unit of electricity from renewable energy sources is disclosed to a customer only once, double counting and double disclosure of guarantees of origin should be avoided. Energy from renewable sources in relation to which the accompanying guarantee of origin has been sold separately by the producer should not be disclosed or sold to the final customer as energy from renewable sources. It is important to distinguish between green certificates used for support schemes and guarantees of origin.

53. It is appropriate to allow the emerging consumer market for electricity from renewable energy sources to contrib-ute to the construction of new installations for energy from renewable sources. Member States should there-fore be able to require electricity suppliers who dis-close their energy mix to final customers in accordance with Article 3(6) of Directive 2003/54/EC, to include a minimum percentage of guarantees of origin from recently constructed installations producing energy from renewable sources, provided that such a requirement is in conformity with Community law.

54. It is important to provide information on how the sup-ported electricity is allocated to final customers in accor-dance with Article 3(6) of Directive 2003/54/EC. In order to improve the quality of that information to con-sumers, in particular as regards the amount of energy from renewable sources produced by new installations, the Commission should assess the effectiveness of the measures taken by Member States.

55. Directive 2004/8/EC of the European Parliament and of the Council of 11 February 2004 on the promotion of cogeneration based on a useful heat demand in the internal energy market provides for guarantees of origin for proving the origin of electricity produced from high-efficiency cogeneration plants. Such guarantees of origin cannot be used when disclosing the use of energy from renewable sources in accordance with Article 3(6) of Directive 2003/54/EC as this might result in double counting and double disclosure.

56. Guarantees of origin do not by themselves confer a right to benefit from national support schemes.

57. There is a need to support the integration of energy from renewable sources into the transmission and distribu-tion grid and the use of energy storage systems for inte-grated intermittent production of energy from renewable sources.

58. The development of renewable energy projects, includ-ing renewable energy projects of European interest


under the Trans-European Network for Energy (TEN-E) programme should be accelerated. To that end, the Com-mission should also analyse how the financing of such projects can be improved. Particular attention should be paid to renewable energy projects that will contribute to a significant increase in security of energy supply in the Community and neighbouring countries.

59. Interconnection among countries facilitates integration of electricity from renewable energy sources. Besides smoothing out variability, interconnection can reduce balancing costs, encourage true competition bringing about lower prices, and support the development of net-works. Also, the sharing and optimal use of transmission capacity could help avoid excessive need for newly built capacity.

60. Priority access and guaranteed access for electric-ity from renewable energy sources are important for integrating renewable energy sources into the internal market in electricity, in line with Article 11(2) and devel-oping further Article 11(3) of Directive 2003/54/EC. Requirements relating to the maintenance of the reliabil-ity and safety of the grid and to the dispatching may differ according to the characteristics of the national grid and its secure operation. Priority access to the grid provides an assurance given to connected generators of electric-ity from renewable energy sources that they will be able to sell and transmit the electricity from renewable energy sources in accordance with connection rules at all times, whenever the source becomes available. In the event that the electricity from renewable energy sources is inte-grated into the spot market, guaranteed access ensures that all electricity sold and supported obtains access to the grid, allowing the use of a maximum amount of elec-tricity from renewable energy sources from installations connected to the grid. However, this does not imply any obligation on the part of Member States to support or introduce purchase obligations for energy from renew-able sources. In other systems, a fixed price is defined for electricity from renewable energy sources, usually in combination with a purchase obligation for the system operator. In such a case, priority access has already been given.

61. In certain circumstances it is not possible fully to ensure transmission and distribution of electricity produced from renewable energy sources without affecting the reli-ability or safety of the grid system. In such circumstances it may be appropriate for financial compensation to be given to those producers. Nevertheless, the objectives of this Directive require a sustained increase in the trans-mission and distribution of electricity produced from renewable energy sources without affecting the reliability or safety of the grid system. To this end, Member States should take appropriate measures in order to allow a higher penetration of electricity from renewable energy sources, inter alia, by taking into account the specificities of variable resources and resources which are not yet storable. To the extent required by the objectives set out in this Directive, the connection of new renewable energy installations should be allowed as soon as possible. In order to accelerate grid connection procedures, Member States may provide for priority connection or reserved

connection capacities for new installations producing electricity from renewable energy sources.

62. The costs of connecting new producers of electricity and gas from renewable energy sources to the electric-ity and gas grids should be objective, transparent and non-discriminatory and due account should be taken of the benefit that embedded producers of electricity from renewable energy sources and local producers of gas from renewable sources bring to the electricity and gas grids.

63. Electricity producers who want to exploit the poten-tial of energy from renewable sources in the peripheral regions of the Community, in particular in island regions and regions of low population density, should, whenever feasible, benefit from reasonable connection costs in order to ensure that they are not unfairly disadvantaged in comparison with producers situated in more central, more industrialised and more densely populated areas.

64. Directive 2001/77/EC lays down the framework for the integration into the grid of electricity from renewable energy sources. However, there is a significant varia-tion between Member States in the degree of integra-tion actually achieved. For this reason it is necessary to strengthen the framework and to review its application periodically at national level.

65. Biofuel production should be sustainable. Biofuels used for compliance with the targets laid down in this Directive, and those that benefit from national support schemes, should therefore be required to fulfil sustain-ability criteria.

66. The Community should take appropriate steps in the context of this Directive, including the promotion of sus-tainability criteria for biofuels and the development of second and third-generation biofuels in the Community and worldwide, and to strengthen agricultural research and knowledge creation in those areas.

67. The introduction of sustainability criteria for biofuels will not achieve its objective if those products that do not fulfil the criteria and would otherwise have been used as biofuels are used, instead, as bioliquids in the heating or electricity sectors. For this reason, the sustainability cri-teria should also apply to bioliquids in general.

68. The European Council of March 2007 invited the Com-mission to propose a comprehensive Directive on the use of all renewable energy sources, which could contain cri-teria and provisions to ensure sustainable provision and use of bioenergy. Such sustainability criteria should form a coherent part of a wider scheme covering all bioliquids and not biofuels alone. Such sustainability criteria should therefore be included in this Directive. In order to ensure a coherent approach between energy and environment policies, and to avoid the additional costs to business and the environmental incoherence that would be associated with an inconsistent approach, it is essential to provide the same sustainability criteria for the use of biofuels for the purposes of this Directive on the one hand, and Directive 98/70/EC on the other. For the same reasons, double reporting should be avoided in this context. Fur-thermore, the Commission and the competent national authorities should coordinate their activities in the framework of a committee specifically responsible for


sustainability aspects. The Commission should, in addi-tion, in 2009, review the possible inclusion of other biomass applications and the modalities relating thereto.

69. The increasing worldwide demand for biofuels and bioliq-uids, and the incentives for their use provided for in this Directive, should not have the effect of encouraging the destruction of biodiverse lands. Those finite resources, recognised in various international instruments to be of value to all mankind, should be preserved. Consumers in the Community would, in addition, find it morally unac-ceptable that their increased use of biofuels and bioliq-uids could have the effect of destroying biodiverse lands. For these reasons, it is necessary to provide sustain-ability criteria ensuring that biofuels and bioliquids can qualify for the incentives only when it can be guaranteed that they do not originate in biodiverse areas or, in the case of areas designated for nature protection purposes or for the protection of rare, threatened or endangered ecosystems or species, the relevant competent author-ity demonstrates that the production of the raw material does not interfere with those purposes. The sustainability criteria should consider forest as biodiverse where it is a primary forest in accordance with the definition used by the Food and Agriculture Organisation of the United Nations (FAO) in its Global Forest Resource Assessment, which countries use worldwide to report on the extent of primary forest or where it is protected by national nature protection law. Areas where collection of non-wood forest products occurs should be included, provided the human impact is small. Other types of forests as defined by the FAO, such as modified natural forests, semi-nat-ural forests and plantations, should not be considered as primary forests. Having regard, furthermore, to the highly biodiverse nature of certain grasslands, both tem-perate and tropical, including highly biodiverse savan-nahs, steppes, scrublands and prairies, biofuels made from raw materials originating in such lands should not qualify for the incentives provided for by this Directive. The Commission should establish appropriate criteria and geographical ranges to define such highly biodiverse grasslands in accordance with the best available scien-tific evidence and relevant international standards.

70. If land with high stocks of carbon in its soil or vegeta-tion is converted for the cultivation of raw materials for biofuels or bioliquids, some of the stored carbon will generally be released into the atmosphere, leading to the formation of carbon dioxide. The resulting negative greenhouse gas impact can offset the positive green-house gas impact of the biofuels or bioliquids, in some cases by a wide margin. The full carbon effects of such conversion should therefore be accounted for in calcu-lating the greenhouse gas emission saving of particular biofuels and bioliquids. This is necessary to ensure that the greenhouse gas emission saving calculation takes into account the totality of the carbon effects of the use of biofuels and bioliquids.

71. In calculating the greenhouse gas impact of land conver-sion, economic operators should be able to use actual values for the carbon stocks associated with the refer-ence land use and the land use after conversion. They should also be able to use standard values. The work

of the Intergovernmental Panel on Climate Change is the appropriate basis for such standard values. That work is not currently expressed in a form that is imme-diately applicable by economic operators. The Commis-sion should therefore produce guidance drawing on that work to serve as the basis for the calculation of carbon stock changes for the purposes of this Directive, includ-ing such changes to forested areas with a canopy cover of between 10 to 30 %, savannahs, scrublands and prairies.

72. It is appropriate for the Commission to develop method-ologies with a view to assessing the impact of the drain-age of peatlands on greenhouse gas emissions.

73. Land should not be converted for the production of biofuels if its carbon stock loss upon conversion could not, within a reasonable period, taking into account the urgency of tackling climate change, be compensated by the greenhouse gas emission saving resulting from the production of biofuels or bioliquids. This would prevent unnecessary, burdensome research by economic opera-tors and the conversion of high-carbon-stock land that would prove to be ineligible for producing raw materi-als for biofuels and bioliquids. Inventories of worldwide carbon stocks indicate that wetlands and continuously forested areas with a canopy cover of more than 30 % should be included in that category. Forested areas with a canopy cover of between 10 and 30 % should also be included, unless there is evidence demonstrating that their carbon stock is sufficiently low to justify their conver-sion in accordance with the rules laid down in this Direc-tive. The reference to wetlands should take into account the definition laid down in the Convention on Wetlands of International Importance, especially as Waterfowl Habitat, adopted on 2 February 1971 in Ramsar.

74. The incentives provided for in this Directive will encour-age increased production of biofuels and bioliquids worldwide. Where biofuels and bioliquids are made from raw material produced within the Community, they should also comply with Community environmental require-ments for agriculture, including those concerning the protection of groundwater and surface water quality, and with social requirements. However, there is a concern that production of biofuels and bioliquids in certain third countries might not respect minimum environmental or social requirements. It is therefore appropriate to encour-age the development of multilateral and bilateral agree-ments and voluntary international or national schemes that cover key environmental and social considerations, in order to promote the production of biofuels and bioliq-uids worldwide in a sustainable manner. In the absence of such agreements or schemes, Member States should require economic operators to report on those issues.

75. The requirements for a sustainability scheme for energy uses of biomass, other than bioliquids and biofuels, should be analysed by the Commission in 2009, taking into account the need for biomass resources to be managed in a sustainable manner.

76. Sustainability criteria will be effective only if they lead to changes in the behaviour of market actors. Those changes will occur only if biofuels and bioliquids meeting those criteria command a price premium compared to


those that do not. According to the mass balance method of verifying compliance, there is a physical link between the production of biofuels and bioliquids meeting the sustainability criteria and the consumption of biofuels and bioliquids in the Community, providing an appropri-ate balance between supply and demand and ensuring a price premium that is greater than in systems where there is no such link. To ensure that biofuels and bioliq-uids meeting the sustainability criteria can be sold at a higher price, the mass balance method should therefore be used to verify compliance. This should maintain the integrity of the system while at the same time avoiding the imposition of an unreasonable burden on industry. Other verification methods should, however, be reviewed.

77. Where appropriate, the Commission should take due account of the Millennium Ecosystem Assessment which contains useful data for the conservation of at least those areas that provide basic ecosystem services in critical situations such as watershed protection and erosion control.

78. It is appropriate to monitor the impact of biomass cul-tivation, such as through land-use changes, including displacement, the introduction of invasive alien species and other effects on biodiversity, and effects on food production and local prosperity. The Commission should consider all relevant sources of information, including the FAO hunger map. Biofuels should be promoted in a manner that encourages greater agricultural productivity and the use of degraded land.

79. It is in the interests of the Community to encourage the development of multilateral and bilateral agreements and voluntary international or national schemes that set standards for the production of sustainable biofuels and bioliquids, and that certify that the production of biofuels and bioliquids meets those standards. For that reason, provision should be made for such agreements or schemes to be recognised as providing reliable evidence and data, provided that they meet adequate standards of reliability, transparency and independent auditing.

80. It is necessary to lay down clear rules for the calculation of greenhouse gas emissions from biofuels and bioliq-uids and their fossil fuel comparators.

81. Co-products from the production and use of fuels should be taken into account in the calculation of greenhouse gas emissions. The substitution method is appropriate for the purposes of policy analysis, but not for the regula-tion of individual economic operators and individual con-signments of transport fuels. In those cases the energy allocation method is the most appropriate method, as it is easy to apply, is predictable over time, minimises counter-productive incentives and produces results that are generally comparable with those produced by the substitution method. For the purposes of policy analy-sis the Commission should also, in its reporting, present results using the substitution method.

82. In order to avoid a disproportionate administrative burden, a list of default values should be laid down for common biofuel production pathways and that list should be updated and expanded when further reliable data is available. Economic operators should always be entitled to claim the level of greenhouse gas emission saving for

biofuels and bioliquids established by that list. Where the default value for greenhouse gas emission saving from a production pathway lies below the required minimum level of greenhouse gas emission saving, produc-ers wishing to demonstrate their compliance with this minimum level should be required to show that actual emissions from their production process are lower than those that were assumed in the calculation of the default values.

83. It is appropriate for the data used in the calculation of the default values to be obtained from independent, scien-tifically expert sources and to be updated as appropriate as those sources progress their work. The Commission should encourage those sources to address, when they update their work, emissions from cultivation, the effect of regional and climatological conditions, the effects of cultivation using sustainable agricultural and organic farming methods, and the scientific contribution of pro-ducers, within the Community and in third countries, and civil society.

84. In order to avoid encouraging the cultivation of raw mate-rials for biofuels and bioliquids in places where this would lead to high greenhouse gas emissions, the use of default values for cultivation should be limited to regions where such an effect can reliably be ruled out. However, to avoid a disproportionate administrative burden, it is appropri-ate for Member States to establish national or regional averages for emissions from cultivation, including from fertiliser use.

85. Global demand for agricultural commodities is growing. Part of that increased demand will be met through an increase in the amount of land devoted to agriculture. The restoration of land that has been severely degraded or heavily contaminated and therefore cannot be used, in its present state, for agricultural purposes is a way of increasing the amount of land available for cultivation. The sustainability scheme should promote the use of restored degraded land because the promotion of biofu-els and bioliquids will contribute to the growth in demand for agricultural commodities. Even if biofuels themselves are made using raw materials from land already in arable use, the net increase in demand for crops caused by the promotion of biofuels could lead to a net increase in the cropped area. This could affect high carbon stock land, which would result in damaging carbon stock losses. To alleviate that risk, it is appropriate to introduce accom-panying measures to encourage an increased rate of productivity on land already used for crops, the use of degraded land, and the adoption of sustainability require-ments, comparable to those laid down in this Directive for Community biofuel consumption, in other biofuel-consuming countries. The Commission should develop a concrete methodology to minimise greenhouse gas emissions caused by indirect land-use changes. To this end, the Commission should analyse, on the basis of best available scientific evidence, in particular, the inclusion of a factor for indirect land-use changes in the calculation of greenhouse gas emissions and the need to incentiv-ise sustainable biofuels which minimise the impacts of land-use change and improve biofuel sustainability with respect to indirect land-use change. In developing that


methodology, the Commission should address, inter alia, the potential indirect land-use changes resulting from biofuels produced from non-food cellulosic material and from ligno-cellulosic material.

86. In order to permit the achievement of an adequate market share of biofuels, it is necessary to ensure the placing on the market of higher blends of biodiesel in diesel than those envisaged by standard EN590/2004.

87. In order to ensure that biofuels that diversify the range of feedstocks used become commercially viable, those biofuels should receive an extra weighting under national biofuel obligations.

88. Regular reporting is needed to ensure a continuing focus on progress in the development of energy from renew-able sources at national and Community level. It is appro-priate to require the use of a harmonised template for national renewable energy action plans which Member States should submit. Such plans could include estimated costs and benefits of the measures envisaged, measures relating to the necessary extension or reinforcement of the existing grid infrastructure, estimated costs and ben-efits to develop energy from renewable sources in excess of the level required by the indicative trajectory, informa-tion on national support schemes and information on their use of energy from renewable sources in new or renovated buildings.

89. When designing their support systems, Member States may encourage the use of biofuels which give additional benefits, including the benefits of diversification offered by biofuels made from waste, residues, non-food cel-lulosic material, ligno-cellulosic material and algae, as well as non-irrigated plants grown in arid areas to fight desertification, by taking due account of the different costs of producing energy from traditional biofuels on the one hand and of those biofuels that give additional ben-efits on the other. Member States may encourage invest-ment in research and development in relation to those and other renewable energy technologies that need time to become competitive.

90. The implementation of this Directive should reflect, where relevant, the provisions of the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, in particu-lar as implemented through Directive 2003/4/EC of the European Parliament and of the Council of 28 January 2003 on public access to environmental information.

91. The measures necessary for the implementation of this Directive should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission.

92. In particular, the Commission should be empowered to adapt the methodological principles and values

necessary for assessing whether sustainability criteria have been fulfilled in relation to biofuels and bioliquids, to adapt the energy content of transport fuels to techni-cal and scientific progress, to establish criteria and geo-graphic ranges for determining highly biodiverse grass-land, and to establish detailed definitions for severely degraded or contaminated land. Since those measures are of general scope and are designed to amend non-essential elements of this Directive, inter alia, by supple-menting it with new non-essential elements, they must be adopted in accordance with the regulatory proce-dure with scrutiny provided for in Article 5a of Decision 1999/468/EC.

93. Those provisions of Directive 2001/77/EC and Direc-tive 2003/30/EC that overlap with the provisions of this Directive should be deleted from the latest possible moment for transposition of this Directive. Those that deal with targets and reporting for 2010 should remain in force until the end of 2011. It is therefore necessary to amend Directive 2001/77/EC and Directive 2003/30/EC accordingly.

94. Since the measures provided for in Articles 17 to 19 also have an effect on the functioning of the internal market by harmonising the sustainability criteria for biofuels and bioliquids for the target accounting purposes under this Directive, and thus facilitate, in accordance with Article 17(8), trade between Member States in biofuels and bioliquids which comply with those conditions, they are based on Article 95 of the Treaty.

95. The sustainability scheme should not prevent Member States from taking into account, in their national support schemes, the higher production cost of biofuels and bioliquids that deliver benefits that exceed the minima laid down in the sustainability scheme.

96. Since the general objectives of this Directive, namely to achieve a 20 % share of energy from renewable sources in the Community’s gross final consumption of energy and a 10 % share of energy from renewable sources in each Member State’s transport energy consumption by 2020, cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale of the action, be better achieved at Community level, the Com-munity may adopt measures, in accordance with the prin-ciple of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

97. In accordance with point 34 of the Interinstitutional agreement on better law-making, Member States are encouraged to draw up, for themselves and in the inter-est of the Community, their own tables illustrating, as far as possible, the correlation between this Directive and the transposition measures and to make them public.


HAVE ADOPTED THIS DIRECTIVE: Complete Articles 1 to 25 are the part of ANNEX, on CD only

Stock taking document (06.05.2010):Towards a new Energy Strategy for Europe 2011-2020

INTRODUCTION AND CONCLUDING REMARKS

*NOTE: draft document is the part of ANNEX on CD only

IntroductionEuropean energy policy has developed in the last decade with the European Commission adopting successive Green Papers and Strategic Energy Reviews to advance the agenda on sustainability, competitiveness and security of supply. The first EU Energy Action Plan, endorsed by the European Council in March 2007, has been largely executed through new legisla-tion and ongoing proposals that will soon be agreed. In 2007 the European Council called on the Commission to prepare a new Action Plan for the post 2010 period.

The overall goal of European energy policy remains to ensure safe, secure, sustainable and affordable energy for all, businesses and consumers alike. The challenges of global energy security and energy geopolitics, slow progress in combating climate change at the global level, the urge to recover on growth and jobs in the EU and the need to invest in tomorrow’s energy networks call for a new Energy Strategy to further deliver on those objectives. The Commission’s proposals for a Europe 2020 Strategy include the flagship initiative topromote a “Resource-efficient Europe”. This incor-porates the commitment to deliver the 20-20-20 targets on greenhouse gas emissions, renewable energy and energy savings (with the target of a 30% cut in greenhouse gas emissions if the conditions at international level are right). It also requires completing the internal energy market and implementing the European Strategic Energy Technology Plan (SET-Plan).

Completing the internal energy market, achieving energy savings and promoting lowcarbon innovation are the main vectors to reach the objectives of competitive-ness, sustainability and security of supply. A well functioning internal market, based on regional and pan-European intercon-nections, will serve all consumers, ensure energy security and allow the transition towards a low-carbon electricity system. There remains large scope for cost-efficient energy saving measures in order to reduce greenhouse gas emissions; energy savings also lower the energy bill and reduce depen-dence on energy imports. Finally innovation will be essential to make energy system sustainable and to renew Europe’s manufacturing base and create green jobs. An open global business climate and a more coherent and effective approach to the EU external energy relations will also help us to reach our objectives.

The inclusion of a specific chapter on energy in the Lisbon Treaty now offers a firm legal basis for developing energy initiatives based in particular on sustainability, security of supply, the functioning of the internal energy markets, the interconnection of networks and solidarity, while restating the right of Member States to decide which fuels to include in their energy mix.

The purpose of this document is to take stock of the far-reaching debate on energy policy initiated by the Spanish Presidency, including at the fruitful Informal Energy Council on 14-15 January 2010, in view of formulating a new comprehensive Energy Strategy for Europe for 2011-2020 early this year. The Commission is committed to have an in depth discussion with all stakeholders on the basis of this stocktaking document.

ConclusionsSince endorsement of the first Energy Action Plan by the European Council in March 2007, the legislative framework for achieving energy policy objectives has been substantially strengthened. We now need to focus on fully implementing this framework and translate our agreed policies into concrete results for the citizens and businesses of Europe. Several shortcomings remain and new developments have exacer-bated the need for a reinforced energy strategy.

The key components of such a strategy are the exploitation of the full potential of energy savings, the promotion of low carbon innovation, a fully functioning internal energy market, secure and sustainable energy networks and greater coopera-tion and solidarity within the EU as well as achieving a more coherent and effective approach to the EU external energy relations. Short term effects of the economic crisis cannot reduce Europe’s determination to improve the sustainability of our energy consumption and reduce the amount of energy needed and emissions generated per unit of output.

Compared to the previous Action Plan, greater emphasis is needed on investments. Billions of Euros will need to be invested in new technologies, infrastructure, energy effi-ciency improvements, low-carbon power generation and public education and skills to make the lowcarbon transforma-tion happen. While the economic crisis made finance scarcer, market-based instruments need to be used more consistently to orient investments in the right direction. Future security of supply will depend on new interconnections both inside and outside the EU, energy saving practices and technologies and “intelligent” grid and metering technologies. Keeping energy affordable for industrial, commercial and private consumers


will be a further challenge, but European rather than national approaches will be more efficient, and create economies of scale, for the benefit of consumers.

In today’s globalised world, the economic and social benefits of achieving the 2020 goals are significant. This could result in €60 billion less in oil and gas imports by 2020. This represents not only financial savings; it is also essential for energy security. Further progress with the integration of the European energy market can add an extra 0.6% to 0.8 % GDP. Meeting the EU’s objective of 20% of renewable sources of energy alone has the potential to create more than 600 000 jobs in the EU. Adding the 20% target on energy savings, it is well over 1 million new jobs that are at stake.

However, complementary measures will need to be taken, for example to ensure the availability of skilled labour, to realise this potential.

The delivery of the 2020 goals will imply a coordinated effort at all levels. Europe will achieve its objectives of sustainability, competitiveness and security of supply in energy if it acts collectively. The new Energy Strategy should encompass actions at both EU and Member State level. Cities and regions play a key role in developing local integrated solutions. In accordance with the Europe 2020 strategy, new tools need to be developed to assess progress towards common goals and coordinate national strategies.


Energy 2020 - A strategy for competitive, sustainable and secure energy (10.11.2010)


*NOTE: draft document is on CD only

IntroductionThe price of failure is too high.

Energy is the life blood of our society. The well-being of people, industry and economy depends on safe, secure, sustain-able and affordable energy. At the same time, energy related emissions account for almost 80% of the EU’s total green-house gas emissions. The energy challenge is thus one of the greatest tests which Europe has to face. It will take decades to steer our energy systems onto a more secure and sustainable path. Yet the decisions to set us on the right path are needed urgently as failing to achieve a well-functioning European energy market will only increase the costs for consumers and put Europe’s competitiveness at risk.

Over the next ten years, energy investments in the order of € 1 trillion are needed, both to diversify existing resources and replace equipment and to cater for challenging and changing energy requirements. Structural changes in energy supply, partly resulting from changes in indigenous production, oblige European economies to choose among energy products and infrastructures. These choices will be felt over the next 30 years and more. To enable these decisions to be taken urgently calls for an ambitious policy framework. Postponing these decisions will have immeasurable repercussions on society as regards both longer-term costs and security.

A common EU energy policy has evolved around the common objective to ensure the uninterrupted physical availability of energy products and services on the market, at a price which is affordable for all consumers (private and industrial), while contributing to the EU’s wider social and climate goals. The central goals for energy policy (security of supply, competi-tiveness, and sustainability) are now laid down in the Lisbon Treaty. This spells out clearly what is expected from Europe in the energy area. While some progress has been made towards these goals, Europe’s energy systems are adapting too slowly, while the scale of the challenges grows. Forthcoming enlarge-ments of the EU will make this challenge even greater as the Union takes in countries with outdated infrastructure and less competitive energy economies.

The European Council adopted in 2007 ambitious energy and climate change objectives for 2020 – to reduce green-house gas emissions by 20%, rising to 30% if the conditions are right, to increase the share of renewable energy to 20% and to make a 20% improvement in energy efficiency. The European Parliament has continuously supported these goals. The European Council has also given a long term commitment to the decarbonisation path with a target for the EU and other industrialised countries of 80 to 95% cuts in emissions by 2050.

Nevertheless, the existing strategy is currently unlikely to achieve all the 2020 targets, and it is wholly inadequate to the longer term challenges. EU energy and climate goals have been incorporated into the Europe 2020 Strategy for smart, sustainable and inclusive growth, adopted by the European Council in June 2010, and into its flagship initiative ‘Resource efficient Europe’. The urgent task for the EU is to agree the tools which will make the necessary shift possible and thus ensure that Europe can emerge from recession on a more competitive, secure and sustainable path.

Despite the importance of energy policy aims, there are serious gaps in delivery.

The internal energy market is still fragmented and has not achieved its potential for transparency, accessibility and choice. Companies have grown beyond national borders, but their development is still hampered by a host of different national rules and practices. There are still many barriers to open and fair competition. A recent study into consumer conditions in retail electricity markets indicates sub-optimal consumer choice. Implementation of internal market legisla-tion is disappointing, with over 40 infringement procedures underway on the second internal energy market package from 2003 alone.

The security of internal energy supplies is undermined by delays in investments and technological progress. Currently, nearly 45% of European electricity generation is based on low-carbon energy sources, mainly nuclear and hydropower. Parts of the EU could lose more than a third of their genera-tion capacity by 2020 because of the limited life-time of these installations. This means replacing and expanding existing capacities, finding secure non-fossil fuel alternatives, adapting networks to renewable energy sources and achieving a truly integrated internal energy market. At the same time Member States still need to phase out environmentally harmful subsidies.

The quality of National Energy Efficiency Action Plans, developed by Member States since 2008, is disappointing, leaving vast potential untapped. The move towards renewable energy use and greater energy efficiency in transport is happening too slowly. While we are broadly on track for the 20% target for renewable, we are a long way from achieving the objective set for energy efficiency.

At an international level, little heed is paid to warnings about tight oil supply in the future. Despite serious gas supply crises that have acted as a wake-up call, exposing Europe’s vulner-ability, there is still no common approach towards partner, supplier or transit countries. The potential for further devel-opment of EU indigenous fossil fuel resources, including


unconventional gas, exists and the role they will play must be assessed in all objectivity.

Member States’ energy interdependence requires more European action.

The EU is the level at which energy policy should be developed. Decisions on energy policy taken by one Member State inevi-tably have an impact on other Member States. The optimum energy mix, including the swift development of renewables, needs a continental market at least. Energy is the market sector where the greatest economic efficiencies can be made on a pan-European scale. Fragmented markets not only undermine security of supply, they also limit the benefits which energy market competition can bring. The time has come for energy policy to become truly European.

The EU must remain an attractive market for companies at a time of increasing competition on energy resources worldwide. The new European energy strategy must support the inte-grated industrial approach just presented by the European Commission, in particular since energy remains an important cost factor for industry. The EU must also consolidate its competitiveness in energy technology markets. The share of renewable energy in the EU energy mix has risen steadily to some 10% of the gross final energy consumption in 2008. In 2009, 62% of newly installed electricity generation capacity in the EU was from renewable sources, mainly wind and solar. However, Europe’s lead is challenged. The independent 2010 Renewable Energy Attractiveness Index now cites the US and China as the best investment opportunities for renewable energy. New stimulus is needed; more than ever is EU leader-ship called to address these challenges.

In international energy affairs, the EU could be much stronger and effective if it took charge of its common interest and ambition. Despite accounting for one fifth of the world’s energy use, the EU continues to have less influence on international energy markets than its economic weight would suggest. Global energy markets are becoming tighter, with developing Asian countries and the Middle East accounting for most of the growth in global demand. As the world’s largest energy importer, the EU is likely to be more vulnerable to supply risks as a result.

The inclusion of energy policy in the EU Treaty calls for a new outlook.

We must build on what we have achieved, and be bold in our ambition.

The EU cannot afford to fail in its energy ambitions. Therefore the Commission proposes a new energy strategy towards 2020. This will consolidate the measures which have been taken so far and step up activity in areas where new challenges are emerging. It is the result of extensive debates within the EU institutions and wide-ranging public consultations.

The focus here is not on a comparative analysis of different energy sources, rather the steps which are required to deliver Europe’s medium term policy objectives. Various scenarios in terms of energy mix will be presented in the forth-coming energy roadmap 2050, which will describe ways of achieving Europe’s long-term decarbonisation goal and their

implications for energy policy decisions. This strategy sets out initial policy decisions which will be needed to meet our 2020 energy objectives as they currently stand. The 2050 low carbon economy and energy roadmaps will further inform and guide this programme of action and its implementation by offering a long term vision.

We urgently need far-reaching changes in energy production, use and supply.

First and foremost, the strategy underlines the need to rebalance energy actions in favour of a demand-driven policy, empowering consumers and decoupling economic growth from energy use. In particular, the transport and construc-tion industries must pursue an active energy savings policy and diversify towards non-polluting energy sources. Beyond the Emissions Trading Scheme (ETS), the strategy should help create market conditions which stimulate higher energy savings and more low carbon investments, to exploit a wide range of centralised and distributed renewable energy as well as key technologies for energy storage and electro-mobility (notably electric vehicles and public transport).

Energy policy is a key contribution for achieving the objective of the new strategy for smart, sustainable and inclusive growth in support of a strong, diversified and competitive industrial base. In this context, Europe has to acknowledge that its indus-trial base is in need of all sectors across the entire value chain.

Public authorities have to lead by example. Each year, 16% of EU GDP, around € 1,500 billion, is spent by public authorities. Public procurement rules should insist on efficiency conditions to increase energy savings and spread innovative solutions, notably in buildings and transport. The potential of market-based and other policy instruments, including taxation, to enhance energy efficiency should be fully exploited.

On the supply side, the priority must continue to be the devel-opment of secure and competitive sources of energy. In the field of electricity generation, investments should lead to nearly two thirds of the electricity coming from low carbon sources by the early 2020’s, the current level being 45%. In this context, priority should be given to renewable energies. The strategy must provide a framework at EU level which, while respecting national differences, would not only allow Member States to outperform their respective targets, but also ensure that the renewable energy sources and technologies are economically competitive by 2020.

The contribution of nuclear energy, which currently generates around one third of EU electricity and two thirds of its carbon-free electricity, must be assessed openly and objectively. The full provisions of the Euratom Treaty must be applied rigor-ously, in particular in terms of safety. Given the renewed interest in this form of generation in Europe and worldwide, research must be pursued on radioactive waste manage-ment technologies and their safe implementation, as well as preparing the longer term future through development of next generation fission systems, for increased sustainability and cogeneration of heat and electricity, and nuclear fusion (ITER).

For oil and gas, rising import requirements and increasing demand from emerging and developing countries call for


stronger mechanisms to secure new, diversified and safe supply routes. As well as crude oil access, refining infrastruc-ture is a crucial part of the supply chain. The EU is a strong geopolitical partner in energy markets and must have the ability to act accordingly.

The new energy strategy focuses on five priorities: 1. Achieving an energy efficient Europe;2. Building a truly pan-European integrated energy market;3. Empowering consumers and achieving the highest level

of safety and security;4. Extending Europe’s leadership in energy technology and

innovation;5. Strengthening the external dimension of the EU energy

market.

ConclusionsThe EU is on the threshold of an unprecedented period for energy policy. Energy markets have been largely cushioned from the effects of global market turbulence in recent years as a result of liberalisation, ample supply and production capaci-ties and adequate import possibilities. However, dramatic changes are afoot. Energy prices will be affected by the huge need for energy sector investments, as well as carbon pricing and higher international energy prices. Competitiveness, supply security and climate objectives will be undermined unless electricity grids are upgraded, obsolete plants are replaced by competitive and cleaner alternatives and energy is used more efficiently throughout the whole energy chain.

Member States and industry have recognised the scale of the challenges. Secure energy supplies, an efficient use of resources, affordable prices and innovative solutions are crucial to our long-term sustainable growth, job creation and quality of life. Member States have agreed that these chal-lenges will be tackled most effectively by policies and action at EU level, by ‘Europeanising’ energy policy. This includes directing EU funding support towards public priorities that markets fail to meet and that bring the most European value.

The new EU energy strategy will require significant efforts in technical innovation and investment. It will foster a dynamic and competitive market and will lead to a major strengthening of institutional arrangements to monitor and guide these devel-opments. It will improve the security and the sustainability of energy systems, grid management, and energy market regu-lation. It will include extensive efforts to inform and empower domestic and business consumers, to involve them in the switch to a sustainable energy future, for example by saving energy, reducing wastage and switching to low-carbon tech-nologies and fuels. Investments in low-carbon energy produc-tion will be further encouraged by market-based instruments such as emissions trading and taxation. The new strategy will take the first steps to prepare the EU for the greater chal-lenges which it may well have to face already by 2020. Above all, it will ensure better leadership and coordination at the European level, both for internal action and in relations with external partners.

The global energy system is entering a phase of rapid transi-tion with potentially far-reaching implications that will unfold in the next decades. Europe has to act before the window of opportunity closes. Time is short. Thus, the Commission will present most of the proposals to achieve the 2020 goals in the coming 18 months. Discussion, adoption and implemen-tation will be needed quickly. In this way, the EU will be better able to put in place the building blocks for the 2020 outcome – standards, rules, regulations, plans, projects, financial and human resources, technology markets, social expectations etc. – and prepare Europe’s citizens for the challenges ahead.

Due to the long lead in times for energy system changes, taking action today does not guarantee that the struc-tural changes needed for the low-carbon transition will be completed in the period to 2020, which this strategy covers. It is therefore necessary to look beyond the timescale of the present strategy to ensure that the EU is well prepared for the 2050 objective of a secure, competitive and low-carbon energy system. The Commission will therefore follow up this strategy with a complete roadmap for 2050 which will set the measures covered in this paper in a longer term and consider further and complementary steps.


Renewable Energy Progress Report (31.01.2011):Progressing towards the 2020 target



IntroductionRenewable energy is crucial to any move towards a low carbon economy. It is also a key component of the EU energy strategy. The European industry leads global renewable energy tech-nology development employs 1.5 million people and by 2020 could employ a further 3 million. The promotion of renewable energy also develops a diverse range of mostly indigenous energy resources.

EU renewable energy policy is relatively young, having started with the adoption of the 1997 White Paper. It has been driven by the need to de-carbonise the energy sector and address growing dependency on fossil fuel imports from politically unstable regions outside the EU. Over that period the focus has shifted from the promotion of renewable energy through indicative targets for the electricity and transport sectors to the definition of legally binding targets supported by a compre-hensive legislative framework, and most recently, by a reori-entation of European energy infrastructure policy that facili-tates renewable energy growth. The new Renewable Energy Directive provides a strong and stable regulatory framework for the development of the renewable energy in Europe. With the transposition of the directive by all Member States by the deadline of 5th December 2010 and the adoption of National Renewable Energy Action Plans, the foundations for deter-mined EU action on renewable energy have been laid.

The Commission’s Energy 2020 Strategy highlights how EU infrastructure and innovation policies are supporting the renewable energy sector’s development, ensuring that renewable energy sources and technologies become econom-ically competitive as soon as possible, thus supporting the growth of renewable energy to achieve our goals. However, as a young and developing industry, these important challenges as well as the dimension of financing will have to be addressed in the coming years.

This Communication presents an overview of the renewable energy industry in Europe, its prospects to 2020 and addresses the outstanding challenges for the development of the sector. The background analysis underpinning this Commu-nication is provided in three reports reviewing the European and national financing of renewable energy, the recent progress in the development of renewable energy sources and

the use of biofuels and other renewables in transport as well as the operation of the mass balance verification method for the biofuels and bioliquid sustainability scheme Taken together, these four documents form the Commission’s response to the reporting requirements set out in the relevant EU legislation.

ConclusionThe limited and fragmented growth of Europe’s renewable energy industry in the decade to 2008 resulted partly from the limited EU regulatory framework. Recognising that renewable energy will form the heart of any future low carbon energy sector, the EU introduced a comprehensive and robust supportive legislative framework. The challenge is now to move from policy design to implementation at national level, with concrete action on the ground. The implementation of the Directive and the presentation of plans are encouraging signs of progress that need to be sustained.

In the current context of macro-economic fragility and fiscal consolidation, it is important to recognise the financing for renewable energy as growth-enhancing expenditure that will provide greater return in the future. It is equally important to ensure the quality of the expenditure, applying the most efficient and cost effective financing instruments. As with energy infrastructure, there is a need for European action, to speed up the efficient delivery of renewable energy production and its integration into the single European market.

At national level, any revision of financing instruments should be pursued in a way that avoids creating investor uncertainty and takes into account other Member States’ policies to ensure an approach coherent with the creation of a genuine European market. The Commission will actively support national cooperation on financing renewables, based on the new framework for Member State cooperation contained in the Renewable Energy Directive and promote the integration of renewable energy into the European market. At European level, EU funds should be directed to ensure cost effective renewable energy development and providing technical assis-tance while ensuring the most effective means of lowering the cost of capital investments in the sector, including in collabora-tion with the EIB and provision of technical assistance.


Communication of EC on energy efficiency (8.3.2011):Energy Efficiency Plan 2011

A new plan for energy efficiencyEnergy efficiency is at the heart of the EU’s Europe 2020 Strategy for smart, sustainable and inclusive growth and of the transition to a resource efficient economy. Energy efficiency is one of the most cost effective ways to enhance security of energy supply, and to reduce emissions of greenhouse gases and other pollutants. In many ways, energy efficiency can be seen as Europe’s biggest energy resource. This is why the Union has set itself a target for 2020 of saving 20% of its primary energy consumption compared to projections, and why this objective was identified in the Commission’s Commu-nication on Energy 2020 as a key step towards achieving our long-term energy and climate goals.

Substantial steps have been taken towards this objective – notably in the appliances and buildings markets. Nonethe-less, recent Commission estimates suggest that the EU is on course to achieve only half of the 20% objective. The EU needs to act now to get on track to achieve its target. Responding to the call of the European Council of 4 February 2011 to take ‘determined action to tap the considerable potential for higher energy savings of buildings, transport and products and processes’, the Commission has therefore developed this comprehensive new Energy Efficiency Plan.

It will be pursued consistently with other policy actions under the Europe 2020 Strategy’s Flagship Initiative for a Resource Efficient Europe, including the 2050 roadmap for a low carbon economy, to ensure policy coherence, assess trade-offs between policy areas and benefit from potential synergies. The energy efficiency measures will be implemented as part of the EU’s wider resource efficiency goal encompassing efficient use of all natural resources and ensuring high standards of envi-ronmental protection.

The combined effects of full implementation of the existing and new measures will transform our daily life and have the potential to generate financial savings of up to € 1 000 per household every year; improve Europe’s industrial competi-tiveness; create up to 2 million jobs; and reduce annual green-house gas emissions by 740 million tons.

The greatest energy saving potential lies in buildings. The plan focuses on instruments to trigger the renovation process in public and private buildings and to improve the energy performance of the components and appliances used in them. It promotes the exemplary role of the public sector, proposing to accelerate the refurbishment rate of public buildings through a binding target and to introduce energy efficiency criteria in public spending. It also foresees obligations for utilities to enable their customers to cut their energy consumption.

Transport has the second largest potential. This will be addressed by the upcoming White Paper on Transport. Energy efficiency in industry will be tackled through energy efficiency requirements for industrial equipment, improved informa-tion provision for SMEs and measures to introduce energy audits and energy management systems. Improvements to the efficiency of power and heat generation are also proposed, ensuring that the plan includes energy efficiency measures across the whole energy supply chain.

Targets for energy efficiency are an effective way to trigger action and create political momentum. The “Europe 2020” process has created, with the application of the “European semester”, a new governance context and additional tools for the EU to steer its efforts on energy efficiency. The Commis-sion therefore proposes a two step approach to target setting. As a first stage, Member States are currently setting national energy efficiency targets and programmes. These indicative targets and the individual efforts of each Member State will be evaluated to assess likely achievement of the overall EU target and the extent to which the individual efforts meet the common goal. The Commission will support and provide tools for the Member States in the elaboration of their energy efficiency programmes and closely monitor their imple-mentation through its revised legislative framework and within the new framework provided under the Europe 2020 process. In 2013, the Commission will provide an assess-ment of the results obtained and whether the programmes will, in combination, deliver the European 20% objective. If the 2013 review shows that the overall EU target is unlikely to be achieved, then as a second stage the Commission will propose legally binding national targets for 2020. As in the case of renewable energy, it would then be necessary to take into account the individual starting points of Member States, their economic performance and early action undertaken in the field.

This plan builds on the contributions of the European Parlia-ment, notably the recent own initiative report on energy efficiency, of many stakeholders, and on experience gained with the 2006 Energy Efficiency Action Plan. The Commis-sion estimates that the measures already in place, combined with those newly presented in this plan, should ensure the full achievement of the 20% target. The leading principle of this plan is to propose stringent binding measures without binding national targets.

The Union’s success in implementing this plan will depend on close cooperation between the EU institutions, Member States and all relevant stakeholders. The Commission counts on the involvement and commitment of all parties concerned in this ambitious endeavour.


Public sector: leading by examplePublic spending accounts for 17% of EU GDP. Publicly owned or occupied buildings represent about 12% by area of the EU building stock. A stronger emphasis on energy efficiency in the public sector is crucial, covering public purchasing, the refur-bishment of public buildings and the encouragement of high performance in cities and communities. The public sector can create new markets for energy efficient technologies, services and business models. Member States need to reform subsidies promoting energy use, for example by reorienting them to improve energy efficiency and address energy poverty.

Energy efficiency in public spending

Steering public spending towards energy efficient products, transport modes, buildings, works and services helps to reduce public authorities’ expenditure on energy bills and offers improved value for money. The Commission’s work on public procurement for a better environment has supported this by developing procurement criteria that take energy efficiency into account. In addition, public bodies that are subject to the EU public procurement Directives are already required to take into account energy efficiency criteria in their procurement of vehicles or office equipment. From 2019 onwards, this will also be the case for the sector’s new buildings, which will have to reach a “nearly zero-energy” performance level. To deploy this approach on a wider scale, the Commission proposes that high standards of energy efficiency should systematically be applied when public authorities purchase goods (e.g. ICT equipment), services (e.g. energy) and works (e.g. refurbish-ment of buildings).

Renovation of public buildings

Public bodies should take the lead in bringing their buildings up to high energy performance levels. In order to achieve this result it would be appropriate for public authorities at least to double the current renovation rate. The Commission will therefore present a legal instrument under whose provi-sions public authorities will be required to refurbish at least 3% of their buildings (by floor area) each year – about twice the currently prevailing rate for the European building stock. Each refurbishment should bring the building up to the level of the best 10% of the national building stock. And when public bodies rent or buy existing buildings, these should always be in the best available energy performance class.

Energy performance contracting

Energy performance contracting is an important tool in the refurbishment of buildings. Under this performance-based form of purchasing, monetary savings from lower utility bills and maintenance costs that result from energy efficiency measures are used to cover part or all of the measures’ investment costs. This model has been tried and proved cost-effective in a number of Member States. Energy performance contracting

is relevant for triggering renovation in public buildings and for upgrading the energy efficiency level of public infrastructure such as street lighting. However, the deployment of energy performance contracting is hampered in many Member States by ambiguities in the legal framework and the lack of reliable energy consumption data to establish the baselines against which performance is measured. The Commission will bring forward legislative proposals to overcome these problems in 2011.

Implementing energy efficiency on the ground

More than two thousand cities have volunteered to implement sustainable energy measures through the EU-supported Covenant of Mayors. The Covenant is a formal commitment to reduce signatories’ CO2 emissions by more than 20% by 2020 through sustainable energy measures on their territo-ries. It is made concrete through Sustainable Energy Action Plans, developed in line with the Covenant methodology and formally agreed by the city/regional council. The benefits go beyond energy saving: building retrofitting, urban mobility and urban renovation are employment-intensive economic activi-ties, and the jobs created tend to be skilled, stable and not subject to de-localisation.

The Commission will continue to support the local approach to energy efficiency through the Covenant of Mayors and will seek to encourage partnerships with more like-minded cities including those from countries outside the EU. In 2011 it will also launch a new Smart Cities and Smart Communities initiative to develop the European framework for excellence in innovative low-carbon and efficient energy solutions at the municipal level. This initiative will focus on speeding up the translation of research results into real, practical innovations in selected cities and communities. In particular, the initiative will support large scale demonstration projects also including action on urban mobility, ‘green’ infrastructure and the use of information and communication technologies.

Paving the way towards low energy consuming buildingsNearly 40% of final energy consumption is in houses, public and private offices, shops and other buildings. As the figure shows, in residential homes, two thirds of this is for space heating.

A large energy saving potential remains untapped. Techniques exist to cut existing buildings’ consumption by half or three quarters and to halve the energy consumption of typical appli-ances. But the renovation rate of buildings is too low, as is the uptake of the most efficient appliances. The barriers to energy efficiency buildings need to be overcome. The Commission invites Member States to establish promotion systems for private sector buildings.


Tackling heat use in buildings

Addressing heat consumption in buildings will be of prime importance in the coming years. The Commission will further explore the range of available solutions, including possibilities to promote the use of district heating in the context of inte-grated urban planning.

Legal obstacles

One important barrier is “split incentives” for upgrading energy performance. This term describes the common situation in which owners and tenants are each reluctant to pay for improving the energy performance of a rented property because the benefits are shared between them. Several Member States have developed legal provisions that define the amount which can be recovered by investors from tenants. In public and commercial buildings Energy Service Companies (ESCOs) can also play a key role in overcoming the problem. The Commission will bring forward legislative provi-sions requiring Member States to introduce measures – in line with national property law - to address this problem.

Training

Energy efficient building solutions are often technically demanding. There is a lack of appropriate training for archi-tects, engineers, auditors, craftsmen, technicians and installers, notably for those involved in refurbishment. Today, about 1.1 million qualified workers are available, while it is estimated that 2.5 million will be needed by 2015. The Commission is therefore launching the ‘BUILD UP Skills: Sustainable Building Workforce Initiative’ to support Member States in assessing training needs for the construction sector, developing strate-gies to meet them, and fostering effective training schemes. This may lead to recommendations for the certification,

qualification or training of craftsmen. The Commission will also work with the Member States to adapt their professional and university training curricula to reflect the new qualification needs (in line with the European Qualification Framework). The Commission’s Flagship Initiative “An Agenda for New Skills and Jobs” calls for skills supply to be matched with labour market needs. Transition to energy-efficient technologies requires new skills, environment-conscious vocational education and training in construction and in many other sectors.

Energy Service Companies (ESCOs) as catalysts for renovationESCOs deliver energy efficiency improvements, accepting financial risk by covering – or helping to finance - upfront investment costs and refinancing this through the savings achieved. They can help public authorities upgrade buildings by grouping them into scalable projects under energy performance contracts. Analysis suggests that the market for energy services in Europe is not developing to its full potential. Potential clients in the private and public sector often lack systematic information on available ESCO services or have doubts about the quality of the services offered. In order to overcome these barriers and increase the transpar-ency of the ESCO market, the Commission will propose that Member States provide market overviews, lists of accredited energy service providers and model contracts. In this context, emphasis will be placed on ensuring that when buildings are renovated that this is done in a comprehensive manner (i.e. deep renovation) to avoid repeated disruption of buildings. The European public private partnership expertise centre (EPEC) can also provide useful information.

For ESCOs to play their role, they need access to financial resources. Innovative financing with high leverage both on national and European level would be an appropriate way to

EU-27 households’ energy consumption at home, %


catalyse the development of this market, for example, through the expansion of access to project-based financing via instru-ments that may include provision of liquidity and guarantees, credit lines and revolving funds.

Energy efficiency for competitive European industry

Increasing the competitiveness of European manufacturing industry

About 20% of the EU’s primary energy consumption is accounted for by industry. This is the sector where progress in energy efficiency has been greatest (with a 30% improvement in energy intensity over 20 years). Nevertheless, worthwhile energy saving opportunities remain. The Emissions Trading Scheme and the Energy Taxation Directive (including its planned reform) should encourage take-up of some of these opportunities. In addition, obstacles like the lack of informa-tion, lack of access to capital, and short term pressures of the business environment should also be addressed. Overcoming these obstacles would reduce energy bills and improve competitiveness. At a time of increasingly scarce energy resources worldwide, expertise in energy efficient processes, technologies and services can also be turned into a new export business, giving a competitive edge to European industries.

The obstacles to investment in energy efficient technologies are most acute for small and medium sized enterprises (SMEs). The Commission will therefore encourage Member States to provide them with information (for example about legislative requirements, criteria for subsidies to upgrade machinery, availability of training on energy management and of energy experts) and develop appropriate incentives (such as tax rebates, financing for energy efficiency investments, or funding for energy audits). In association with the relevant industry associations, the Commission will support the exchange of best practices in energy efficiency and projects aimed at building capacity on energy management in micro and small companies. It will support the development of tools that SMEs can use to benchmark their energy use against comparable companies.

For large companies the Commission will propose to make regular energy audits mandatory. It will recommend that Member States should develop incentives for companies to introduce an energy management system (for example as set out in standard EN 16001) as a systematic framework for the rational use of energy.

Building on the success of ecodesign measures as an effective tool to stimulate innovation in energy efficient European tech-nologies, the Commission is investigating whether and which energy performance (ecodesign) requirements would be suitable for standard industrial equipment such as indus-trial motors, large pumps, compressed air, drying, melting, casting, distillation and furnaces.

The Commission will continue to work with industry – including energy intensive industries and the ICT industry, which has

the potential to be a key enabler in achieving improvements in other sectors – to encourage voluntary agreements on implementing energy efficiency processes and systems. These should be based on clear targets, methodologies, measure-ment and monitoring schemes, notably via ecodesign require-ments, and can include the dissemination of good practice.

Research and innovation as catalyst for cost-effective energy efficient technologies in industry

To support technological innovation, the Commission will continue to foster the development, testing and deploy-ment of new energy-efficient technologies, e.g. through the Strategic Energy Technology Plan (SET Plan), in order reduce the costs and improve the performance of energy efficient technologies, generating new solutions and facilitating widespread market take-up. This will help the EU become more energy-efficient and open new markets for EU industries.

Appropriate national and European financial supportMany energy efficiency investments pay for themselves quickly, but are not realised due to market and regulatory barriers. Market incentives and price signals therefore need to be intensified through energy and carbon taxes and through national energy saving obligations for utilities. This should be complemented by mechanisms to improve the availability of suitable financing products. Since investment costs represent a significant financial barrier to the use of energy efficient technologies, availability of funding plays an important role in accelerating investment.

Complementing national funding programmes, the EU is currently able to support energy efficiency through:

– Cohesion Policy: For the period 2007-2013, the planned support from Cohesion Policy Funds for invest-ments related to energy efficiency, co-generation and energy management is approximately € 4.4 billion. Two key amendments have been made to better reflect energy efficiency needs. Whereas regional policy has traditionally financed energy efficiency investments only in public and commercial buildings, it is now possible to use these funds in the residential sector in all Member States; and the use of financial engineering instruments has been extended to energy efficiency in buildings. In cooperation with the responsible programme managers, the Commission will seek ways to improve the use of the resources available for energy efficiency improvements.

– The Intelligent Energy Europe Programme (2007-2013): this € 730 million programme supports proj-ects to overcome market failures, including activities to accelerate the renovation of the building stock. One of its newest tools is the ELENA (European Local Energy Assis-tance) facility. This provides grants to local and regional authorities for the technical assistance costs of develop-ing bankable sustainable energy investments. The original


facility was implemented by the European Investment Bank; two additional facilities are foreseen in 2011. In just over a year of operation, ten ELENA projects have been approved which will provide approximately € 18 million in grants to final beneficiaries with a view to mobilizing about € 1.5 billion in investments over their three year lifetimes.

– Intermediated finance: Credit lines from International Financial Institutions (IFI) and other public sector banks have provided an important source of finance for energy efficiency projects through intermediated finance through local banks. Use is often made of EU funding to provide technical assistance, either to the participating bank for capacity building, or for measures such as energy audits for final beneficiaries.

– The European Economic Recovery Programme: This programme is funding the “Energy-efficient Buildings” public private partnership, providing € 1 billion research methods and technologies to reduce the energy consump-tion of new and renovated buildings. In addition, the Com-mission is currently working with the European Investment Bank to set up a dedicated investment fund using unspent funds from this programme to support energy efficiency and renewable energy projects. This will be launched later in 2011.

– The Framework Programme for research, techno-logical development and demonstration (2007-2013): this programme supports research and innova-tion in energy efficiency as a cross-cutting measure right across the Cooperation Programme, resulting so far in more than 200 projects being financed with an EU con-tribution of €1 billion. In the process of preparing the next multi-annual financial framework, the Commission is exam-ining the results achieved by EU support programmes and their European added value. It will analyse the scope for improvement of existing EU financial mechanisms as well as further options to trigger investments in energy efficiency at the scale necessary to attain the 2020 EU energy and climate objectives.

TransportAs well as the sectors covered in detail in this plan, transport – which accounts for 32% of final energy consumption – is a key area for energy savings. It is the fastest growing sector in terms of energy use, with the strongest reliance on fossil fuel. The upcoming White Paper on Transport will define a strategy for improving the efficiency of the transport sector that includes the introduction of advanced traffic manage-ment systems in all modes; infrastructure investment and the creation of a Single European Transport Area to promote multimodal transport; smart pricing; and efficiency standards for all vehicles across all modes as well as other measures to promote vehicle innovation.

A framework for national effortsMember States have the key role to play in introducing the energy efficiency policies and measures needed to achieve the 20% target. So far, National Energy Efficiency Action Plans (NEEAPs), introduced under the Energy Services Directive, have provided the national framework for energy efficiency policy development in end-use sectors. In the light of this new Energy Efficiency Plan covering all sectors from generation to end-use, it becomes evident that the scope of the national framework needs to be expanded to cover the whole energy chain, thus tapping into more energy saving potentials.

At the same time, the launch of the first European Semester of ex-ante policy co-ordination in the framework of the Europe 2020 strategy opens new opportunities for the Commis-sion to follow and assess Member States’ annual progress in energy efficiency.

As it is essential to monitor national achievements to assess progress made towards the European 20% target, the Commission will in the coming months analyse what the most appropriate monitoring framework should be.

ConclusionThe measures proposed in this Plan aim at closing the gap in reaching the EU’s 20% energy saving target as well as at helping to realise our 2050 vision of a resource efficient and low carbon economy, as well as aiming at increased energy independence and security of supply. Fully implementing this plan should deliver important energy savings: it is estimated that the actions of the public sector and the new minimum efficiency requirements for appliances should yield savings of up to 100 Mtoe and that comparable savings can also be expected from measures in the transport sector and from energy savings for consumers from their energy suppliers.

The binding measures put forward in this plan will be imple-mented through appropriate legislative instruments, including a legislative proposal encompassing revision of the existing Energy Services and Combined Heat and Power Directives. The next steps during 2011 will be the adoption of that proposal; the adoption of new ecodesign and energy labelling measures; the launching of the Smart Cities and Smart Communities initiative; and proposals on financing tools which will be brought forward during the budgetary discussions of 2011.

The Commission calls on the EU institutions, Member States and all relevant stakeholders to endorse this new Energy Efficiency Plan, to actively engage in discussion concerning implementing measures and to cooperate closely in its implementation.


EUROPEAN COMMISSION Brussels, 22 January 2010

COMMISSION STAFF WORKING PAPER

INTERPRETATIVE NOTE ON DIRECTIVE 2009/72/EC CONCERNING COMMON RULES FOR THE INTERNAL MARKET IN ELECTRICITY AND DIRECTIVE 2009/73/EC CONCERNING COMMON RULES FOR THE INTERNAL MARKET IN NATURAL GAS

RETAIL MARKETS

Chapter 4. Consumer protection

4.7. Implementation of intelligent metering systems

4.8. Smart grids

This note provides further information to guide the implemen-tation of measures in the new Electricity and Gas Directives relating to retail market issues. It outlines the new consumer protection measures that are included in the legislation; describes the new roles and duties of Regulators; provides direction for the long-term assessment of the cost-benefit analyses that may be carried out on the implementation of intelligent metering systems (smart meters); and provides guidance on closed distribution systems.

4.7. Implementation of intelligent metering systems

An intelligent metering system or ‘smart meter’ is an elec-tronic device that can measure the consumption of energy, adding more information than a conventional meter, and can transmit data using a form of electronic communication. A key feature of a smart meter is the ability to provide bi-directional communication between the consumer and supplier/operator. It should also promote services that facilitate energy effi-ciency within the home. The move from old, isolated and static metering devices towards new smart/active devices is an important issue for competition in energy markets. The imple-mentation of smart meters is an essential first step towards the implementation of smart grids.

For consumers and the operation of the retail market, there are a number of benefits associated with the roll-out of smart meters that the Commission considers should be covered by the economic analysis, including:

y improved retail competition;

y energy efficiency and energy savings; y lower bills due to better customer feedback; y new services for consumers, including vulnerable

consumers; y improved tariff innovation with time of use tariffs; y accurate billing; y reduced costs and increased convenience for pre-pay; y less environmental pollution due to reduced carbon emis-

sions; and y the facilitation of microgeneration, including renewable

generation.

This is not an exhaustive list of potential benefits. Smart metering would also bring benefits to the energy companies in the form of reduced management costs in terms of manual meter reading and less significant debt handling costs; more efficient network operation and management; and reduced levels of fraud. With regard to the frequency of meter reading, it should be noted that consumers must be properly informed of actual energy consumption and costs frequently enough to enable them to regulate their own consumption (Annex I(1)(i) of the Electricity and Gas Directives). The Commission’s services consider that receiving information on a monthly basis would be sufficient to allow a consumer to regulate his consumption. When carrying out an economic assessment, Member States should have regard to appropriate pilot programmes that have already implemented smart meters.

Where an economic assessment of the long-term costs and benefits has been made, at least 80% of those consumers who have been assessed positively, have to be equipped with intelligent metering systems for electricity by 2020. In reply to a request for clarification on the scope of the 80 % target for smart meters in Annex I to the Electricity Directive, the Commission issued a Declaration to the effect that it is under-stood that where no economic assessment of the long-term costs and benefits is made, at least 80 % of all consumers have to be equipped with intelligent metering systems by 2020 (Annex I(2) of the Electricity Directive).


Member States must have regard to the interoperability of smart meters in their jurisdiction when implementing these provisions. They must also apply appropriate standards and best practices and have due regard to the importance of developing the internal market for energy.

When considering issues relating to the implementation of smart meters, Member States should have due regard to the confiden-tiality of consumer information as provided for in Article 16 of the Treaty of the Functioning of the European Union.

4.8. Smart grids

The Commission’s services consider that the implementation of more active transmission and distribution systems in the form of smart grids is central to the development of the internal market for energy. The development of technology to deliver more efficient management of networks is more commonly known as smart grids. The new systems will improve efficiency, reliability, flexibility and accessibility and are the key next steps in the evolution of the internal market in energy. Member States are encouraged to modernize distribution networks, for example through the introduction of smart grids, which should be built in a way that encourages decentralized generation and energy efficiency.

In order to promote energy efficiency, Member States or, where a Member State has so provided, the regulatory authority must strongly recommend that electricity and gas undertak-ings optimize the use of energy, for example by providing energy management services, developing innovative pricing formulas, or introducing intelligent metering systems or smart grids, where appropriate (Article 3(11) of the Electricity Directive, Article 3(8) of the Gas Directive).

Such encouragement is reinforced by the revised objectives and duties of national regulatory authorities, who are respon-sible for promoting a competitive, secure and environmen-tally sustainable internal market in electricity/gas within the European Union and effective market opening for all customers and suppliers in the European Union, and for ensuring appro-priate conditions for the effective and reliable operation of electricity/gas networks, taking into account long-term objec-tives (Article 36(a) of the Electricity Directive, Article 40(a) of the Gas Directive). Relevant long-term objectives are European targets for the share of energy from renewable sources in final energy consumption, energy efficiency improvements and greenhouse gas emission reductions.

4.8.1. Smart Grid Development – EU Directions

In the previous five years, three strategic projects have been initiated by the European Commission from the field of Smart Grids:

y Vision and Strategy for Europe’s Electricity Networks of the Future,

y Strategic Research Agenda for Europe’s Electricity Net-works of the Future and

y Strategic Deployment Document for Europe’s Electricity Networks of the Future.

The task force (European Technology Platform for Smart Grids - ETP SG) who published the above documents comprised the representatives of the ministries, regulatory bodies, power utilities, power equipment manufacturers, consultancy firms, universities and other EU Member States’ institutions. The above documents strategically define, i.e. identify the EU Smart Grid vision, development directions and implementation.

In addition, to efficiently coordinate the above plan activities, the Commission has in November 2009 initiated the estab-lishment of the Task Force for Smart Grids (TF SG) with the mandate of 20 months. TF SG task was to advise the Commis-sion concerning the Smart Grid policy and regulatory direc-tions, and to coordinate the initial EU-level implementation steps. Three expert groups under the TF SG have in the end of June 2010 finalised the following drafts:

y Functionalities of Smart Grids and Smart Meters, y Regulatory Recommendations for Data Safety, Data Han-

dling and Data Protection and y Roles and Responsibilities of Actors Involved in the Smart

Grids Deployment.

The above expert groups have based their work both on the documents developed by the ETP SG, and on the Roadmap 2010-2018 and Detailed Implementation Plan 2010-2012 developed in May 2010 by the European Electricity Grids Initiative (EEGI). EEGI is one of the essential EU industrial initiatives under the Strategic Energy Technologies Plan (SET-PLAN), comprising of the European Transmission and Distri-bution System Operators, closely cooperating in the field with the relevant EC directorates and the European Regulators’ Group for Electricity and Gas (ERGEG).

Under this document, the 10-year research programme, development and the accompanying pilot project in the EU Smart Grid field should receive some EUR 2 billion, out of which EUR 1 billion between 2010 and 2012.

Given the indicated trends, activities and experience in the defining the clear framework to apply the established EU-level concept there was a need to adopt the equivalent documents in our country fully aligned with the established strategic orientations, primarily towards Europe.

4.8.2. 10 Steps to Smart Grids

In its Communication “Smart Grids: from innovation to deploy-ment”, published on April 2011, the European Commission announced that it “will request Member States to produce action plans with targets for the implementation of Smart Grids”. EURELECTRIC DSOs believe that there is a great need for more awareness about what the deployment of smart grids will include, in particular with a view to identifying the most important steps for policymakers and industry. With the aim of providing reference to member states, EURELECTRIC DSOs Directors Gathering has therefore released its indicative 10-Year Roadmap for Smart Grid Deployment in the EU.

The “10 Steps” paper points out what we see as milestones on the way towards new commercial customer-oriented solutions which will contribute to a successful EU energy policy in terms of sustainability, security of supply and competitive-ness. EURELECTRIC believes that with the rising integration of


variable RES and later also e-mobility into the power system, increasing flexibility and establishing new commercial services will be a must. Smart grids will enable DSOs to have real-time information about electricity flowing within their grids. DSOs will increasingly move beyond their traditional role and will become enablers for producers, service providers and customers to meet on an open market place. EURELECTRIC recognizes that implementation of smart grids is an incre-mental and continuous step-by-step learning process, charac-terized by different starting points throughout Europe. Smart grids are a steady evolution which has to include the customer as well as DSOs, energy suppliers and producers. Imple-menting smart grids requires 10 steps to be taken, many of which are closely interrelated and will develop simultaneously rather than in isolation. Nevertheless, EURELECTRIC clusters them in three development phases:

A facilitation phase at both national and EU level will include (1.) the development of regulatory incentives for smart grid investments and (2.) market models, (3.) setting standards and ensuring data protection and privacy; and (4.) testing promising projects and sharing knowledge.

In the second, deployment phase, large-scale introduction of in particular “smart network management” and “smart inte-grated generation” functionalities in the member states will follow. This will involve: (5.) rolling out smart metering, (6.) monitoring and controlling the grid & distributed generation, (7.) moving to integrated local & central balancing of all gener-ation and (8.) aggregates distributed energy sources.

Finally, the commercialization phase will see new services offered by commercial parties: (9.) e-mobility, heating, cooling and storage should be integrated into the system on a large scale and (10.) real customer participation in the power market should be achieved. This will involve a large number of stakeholders and is expected to take longer, most probably beyond 2020.

While the facilitation phase (our first four steps) will require EU support, the following deployment and large-scale commer-cialization will take place in those member states where smart grids are considered to be economically viable, taking into account the energy supply mix, current and future demand, and the status of networks.


Comment on EU Emission Trading System


4.8.2 Power Utility Standards

As a follow-up to “Smart Standards for the Smart Grid”, here are the power utility fibre-optic cable standards that attach the smart grid to a power utility’s network operations centre. Without them, there can be no smart grid: IEEE 1138

Optical Power, Ground Wire (OPGW); IEEE 1222 All Dielec-tric Self-Supporting (ADSS) Fibre Optic Cables; IEEE 1591.1 Hardware for OPGW Cables; IEEE 1591.2 Hardware for ADSS Cables; IEEE 1591.3 Hardware for WRAP Cables; and IEEE 1594 Standard for Helically Applied Fibre Optic Cables.


The basis of legal framework for the realization of the energy policy of the Republic of Serbia, a way of organizing the energy markets and conditions for safe production and distribution of electricity, the conditions for carrying out energy activities, environmental protection, energy efficiency and achieving control over the conduct of these economic activities estab-lishes the Energy Law.

Energy Law of the Republic of Serbia (Official Gazette RS No. 84/2004), particularly defines renewable energy sources as sources that are found in nature and reproduced in whole or in part. This term particularly includes energy that is derived from biomass, geothermal, solar energy, wind energy and economically acceptable hydropower potential of small rivers.

There are two main emphasis of the Energy Law. The first is the separation of competencies for the adoption of new regu-lations and the establishment of the Energy Development Strategy, and the other is a reorganization of Public energy enterprises and the abolition of monopolies in the energy sector wherever possible, i.e., monopoly control by the Energy Agency as an independent state institution.

The law recognizes the importance of renewable energy sources and creates detailed legal framework by adopting variety of bylaws as an incentive for their effective use.

The Law, therefore, creates the possibility of establishing priorities in the energy sector, which are defined by numerous bylaws, Decrees and Decisions, and in particular by adopting the Strategy of Energy Development in the Republic of Serbia until year 2015 by the Assembly of RS in May 2005 (Official Gazette of RS, No. 44/05).

Strategies of energy development in the Republic of Serbia until year 2015The strategy especially deals with the area of renewable energy sources, given the special difficulties and limitations in the use of existing resources of energy production and the negative energy balance of Serbia in relation to the real needs of sustainable economic development in the future.

Therefore, this Strategy regulates the Program for selective use of new renewable energy sources, which would establish a framework for all activities that would be imple-mented in order to achieve efficient use of renewable energy sources.

Although there is considerable potential of renewable energy sources, they are still for the most part unexploited even though it is a small (from kW up to a few MW at most)

3.2 Use of renewable energy in Serbia legal framework

and relatively simple facility for energy production for local communities needs.

Within the new category of “Renewable sources of energy”, which include biomass, hydro potentials of small water courses (with facilities up to 10 MW), geothermal energy, wind energy and solar radiation, it should be noted that in Serbia there are special benefits and demand for their organized use in the so-called decentralized production of heat energy (by burning biomass and “capture” of the solar radiation) and elec-tricity (construction of mini hydro power plants up to 10 MW and wind power plants, up to 1 MW) to meet the needs of local consumers, as well as the delivery of surplus electricity to the local network within the power system of Serbia.

The energy potential of mentioned renewable energy sources in Serbia is very significant and amounts to over 3 M t.en. annually (with the potential of small hydropower plants, of about 0.4 M t.en).

About 80% of the total potential is located in the utiliza-tion of biomass, of which about 1.0 M t.en. is comprised of the potential of wood biomass (harvest wood and waste of wood mass in its primary and / or industrial processing), and more than 1.5 M t.en. is comprised of the agricultural biomass (agricultural residues and crops, including liquid manure). The energy potential of geothermal resources in Serbia is close to 0.2 M t.en, in the territories of Vojvodina, Posavina, Macva, Danube region and the wider area of central Serbia as well as in existing spas.

For the realization of this program it is necessary to establish incentives for the introduction of modern technology, invest-ment in new facilities and purchase of equipment for the use of renewable energy sources, followed by the measures for raising awareness of wider and professional community about the possible use of various renewable energy sources and the benefits provided by the International Funds for implementa-tion of specific Projects.

In accordance with the announced harmonization of the practice and legislation in this field with EU regulations, this program would introduce special legislation, regulations and standards for organized stimulation of wide range of activities related to the use of renewable energy sources.

Similar to the Program for rational use and energy efficiency, it is necessary to “develop” special “schemes” / patterns of financial support for the introduction of measures that enable more intensive use of new renewable energy sources in Serbia.

The Law provides the fundamental definitions in the area which it governs, among which are the most significant following concepts:


Energy activity is defined as the production of electricity, transmission and transmission system operation, distribution, organizing of electricity market, electricity trading and other activities.

Energy operator is defined as a legal entity or entrepreneur who is registered to perform one or more energy activities.

Energy permit is a permit for the construction of energy facilities.

License is permission for performing energy activity, in accordance with the Law. The Law defines other important concepts related to energy.

Law establishes the independent state institution, the Energy Agency, which within its Law defined tasks, carries out tasks of issuing licenses for energy activity.

Law also stipulates that energy facilities are built in accor-dance with the law governing spatial planning and construc-tion of facilities, technical and other regulations, and subject to prior energy permit issued in accordance with the Law.

Energy permit is obtained for the construction and recon-struction of all facilities for the production of electricity with power above 1MW. This permit can be issued only to an energy entity licensed to perform energy activity.

Application for issuing energy permits may be submitted by domestic and foreign legal and natural persons. Energy permits can be obtained even before the acquisition of property rights, or rights of use on the land wherein the planned construction of an energy facility, and prior to issuing the document on urban conditions for the construction of energy facility, i.e., the construction approval.

Energy permit is issued by the Minister for energy affairs.

Criteria, according to which the issuing of permits for the construction of production facilities is performed, include in particular:1. Requirements regarding the safe operation of electrical

power system2. Requirements for determining the location and land use3. Requirements of environmental protection,4. Measures of protection of public health and safety of

persons and property5. Energy efficiency level6. Requirements for use of primary energy sources7. Requirements related to technical equipment and finan-

cial capacity of the applicant to implement the construc-tion of energy facilities.

More detailed criteria for issuing these permits are provided by the Minister. These criteria are set forth in the Regulation (Official Gazette of RS, No. 23/2006 and 113/2008). Special Register is kept on issued permits.

Application for the issuance of energy permit contains infor-mation on the location wherein the facility should be built, deadline for completion of works, the type and capacity of the facility and its energy efficiency, energy sources the facility will use, mode of production and acquisition of energy, means to protect the environment during construction of the facility and in the course of its operation, the conditions regarding the

termination of operation of the facility, the amount of funds planned for construction and sources of these funds.

Energy permit is issued with a validity period of 2 years as of the date of issuance and may be extended at the request of the applicant for another year at most.

Energy activity is performed by a natural or legal person or entrepreneur registered and licensed to perform these activi-ties. Production of electricity is the activity of public interest.

Energy operator may commence energy activity in terms of the license issued by the Agency, while the license is required for power generation facilities with power over 1 MW. The license is issued for a period of 10 years. Expiry date can be extended at the request of the energy operator.

The requirements for issuance of the license are that the operator is registered with the relevant register for performing activities regarded as the energy activity, that facilities, systems, installations and plants meet the technical and fire conditions and requirements of environmental protection, that requirements in terms of technical staff handling the facility are met, that funding is provided for performing the activity, and that members of the management of the operator have not been previously punished for crimes against the economy. Evidences of compliance with these conditions are enclosed by the energy operator when applying for the license. Along with the application it is necessary to provide a report of a competent inspector of compliance with the technical require-ments and staffing.

Energy facility which is supplied with the license for the produc-tion of energy, in accordance with the law, may be subject to incentives of the Government of the Republic of Serbia, which relate to specific benefits provided the electricity is produced by using renewable sources, as stated above.

Incentive measures of the Serbian Government for privileged producers of electricityDecree on the measures of incentives for the production of electricity using renewable energy sources and combined production of electricity and heat (Official Gazette of RS, No. 99/2009), prescribes in more detail measures of incentives for the production of electricity using renewable energy sources and for the purchase of energy - Feed-in tariff, balancing and readout; defines energy facilities that produce electricity from renewable sources, regulates the content of the agreement on purchase of electricity per incentive measures, as well as reimbursement of costs to the purchaser of produced energy.

The terms used in this Decree have the following meaning: – Renewable energy sources are energy sources that are

found in nature and reproduced in whole or in part espe-cially watercourses energy, wind energy, solar energy, biomass, geothermal energy, bio-fuels, biogas, synthetic gas, landfill gas, gas from sewage, water and waste water treatment plants from food and wood processing indus-tries that do not contain hazardous substances;

– Biogas power plants are biogas plants that use gas emerged from the remains in agriculture (liquid manure and manure from livestock and poultry farms), biomass,


biomass residues resulting from primary processing of agricultural products, which do not contain hazardous materials, debris and parts of animals;

– Hydroelectric power plants on the existing infrastruc-ture are hydro power plants that use existing dam con-trolled by a public company, as well as hydro power plants built on pipelines designated to supply raw water to the water plant for processing.

– Power plants using landfill gas are power plants that use gas originated in the public landfills or gas created by plants for treatment of public wastewater;

– Power plants with combined production on the existing infrastructure are revitalized old power plants with combined production of fossil fuels that were in oper-ation for at least 25 years prior to the revitalization, as well as reconstructed old power plants with combined produc-tion of fossil fuels, which have not been in the operation for at least five years prior to reconstruction, regardless of time of operation in the plant;

Producer of energy that meets prescribed conditions is the privileged producer of electricity.

Power Plant, in the terms of this Decree, is the plant for producing electricity or combined production with one or more production units, namely:1. hydro power plants of installed power up to 10 MW;2. power plants of installed power up to 10 MW, which in

the production process use only biomass or biomass combined with some additional fossil fuel, provided the energy value of biomass used annually makes at least 80% of total primary energy;

3. power plants which produce electricity using renew-able sources of energy other than biomass, provided energy value of used renewable energy in the production process annually makes at least 90% of total primary energy, with a supplementary fuel as some of the fossil fuels, biomass or waste;

4. power plants for combined production of installed power up to 10 MW which use renewable energy sources, fossil fuels or fossil fuels combined with some renewable energy source;

5. power plants that use separated biodegradable fraction of public waste (hereinafter: the waste) of installed power up to 10 MW.

The right to incentive measures set forth in this Decree for electricity produced in power plants that use un-accumulated solar energy is limited to the total installed power up to 5 MW in these power plants.

The right to incentive measures set forth in this Decree for electricity produced in power plants that use wind energy is limited to the total installed power up to 450 MW in these power plants.

Besides the privileged producers that are entitled to incentive measures in terms of paragraph 2 of this Article, the right to incentive measures set forth in this Decree may also be obtained by privileged producers of electricity in wind power plants at a total of installed power equal to the amount of 10% of the capacity to produce electricity, which is built by a public company for production, distribution and trading of electricity within the period of validity of this Decree.

Incentive measures, in terms of this Decree, include the purchase price determined by this Decree, according to the type of power plant that produces electricity using renewable energy sources as well as according to the installed power (R) expressed in MW.

Type of power plant, as well as installed power is determined by the act on acquiring the status of privileged producers of electricity.

Purchase prices from first paragraph of this Article, expressed in euro cents per kilowatt-hour (c € / kWh 1), as follows:


Produced energy can be purchased at prices prescribed by this Decree, which is valid for a period as of 1 January 2010 to 31 December 2012.

Price is determined in EUR per kilowatt hour and provides different amounts, depending on the installed power of facility and other parameters shown in the above scale, and is paid in dinars counter value by the middle exchange rate of NBS on the date of invoicing.

Purchaser of produced electricity is a public company for production, distribution and trade of electricity.

The rights and obligations of the purchaser and the producer shall be defined by the Agreement, which is concluded for the period of 12 years, while the purchaser prepares the model of this Agreement and submits it to the competent Ministry, for its approval.

Privileged producer, who concluded such an agreement, does not pay for balancing, or the read-out of electricity. Before signing the agreement, the initial state is read out, and within

3 days the information on that is provided to the purchaser and the producer.

Privileged producer of electricity

Acquiring the status of privileged producer is regulated by the Decree on conditions for obtaining the status of privileged producer and criteria for assessing compli-ance with these conditions (Official Gazette of RS, No. 72/2009).

The status of privileged producer may acquire producers that:1. use renewable sources of energy or the separated frac-

tion of public waste in generating electricity;2. generate electricity in power plants, which in terms of the

Law governing the power industry, are considered low power;

3. simultaneously produce electricity and thermal energy, provided they satisfy criteria in terms of energy efficiency.

Number Type of power plant Installed power (MW)Measure of incentive -

the purchase price (c € / kWh 1)

1. Hydro power plants

1.1 up to 0.5 MW 9.7

1.2 from 0.5 MW to 2 MW 10.316 - 1.233*R

1.3 from 2 MW to 10 MW 7.85

1.4 on existing infrastructure up to 2 MW 7.35

1.4 on existing infrastructure from 2 MW to 10 MW 5.9

2. Biomass power plants

2.1 up to 0.5 MW 13.6

2.2 from 0.5 MW to 5 MW 13.845 - 0.489*R

2.3 from 5 MW to 10 MW 11.4

3. Biogas power plants

3.1 up to 0.2 MW 16.0

3.2 up to 0.2 MW do 2 MW 16.444 - 2.222*R

3.3 over 2 MW 12.0

4. Power plants using landfill gas and gas from the plants for public wastewater treatment 6.7

5. Wind power plants 9.5

6. Solar energy power plants 23

7. Geothermal energy power plants 7.5

8. Power plants with combined production on fossil fuels

8.1 up to 0.2 MW Co =10.4

8.2 from 0.2 MW to 2 MW Co = 10.667-1.333*R

8.3 from 2 MW to 10 MW Co = 8.2

8.4 On existing infrastructure up to 10 MW Co = 7.6

9. Waste power plants

9.1 up to 1 MW 9.2

9.2 from 1 MW to 10 MW 8.5


Biomass, in terms of this Decree, are biodegradable materials made in agriculture, forestry and associated industries and households, which include: plants and plant parts, fuel obtained from plants and plant parts, plant debris and byproducts from agriculture (straw, corn stalks, branches , seeds and husks); residues resulting in animal agriculture (manure), the remains of plants in forestry (the remains of the logging of forests); biodegradable residues in food and timber industries, which do not contain hazardous substances, and separated biode-gradable fraction of public waste.

Not considered as biomass, in terms of this Decree, are fossil fuels, peat, paper and cardboard, textiles, animal body parts, industrial waste except that which is considered as biomass, public waste, waste from plants for treatment of public waste-water and commercial waste.

Biogas, in terms of this Decree, is gas formed in biomass anaerobic processes.

Synthetic gas, in terms of this Decree, is gas formed in pyrolytic decomposition of biomass and separating fraction of public waste.

Waste, in terms of this Decree, is any substance or item contained in the list of categories of waste (LJ list) that the owner discards, intends to discard or is required to discard, in accordance with the law governing waste management.

Public waste, in terms of this Decree, is household waste (house waste), as well as other waste which, because of its nature or composition, is similar to waste from households, in accordance with the law governing waste management.

Fossil fuels, in terms of this Decree, are coal, petroleum and petroleum products, natural gas and oil shale.

If the producer of electricity performs the activity of produc-tion of electricity in a power plant, which contains different production units, it obtains the status of privileged producer only for production units that comply with the requirements prescribed in this Decree.

Producer performing the activity of production of electricity in several plants submits the application for acquiring the status of privileged producer for each of the power plants.

Legal entity or entrepreneur can acquire the status of privileged producer, subject to regulation, for:1. hydro power plant;2. power plant which in the production process uses

biomass or biomass combined with any additional fossil fuel or waste, provided the energy value of biomass used annually makes at least 80% of total primary energy;

3. plant that produces electricity using renewable energy sources, except biomass, provided the process of pro-duction used energy value of renewable energy annually makes at least 90% of total primary energy. Additional fuel can be some of the fossil fuels or waste;

4. plant that produces electricity using waste or waste combined with some fossil fuel or renewable source of energy, provided the energy value of used waste annu-ally makes at least 80% of total primary energy;

5. combined power plant that uses fossil fuels or fossil fuels in combination with renewable sources or waste, pro-vided it has a total annual efficiency level higher than the corresponding value of the minimum total annual level of power plant efficiency for combined production, listed in the table:

Installed power (MWe) Share of fossil fuel in energy value of fuel consumed (%)

(20-40)% (40-60)% (60-80)% (80-100)%

<1 45% 50% 55% 60%

1-10 55% 60% 65% 70%

Application for acquisition of the status of privileged producer is submitted to the minister responsible for energy affairs, in accordance with the law governing the energy sector.

In addition to application under paragraph 1 of this Article, the applicant shall submit evidence of compliance with the requirements for obtaining this status, namely:1. copy of the license for production of electricity, provided

the power plant has power of higher than or equal to 1 MW;

2. copy of the agreement with the holder of the license, pro-vided the power plant has power of 1 MW or higher, if the producer is not the holder of the license;

3. project of building of power plant;4. copy of the agreement on the connection to the distribu-

tion network or transmission system, and for the power plants of special features with the combined production, the copy of the agreement on the connection and take-over of thermal energy, with the competent energy or other economic entities;

5. the use permit;6. data on the person responsible for the operation of

power plant (name, position, phone, fax, e-mail).

When applying for acquiring the status of privileged producer for each plant with combined production, in which the share of fossil fuels in total primary energy is higher than 20%, besides the documents referred to in paragraph 1 of this Article shall be enclosed:1. the expected annual production of thermal energy, with a

monthly schedule;2. the expected value of the total annual level of efficiency.

Based on all of the above set forth, there is obvious economic interest in investment in energy facilities producing electricity from renewable sources and taking measures in order to obtain the status of privileged producer, because the differ-ence in prices of purchased energy and economic security which is achieved by concluding long-term agreement with Purchaser (for the period of 12 years), realizes the financial


“ratio” of such investments, in a short period of time this will ensure project profitability, while simultaneously protecting the interests of the wider community to improve the overall energy balance of the Republic of Serbia in the years to come.

Legal form of investment in the construction of energy facilities producing electricity from renewable sources in order to acquire the status of privileged producer -The proposal of a simple model-Participation of the interested Company (a general term used for any potential investor) in the project of financing the construction of an energy facility for the production of elec-tricity that would meet the requirements for obtaining the status of privileged producer, and the entity that can make a profit on the basis of achieving the difference in prices of produced and sold electricity, can be achieved through the following legal form (joint investment framework), comprising of several basic steps:

Conclusion of the Agreement (pre-contract, the Protocol) on the framework of business cooperation on the project invest-ment in the construction of the facility for production of elec-tricity from renewable sources, wherein the Company, with the local self-government unit and other potential partners in the project, would define mutual rights and obligations regarding the project, on a long-term basis, bearing in mind especially that it takes some time for the preparation of studies, prepa-ration of project documentation, works on the construction of the facility, which include the preparation of planning and urban development documentation, preparation of ecological study, rendering relevant decisions and obtaining all necessary permits and approvals as well as the license. This Agreement would determine the legal form of joint ventures.

Having regard to the regulations mentioned in this report, entity obtaining approvals and licenses for performing energy activity, as well as all necessary approvals for project imple-mentation, it is rational to anticipate the ESTABLISHMENT OF COMPANY in the form of Limited Liability Company, which will be registered for conducting the energy activities, serve as the holder of the project documentation for construction of the production facility, of all necessary approvals and licenses, and also be the party to the conclusion of the agreement on sale of power produced from renewable sources with the authorized Purchaser.

In the process of establishment of the company, it is necessary to determine in advance the percentage of participation of each of the founders, as well as a form of investment- in a limited liability company, it is possible that the share of each founder is expressed in objects and / or rights- money, equipment, knowledge and skills (know-how) and other forms of participation in this capital of such company.

Bearing in mind the different role of potential participants in this project, possible investment in cash and non-cash form, would be defined as follows:

y LOCAL SELF-GOVERNMENT- on the basis of author-ity provided by the Law, determines the location where facility for electricity production that meets the criteria

described above can be built, adopts planning regula-tions which provide for the construction of such facility, and renders the decision which assigns the usage right on the subject location in favor of the established company, which meets the requirement for eligibility for investments in the amount of land value and all possible costs regarding the usage right on the land, while still undertakes to issue the building permit under urgent procedure upon the sub-mitted request, technical admission and issuance of use permit for the facility when built. Municipality, wherein such facility is being built, shall provide the entire necessary infrastructure for the undisturbed construction and opera-tion of the underlying facility. Form of investment of local self-government, therefore, may be in non-monetary form, as well as know-how and field support, and not just finan-cial, that is, monetary investment, depending on the finan-cial capabilities of each local community, and regulations.

y COMPANY obliges to provide funding on behalf of its share in the total costs of project implementation, given the cost of land, costs of establishment, obtaining permits and licenses for the production, cost of facility construction, cost of equipment and liquid assets to start the operation of the facility, in the amount to be ascertained by the study on economic justification of this project and the assess-ment of an authorized appraiser.

y Percentage of share ratio of the founders presumably would be the subject of evaluation and negotiation in each particular case

y Joint responsibility of the founders in the new company will certainly be the implementing of the necessary pro-cedures for obtaining permits to build the energy facility for these purposes, a project study on the construction of energy facility, the project documentation in order to obtain approval for the construction and implementation procedures for the procurement of appropriate equipment and facilities for the production, under the most favorable conditions, thus the equipment meets all the norms and standards for obtaining the license, in accordance with the regulations quoted above. At the same time, the found-ers shall bear all costs of acquiring permit and license for energy production, and also carry out the selection of per-sonnel necessary for the handling of equipment and facili-ties, in order to meet conditions required for issuance of the license.

y When the conditions are met that are in compliance with the regulations mentioned above and all preconditions for achieving the status of privileged producer are ful-filled, a new company may conclude agreement with the purchaser, for a term of 12 years, in compliance with the regulations.

In the process of establishment of the company, in the form of Limited Liability Company, it is common that the Founding Act-Agreement on the establishment provides mutual ratio of ownership, appropriate management of the company by the founders, and the most rational solution being ASSEMBLY AND BOARD OF DIRECTORS, wherein all the founders will be proportionally represented. Basic parameters for the estab-lishment of the bodies of the company and the establishment procedure are provided by the Companies’ Law. The registra-tion procedure is regulated by the rules on registration of the Business Registers Agency in Belgrade.


Please note that, in addition to other provisions of the founding documents that are common, the founding act provides for a special mechanism for resolving all disputes within the company.

Founding act provides in a mandatory manner for a way of distribution of profit realized by performing business activities, as well as cases where the profits are distributed in other ways.

Apart from the founding act, the Agreement of members of the company may be concluded simultaneously, stipulating other mutual obligations of the founders which do not have to be the subject of the founding act, such as, for example, addi-tional obligations without increasing the initial capital, which are treated as loans, terms and conditions of repayment and the possibility of conversion of loans into the capital of the company.

The possibility of subsequent changes in members’ shares percentage in the capital of the company remains an open question, as well as the ability to transfer capital to other founders, or the ability to offer share capital of the company to third parties or interested investors, so they could become new members in the company by joining.

Of course, one can foresee the possibility that in any period of the operation of the company, based on consensual decision of the founders, new members may adjoin the company, i.e. potential investors, with monetary or non monetary share in order to increase the capital of the company.

The Agreement on the establishment of the company would anticipate issues in which the consent of the Assembly must be obtained for the adoption of certain decisions, the jurisdic-tion of the Board of Directors, the decision-making of these bodies, as well as limitations in representation and signing by representatives of the company.

The Founding Act provides for which decisions a consensus must be reached, while for the others a simple or qualified majority is enough in decision-making.

Given that for the implementation of the project it is necessary to achieve coordination, promptness in decision making and professional support, as well as the maximum cooperation of all parties concerned, it is recommended to form a profes-sional team in advance, comprised of representatives of the founders, for achieving legal, administrative and technical support to the founders and to the newly established company in order to facilitate the registration, obtain various permits and approvals and other professional activities.

Please note that the text above defines one of the possible legal models of investment and establishment of a joint business enterprise, however certainly not the only one that can achieve the investment with stated objectives, but according to many criteria, the simplest and the most effective.

With the development of basic activity, a form of limited liability can be transformed into the form of joint stock company, of an open and closed form, upon the decision of the founders in accordance with relevant laws and internal regulations of the Company.

The conclusion is that there are other possible legal forms of achieving cooperation, such as the establishment of the

subsidiary company by only one of the participants in the project, with which other participants would conclude an Agreement on joint investment in construction and financing the operation of the facility for the production of electricity and the manner of division of profit generated in the produc-tion of electricity in this power plant, bearing in mind that the nature of such agreement is entirely different from the above described model.

Namely, this type of agreement is subject to contractual legal regime, unlike the status regime-continuous cooperation and continuous investment. Contractual agreement, as a commer-cial agreement, by its very nature has a relatively limited duration, and thus more exposed to changes, possibilities of termination, cancellation, potential disputes, the blockade of work and undisturbed financing, and other shortcomings in comparison with the formation of a new legal entity on basis of equality.

Such a contractual agreement has disadvantages in terms of accession of new contracting parties, as potential strategic partners, to which a form of continuous cooperation (acquisi-tion of share in the company and the status of the founder, as with proportionate participation in decision making) is certainly greater guarantee that every investment should pay off in the quickest and safest way.

Conclusion

Analysis of the legal framework for energy production in the Republic of Serbia, with special emphasis on renewable resources, incentive measures adopted by the Government of the Republic of Serbia and obtaining the status of privileged power producers, with the aim of achieving multiple benefits, to both economic, ecological and energetic, also aims to show the possibility of further investment in facilities for the produc-tion of electricity from renewable sources, to a relatively simple legal form of such investment and to arouse further interest in domestic and foreign investors for the realization of such projects.

It can be concluded that there are many potential sources of energy in Serbia who have not been sufficiently identified, both by authority of local governments, especially the less developed areas in Serbia, but that there is insufficient infor-mation of foreign investors on the possibilities of such an investment.

Our demand for increased use of renewable sources is in accordance with the practice of developed countries and the European Union, which correspond to their aspirations to reduce emissions of harmful substances and stimulate sustainable development.

Apart from the obvious energy effects (reduction of imported fuel and reduction of endangering the environment), the real-ization of this program would involve domestic investment capital, boost small and medium enterprises and stimulate domestic production and development of equipment using renewable energy sources.

Special interest for foreign investments in the implementa-tion of individual projects under this program derives from the growing interest of foreign partners for the acquisition of


so-called Green certificates, based on electricity production using new energy sources, and on this basis the possibility of free disposal of their own “quota” of emissions and providing additional financial resources for foreign investment in the development of energetic sector in Serbia.

It is important to achieve that, through specific means of informing, development programs and incentives for the production of electricity from renewable energy sources

become easily accessible and understandable to all potential investors and local self-governments on whose territory there are potentials for development in the energy field.

* NOTE: Some specific legal issues regarding WASTE TO ENERGY are mentioned in related chapter.

PE EPS TOWARDS EC COMMUNICATION ON

ENERGY EFFICIENCY, SAVINGS AND RENEWABLE ENERGY

ROAD MAP


Efficient generation of heat and electricity

About 30% of the EU’s primary energy consumption is consumed by the energy sector, mainly for transforming energy into electricity and heat and for distributing it. New generation capacity and infrastructure need to be built to replace ageing equipment and meet demand. It is important to ensure that energy efficiency is taken into account and that new capacity reflects the best available technology (BAT). The Emissions Trading Scheme will encourage this, as will the new Industrial Emissions Directive. The Commission will monitor the extent to which these measures lead to an improvement in the efficiency of new generation. Taking into account the results, and the need to achieve greater efficiency in a medium and longer term perspective, the Commission will consider introducing a legal provision requiring Member States to make the achievement of BAT levels applicable to new installations a mandatory condition for the authorisation of new capacity and to ensure that existing installations are upgraded to BAT levels applicable to existing capacity as part of their permit update.

Exploring ways to tackle the effective recovery of heat losses from electricity and industrial production processes will be another important task for the Commission, since unused energy saving potential is far from being exhausted and could cover a significant part of Europe’s thermal energy needs e.g. for heating and cooling, boosting local resources and displacing imported energy in many instances. Harnessing this potential requires an integrated, crosscutting approach that takes into account current thermal energy needs e.g. in buildings and businesses, the role of local and regional authorities in planning and implementing energy efficient and environmental friendly strategies, including the development of efficient infra-structures, and synergies with commercial solutions for cheap, clean and convenient thermal supply services using recovered waste heat.

Greater use of (high-efficiency) cogeneration, including from municipal waste treatment plants, and district heating and cooling can make an important contribution to energy effi-ciency. The Commission will therefore propose that, where there is a sufficient potential demand, for example where there is an appropriate concentration of buildings or industry nearby, authorisation for new thermal power generation should be conditional on its being combined with systems allowing the heat to be used – “combined heat and power” (CHP) – and

4.1 EC Communication on efficiency in heat and electricity

that district heating systems are combined with electricity generation wherever possible. To improve the energy-saving performance of CHP systems, the Commission also proposes that electricity distribution system operators provide priority access for electricity from CHP, and will propose reinforcing the obligations on transmission system operators concerning access and dispatching of this electricity.

Energy efficiency in electricity and gas networks

The Commission will strengthen the basis for national grid regulators to take energy efficiency into account in their decisions and in monitoring the management and operation of gas and electricity grids and markets, including reflecting energy efficiency priorities in network regulations and tariffs, network and technical codes.

Energy efficiency as a business sector

A prerequisite for an energy efficient Europe is creating value for energy savings through market mechanisms. Instruments are therefore needed to put a financial value on energy savings and link the profits of utilities (suppliers or distributors) to energy efficiency rather than the volume of energy delivered. Some Member States have already established a system of national energy saving obligations for the energy industry with good results: savings of up to 6% of final energy consump-tion have been achieved. In systems of this type, utilities are required to deliver a fixed amount of energy savings by implementing energy efficiency improvements among their customers (such as households, companies, municipalities or housing associations) or in other sectors such as energy generation or transport. As an alternative to delivering the savings themselves, some systems allow utilities to buy the energy savings from actors such as energy service companies (ESCOs). Energy saving obligations stimulate suppliers to change their business model from retailing energy commodi-ties towards offering energy services.

The Commission will propose that all Member States establish a national energy saving obligation scheme appropriate for their circumstances. The impact could - depending on the scope and stringency of the requirement - yield savings of up to 100 million tons of oil equivalent (Mtoe) in 2020.


Improvements to the energy performance of devices used by consumers – such as appliances and smart meters – should play a greater role in monitoring or optimizing their energy consumption, allowing for possible cost savings. To this end the Commission will ensure that consumer interests are properly taken into account in technical work on labelling, energy saving information, metering and the use of ICT. The Commission will therefore research consumer behaviour and purchasing attitudes and pre-test alternative policy solutions on consumers to identify those which are likely to bring about desired behavioural change. It will also consult consumer organisations at the early stage of the process. Consumers need clear, precise and up to date information on their energy consumption – something that is rarely available today. For example, only 47% of consumers are currently aware of how much energy they consume. They also need trustworthy advice on the costs and benefits of energy efficiency invest-ments. The Commission will address all of this in revising the legislative framework for energy efficiency policy.

Promoting energy and resource efficient appliancesImproving the performance of buildings, and the products used to heat, cool, ventilate and light them, is one of the most tangible ways in which energy efficiency policy can benefit household budgets. Already-introduced ecodesign efficiency standards and energy labels for household appliances have delivered substantial energy savings for consumers and business opportunities for European manufacturers of high quality goods. Under the current ecodesign working plan, the Commission will continue this approach, setting stricter consumption standards for heating boilers, water heaters, computers, air conditioners, tumble driers, pumps, vacuum cleaners and further types of lighting. It will also bring forward a new working plan for 2012-2014.

Energy labels are an essential accompaniment to this approach. They are most effective when taking the way consumers choose as their starting point. The Commission will launch a survey on consumer understanding of energy labels. This will help to better accommodate consumer interests (e.g. reflecting on the perception of different labels and the influence of marketing) in forthcoming energy labelling measures and also support the dialogue with consumer organisations.

Today more than 40% of windows in the EU are still single-glazing, and another 40% are early uncoated double-glazing. The Commission will work to facilitate the market uptake of more efficient building components, for example by applying the eco-design or labelling frameworks to windows.

In its future work on ecodesign and energy labelling the Commission will examine the option, where relevant, of covering systems as well as individual products. In order to enforce the effectiveness of these measures, the Commis-sion will continue to analyse the life-cycle energy impact of products. It will strengthen market surveillance to ensure that product requirements are properly implemented and will support measures to help consumers, installers and retailers make best use of energy labels.

Empowering consumers with new technology

Under current EU legislation, final consumers should already be informed frequently about their energy consumption at the time of use to enable them to regulate their consumption through individual meters for all important types of energy: electricity, gas, heating and cooling and hot water. They should also be provided with information through their bills and contracts about prices and energy costs. This should be presented in ways which help them improve their energy effi-ciency, for instance relating their consumption to benchmarks or available energy efficient solutions.

In practice, these consumer rights still need to be properly implemented. The information provided must be better targeted to consumer needs. The Commission will work with Member States to ensure the full implementation of these as well as other provisions of European energy efficiency legislation.

In future years the deployment of a European “smart grid” will bring about a step change in the scope for gathering and communicating information about energy supply and consumption. This information will allow consumers to save energy. Member States are obliged to roll out smart elec-tricity meters for at least 80% of their final consumers by 2020 provided this is supported by a favourable national cost-benefit analysis. It is important to ensure that intelligence can also develop in other networks, such as heat, cooling and gas, and that these intelligent networks all contribute to build a well-functioning, interoperable market for energy efficiency services. Smart grids and smart meters will serve as a backbone for smart appliances, adding to the energy savings obtained by buying more energy efficient appliances. New services will emerge around the development of smart grids, permitting ESCOs and ICT providers to offer services to consumers for tracking their energy consumption at frequent intervals (through channels like the internet or mobile phones) and making it possible for energy bills to indicate consumption for individual appliances. Beyond the benefits for household consumers, the availability of exact consumption data through

4.2. Savings for consumers


smart meters will stimulate the demand for energy services by companies and public authorities, allowing ESCOs to offer credible energy performance contracts to deliver reduced energy consumption. Smart grids, meters and appliances will allow consumers to choose to permit their appliances to be activated at moments when off peak cheaper energy supply or abundant wind and solar power are available – in exchange for financial incentives. Finally, they will offer consumers the convenience and energy saving potential of turning appliances on and off remotely.

Delivering on this potential requires appropriate standards for meters and appliances, and obligations for suppliers to provide consumers with appropriate information (e.g. clear billing) about their energy consumption including access to advice on

how to make their consumption less energy intensive and thus reduce their costs. To this end, the Commission will propose adequate measures to ensure that technological innovation, including the roll-out of smart grids and smart meters fulfils this function. These measures will include minimum require-ments on the content and format of information provision and services. Further, the Commission needs to ensure that energy labels (energy performance certificates) and standards for buildings and appliances reflect, where appropriate, the incor-poration of technology that makes appliances and buildings “smart grid ready” and capable of being seamlessly integrated into the smart grid and smart meter infrastructure. Appliances such as fridges, freezers and heat pumps could be the first to be tackled.


Serbia is on its way to EU accession and has signed already the Energy Community Treaty and is currently transposing the energy acquis communautaire. It is clear that sooner or later Serbia will want to or have to comply with the requirements of the respective EU legislation. As has been shown in the section on EU regulation there are currently many significant changes with respect to major energy companies, such as EPS.

During the past decades Member States were throughout Europe mostly establishing a monopolistic national energy company being either owned publicly or at least closely linked to policy.

Currently there is a tendency towards the abolishment of “a national market” to form integrated regional or a European market, to move from the monopolistic to deregulated liber-alized and potentially competitive markets and from a rather fossil fuel friendly environment with few huge thermoelectrical power plants running at baseload to a low-carbon sustainable, competitive environment with high volatility and uncertainty.

4.3.1 Efficiency increasment in generation sector 2000-2020

CHAPTER INTRODUCTION

In defining its development plans, PE EPS aims to build on the Republic of Serbia energy policy guidelines, in line with the EU energy policy (“20-20-20 energy targets”). The main premise in identifying Serbian energy policy aims and setting its priorities and the appertaining instruments stems from the country’s political commitment to alignment of the overall energy system development with the country’s economic development in a cost-effective manner and its progress towards European integration. Within a short time period, energy system development should be brought in line with the country’s economic development, and energy generation sector development – with energy consumption sectors.

Aiming to contribute to the attainment of the proclaimed EU target of increasing overall energy efficiency by 20% by year 2020, on 29 October 2010 the Republic of Serbia adopted the Action Plan for Energy Efficiency 2010–2012 (hereinafter: “APEE”), prepared on the basis of require-ments contained in Directive 2006/32/EC of the European

4.3 PE EPS Case

Parliament and of the Council on energy end-use efficiency and energy services, in conformity with the recommended model prepared by the Energy Efficiency Working Group, established within the Energy Community Secretariat. The crucial period for EU Member States to attain the indicative target, under the Directive, is 2008–2016. The principal aim is for all Member States to realise the planned savings amounting to 9% of the average energy end use for 2001, in the ninth year of implementation of the Directive. The above target does not pertain to energy consumers covered by Directive 2003/87/EC of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community or to energy end users belonging to air and river transportation sectors.

From 30 June 2007, EU Member States started submit-ting their national action plans, in which they committed to increasing energy savings to 9% by 2016, to the European Commission.

As regards the Republic of Serbia, in conformity with Decision 2009/05 of the Ministerial Council of the Energy Community, the first Action Plan covers the period from 2010 to 2012 and sets the average indicative target for this period at 1.5% of domestic energy end use in 2008, and the end target at a minimum of 9% of energy end use in the ninth year of imple-mentation (at the end of 2018). The energy end-use savings target of 1.5% will be attained by implementing measures towards increasing energy efficiency in household, public and commercial sectors (0.0235 Mtoe), industry (0.0566 Mtoe) and transportation (0.0453 Mtoe). During the APEE imple-mentation period, the Republic of Serbia should continue introducing considerable legislative, fiscal, financial and organ-isational measures in the interest of full implementation of and adherence to the Directive.

The implementation of measures required for attaining the indicative target requires mobilising considerable financial resources, broadening the state’s activities towards improving energy efficiency and further energy market liberalisation, in particular on the energy services supply side, as well as developing public-private partnership in the sphere of energy efficiency. This document (White Book) should introduce the Republic of Serbia’s planned activities concerning energy efficiency enhancement to the general public and thus enable access to EU pre-accession funds for the purpose of financing these activities.


PE EPS POLICY IN THE SPHERE OF ENERGY EFFICIENCY

4.3.1.1 2000–2010, THE PAST TEN YEARS

In conformity with the first and highest priority of the Energy Sector Development Strategy of the Republic of Serbia by 2015, namely the priority of continuity in terms of technology, most EPS activities over the past ten years were focused on rehabilitation and modernisation of the existing generation capacities. In qualitative terms, a new level was reached, which was reflected in improved overall power system perfor-mance. Since the adoption of the Energy Sector Development Strategy in 2005, changes have taken place, both internation-ally and domestically, affecting the energy situation in Serbia and the bases for building its future in terms of energy.

Serbia has become party to the Treaty Establishing the Energy Community of South-East Europe. Ten more countries from the South-East Europe region have chosen to join this Energy Community, thus committing to aligning their legislative and regulatory frameworks with the acquis communautaire governing the field of energy industry, energy market opening and development, and integration in the common EU energy market. The implementation of this Treaty is significant for PE EPS and Serbia, primarily for ensuring a more favourable invest-ment climate and enhancing security of supply. Investors expect security of their investments, and among the most important guarantees of security is the establishment of a stable regula-tory and legal framework. Ratification of the Treaty Establishing the Energy Community of South-East Europe imposes a formal obligation on the Republic of Serbia, and thereby also on PE EPS, to observe the EU energy policy and to promote sustain-able, competitive and secure energy supply.

PE EPS aims to introduce and implement energy efficiency enhancement measures throughout the chain, from primary energy to final energy generation. PE EPS users’ consump-tion equals 2/3 of the average EU users’ consumption, but their approach to using electric and overall energy is far less rational than that of EU consumers. They consume 1.6 times more total primary energy than the EU average (calculated in terms of primary energy consumption, source: Eurostat, 2009). In view of these indicators, in its plans, PE EPS pays increasing attention to activities aimed at enhancing energy efficiency.

In rehabilitation and modernisation of the existing generation capacities, PE EPS has always applied the “best available tech-nology” principle”; as a result, in the past ten years or so, it has achieved considerable success in generation (most notably, overcoming the “gas crisis” of 2008 and 2009) by increasing facilities’ availability and the amount of energy deliverable to consumers.

In the past ten years, the main priority of PE EPS has been “successful repair and rehabilitation of energy sources”, to overcome accumulated problems arising from years of restric-tive maintenance. The main criterion for defining priorities and scale of works has been meeting Serbian consumers’ energy requirements, and technical assessments indicated that the thermal power sector should have the priority in investments. The results achieved showed that this was the right strategic decision, as thermal power sector’s operation indicators were considerably improved.

The results achieved in 2010, following the rehabilitation interventions on TPPs, in comparison with results from 2001, are illustrated by the following figures:

y Thermal units’ reliability was increased by 10.7%;

Thermal power plants’ reliability (2001–2009)


y TPP’s efficiency was raised by 11.9%, i.e. the energy deliv-ered to the system increased by 4189 GWh in absolute terms or by 22% compared to 2001, which practically means that, at the annual level, compared to 2001, the EPS electric power system had an additional 478 МW unit on the grid (it operated at the installed capacity of Kp = 100%, without a single outage, for full 8760 h, Ke = 100%);

y The cumulative increment of the electric energy generated by the units in the corporate enterprises of TENT and TPPs

Kostolac amounted to 30708 GWh compared to 2001, or an additional 1.5 billion EUR in financial terms;

y Overall TPP unavailability during outages and operation was reduced by as much as 16.8%;

y Generation costs were also reduced – specific coal con-sumption was reduced by 3.3%, and fuel oil consumption was halved;

y Increased investments in environmental protection.

Specific heat consumption

Increasing energy efficiency of coal-fired thermal power plants

These results were achieved by “old” units, which realised an average of over 193 thousand hours of operation. Such good results in the thermal power sector were accompanied by

increased coal output (5 mil. t/year), although investments in the coal sector were considerably lower.


4.3.1.2 2010-2020, PE EPS PLANS UNTIL 2020

In view of positive experiences and results achieved through application of advanced technologies, in new planned projects PE EPS intends to apply only those technologies that conform to the appropriate BREF BAT – Best Available Techniques.

Between 2010 and 2020, investment interventions in hydro-power plants will receive more attention. The period of modernisation of the existing hydro-power plants commenced in 2009 by rehabilitation of one unit in each of our largest hydro-power plants: Djerdap I and Bajina Bašta. The average HPP age at the end of 2010 was 36.

Power plant/UnitIncrease in the

installed capacity (MW)

HPP Djerdap I, unit 6 22.00






HPP Bajina Basta, unit 1 13.00




HPP Zvornik, unit 1 6.35




HPP Medjuvrsje (2 units) 2.37

HPP Ovcar Banja (2 units) 1.63

TENT B1 47

TENT B2 47

TENT A6 40

TENT A3 30

TENT A4 30

Planed increase in the installed capacity of EPS power plants

In the forthcoming period, PE EPS also foresees considerable activities towards enhancing energy efficiency in the distribu-tion sector. The planned activities are focused on improving the operational indicators of the distribution network by implementing the “smart grid” concept. The procurement and installation of modern equipment, more precise consumption

metering, two-way communication with consumers and a new metering system will facilitate better supply monitoring and control at the distribution level, higher quality of the delivered electric energy and also a considerable reduction of grid losses.


4.3.2 New thermal high efficiant generation capacities

Construction completion of TPP Kolubara B (2 x 350 MW)TPP Kolubara B is located in the vicinity of Kalenic village, 60 kilometres south-west from Belgrade, at the northern side of open cast mine Tamnava – West Field.

Decision on construction of CHP Kolubara B (as it was called then), capacity 2 x 350 MW, was adopted in 1983. It was designed as the facility for combined generation of electricity and heat, with the intention of heat delivery to Belgrade for its district heating system. Preparation activities have been started in 1988 by execution of construction works (site prep-aration and organisation), while the construction continued in accordance with available funds. Procurement of the third part of basic equipment was contracted, and it was mostly

delivered. Initiated activities on project implementation and usage of World Bank loan have progressed very slowly. Due to lack of funding in 1992 activities have completely been suspended. By 1992, when works were suspended due to sanctions, about 40% of the facility was constructed at the site. After that, only the most essential activities have been done. As a result of the changed concept of heat supply to Belgrade, operational regime has been changed, i.e. the facility will operate in condensation regime.

In the second half of the nineties the issue of construc-tion continuation was opened again, but without any major progress. In the beginning of 2000 the issue of construc-tion continuation became topical again, summary of previous investments has been made, together with construction continuation feasibility assessment, when it was concluded that there are technical – technological solutions guaranteeing modern operating parameters in the rank of modern thermal power units.

Basic parameters of TPP Kolubara B

Unit capacity 350 МW

Number of units 2

Boiler Combustion Engineering, flow-through with subcritical steam parameters

Turbine condensation, triple-housing with additional steam reheating and regenerative heating of feed water and condensate

Basic fuel lignite from Kolubara mining basin, 6,700 kJ/kg

Unit efficiency ratio (net) ≥ 37 %


Project value

The study which established that more than EUR 300 million has been invested so far in the construction of TPP Kolubara B was developed in 2004, with assessment that about EUR 550 million still need to be provided for construction completion. Executed analysis for the construction of new generation capacities firing Kolubara lignite indicate imple-mentation feasibility of TPP Kolubara B construction.

Project status

EPS has initiated activities for the finalisation of TPP Kolubara B, through implementation of the joint venture model of EPS with a strategic partner, whereas EPS will make available assets (facilities and equipment) already constructed, i.e. procured equipment, while the strategic investor will invest capital and thereby acquire its share in ownership proportionally to the invested capital. In this manner, necessary funds for project implementation will be provided


Implementation manner strategic partner

It is expected that the strategic partner will be selected through transparent tendering procedure by the end of 2011.

Planned construction beginning 2012

Construction duration 3-4 years

Planned commissioning of the first unit is in 2015 and the other in 2016.


Basic parameters of TPP Nikola Tesla B

Unit capacity ~ 744 МW

Number of units 1

Boiler with supercritical steam parameters

Turbine condensation, with additional steam reheating and regenerative heating of feed water and condensate

Basic fuel lignite from Kolubara mining basin, 6,900 kJ/kg


Project value

Investment–technical documents for the construction of unit B3 at TPP Nikola Tesla analysed the construction of unit with the capacity of 744 MW , with net efficiency ratio of approxi-mately 40%. Basic investment is at the level of EUR 870 million. Executed analyses indicate that this investment is feasible, i.e. that all profitability parameters of the facility are positive.

Project status

Implementation of this project has been anticipated through the application of the same model as for TPP Kolubara B,

i.e. together with the strategic partner selected under the tendering procedure. Finalisation of the tending procedure is expected in the last quarter of 2011.


Planned construction beginning 2013

Construction duration 4-5 years

Commissioning of the unit was planned for 2017.

TPP Nikola Tesla B3 - New Unit

Thermal power plant Nikola Tesla B is located on the right bank of the River Sava, about 60 km upstream from Belgrade. Elec-tricity generation in thermal power plants is based on lignite coming from open cast mines of Kolubara Mining Basin. The first construction phase of thermal units was implemented by 1985, with the total capacity 2 x 620 MW (TPP Nikola Tesla B).

For the purpose of further development and construction of thermal units at this location, it became necessary to analyse possibilities and feasibility of construction continuation on the existing location Vorbis, through the construction of state-of-theart unit of total capacity ca. 700 MW, while observing all environmental measures.

In the period up to 1985, the first construction phase was completed by building two units with a total capacity of 2 x 620 MW (TPP Nikola Tesla B), while the technical design docu-mentation foresaw building two more units of equal capacity

at the same site. During the first phase of building the TPP Nikola Tesla B, certain facilities and structures required for the second phase were also designed and built.

The second construction phase was executed by building the new unit B3, with the capacity of ca. 700 MW.

The exact location of the new unit at this location was based on the requirement for high functionality of technological process, with observation of the basic assumptions:

– New unit B3 will be constructed in continuation of existing units B1 and B2;

– Installed capacity of this unit will be ca. 700 MW; – There will be no further construction on this location; – The new unit will be fitted in architectural, construction and

technological terms into the existing layout, in accordance with the available area, taking into account facilities exe-cuted within Phase I of construction, as well as the area for the location of environmental capacities.


CHP Novi Sad

Existing CHP Novi Sad in cogeneration operation regime generates electricity and heat for the heating of Novi Sad, as well as technological steam for the needs of Oil Refinery. The first construction phase was finalised in 1981 and the second in 1984. This facility has been used in previous years during the coldest winter months for Novi Sad heating, as well as for the coverage of the Republic power system needs.

Modest efficiency level of existing cogeneration facility, without steam reheating, as well as high gas and fuel oil price have caused very restricted utilisation of available installed capacity and thereby low generation and income. However, it should be taken into consideration that CHP Novi Sad is also an irreplaceable basic heat source of Novi Sad district heating system, supplying more than 60,000 households and other consumers. Considering the above-mentioned multiple role of CHP Novi Sad, it became necessary to find a new business model enabling its economically feasible operation and fulfil-ment of PE EPS business interest in electricity and heat gener-ation for longterm supply of district heating system under the price lower than the one generated in boiler plants of Novi Sad heating plant.

By considering a series of possible reconstruction variants of existing CHP Novi Sad into gas–steam facility, with the utilisation of existing equipment and comparison with the construction of the new gas–steam unit with the utilisation of the existing location and infrastructure, it was concluded that the construction of the new cogeneration high capacity and

efficiency gas–steam unit possesses the highest cost-effec-tiveness level.

Key reasons for implementing the project of building a new gas-steam unit at CHP Novi Sad include the following:

– High efficiency level of imported natural gas in the cogen-eration process of electricity and heat, as well as in the condensation operation regime;

– Relatively low investment and capital costs compared to power facilities using other fossil fuels (coal, fuel oil);

– Possibility of rational utilisation of existing infrastructure at the location;

– Short construction period of the new plant (up to 3 years) in accordance with the fulfilment of growing power system needs;

– Exceptionally low fixed operation costs of modern gas-steam plants;

– Fulfilment of the strictest environmental standards (con-siderably higher carbon-dioxide emission compared to other fossil fuels, etc).

Economically most favourable results would be achieved through the construction of modern high-efficiency gas-steam facility with the total capacity above 400 MW el, and high efficiency level in electricity generation of over 58%, with possible heat generation of 300 MWt with minimum electric power reduction factor in the combined operation regime and total heat efficiency of over 82%. Basic indicators of the considered facility to be installed in continuation of existing turbine hall are provided in the table below.


Basic parameters of CHP Novi Sad

Nominal electrical gross unit capacity 478 mw (448 - 492) MW

Heat load of steam turbine extraction 300 MWt

Nominal electrical power of gas turbine under ISO conditions (0 masl, 60% of relative humidity and air temperature of 15°c)

322 MW

Nominal steam turbine capacity with collection 155 MW

Gas turbine efficiency level 39.5%

Total efficiency level of facilities in condensation operation regime ca. 58%

Total thermodynamic efficiency level of the facility higher than 82%

Project value

Investment value of this project, depending on final facility configuration and the usage level of existing infrastructure on the current location, would reach EUR 280 million, providing the level of specific investments of 550 EUR/kWh.

Project status

Retention of the cogeneration concept of electricity and heat in the context of investment capital attraction required the formation of an institutional framework for long-term public interest protection in the field of energy supply, through formation of a joint company by EPS and the City of Novi Sad. By recognising this concept, support of the Serbian Government was obtained and agreement achieved with administration of Novi Sad, whereby initial assumptions have

been created for intensive project development, i.e. selection of the strategic partner with whom this project would be implemented.


A strategic partner is expected to be selected through a transparent tendering procedure by the end of 2011.

Planned constructionbeginning 2012

Construction duration 2–3 years

Commissioning of the unit is planned in 2014.


TPP Kostolac B3 – New Unit

Thermal power plant Kostolac B is located on the right bank of the Mlava River, in the area of the Drmno village near Kostolac. Electricity generation in this thermal power plant is based on lignite coming from the open cast mines of the Kostolac Mining Basin. By 1991, the first construction phase of units B1 and B2 was finalised, 2 x 348.5 МW total capacity (TPP Kostolac B).

To further develop and construct the thermal power units on this site, it was necessary to analyse the potentials and feasi-bility of construction continuation on the existing site, by the construction of a modern unit with the total capacity of ca. 350 MW, and consideration of all environmental measures.

The first construction phase was implemented by 1991, covering two units with the total capacity of 2 х 348.5 МW, while the design-technical documents foresee the construc-tion of two more units of the same capacity. Throughout the

first phase, some plants and facilities have been constructed foreseen for the needs of the second construction phase.

By constructing the new unit, B3, ca. 350 MW, the second construction phase would be implemented.

The new unit position at this site was based on the techno-logical process functionality requirements and the following assumptions:

– the new B3 unit will be built in continuation of the existing B1 and B2 units;

– installed capacity of the new unit will be ca. 350 MW; – no further construction will be performed on this site; – the new unit is fitted in architectural, construction and

technological terms into the current layout, in accordance with the available space, taking into account the facilities already built during the first construction phase, as well as the future environmental facilities.

TPP Kostolac B3 parameters

Unit capacity 350 МW

Number of units 1

Boiler With subcritical or supercritical steam parameters

Turbine Condensation with additional steam reheating and regenerative feed water and condensate heating

Basic fuel Kostolac Mining Basin lignite, 7,800 kJ/kg


Project value

The B3 unit construction investment – technical documents at TPP Kostolac B analysed the 350 MW unit construc-tion with the net efficiency ratio of approximately 40%. The basic investment is at the level of EUR 600 million. Executed analyses indicate that this investment is feasible, i.e. that all the profitability parameters are positive.

Project status

The project will be implemented by PE EPS using foreign loan funds.Manner of implementation: individuallyPlanned start of construction: 2015Construction duration: 4-5 yearsUnit commissioning was foreseen for 2015.


IntroductionGlobal increase of population and wealth leads to increasing consumption and thus scarcity of resources particularly energy resources and potable water. The electricity consump-tion is said to double over the next 15-20 years.

Independently from environmental concerns is the increase of renewable electricity production a major need for states to reduce their external dependence and quest for resources. Renewable resources are a valuable alternative over time. In many areas (e.g. Mediterranean area) solar power is abundant and for free, in others wind power is a natural choice.

4.4. Renewables

Technological improvements of all different ways using solar power, including solar cells and the photovoltaic effect will bring a competitive way of producing electricity within the next 2-3 years. Once PV is competitive (also reinforced through distributed generation policy and smart grids) its installation potential is extremely significant.

The assumptions are mostly derived from information from the EC (e.g. Photovoltaic Solar Energy), the IEA, BP World Energy Statistics, ETH Zürich, EWEA (Powering Europe,..). Some addi-tional respective sources of information are however also used in the following pages.

Environmental issues

Energy supply’s environmental impact is, nowadays, one of the biggest civilization’s threats: global warming, nuclear waste, pollution have been key points in all energy policies since some years ago.

EPS relevance

EPS is also actively preparing its future and develops its CO2

reduction strategy. There are several important aspects to be taken into account, given the importance within Serbia, like the good quality of service to the customers and a stable network.

Environmental concerns but also a need to more cost-efficient investment and operation pushes EPS to raise efficiencies of the current power plants. In addition, EPS is aware of the need to provide its staff with job opportunities and to be ulti-mately competitive in the European market, profiting from the excellent skilled staff and its geo-strategic position amongst other issues.

Issues of higher efficiency but also aspects of security of supply result in the introduction of new technologies and new ways of operations of energy networks. As the current EU tendency is to introduce smart technologies such as smart metering


and generally move to a more distributed generation pattern, which means that more smaller scale decentralized production facilities serve jointly to supply the market but reducing inher-ently transport distances (losses) and transformation losses, EPS is also assessing its way forward.

It is clear that more decentralized electricity production reduces constraints on transmission level, potentially reducing the need for major transmission network investments to cope with future increase of electricity demand.

However, most of the decentralized low-carbon and sustain-able electricity production possibilities stem from renewable energy. Some technologies, like hydro, biomass or waste-to-energy can be operated at stable and predictable rhythm, others, like eolic and solar produce electricity as nature wishes, thus in a very volatile fashion.

EPS is studying the effects of such technologies on its overall portfolio.

EPS is actually owning and operating several distribution companies and a part of its strategy to reduce CO2 emissions are dealt with on distribution level. This is consistent with the introduction of decentralized power production and helps to find the right choices with respect to optimal local renewable energy options.

EPS tries to focus and this white paper shall bring some examples of future developments. For instance, the distribu-tion area of ED “Užice” and ED “Čajetina” will be the first region to realize several projects with a view of alignment with the renewable directive of the European Union. These projects will serve as base for learning and enhancing the technologies and practices necessary for a successful company development in the new environment.

EPS will begin with 3 projects, likely to be started in 2011, provided that the right co-investors can be found on occasions.

In the area of Zlatibor preparations are to establish a utility scale PV installation, the first phase of which shall be opera-tional later this year. After the initial stage, at least 10 MW should be installed there finally.

To counterbalance the stronger volatility of local energy produc-tion, an investment will be undertaken in the vicinity of Užice to upgrade an existing pump-hydro power plant to be able to compensate the production variation of the solar installation. It is clear that this is on one hand a physical potential, but the intention is also to be prepared for stronger market liberaliza-tion and volatile competitive market oriented electricity prices, hence these two projects shall be seen independently from a commercial and physical point of view in the mid term.

In addition to the 2 projects, a waste-to-energy facility should bring additional generation capacity to the area. This partic-ular project also eases the stress of local authorities on waste treatment.

These 3 projects will also have a positive effect on local employments. To cite an example, current solar installations are calculated around 3,2 €/Wp of which roughly 30% are benefiting directly people being in charge of designing, manu-facturing, transporting and installing the power plant compo-nents. It has been seen in the early years in Spain, but can also

be seen in Germany that this brings several job opportunities. 10 MW of installations would result thus in a sum of roughly 1 million € to the economy and employment. In the section on solar one can get more details on the potentials.

The overall goal is to achieve over time a 20% share of renewable energy production (compared to energy needs) in the distribution area of Uzice. 2011 will see the first projects start, the goal should be achieved long before 2020.

Based on this experience EPS will also engage in other distribution areas to assess investments in similar projects, according to the possibilities. In some areas the use of wind and biomass will be combined, others will have another mix, the importance is to be on one hand flexible with respect to the means of resources used and on the other hand to achieve the objective of producing 20% of energy consumption. EPS is however needing to achieve the projects on a commercially viable bases. EPS hence urges the Serbian authorities to guarantee that investment conditions are right.

Another issue is to raise the efficiency of network operation and thus reduce system losses and eventually try to introduce elements of smart metering as a start.

Generally, EPS prepares for EU market rules and wants to be an active player in the European market. In addition, EPS is committed to provide Serbian citizens with best service possible and at a high quality level, being in line with EU obli-gations and developments.

4.4.1 Wind millsAs can be seen in the documents of the EU there is a huge potential in Europe for eolic electricity production and, at locations of suitable weather conditions, be on the brink of competitive pricewise.

For the time being however the potential in Serbia has to be further assessed by EPS in order to decide on further engage-ment. Relatively, the potential of solar, hydro and biomass seem to be more promising at this stage as a first.

Economic and commercial assumptions for eolic (wind power): general (from EWEA, Powering Europe)

Europe has a particular competitive advantage in wind power technology. Wind energy is not only able to contribute to securing European energy independence and climate goals in the future, it could also turn a serious energy supply problem into an opportunity for Europe in the form of commercial benefits, technology research, exports and employment. The fact that the wind power source is free and clean is economi-cally and environmentally significant, but just as crucial is the fact that the cost of electricity from the wind is fixed once the wind farm has been built. This means that the economic future of Europe can be planned on the basis of known, predictable electricity costs derived from an indigenous energy source free of the security, political, economic and environmental disadvantages associated with conventional technologies.


Wind power and European electricity

Due to its ageing infrastructure and constant demand growth, massive investment in generation plant and grids are required. Over the next 12 years, 360 GW of new electricity capacity – 50% of current EU electricity generating capacity – needs to be built to replace ageing power plants to meet the expected increase in demand.

Wind energy technology has made major progress since the industry started taking off in the early 1980s. Thirty years of technological development means that today’s wind turbines are a state-of-the-art modern technology: modular and quick to install. At a given site, a single modern wind turbine annually produces 200 times more electricity and at less than half the cost per kWh than its equivalent twenty five years ago. The wind power sector includes some of the world’s largest energy companies. Modern wind farms deliver grid support services – for example voltage regulation – like other power plants do. Effective regulatory and policy frameworks have been developed and implemented, and Europe continues to be the world leader in wind energy. Wind currently provides more than 5% of Europe’s electricity, but as the cheapest of the renewable electricity technologies, onshore wind will be the largest contributor to meeting the 34% share of renewable electricity needed by 2020 in the EU, as envisaged by the EU’s 2009/28 Renewable Energy Directive.

On 7 October 2009, the European Commission published its Communication on “Investing in the Development of Low Carbon Technologies (SET-Plan)” stating that wind power would be “capable of contributing up to 20% of EU electricity by 2020 and as much as 33% by 2030” were the industry’s needs fully met. With additional research efforts, and crucially, significant progress in building the necessary grid infrastruc-ture over the next ten years, wind energy could meet one fifth of the EU’s electricity demand in 2020, one third in 2030, and half by 2050.

Meeting the European Commission’s ambitions for wind energy would require meeting EWEA’s high scenario of 265 GW of wind power capacity, including 55 GW of offshore wind by 2020. The Commission’s 2030 target of 33% of EU power

from wind energy can be reached by meeting EWEA’s 2030 installed capacity target of 400 GW wind power, 150 GW of which would be offshore. Up to 2050 a total of 600 GW of wind energy capacity would be envisaged, 250 GW would be onshore and 350 GW offshore. Assuming a total electricity demand of 4,000 TWh in 2050 this amount of installed wind power could produce about 2,000 TWh and hence meet 50% of the EU’s electricity demand.

In June 2010 the European Commission’s Joint Research Centre highlighted that provisional Eurostat data showed that in “2009 about 19.9% (608 TWh) of the total net Elec-tricity Generation (3,042 TWh) came from Renewable Energy sources. Hydro power contributed the largest share with 11.6%, followed by wind with 4.2%, biomass with 3.5% and solar with 0.4%.” It went on to conclude “that if the current growth rates of the above-mentioned Renewable Electricity Generation Sources can be maintained, up to 1,600 TWh (45 – 50%) of renewable electricity could be generated in 2020.” Whilst the technology has been proven, the full potential of wind power is still to be tapped. Europe’s grid infrastructure was built in the last century with large centralised coal, hydro, nuclear and, more recently, gas fired power plants in mind. The future high penetration levels of wind and other renewable electricity in the power system require decision makers and stakeholders in the electricity sector to work together to make the necessary changes to the grid infrastructure in Europe.

By 2020, most of the EU’s renewable electricity will be produced by onshore wind farms. Europe must, however, also use the coming decade to exploit its largest indigenous resource, offshore wind power. For this to happen in the most economical way Europe’s electricity grid needs major invest-ments, with a new, modern offshore grid and major grid rein-forcements on land. The current legal framework, with newly established bodies ENTSO-E and ACER, the key deliverable of the 10-Year Network Development Plan, as well as the ongoing intergovernmental “North Seas Countries’ Offshore Grid Initiative” are all steps in the right direction and the political momentum for grid development and the integration of renewable energy is evident.


Wind power in the system

Wind cannot be analysed in isolation from the other parts of the electricity system, and all systems differ. The size and the inherent flexibility of the power system are crucial for deter-mining whether the system can accommodate a large amount of wind power. The role of a variable power source like wind energy needs to be considered as one aspect of a variable supply and demand in the electricity system. Grid operators do not have to take action every time an individual consumer changes his or her consumption, for example, when a factory starts operation in the morning. Likewise, they do not have to deal with the output variation of a single wind turbine. It is the net output of all wind turbines on the system or large groups of wind farms that matters. Therefore, wind power has to be considered relatively to the overall demand variability and the variability and intermittency of other power genera-tors. The variability of the wind energy resource should only be considered in the context of the power system, rather than in the context of an individual wind farm or turbine. The wind does not blow continuously, yet there is little overall impact if the wind stops blowing in one particular place, as it will always be blowing somewhere else. Thus, wind can be harnessed to provide reliable electricity even though the wind is not available 100% of the time at one particular site. In terms of

overall power supply it is largely unimportant what happens when the wind stops blowing at a single wind turbine or wind farm site.

The essentials on wind power technics

Although on a system-wide level wind power plants generate electricity just like any other plant, wind power has quite distinctive generation characteristics compared to conven-tional fuels. Firstly, there is the technical concept of the wind power plant. But perhaps more importantly, there is the variable nature of the wind resource driving the wind plant. Understanding these distinctive characteristics and their inter-action with the other parts of the power system is the basis for integrating wind power into the grid.

Wind power plant concepts and grid-friendly wind turbines

Wind turbines are usually placed in clusters (wind farms), with sizes ranging from a few MW up to several 100 MW. These clusters are connected to the grid as single generation units, therefore the term wind plants is the best suited. Whereas initially the emphasis on wind farm design was mainly on efficient and economic energy production that respected the rules of the grid operators, nowadays, with increasing wind power penetration,


4.4.2 Solar energyAs can be seen in the documents of the EU there is a huge potential in Europe for solar electricity production and, at locations of suitable weather conditions, be a substantial factor for achieving the renewable energy target. EPS believes that the cost decrease of modules will continue and that ulti-mately also the solar industry will see installations based on competitive price calculations in mid term.

Concerning the concrete envisaged project in the Zlatibor area, the following statements can be made. The area of ED “Užice” and ED “Čajetina” had a yearly electricity consump-tion of 513.553 MWh. Conservative calculations of a 10 MWp solar installations using single axes trackers show a yearly

the demands of the grid operators have changed. In response to these demands, modern wind turbines and wind farms have developed the concept of the so-called wind energy power plant. The concept is essentially a wind farm with properties similar to a conventional power plant, with the exception that the fuel injection is variable. The operation of a wind energy power plant is designed in such a way that it can deliver a range of ancillary services to the power system. Its control system is designed such that the power can be actively controlled, including ramping up and down similar to conventional generation plants. Wind power plants can and do positively contribute to system stability, fault recovery and voltage support in the system. The properties described above greatly enhance the grid integration capability of wind power. In order to achieve high penetration levels, active control properties are essential to optimally share the power supply tasks together with other plants and to enhance network security. For essential power plant services, wind plants become comparable to conventional plants, as illustrated in the following table, where the maximum possible values for both technologies are shown. Differences will remain due to the nature of variable generation dictated by meteorological input.

expected production of 14.710 MWh. This would result in roughly 2,8% of electricity consumption, and of course less with a view to the total energy consumed. However, as a start (the 10 MW might be achieved over time) it will serve as a reference installation and field experience site. In addition, the area of Zlatibor is famous for its healthy air and its tourism which is protected when producing electricity from solar. In addition, when tourists are at maximum, which is often during summer, the solar production is also at its highest. To compare, Germany currently envisages an average of 3 GW of solar power installed per year. Given the bigger size but also the fewer irradiation, a potential of 300 MW per year in Serbia can be envisaged.


Economic and commercial assumptions for photovoltaics: generalThere are several technologies of producing photovol-taic electricity (thin film, monocristaline, polycristaline,

concentration…). The different technologies create competi-tion and the module prices go down significantly. It is expected that this trend continues at a digressive pace as can be seen in the following table.

Early 2008 Early 2009 2009 2010 2012

~ 3,5 €/Wp ~2,2 1,8 – 2,2 ~ 1,5 ~1

Introduction to EC support schemes and techni-cal developmentOver the last decade, European photovoltaic companies have achieved an average annual production growth rate of over 40 %. Currently the turnover of the photovoltaic industry amounts to some EUR 10 billion. The European market is characterised by a dominant German market while other European countries – like Spain, Italy, France and Greece – have recently boosted their share. For the whole European Union (EU), approximately 70,000 people are employed by the photovoltaic sector. Although productivity in the photo-voltaic industry progresses with automated production and reduced unit and system costs, the rapid market growth will create new jobs in Europe.

Support for the research, development and demonstra-tion of new energy technologies is available through the EU

Framework Programme (FP) for research. Through a series of research FPs, the European Commission has maintained long-term support for research, development and demonstra-tion in the photovoltaic sector, providing a framework within which researchers and industry can work together to develop photovoltaic technology and applications. Within the 6th Framework Programme (FP6, 2003-06), the European Commission committed EUR 105.6 million for supporting photovoltaic research, development and demonstration (RD&D) thus continuing co-financing the development of solar electricity in Europe.

This synopsis describes the projects funded under FP6, in the research, development and demonstration domain, their aims and the achieved results. In addition, it outlines four photo-voltaic projects funded under the first Intelligent Energy – Europe programme (IEE-I, 2003-06) which tackles the ‘softer’, non-technological factors and ran in parallel with FP6.


The impact of EU programmes on the development of photo-voltaics can be examined on several levels. The announce-ment of champion cell efficiencies achieved in EU projects is an obvious indicator. Indeed one key impact, which arguably only really began to manifest itself within the current environ-ment of dynamic market growth, is the creation of know-how, resulting in start-up companies. For example, many of the European companies producing thin-film photovoltaics have their origins in EU projects. There is also significant anecdotal evidence that start-up companies receiving support from EU RD&D projects can successfully attract investment from larger companies that are looking to broaden their technology portfolio. FP6 coincided with a remarkable period of sustained high growth of photovoltaics. As a result of such growth, the role and objectives of European RD&D have been re-exam-ined, with the aim of maximising the effect of available public funds, including national and regional funds. Two initiatives – the European Photovoltaic Technology Platform and PV-ERA-NET – which began during FP6, have been active in recent years in improving the overall coordination of the photovoltaic sector at European level.

The budget for the 7th Framework Programme (FP7, 2007-13) has significantly risen compared with the previous

programme, and will run for seven years. Calls for proposals based on topics identified in the work programme are launched on an annual basis.

FP7 has begun with less emphasis on the development of traditional wafer-based silicon for photovoltaic solar cells – the focus of increasing R&D investment by companies and national programmes. Material develop ment for longer-term applications, concentration photo voltaic and manufacturing process development have attracted most European funding. Furthermore, significant funding is expected to be made available for thin-film technology in future years. The potential of solar electricity and its contribution to the EU’s electricity generation for 2020 has recently been reassessed by the photovoltaic industry. This ambition needs now to be made concrete in a realistic European Solar Initiative to make the sector realise its full potential.

Variable electricity generation (as with solar photovoltaic), at high penetration level, will bring additional challenges to power systems. Furthermore, quality and longevity of photovoltaic devices and systems, and profitable lifecycle features of whole photovoltaic systems, will become increasingly important in such a highly competitive world market. These are parts of the RD&D needs which future activities should address.


4.4.3 SMALL HYDRO POWER PLANTS

FOREWORD

This overview considers the small hydropower plants (SHPP) construction, i.e. revitalisation potentials on the territory of the Republic of Serbia.

This document is based on the Decree on the Republic of Serbia Energy Sector Development Strategy by 2015 Implementation Programme for the period from 2007 to 2012 (hereinafter referred to as: SIP). It was published in the Official Gazette RS, No. 27 from 28 April 2010.

Considered small hydropower plants have been divided into four categories:

y Existing SHPPs owned by EPS which need to be revitalised; y SHPPs on existing water management facilities; y SHPPs on existing hydropower plants (HPP) and thermal

power plants (TPP) owned by EPS and y SHPPs on new sites (Greenfield).

With regard to the first group (existing SHPPs owned by EPS), point 6.2.8 SIP indicates some of the SHPPs which need to be modernised and revitalised (Sveta Petka SHPP, Sicevo SHPP and Sokolovica SHPP), as well as the need to modernise and revitalise SHPPs foreseen by the PE EPS investment plan. In the course of preliminary analyses it was proposed to consider in more detail the 17 existing SHPPs owned by EPS. Therefore, the subject of this consideration is: Ovcar Banja SHPP, Medjuvrsje SHPP, Raska SHPP (Sopocani), Seljasnica SHPP (Seljasnica – Prijepolje), Turica SHPP, Kratovska Reka SHPP (Kratovo – Priboj), Pod Gradom SHPP (Uzice), Moravica SHPP (Ivanjica), Sveta Petka SHPP, Sicevo SHPP, Temac SHPP, Sokolovica SHPP, Gamzigrad SHPP, Vucje SHPP, Jelasnica SHPP, Radaljska Reka SHPP (Banja) and Vrelo SHPP.

As regards the second group (SHPPs on existing water management facilities), point 6.3.1 SIP provides the list of existing reservoirs which can be supplemented with the energy function: Ćelije, Bovan, Barje, Grlište, Brestovac, Nova Grošnica, Zlatibor, Gruža, Garaši, Krajkovac, Bresnica, Bukulja, Goli kamen, Pridvorica, Rastovnica, Velika Dičina, Parmenac, Prvonek, Rovni and Selova, whereas, EPS may be the sole investor, individually or with a local government. Preliminary analysis carried out for the purpose of this overview estab-lished that 9 out of 20 indicated SHPPs should be analysed in more detail, while the remaining 11 SHPPs have considered as a second priority. There are also some power plants covered by the special investment programmes (Prvonek). For this reason, the subject of this consideration includes the following SHPPs: Celije SHPP, Bovan SHPP, Barje SHPP, Zlatibor SHPP, Parmenac SHPP, Rovni SHPP, Selova SHPP, Svrackovo SHPP (Arilje) and Vrutci SHPP.

When it comes to the third group (SHPPs on existing HPPs and TPPs owned by EPS), section 6.3.1 SIP indicates the construc-tion of Jezero SHPP, SHPP Mala Vrla 1, Zavoj SHPP and Pirot SHPP, whereas, EPS may be the sole investor, individually or with a selected strategic partner. Based on this, the subject of this consideration covers 5 SHPPs which may be constructed on existing HPPs and TPPs: Jezero SHPP, Mala Vrla 1 SHPP, Zavoj SHPP, Pirot SHPP and TENT B SHPP.

In addition to the above, this document considers some possible SHPPs on new sites (Greenfield). Currently, 4 potential SHPPs have been identified: Tigar SHPP, Banjica SHPP, Stalac SHPP and Sokolja SHPP (it should be noted that point 6.3.1 SIP indicates the construction of Banjica SHPP located between the existing Sveta Petka SHPP and Sicevo SHPP). This group is still open for inclusion of other potential sites established by the preliminary analysis to be suitable for further consideration.


Revitalisation of Existing SHPPs owned by EPS

■ Ovcar Banja SHPPThe Ovcar Banja SHPP is a facility which together with the Medjuvrsje SHPP utilises the Zapadna Morava river hydro-power potential through the Ovcarsko - Kablarski Canyon. First studies were made in the beginning of 20th century, while the power plant was commissioned in 1954. The Ovcar Banja SHPP is a storage power plant, with gross head of 18.5 m. Six meters of gross head is obtained from backwater in the reservoir while the rest represents the natural head of the riverbed along a relatively short section of 700 m. Headwater tunnel is 400 m long. There are 2 generator sets in the power-house, with revitalised installed capacity 7.8 MW. Revitalisation of the power plant electrical equipment is under way, covering capacity increase for over 15%. Considering its operating life, revitalisation of mechanical equipment was planned, together with the rehabilitation of the civil part of the facility, to the extent demonstrated by the investment-technical documents whose development is planned, i.e. in progress.The Ovcar Banja SHPP

is a facility which together with the Medjuvrsje SHPP utilises the Zapadna Morava river hydropower potential through the Ovcarsko - Kablarski Canyon. First studies were made in the beginning of 20th century, while the power plant was commis-sioned in 1954. The Ovcar Banja SHPP is a storage power plant, with gross head of 18.5 m. Six meters of gross head is obtained from backwater in the reservoir while the rest repre-sents the natural head of the riverbed along a relatively short section of 700 m. Headwater tunnel is 400 m long. There are 2 generator sets in the powerhouse, with revitalised installed capacity 7.8 MW. Revitalisation of the power plant electrical equipment is under way, covering capacity increase for over 15%. Considering its operating life, revitalisation of mechan-ical equipment was planned, together with the rehabilitation of the civil part of the facility, to the extent demonstrated by the investment-technical documents whose development is planned, i.e. in progress.

Dam and reservoir data

Dam type Gravity concrete + earth dam

Construction height m 23.2

Total reservoir volume million m3 0.63

Live storage million m3 0.20

Spillway elevation mASL 286

Normal backwater elevation mASL 292

Year of construction 1954

Watercourse and catchment area data

Watercourse Zapadna Morava

Narrow / wider catchment area

Mean annual discharge m3/s 35.26

Guaranteed discharge m3/s 3.75

Facility and water use data

Facility use Energy production

Current water intake m3/s 0

Future water intake m3/s 0

Energy data

Installed discharge m3/s 48.0

Capacity MW 7.8

Possible annual generation GWh 37.4

Estimated investments EUR 1,200,000


SHPP Installed discharge

Gross/net head height

CapacityInvestments

–civil structures

Investments – equipment

Investments -unspecified

Investments - total

m3/s m MW EUR EUR EUR EUR

Ovcar Banja 48.00 19.50 7.80 250,000 700,000 250,000 1,200,000

Ovcar Banja SHPP

Ovcar Banja SHPP


■ Medjuvrsje SHPP The Medjuvrsje SHPP, which is a storage dam facility, uses the Zapadna Morava river potential downstream from the Ovcar Banja SHPP. Gravity concrete dam is 21 m high. Underground powerhouse is constructed on the right side, downstream from watertight diaphragm.

Initial gross reservoir volume was 18 million m3. Intensive erosion in the catchment area caused reservoir volume to reduce for 90%, as a result the HPP operates as run-of-river

facility. This fact and occurrence of islands within the reservoir, its location between the Ovcar and Kablar massifs, thirteen monasteries in the surrounding area and weekend homes on the reservoir bank provide great potentials for tourism devel-opment in this area.

Revitalisation of electrical equipment in the Medjuvrsje SHPP is in the final phase. Development of the design documents for revitalisation of this part of the facility is planned.


Dam type Gravity concrete









Narrow/wider catchment area







Energy data


Capacity MW 7.6





CapacityInvestments

–civil structures



Investments - total


Medjuvrsje 48.00 21.60 7.60 300,000 900,000 300,000 1,500,000

Medjuvrsje SHPP


■ Radaljska Reka (Banja) SHPP


Dam type Low gravity dam with stop logs (emergency gates)




Spillway elevation mASL 475.00

Normal backwater elevation mASL 475.00



Watercourse Radalj

Narrow/wider catchment area Drina





Current water intake m3/s 0.074

Future water intake m3/s 0.142

Energy data


Capacity MW 0.250


Estimated investments EUR 100,000



CapacityInvestments

–civil structures



Investments - total


Radaljska reka 0.40 70.00 0.25 30,000 60,000 10,000 100,000


■ Vrelo SHPP The Vrelo SHPP was constructed in 1927 at the Perucac settlement. The Vrelo spring is located on 234mASL, while the actual watercourse is 365m long, with the mean discharge of 2.1 m3/s. The power plant was revitalised in 1987 and it is currently operational. This is a derivation, run-of-river hydro-power plant with the installed discharge of 0.75 m3/s. Water is led to the powerhouse by a 1.5 m3/s capacity channel. Gross

head ranges between 17.01 m and 15.1 m. Minimum net head is 13.09 m, while the maximum head amounts to 15.65 m. The turbine is of horizontal Francis type with automatic regula-tion. Installed capacity is 60 kW. The design annual electricity generation is 350,000 kWh. Installation of one more turbine was foreseen under the 1986 Detailed Reconstruction Design.


Dam type Low gravity dam with side intake and stop logs (emergency gates)


Total reservoir volume million m3 No accumulation

Live storage million m3 No accumulation





Watercourse Perućačko vrelo

Narrow/wider catchment area Drina


Guaranteed discharge m3/s




Future water intake m3/s 0.75+1.50

Energy data


Capacity MW 0.060

Possible annual generation GWh 0.476 (with new generator set 0.751)


Existing documentation: y The Vrelо SHPP Reconstruction – Detailed Construction Design, Hidroprojekat, 1986



CapacityInvestments

–civil structures



Investments - total


Vrelo 2.25 17.00 0.06 30,000 70,000 10,000 110,000


■ Raska (Sopocani) SHPP The Raska SHPP is a derivation facility using the potential of the Raska river tributaries and waters from the Pester plateau. Derivation consists of a headwater tunnel, 4 km long, surgetank and a steel pipeline. Powerhouse is of underground type. It is located near Novi Pazar, i.e. medieval monastery Sopocani. The powerhouse houses two identical generator sets. Power plant is connected to 35 kV power grid. Consid-ering its water potential, as well as its technical and tech-nological characteristics, this SHPP is able produce about 21,000 MWh of energy annually. In order to achieve this,

revitalisation of the headwater system needs to be carried out, together with powerhouse equipment overhaul. It is especially necessary to analyse the installed discharge duration increase and reduction of water losses, i.e. increase of energy genera-tion, which would have an impact on the profitability of the entire revitalisation.

The Raska SHPP also includes the Sopocani pumping station, with the capacity of 2 x 500 l/s. Pump head is 25m. The pumping station pumps the water collected from the surrounding springs to the headrace tunnel.


Dam type Low concrete dam in stream bed

Construction height m

Total reservoir volume million m3 0

Live storage million m3 0

Spillway elevation mASL

Normal backwater elevation mASL



Watercourse Raska





Facility use Energy generation, water supply of Novi Pazar after energy usage

Current water intake m3/s -

Future water intake m3/s -

Energy data


Capacity MW 6.4





CapacityInvestments

–civil structures



Investments - total


Raska 4.60 160/ 6.40 440,000 1,980,000 220,000 2,640,000


■ Seljasnica SHPP (Seljasnica – Prijepolje)

The Seljasnica SHPP is a derivation facility, with a channel 800m long. Powerhouse houses two Pelton turbines. Over the summer, due to the lack of water, SHPP is not in operation (water from the same spring is used by the city water supply system). Technical documents are incomplete. Tender documents for powerhouse and pipeline reconstruction are

under preparation. The turbine shut-off valve and the turbine No. 2 abutment technical conditions for overhaul will serve for the tendering process. In addition to this, automation design was also developed. The contract value was RSD 2,764,696. The roof and the ceiling were replaced, the facade repaired, painting and decorating works performed, together with reha-bilitation of water supply and sewage systems and installation of sanitary fixtures and joinery.




Total reservoir volume million m3 0.0006 (reservoir)

Live storage million m3





Watercourse Seljasnica

Narrow/wider catchment area Lim / Drina




Facility use Water supply (Prijepolje) and energy generation

Current water intake m3/s

Future water intake m3/s

Energy data


Capacity MW 0.9



Existing documentation: y Detailed Headrace Reconstruction Design; y Detailed Design – Volume 3, Volume 5, drawings; y Project documentation – drawings.



CapacityInvestments

–civil structures



Investments - total


Seljasnica 0.75 160/ 0.90 50,000 90,000 10,000 150,000


Seljasnica SHPP

Turica SHPP


■ Turica SHPP The surgetank rehabilitation study and preparation of the tender documents have not been developed since the persons in charge for civil works were engaged on supervisory

activities for SS 110/x kV Arilje. The following concrete works should be performed: surgetank rehabilitation, together with sand blasting and painting of the pipeline.


Dam type concrete








Watercourse Djetinja

Narrow/wider catchment area Zapadna Morava/Velika Morava




Facility use Energy generation



Energy data


Capacity MW 0.32



Existing documentation: y SHPPs in Užice, ‘Science and Technology Museum’, 1999; y Basic data and drawings.



CapacityInvestments

–civil structures



Investments - total


Turica 2.00 /21.84 0.32 64,000 290,000 35,000 389,000


■ Kratovska Reka SHPP (Kratovo – Priboj)

This SHPP is a derivation facility with a pipeline 1900 m long. It has two Francis turbines. Tender documents for the procure-ment and installation of dam trashrack cleaning device reducer

drive were prepared. Old design documents developed by ’24. septembar’ from Uzice were used as baseline information to prepare the necessary equipment and works specifications. Tender documents for the procurement and construction of the control-signalling connection cable between the SHPP and the waterintake dam have also been prepared.


Dam type Low concrete dam

Construction height m 3.5 (above ground level)

Total reservoir volume million m3




Year of construction 1989 (commissioned)


Watercourse Kratovska reka (right tributary of Lim river)

Narrow/wider catchment area Kratovska reka / Lim




Facility use Water supply (Prijepolje) and energy generation



Energy data


Capacity MW 1.4



Existing documentation: y Construction permit; y Water management permit; y The Kratovska reka SHPP Technical - Economic Study; y Pipeline usage agreement for the SHPP Kratovska reka needs; y Detailed Construction Design updates; y The Kratovska reka SHPP As-Built Design for 10 kV unit and 0,4 kV switchgear.



CapacityInvestments

–civil structures



Investments - total


Kratovska reka 0.58 123.00 1.40 224,000 1,010,000 112,000 1,346,000


■ Pod Gradom SHPP (Uzice)It is located on the Djetinja river. This SHPP is a deriva-tion facility with a 519 m long channel and a 4 m concrete dam, practically representing a waterintake. The power plant

has three Francis turbines. Last large reconstruction was in 2000. Complete electrical equipment was overhauled and automated, together with the 2.1 kV and 10 kV switchyard. Technical documents development is in the final phase.


Dam type Low concrete dam

Construction height m 4.5 (above ground level)





Year of construction 1900 (1904 started to work)



Narrow/wider catchment area Djetinja / Zapadna Morava







Energy data


Capacity MW 0.3



Existing documentation: y Licenses and Permits; y Investment technical documentation.



CapacityInvestments

–civil structures



Investments - total


Pod Gradom 2.30 11/ 0.30 30,000 140,000 15,000 185,000

Pod Gradom SHPP


■ Moravica SHPP (Ivanjica)

Throughout its long-term operation from 1911, SHPP Ivanjica only had one equipment overhaul in 1987. However, from 2004 and 2005 serious problems have been identified, especially on the civil part of the facility, resulting in operation prohibition by the inspection.

The indicated problems may be resolved in two phases: y Phase I: The existing Ivanjica SHPP reconstruction in

terms of security and facility and equipment functioning with the aim of returning it to its former state, i.e. provide its functioning;

y Phase II: The Ivanjica SHPP reconstruction from the view-point of the modern hydropower potential use options of this dam site, by observing the modern dimensioning criteria and by using significant recent equipment devel-opment achievements, especially electrical equipment (remote control, higher performance machines, etc.);

Mechanical equipment was reconstructed in the course of 2007. On 14 July 2010, civil structures rehabilitation and reconstruction were officially initiated, while the preliminary works, access roads and fence posting is under way. The supervisory engineer was selected. The automation detailed design tender documents are being developed.

This is a reservoir dam facility constructed on the Moravica river in the town of Ivanjica. Installed discharge equals to 2.5 m3/s and it is used through one turbine. The total installed power plant capacity is 160 kW. It is connected to 0.4 kV power grid.

Given that this SHPP also has a historical and cultural value, and that the Moravica river water potentials are much higher than the ones currently in use, there are ideas to build one more modern dam-derivation SHPP located downstream from the existing one. Waterintake of this SHPP would be made in an appropriate place within intake structures of the existing SHPP (probably in the headrace), with a penstock leading from this point to the newly planned SHPP (ca. 50 m long). This solution provides the creation of a 10 m gross head, making the total capacity of the old and the new SHPP about 650 kW, (i.e. some 300% higher). Depending on the current water amount, operation of these two SHPPs could be combined.

The above solution was elaborated at the conceptual solution level; therefore, additional hydrological and technical-economic analyses should be performed in order to make the final decision whether to go ahead with this investment or not. One advantage is that relatively small investments into intake structures of the newly planned SHPP are necessary given that the existing plant infrastructure will be used. Estimated value of this investment is between EUR 600,000 and 700,000.


Dam type Gravity - arch dam

Construction height m 17







Watercourse River Moravica

Narrow/wider catchment area Moravica / Zapadna Morava








Energy data


Capacity MW 0.16



Existing documentation: y The Moravica SHPP Mechanical Equipment Overhaul Report; y The Detailed Moravica SHPP Reconstruction Design; y Reconstruction approval decision; y Water management permit; y Water management agreement; y Urban Planning Conditions Act; y Power grid connection conditions.



CapacityInvestments

–civil structures



Investments - total


Moravica* 2.50 8.00 0.66 1,385,714 200,000 115,000 1,700,714


■ Sveta Petka SHPPThis is a run-of-river derivation facility utilising the Nisava river hydropower potential, located some 10 km downstream of the Sicevo SHPP. The derivation comprises of a headrace, relief well and a steel pipeline. The powerhouse is of surface type. It is located near Ostrovica. The facility was commis-sioned in 1931, together with the downstream Sicevo SHPP and it was used to power machines in the textile industry.

Installed discharge is some 10.5 m3/s, gross head around 7 m. The powerhouse houses three identical generator sets and 200 kW capacity. SHPP is connected to 10 kV power grid. The revitalisation may start once the hydro-potential of this Nisava river section has been analysed.

Estimates show that the installed capacity may be increased for 120% requiring additional investment of EUR 1,000,000.


Dam type Concrete dam








Watercourse Nisava

Narrow/wider catchment area Nisava / Juzna Morava







Energy data


Capacity MW 0.60



Existing documentation: y Restoration-Conservation Works Design, the Cultural Monuments Protection Authority, Nis, 2008; y Single-line diagram.



CapacityInvestments

–civil structures



Investments - total


Sveta Petka 10.50 / 7 1.32 1,120,000 540,000 60,000 1,720,000

Sveta Petka SHPP


■ Sicevo SHPPThis is a run-of-river, derivation facility utilising the Nisava river hydropower potential. The derivation is made of a headrace , relief well and a steel pipeline. The powerhouse is of a surface type. It is located near Sicevo. The plant was commissioned in 1931. Installed discharge amounts to 20.0 m3/s, net head some 8 m. The powerhouse has three generator sets, two with the same characteristics (each with the capacity of 352 kW) and one generator set with the capacity of 644 kW. The power plant is connected to 10 kV power grid. Revitalisation project of this SHPP should cover the hydropower potential of this

Nisava river stretch, considering that the Sveta Petka SHPP is located upstream on the same watercourse and that there is one section of the watercourse between these power plants which can be used for power generation. Accordingly, the existing SHPPs head and discharge increase options should be analysed or a construction of one additional cascade providing more efficient use of this hydropower potential. For this to take place existing SHPPs should be adequately revital-ised and their potential capacity increase re-examined.

It is estimated that 20% installed capacity increase would require further investments of about EUR 100,000.


Dam type Concrete dam in stream bed

Construction height m 4 (above ground)







Watercourse Nisava

Narrow/wider catchment area Nisava / Juzna Morava







Energy data


Capacity MW 1.35



Existing documentation: y Dam drawing; y Turbine drawing; y Gate drawing; y Permit issuing order.



CapacityInvestments

–civil structures



Investments - total


Sicevo 20.00 10/9.5 (8) 1.62 260,000 720,000 80,000 1,060,000

Sicevo SHPP


■ Temac SHPP The Temac SHPP is a storage plant with a short derivation (about 20m) cutting the large Temstica river meander in the area of the Temska village, near the town of Pirot. Its installed discharge equals to 4.65 m3/s, utilised by the three different capacity turbines (2.5 m3/s, 1.4 m3/s and 0.75 m3/s). The

power plant is connected to 10 kV power grid. Given its civil structures and equipment state, civil structures (tail race and powerhouse) should be rehabilitated, while the mechanical and electrical equipment should be overhauled, replaced and revitalised to increase its operational security.


Dam type Concrete dam in stream bed








Watercourse Temska reka








Energy data


Capacity MW 0.78



Existing documentation: y Generation Upgrade – Conceptual Solution



CapacityInvestments

–civil structures



Investments - total


Temac 4.65 20.00 0.78 60,000 270,000 30,000 360,000

Temac SHPP


■ Sokolovica SHPP This is a storage dam facility constructed on the Timok river near the town of Cokonjar. Its installed discharge equals to 40 m3/s utilised by the three turbines (8 m3/s, and 2 x 16 m3/s). The generator sets capacity is 3.724 kW, with the first one commissioned in 1948. The power plant is connected to 35 kV power grid. The revitalisation should cover the turbine runner replacement with the one of the

same dimensions and improved performance (higher η), dam and headrace mechanical equipment rehabilitation or replace-ment, concrete damages repair, access road and power plant connection to the control centre reconstruction. The installed capacity and energy generation may be increased for 10% by increasing the backwater elevation through the spillway gate level increase.










Watercourse Timok

Narrow/wider catchment area Timok







Energy data


Capacity MW 3.72

Possible annual generation GWh 10




CapacityInvestments

–civil structures



Investments - total


Sokolovica 40.00 12/8.50 3.72 360,000 620,000 180,000 1,160,000


Sokolovica SHPP

Gamzigrad SHPP


■ Gamzigrad SHPP










Watercourse Crni Timok

Narrow/wider catchment area Crni Timok







Energy data


Capacity MW 0.22



Existing documentation: y Detailed Gamzigrad SHPP Civil Structures Reconstruction Design; y Construction documents review report.



CapacityInvestments

–civil structures



Investments - total


Gamzigrad 4.20 9/8.5 0.22 32,000 144,000 16,000 192,000


■ Vucje SHPP The Vucje SHPP is a derivation facility utilising the Vucjanka river hydropower potential to generate energy. The facility comprised of a Tyrolean intake in the river, open headrace,

relief well, steel pipeline and a powerhouse. The power-house has three generator sets with different capacities, total capacity 930 kW. This is the one of the best maintained SHPPs owned by EPS.


Dam type Tyrolean side water intake








Watercourse Vucjanska reka








Energy data


Capacity MW 0.93





CapacityInvestments

–civil structures



Investments - total


Vucje 1.35 139.2/123.8 0.93 10,000 80,000 10,000 100,000


Vucje SHPP

Jelasnica SHPP


■ Jelasnica SHPP


Dam type








Watercourse Jelasnica

Narrow/wider catchment area Jelasnica / Juzna Morava

Mean annual discharge m3/s






Energy data


Capacity MW 0.40



Existing documentation: y Detailed Gamzigrad SHPP Civil Structures Reconstruction Design; y Construction documents review report.



CapacityInvestments

–civil structures



Investments - total


Jelasnica 0.42 120/117 0.40 64,000 288,000 32,000 384,000


SHPP Construction on the Existing Water Management Facilities

■ SHPP BovanThe Bovan SHPP could be constructed on the Bovan dam near Aleksinac. This SHPP utilises the Moravica river water (Alek-sinacka), the right tributary of the Juzna Morava.

The dam is of rock-fill type, 52 m high from the foundation and 151 m long at the crest. Dam crest elevation is 236 mASL, maximum level 261.5 mASL, spillway crest elevation 258.5 mASL and normal backwater elevation 252.5 mASL.

Total reservoir volume (from the spillway crest) amounts to 47.5 million m3, while its live storage equals 19.5 million m3.

The powerhouse could have two generator sets. Installed discharge of the main generator set would be 6 m3/s, and its mean annual generation 5.52 GWh. The generator set would have an installed discharge of 0.5 m3/s at the biological minimum outlet, while its mean annual generation would equal 1.40 GWh.


Dam type Rock-fill dam with clay core








Watercourse Moravica

Narrow / wider catchment area Moravica / Juzna Morava




Facility use Flood protection, irrigation, water supply, energy

Current water intake m3/s 0,15 water supply

Future water intake m3/s by 0,5 water supply

Energy data


Capacity MW 1.5





CapacityInvestments

–civil structures



Investments - total


Bovan 6.50 35.00 1.50 495,200 1,243,900 260,900 2,000,000


■ Celije SHPP The Celije SHPP is a dam, reservoir SHPP located within the existing Celije dam structure. The dam is located on the Rasina river, at the section some 23 km away from Krusevac. The dam is 52 m high, 49 m above riverbed bottom. It is 220 m long at the crest, and 8 m wide. Dam is equipped with the side spillway. Water management permit was issued for elevation 277, while the live storage under this elevation amounts to 36.6 million m3. Reservoir elevation would range from 272 to 277 mASL during SHPP operation, while tail water elevation would equal 232 mASL. Installed discharge of main generator sets would be 10 (2 x 5) m3/s, their gross head 45 and net head 43 m. Water would be conveyed to the generator set

through an existing channel with a 2600 mm diameter, subse-quently through a 1500 mm pipeline, 50 m long. Generator sets would be of Francis type with a vertical shaft. Installed capacity of each generator set would be 1.8 MW, maximum capacity 2 MW, and generator capacity of 2.5 MVA. Estimated annual operating hours would be 3400 h, with the mean annual electricity generation (peak energy) of 11.5 GWh. The generator set would have an installed discharge of 0.56 m3/s (maximum 0,6 m3/s), under the guaranteed flow, while its net head would equal 43 m. Installed generator set capacity would amount to 0.2 MW (maximum 0.22 MW), while the generator capacity would be 0.250 MVA. Annual electricity generation (45% peak energy) would amount to 0.987 GWh.










Watercourse Rasina

Narrow/wider catchment area Rasina /Juzna Morava


Guaranteed discharge m3/s 0.56 (according with watershed licence)


Facility use Water supply, flood protection, low water improvement, irrigation, energy

Current water intake m3/s 0.6 water supply/1.0 irrigation (summer)

Future water intake m3/s 1.2 water supply/1.0 irrigation (summer)

Energy data


Capacity MW 4.22





CapacityInvestments

–civil structures



Investments - total


Celije 10.60 35.00 4.22 301,000 2,086,000 613,000 3,000,000


■ Barje SHPP The Barje SHPP is a dam, reservoir SHPP located within the existing Barje dam structure. The dam is located on the Veternica river, some 33.5 km from the confluence to the Juzna Morava river. The dam is 75 m high. It is 330 m long at the crest, and 10 m wide. Dam is equipped with a shaft spillway. Total reservoir volume equals 40.67, while its live storage amounts to 21 million m3.

The maximum level is 382, normal level 370.5 and spillway elevation 379 mASL. Spillway capacity amounts to 1270, while the capacity of other discharge structures equals 280 m3/s. The powerhouse would comprise three generator sets, two main ones and one for the guaranteed discharge. Installed discharge of the main generator sets would be 5 (2 x 2.5) m3/s, their gross head 50 and net head 48 m. Water

would be conveyed to the generator set through a tunnel with a 3100 mm diameter, 400 m long, subsequently through a 1500 mm pipeline, 50 m long. Generator sets would be of the Francis type with a horizontal shaft. Installed capacity of each generator set would be 1.05 MW, maximum capacity 1.1 MW, and generator capacity 1.25 MVA. Estimated annual operating hours would be 3000 h, with the mean annual electricity generation (peak energy) of 6.309 GWh. The guaranteed discharge generator set would have an installed discharge of 0.35 m3/s (maximum 0,45 m3/s), while its net head would amount to 48 m. This generator set would be of the Francis type with a horizontal shaft. Installed generator set capacity would amount to 0.14 MW (maximum 0.18 MW), while the generator capacity would be 0.250 MVA. Annual electricity generation (45% peak energy) would amount to 0.679 GWh.








Year of construction


Watercourse Veternica

Narrow / wider catchment area Veternica / Juzna Morava




Facility use Water supply, flood control, biological minimum increase

Current water intake m3/s 0.675 water supply

Future water intake m3/s 0.8 water supply

Energy data


Capacity MW 2.34





CapacityInvestments

–civil structures



Investments - total


Barje 5.25 50.00 2.34 142,000 882,500 475,500 1,500,000


■ Zlatibor SHPP The Zlatibor SHPP would be built within the Zlatibor dam, built on the Crni Rzav river, near the Ribnica village. It was built for water supply purposes of Partizanske vode, Cajetina and other settlements in Zlatibor area.

The dam is of arched, concrete type, with the crest elevation of 988 mASL. Along the crest, the dam is some 94.2 m long and 1.5 m wide.

Normal backwater elevation of the reservoir is 986 mASL, while the maximum backwater elevation equals 988 mASL.

This SHPP would entirely be generating the peak energy.


Dam type Concrete arch dam








Watercourse Crni Rzav

Narrow/wider catchment area Veliki Rzav / Drina




Facility use Water supply



Energy data


Capacity MW 0.26





CapacityInvestments

–civil structures



Investments - total


Zlatibor 1.55 25.00 0.26 142,000 380,000 78,000 600,000


■ Parmenac SHPPThe Parmenac SHPP is a dam, reservoir SHPP located within the existing Parmenac dam structure. The dam is located on the Zapadna Morava river, close to Cacak. It is 16.5 m high, and 50 m long at the crest. Total reservoir volume is 0.15 million, while its live storage equals 0.12 million m3. Maximum backwater elevation is 248.1, while normal level elevation amounts to 247.5 mASL. The Parmenac reservoir is intended for water levelling when the Medjuvrsje HPP is in operation. The Zapadna Morava river mean annual flow at the dam section

amounts to 36.85 m3/s. Reservoir elevations would range between 365 to 370 mASL during SHPP operation, while tail water elevation would amount to 318 mASL. Head water elevation would be 247.20, and tail water from 242.00 to 242.50 mASL. The powerhouse would contain two generator sets. Installed discharge would be 50 (2 x 25) m3/s, with the head of 5 m. Generators would be of S (optionally bulb) type with a horizontal shaft. Installed capacity of each generator set equals 1.1 MW, while the generator capacity is 1.25 MVA. Annual electricity generation would amount to 12 GWh.











Narrow / wider catchment area Zapadna Morava




Facility use Irrigation

Current water intake m3/s 2.5 irrigation

Future water intake m3/s 2.5 irrigation

Energy data

Installed discharge m3/s 50

Capacity MW 2





CapacityInvestments

–civil structures



Investments - total


Parmenac 50.00 5.00 2.2 1,616,000 1,427,500 456,500 3,500,000


■ Rovni SHPP The Rovni SHPP would be constructed inisde the Rovni dam, built on the Jablanica river, 15 km upstream from Valjevo, between the villages of Stubo on the right bank and Rovni on the left bank. Reservoir with the total capacity of 51.5 million m3 would be formed once the dam is constructed.

The dam is 75 m high, while dam crest elevation equals 363.50 mASL.

This SHPP would be located downstream from the diversion tunnel outlet gate. The powerhouse would contain three generator sets. In addition to this, a balancing reservoir construction was also envisaged.








Year of construction Under construction


Watercourse Jablanica

Narrow/wider catchment area Kolubara / Sava




Facility useFlood protection, water supply

and provision of guaranteed discharge (for the Kolubara B TPP needs)


Future water intake m3/s 0.6 (1.4) water supply

Energy data


Capacity MW 0.75





CapacityInvestments

–civil structures



Investments - total


Rovni 1.80 36.00-45.00 0.75 237,000 897,000 166,000 1,300,000

Rovni SHPP


■ Selova SHPP The Selova SHPP would be constructed inside the Selova dam, built on the Toplica river, near Kursumlija.

Dam crest elevation is 527 mASL, dam length at the crest 429.5 m and its width 8 m.

Three generator sets would be installed in the powerhouse, whereas, the first generator set would operate depending on water supply needs, the second one with constant biological

minimum discharge, while the third one would process water surpluses, since this SHPP operates in accordance with the needs of basic reservoir users.

The water supply generator set installed flow is 2.0 m3/s, biological minimum generator set 0.3 m3/s and surplus water generator set 2.0 m3/s. Gross heads of these generator sets are 34.5, 59.5 and 59.5 m, respectively. Their installed capacities - 0.5, 0.15 and 0.9 MW.








Year of construction Under construction


Watercourse Toplica

Narrow / wider catchment area Toplica/Juzna Morava




Facility use Water supply, irrigation and energy


Future water intake m3/s 1.7

Energy data


Capacity MW 1.55





CapacityInvestments

–civil structures



Investments - total


Selova 4.30 34.5-59.5 1.55 370,000 1,110,000 220,000 1,700,000


■ Svrackovo SHPP (Arilje)According to the feasibility study, developed in 2007 based on the detailed design, the Svrackovo SHPP was foreseen within the Svrackovo multipurpose reservoir, on the Veliki Rzav river. It forms the part of the Zapadna Morava regional

water supply system of West Serbia (Arilje, Pozega, Lucani, Cacak, Gornji Milanovac) and a balancing reservoir for the future peak Roge HPP. The SHPP was foreseen on the down-stream toe of the rock-fill dam to process surplus waters and guaranteed discharge waters.


Dam type






Year of construction


Watercourse Veliki Rzav




Energy data


Capacity MW 7.65





CapacityInvestments

–civil structures



Investments - total


Svrackovo 15.86 53.50 7.65 1,920,000 7,280,000 80,000 9,280,000


■ Vrutci SHPP The Vrutci SHPP would be positioned inside the Vrutci dam, at the entrance into the Djetinja Gorge, 12 km upstream from Uzice, close to the Stanisavic village. The dam is of arched, dome type, with double curvature, 77 m high, 241 m long and 3.01 m wide at the crest. Dam crest elevation is 630mASL, while the spillway crest elevation equals 627 mASL. The normal reservoir backwater elevation is 621.3 mASL, with the maximum backwater elevation of 629 mASL. Total reservoir volume is 54 million m3. The Djetinja river mean discharge

on the considered section equals 2.03 m3/s. Water for this SHPP would be captured through an opening in the dam, with the 1.4 m diameter and width of 6.5 m. This water would be conveyed to the powerhouse by a 1300 mm pipeline. The powerhouse would contain three generator sets with nominal discharge of 0.96 m3/s each, minimum discharge 0.48 m3/s and maximum discharge of 1.2 m3/s. Installed power plant discharge amounts to 3.6 m3/s. Net generator sets head equals 53 m while the nominal generator capacity is 0.63 MVA.


Dam type Concrete arch dam









Narrow / wider catchment area Djetinja/Zapadna Morava




Facility use Water supply, flood protection, biological minimum increase



Energy data


Capacity MW 1.90





CapacityInvestments

–civil structures



Investments - total


Vrutci 3.60 53.00 1.90 907,300 1,602,300 140,400 2,650,000


SHPPs Construction on the existing HPPs and TPPs owned by EPS

■ Jezero SHPP The Vlasinsko Lake waters transported via the Bozicki tunnel would be used to operate the Jezero SHPP. The current available discharge is 3.90m3/s, out of which 1.19m3/s represents a gravitational inflow coming down the Bozicki and Toplodolski tunnels, while 2.71m3/s is pumped from the Lisina reservoir. There are plans to increase this discharge to 4.5m3/s.

Water for this SHPP would be captured at the Bozicki tunnel outlet and conveyed further via a derivation channel and a

pipeline to the powerhouse located at the Vlasinsko Lake edge. The headrace is dimensioned for the discharge of 8 m3/s.

A concrete pipe, with a 1.9 m diameter and 76 m long, will be tied to the derivation channel.

The powerhouse would contain two Kaplan type generator sets, with installed discharge of 2 x 4m3/s. Gross head ranges from 11 to 15.5m.

Installed SHPP capacity is 1 MW, and its mean annual genera-tion 4.85 GWh.


Watercourse Bozicki tunnel – gravitational transport

Narrow / wider catchment area Bozicka, Lisina, Ljubatska and Toplodolska rivers



Energy data


Capacity MW 1





CapacityInvestments

–civil structures



Investments - total


Jezero 8.00 13.00 1.00 920,000 1,950,000 110,000 2,980,000


■ Mala Vrla 1 SHPP The Vrla 1 SHPP was foreseen to use waters from Vrla and Gradska rivers. Power plant structures include Tyrolean intakes with sedimentation tanks on Vrla and Gradska rivers, headwater pipelines 1.5 and 2.0 km long with the diameter of 600 and 900 mm respectively, leading to the joint 137 m3

capacity relief well. 120 m long steel pressurised pipeline was planned from the relief well to the SHPP, with an 800 mm diameter. The Powerhouse with two generator sets is antici-pated in the area of the current storage at the plateau in front of the Vrla 1 HPP entrance. The Vrla 1 SHPP and the Vrla 1 HPP share the same tail water.


Watercourse Vrla, Gradska

Narrow / wider catchment area



Energy data


Capacity MW 0.47





CapacityInvestments

–civil structures



Investments - total


Mala Vrla 1 1.40 44.00 0.47 290,000 435,000 75,000 800,000


■ Zavoj SHPP The Zavoj SHPP is foreseen on the Zavoj dam foundation outlet. The Pirot HPP water management permit establishes an obligation for continuous water discharge from the Zavoj reservoir downstream from the dam, in the amount of 60 l/s, as well as the discharge of additional water amount intended to meet the guaranteed discharge at the Temska village equalling 1120 l/s.

The Zavoj SHPP technical solution comprises a foundation outlet gate intake, headwater steel 540 m long pipeline, with a 600 mm diameter, anticipated in the foundation outlet tunnel, as well as a surface powerhouse on the left bank of the Visocica river upstream from the foundation outlet, housing one generator set.


Dam type Rock-fill with central clay core








Watercourse Visocica

Narrow/wider catchment area Visocica







Energy data


Capacity MW 0.58





CapacityInvestments

–civil structures



Investments - total


Zavoj 0.90 75.50 0.58 294,000 728,000 90,000 1,112,000


■ Pirot SHPPThe Pirot SHPP would be constructed in the Pirot HPP balancing reservoir. HPP Pirot operates in a peak regime up to 4 hours a day, while its balancing reservoir is emptied during the entire day. The Pirot HPP installed flow is 45 m3/s.

The balancing reservoir water discharge has hydropower potential which could be used by constructing the Pirot SHPP.

Phase I of the Pirot SHPP construction would involve the Pirot 1 SHPP construction, on the left side of the Nisava river

discharge channel, with an installed discharge of 10 m3/s and available gross head from 2 to 4 m. Installed capacity of this SHPP under the above conditions would amount to 0.39 MW.

Phase II would comprise the Pirot 2 SHPP construction, on the right bank of the Nisava river discharge channel, with an installed discharge of 48 m3/s and installed capacity of 1.41 MW.

The total Pirot II SHPP installed discharge after construction would amount to 58 m3/s, with the installed capacity 1.8 MW.


Watercourse River Visocica (Zavoj Lake)

Narrow / wider catchment area Juzna Morava

Mean annual discharge m3/s 10

Energy data


Capacity MW 0.39





CapacityInvestments

–civil structures



Investments - total


Pirot 10.00 2.00-4.00 0.40 100,000 600,000 20,000 720,000


■ TENT B SHPP The TENT B SHPP processes cooling water coming from the Nikola Tesla B TPP. The Nikola Tesla B TPP utilises the Sava river water to cool the turbine condenser of the turbine-feed pump equalling 20m3/s per unit. This water is collected in the overflow chamber 4.26 m above the Sava river average level. There are plans to use this water potential through the TENT B SHPP.

The technical solution comprises the waterintake downstream from the overflow chamber not affecting the thermal power plant operation and security, an inlet pipeline and a power-house on the right Sava river bank nearby the existing water discharge. Two generator sets have been anticipated for two existing TPP units, with potential cooling water use from the third unit under construction.


Watercourse Cooling water discharge from TENT B

Narrow/wider catchment area Sava


Energy data


Capacity MW 1.6





CapacityInvestments

–civil structures



Investments - total


TENT B 40.00 2.50-4.50 1.60 1,000,000 2,800,000 200,000 4,000,000


SHPPs construction of on the new sites

■ Banjica SHPP The Banjica SHPP would be placed in the Sicevacka Gorge, some 2 km south-east from Sicevo located in the Nis munici-pality. The SHPP would utilise the Nisava river waters, the right tributary of the Juzna Morava river.

The Banjica SHPP dam section and powerhouse would be positioned between the Sicevo SHPP (downstream) and the Sveta Petka SHPP (upstream).

Provisional dam height equals 7 m. The Banjica SHPP (catchment area 3480 km2, Qsr = 30 m3/s) is a run-of-river, dam type power plant. The Nisava River would be partitioned by a dam with the provisional height of about 7 m. Road and railway on the right reservoir bank are essential elements used to establish the dam height (head water elevation).

Dam and reservoir data (unconstructed facility)

Dam type Low concrete gravitation dam

Construction height m 12 m provisionally

Total reservoir volume million m3 -

Live storage million m3 -

Spillway elevation mASL -

Spillway apron elevation -



Watercourse Nisava

Narrow/wider catchment area Nisava/Juzna Morava


Guaranteed discharge m3/s 3

Energy data


Capacity MW 2.3



Source of information and estimate

Source of information Jaroslav Cerni Institute data base (estimate)

Feasibility Very good



CapacityInvestments

–civil structures



Investments - total


Banjica 45.00 7.00 2.30 1,800,000 3,900,000 200,000 5,900,000


■ The Stalac SHPP The Stalac SHPP would be placed on the Juzna Morava river, upstream from Stalac (in the gorge). The SHPP would be of dam, run-of-river type. The Juzna Morava river average discharge of on the Stalac SHPP section amounts to 92.49 m3/s.

The river would be partitioned by a so-called low gated dam: the powerhouse would be formed on the right bank at the existing local road level (about 32 m wide); a spillway dam with gates, 4 x 14 m wide, would be constructed in continu-ation along the entire width of the existing riverbed. Spillway elevation would amount to 133 mASL, with normal backwater elevation of 140 mASL. A low dyke would be constructed on the left bank, 6 m high above the ground level, with crest

elevation 141 mASL. A ship-lock for potential future naviga-tion can be formed in this zone (some 130 m wide).

Head water elevation during operation would amount to 140, tail water 131 mASL, gross head 9 and net head 8 m. The powerhouse would comprise four generator sets.

Generator sets installed discharge would amount to 140 (4 x 35) m3/s. They would be of S type with a horizontal shaft. Installed capacity of each generator set would be 2.5 MW, maximum capacity 2.7 MW, while the generator capacity would equal 3.15 MVA.

Mean annual electricity generation would amount to 48 GWh.

Dam and reservoir data (unconstructed facility)

Dam type Low concrete gravity dam with rock-fill section


Total reservoir volume million m3 -

Live storage million m3 -

Spillway elevation mASL -

Spillway apron elevation 133



Watercourse Juzna Morava

Narrow / wider catchment area Juzna/Velika Morava


Guaranteed discharge m3/s 9

Energy data


Capacity MW 11





Feasibility good



CapacityInvestments

–civil structures



Investments - total


Stalac 140.00 9.00/8.00 11.00 12,500,000 13,500,000 3,000,000 29,000,000


■ Sokolja SHPP A mini reservoir was constructed on the Gvozdacka Reka, right tributary of the Ibar river, whose waters are captured and conveyed via a tunnel into the catchment area of Sokolja river (forming the Ribnica river). These waters have previously been processed by the Sokolja SHPP, which suffered large damages in the meantime preventing its further use.

In the newly formed system, the existing Sokolja SHPP would become the Sokolja II SHPP, while the Sokolja I SHPP would be constructed upstream.

Both facilities are of derivation, run-of-river type.

The Sokolja I SHPP would have an installed discharge of 0.32 m3/s, gross head of 295 mASL and net head 285 mASL. One Pelton type generator set would be installed in the power-house with a horizontal shaft.

Head water elevation would amount to 815, tail water elevation 520 mASL.

Installed capacity of the generator set would amount to 0.8 MW, maximum 0.9 MW, and the generator capacity 1 MVA. Mean annual electricity generation would amount to 4.26 GWh.

The Sokolja II SHPP would have an installed discharge of 0.6 m3/s, gross head of 90 mASL and net head 85 mASL. One Pelton type generator set would be installed in the power-house with a horizontal shaft.

Head water elevation would amount to 510, tail water elevation 420 mASL.

Installed capacity of the generator set would amount to 0.45 MW, maximum 0.50 MW, and the generator capacity 0.5 MVA. Mean annual electricity generation would amount to 2.34 GWh.


Watercourse Gvozdacka Reka Sokolja

Narrow / wider catchment area Ibar Ribnica/Ibar

Mean annual discharge m3/s 0.25 0.22

Energy data

Sokolja I Sokolja II

Installed discharge m3/s 0.32 0.6

Capacity MW 0.8 0.45

Possible annual generation GWh 4.3 2.3




Feasibility good



CapacityInvestments

–civil structures



Investments - total


Sokolja 0.32-0.60 285+85 1.25 459,900 1,903,800 636,300 3,000,000


ConclusionThis document provides an overview of potential investments for the revitalisation of the existing or the construction of new SHPPs within the Republic of Serbia territory. It was compiled from various materials of different reliability levels, whereby, some data should be taken with certain level of criticism and reserve.

SHPP owned by EPS requiring revitalisation

Total capacity of all analysed SHPPs from this group amounts to 33.2 MW.

Total mean annual generation of all analysed SHPPs from this group is 134.8 GWh.

Total revitalisation investments of all analysed SHPPs from this group amount to over EUR 12.5 million.

It should be noted that the values indicate the original state of SHPPs, without the increase of their generation capacities.

Another thing to be noted is that some of these projects are in progress (Ovcar Banja and Medjuvrsje). It is expected that these SHPPs will be revitalised based on already initiated programmes. Moreover, the descriptions provided in Section 2 demonstrate that in the case of certain SHPPs, revitalisa-tion of individual civil structures or equipment elements has already been started.

Bearing this in mind, it may be expected that 15 SHPPs will be revitalised under this programme.

Total capacity of these SHPPs is 17.8 MW.

Total mean annual generation of these SHPPs is 54.8 GWh.

Total revitalisation investments of these SHPPs are EUR 9.8 million.

SHPPs which could be constructed on existing water management facilities



Total construction investments of these SHPPs are EUR 25.5 million.

It should be noted that investment values provided in this overview only cover the SHPPs construction. They do not include operational costs (water use fee paid to the state and maintenance paid to the dam owner, etc).

Another thing to be stressed is that property issues need to be resolved for this group prior to the SHPP construction on these facilities (property right is a necessary condition to obtain the site permit – e.g. a contract with the owner on site use).

In addition to this, it is important to say that the Rovni dam is under construction, while the Svrackovo dam construction should be initiated.

Given the above, it may be expected that all 9 SHPPs would be built under this programme.

SHPPs which could be constructed on existing HPPs and TPPs



Total construction investments of these SHPPs are EUR 9.6 million.

It should be emphasised that in the case of Pirot SHPP, the current state data have been provided (not including addi-tional waters). In the case of TENT B SHPP, data are based on the current Nikola Tesla B TPP construction level with 2 units (the existing TENT B SHPP concept design anticipates the construction of the complete facility independently from the fact whether at the moment of SHPP construction a third TPP unit will be constructed or not).

Having this in mind, it may be expected that all 5 SHPPs would be constructed under this programme.

SHPPs which could be constructed on new sites

Total capacity of 4 analysed SHPPs from this group is 20.4 MW.

Total mean annual generation of 4 analysed SHPPs from this group is 82 GWh.

Total revitalisation investments of 4 analysed SHPPs from this group are EUR 45.1 million.

It should be stressed that data on some of these projects are quite unreliable (SHPP Tigar) or there are major potential ownership issues (SHPP Sokolja), therefore, these projects should not be considered further without detailed verification.

Taking this into account, it may be expected that 2 SHPPs will be implemented under this programme, Banjica SHPP and Stalac SHPP.

Total capacity of these 2 SHPPs is 13.3 MW.

Total mean annual generation of these 2 SHPPs is 60.0 GWh.

Total construction investments of these 2 SHPPs are EUR 34.9 million.

It should be noted that this group of power plants has still not been analysed sufficiently and that other possible sites may be included recognized as suitable for further consideration based on preliminary analyses.


4.4.4 WASTE TO ENERGY AND BIOMASS

1. Introductory explanation In Serbia as well as world-wide, waste management has entered a period of rapid and dramatic changes. Having in mind principles of European legislation as well as the need to improve the quality of the environment, Serbian munici-palities are faced with the need to find a way to reduce the current number of inappropriate waste dump sites and start implementing sustainable waste and resource management methods. Waste management is to be tackled in such a manner as not to jeopardize the present and ensure safe future. This elementary principle of sustainable development calls for fundamental changes in the attitude to waste, accountability on part of every individual and all institutions, as well as devel-opment of awareness that responsibility in this matter will in no manner be left to others.

By the Serbian Government decision, National waste manage-ment Strategy was adopted in 2003; it implies implementa-tion of the following principles: prevention, separate collection of waste materials, neutralization of hazardous waste, regional approach in waste collection, and rehabilitation of the existing landfills and dump sites. The objectives of sustainable waste management also relate to minimization of waste generated at source, and increase of the portion of waste which may be re-used, which simultaneously reduces the amount of waste to be disposed of at landfills. The National Strategy also defined regional waste management concept which implies joint waste disposal with a number of adjourning municipalities.

In these terms, regional waste management system “Duboko” was established on the basis of common vested interests in the following 9 towns: Užice, Cajetina, Arilje, Pozega, Ivanjica, Lucani, Kosjeric, Bajina Basta and Cacak, with the accompa-nying rural settlements (as many as 305 of them). Following the environmental policy of the Republic, i.e. PUC “Duboko” as their executive project-implementing body, the municipali-ties adopted the concept of waste separation at the point of generation. Unfortunately, the varying levels of development, qualitative levels of approach to the system, as well as levels of awareness and interest resulted in extreme unevenness in implementation of the concept.

The same thing is with regional project for City of Kragujevac.

During a course of years, from the original project to the beginning of implementation, the project was modified several times in order to reflect the EU Directives and local regula-tions. The major modifications were introduced for the purpose of adapting work to the conditions necessary for inclusion of municipalities which gravitate towards Užice as the regional centre. However, all modifications contributed to increased costliness of the project, while the implemented technical solutions could not solve the problem of landfill capacity; thus, every time a new municipality was added, the landfill lifespan was shortened. The expected working life of “Duboko” landfill is 12 years; as all valid calculations and recommendations state that construction of a regional landfill may be cost-effective

only for a minimum project period of 30 years, it is clear that the whole venture is faced with grave issues, especially from the standpoint of investments provided from international sources, and based on the EU Directives.

In order to prolong the working life of the landfill, it is necessary to amend the general concept of technical and technological solutions used as a base of the project. The new concept is to result in minimizing the amounts of waste to be disposed at the landfill, in order to save the available space for the longest possible period of time. In order to reach an optimum concept compliant with the situation in the field, principles of environmental protection, and economic requirements of users, investors and managers, it is necessary to deliberate and evaluate a number of possible solutions, starting with maximum possibilities for separation of individual waste fractions, the system of thermal treatment of individual fractions or all waste collected, with the assessment of the possibility of using the generated thermal energy for the purpose of electricity production.

THE PURPOSE OF THIS DOCUMENT

Having in mind PROTOKOLS signed between PE EPS and municipalities of Užice and city of Kragu-jevac this chapter represents an invitation for third part to participate as co-investor in futher projects development.

The main purpose of the document is to provide relevant data and sufficient level of information to pass a relevant decision on technical possibilities for construction, and establish initial viability of investment in construction of a plant for thermal treatment of municipal waste. Based on this information it is possible to pass the decision on viability of investment in further preliminary works and composition of the General project and Pre-feasibility study, appropriate spatial planning documents, as well as other documents necessary in the process of construction of thermal energy sources in line with the relevant legal regulations.

In these terms, the items which need to be analyzed are as follows:

y Amounts of waste generated at the territory of each indi-vidual municipality participating in the regional system, portions of individual fractions in the total mass of waste,

y Manner of collection, pre-treatment and transport of waste, y Possibilities for purchase, use, regular maintenance, pos-

sible damages, etc. for each deliberated technological option,

y Basic economic indicators, y Impact to the environment, y Market and possibilities of selling products (electricity and

possibly thermal energy), y Micro-location of the source of thermal energy; y Technology, power, and configuration of the thermal

energy source, y General concept of the project, including limitations,

meeting the legal requirements.


is in ongoing status) includes space for waste disposal, access road and all necessary infrastructures, the center of the selection of waste, as well as the necessary vehicles and equipment for work. As elaborated in text above, the project has gone through several stages of expansion, improvement and modernization, which resulted in substantial savings in terms of the projected period of landfill use. Under present conditions, the concept is based on the principle of separation: primary separation, secondary separation and permanent waste disposal. In general, the existing concept of a regional system of “Duboko” can be expressed through the following scheme:

2. Legal framework on waste to energy in EU and Republic of Serbia

* NOTE: draft document is on CD only

3. Options for landfill extension use regarding techno-economic solutions

Regional waste management system which PE EPS with partners predict for project in Kragujevac and Užice (which

The analysis of past practice is based on research conducted in the area of urban environment of Čacak and compared with similar studies in developed countries and developing countries in which the waste management system gradually introduced in previous years. In all analyzed cases imple-mented in different levels, the amount of recycling material had a similar share in the total weight of waste and varied depending on various factors: the region where the analysis was performed, period of years, population habits, develop-ment of the country, living standards, etc. Comparing research results confirmed the validity of research in Čacak, which point out that municipal waste which generally comes to the landfill, consists of 20% recycling components, 60% biodegradable components and 20% useless parts.

The results of analysis shows fact that the life of any landfill, and landfill “Duboko” in Užice, could be extended if the approaches to the treatment of biodegradable waste compo-nents and the subsequent treatment of inert residues. The biodegradable component contains 30-60% moisture (depending on the composition, season, local and current weather conditions, etc.) in terms of depositing, other than a busy area as a result of biochemical degradation process, respectively decay, producing the effect of creating landfill’s gases that can be causes of problems in the maintenance and work of the landfill if not properly evacuated from landfill body. Also they could have degrading property, since it is a gas of greenhouse gases, primarily of methane, hydrogen sulfide and carbon dioxide. On the other hand, the moisture contained in

Schematic of the work concept of a regional system „Duboko“

the organic component condenses and filters through various layers of the earth. If landfill is not properly covered (foil or clay material) precipitation increases the amount of water that passes through the landfill body. This kind of landfill liquid has pollution up to 10,000 times the pollution of waste waters from urban sewage collectors.

Although the projected landfill management methods of the project minimize the impact of filter vaters using a measure of protection from precipitation and organized collection by drainage system, and then purification and provide for the collection and burning landfill’s gases with the possibility of energy efficiency, these measures do not contribute to reducing the dimensions of delayed waste due to decay.

Reducing the amount of waste that is disposed in a landfill can be achieved only by treatment of biodegradable and inert components of the inert rest, or by biological-mechanical treatment (composting) or through incineration, i.e. burning under controlled conditions, where you get a certain amount of energy.

In further analysis these technological processes disas-sembles, where it is important to emphasize that the use of waste as fuel, because of the sensitivity of the process and resistance to the public, in recent years improved and refined in order to avoid negative impacts on the environment. In addition to biodegradable of municipal solid waste, thermal treatment process to destroy other wastes which processing is expensive or irrational, such as plastic films, bags, textile


remnants and similar, and the process itself depends on the used technology could include waste sludge from waste water, waste from slaughterhouses, and even some types of hazardous waste.

Treatment of inert rest that is left after the thermal treatment of waste is an advanced and relatively expensive technolog-ical process, mainly because of the heterogeneous composi-tion of matter, in which are often found potentially hazardous substances (heavy metals, etc.). Delay or secondary treatment of these substances is conducted in strictly controlled processes. In highly developed countries, this treatment is usually performed using plasma plant.

3.1 Available technologies applied in practice and options for waste minimization

3.1.1 Experiences from developed EU countries

The main task of waste hierarchy, a significant element of waste management policy in the EU countries, is primarily targeted to waste minimization, promoting recycling and reuse, while leaving disposal at landfills as a final solution. The EU Waste Framework Directive sets a six-tier waste hierarchy:

y prevention, y reduction, y re-use, y recycling,

y energy recovery, y disposal

EU member states are obliged to apply the above principles during the waste life-cycle. During its adoption process, the EU Waste Framework Directive has been critised for the consistence of applied and prescribed technological proce-dures. Specifically, debates related to incineration in terms of “recovery” or “redistribution”. The main criticism was given by so called “Green group” of the EU Parliament considering a “green” electricity generated by waste incineration as a myth, provided that burning of waste is followed by large carbon-dioxide emissions. However, most of representatives agreed with the Comission and Parliament to accept to treat waste incineration in terms of “recovery”, provided that waste incineration plants strictly apply energy efficiency standards and other protection measures. Among the existing variety of technologies, the disposal still remains the most frequent treatment option; recycling is applied for one quarter of waste generated, and incineration, i.e. energy production is expanding and has already reached the level of almost 20%.

There are differences in respect to applied technologies from the experiences of number of EU countries. It is typical that recycling is most represented in the countries of Benelux, Germany and Austria, landfilling - in Great Britain and South European countries (Italy, Greece), as well as in Ireland, Finland and Spain, and incineration as a waste treatment method is most developed in Scandinavian and Benelux countries. It can be noticed that France and Luxembourg have the most balanced municipal waste treatment.

Figure below presents general overview of municipal waste treatment in the EU countries in 2005.

Differences are obvious with regard to waste generation as well. Ireland has the highest annual waste generation rate per capita (even 869 kg/a), followed by Denmark, Luxembourg, Holland and Austria. The lowest waste generation rates have

Greece, Portugal, Finland, Sweden and Belgium – less than 500 kg/inh/year.

Next table provides overview of waste generation and treatment in the EU countries, the status in 2005.

Overview of municipal waste treatment in EU countries in 2005


State Recycled (%) Landfilled (%) Incinerated (%) Yearly production (kg/inh.)

Holland 65 3 32 624

Austria 59 31 10 627

Germany 58 20 22 600

Belgium 52 13 35 469

Sweden 41 14 45 464

Denmark 41 5 54 696

Luxembourg 36 23 41 668

Spain 35 59 6 662

Ireland 31 69 0 869

Italy 29 62 9 538

Finland 28 63 9 455

France 28 38 34 567

Great Britain 18 74 8 600

Greece 8 92 0 433

Portugal 3 75 22 434

Municipal waste management in the EU member states

Source: Institute for Public Policy Research

Comparative overview of waste treatment in the EU member states

From the above analysis it can be concluded that Ireland and Greece do not have capacities for waste incineration, and that recycling rates are lowest in Portugal and Greece, the later having the highest percentage of disposal as municipal waste treatment method. Holland and Denmark are biggest opponents to this way of treatment, closing down intensively the rest of their landfills.

3.2 Options contained in the National Waste Management Strategy

The National Waste Management Strategy determines inte-grated waste management. Integrated waste management relates to waste monitoring from its generation, minimization,


collection, transport, treatment, disposal. In order to establish sustainable waste management system, it is necessary to consider all relevant and possible waste treatment options. Decision on the selection of waste treatment option is based on the analysis of waste category, life-cycle, economic possi-bilities, and integrates characteristics of the evinronment and local conditions where waste is generated.

The important factors, affecting the decision on use or waste disposal, are:

y increased requirements for environmentally safe waste removal, resulting with higher cost disposal;

y application of principles of real costs for disposal in respect to polluter and waste generator;

y development of new production technologies and waste use procedures;

y analysis of markets for the placement of recyclables.

The hierarchy concept in waste management indicates that the most effective solution for environment protection is to reduce waste generation. However, if further reduction is not possible, products and materials can be reused, for same or different purpose. If this is not applicable, waste can be further used through recycling or composting, or energy recovery. If none of these options provide adequate solution, waste shall be disposed at landfill.

General overview of municipal waste treatment

3.2.1 Reduction of waste at source

Unlike other options in the waste management hierarchy, the reduction of waste is not the option that may be chosen in lack of other options. Waste reduction should be consid-ered every time the use of resources is subject to decision-making. The reduction must be designed through the life cycle of a product, i.e., already in the design phase, through manu-facturing, packaging, transportation and product placement. Consumers should also take an active role in the reduction of waste by purchasing products with less packaging material or products in bigger packaging, as well as products for multi- and long-term use.

The Government of the Republic of Serbia shall be the engine and main promoter of waste reduction policy. Reduction, i.e. minimization of waste generation represents strategic goal and requires broad and long-term campaigning, regard-less waste management concept and options. It has basic strategic importance and could be connected to any type of activity. Since given activities have as direct impacts saving of energy and resources and reduction of import of raw materials or final products, influencing directly products’ prices and life costs, the issue presents one of the key issues of national importance.

3.2.2 Reuse of products

Some products were specifically designed to be used several times. By introducing regulations on packaging waste, the incentive has been given to producers to take into consid-eration multiple use of packaging waste. In other cases, the products may be treated for same or similar purposes. There are good reasons for products reuse, considering following:

y reduction of costs both for producers and users; y savings in energy and raw materials; y reduction of waste disposal costs.

In certain cases the system of reuse of product has been applied for a long period in our country. The most frequent case has been the exchange of glass bottles when buying liquids (oils, alcoholic drinks, mineral water..). There are examples in the world where such system comes back in the same or modified form, and in the past few years it has the widest application through the model presented in the Law on Packaging and Packaging Waste, prescribing that the product price shall include waste management, once the product, his parts or packaging become waste.


3.2.3 Recycling

It is practically impossible to give a decisive answer to question whether recycling is more important in the sphere of industrial or municipal waste, since in both cases significant technical, environmental and economic effects are obtained. The most important are: drastic reduction of quantities of industrial and municipal waste that must be disposed to sanitary landfills, which prolongs the period of use of landfill, improved landfill management, significant slow down of the process of exploi-tation of natural resources, energy savings etc. Reasons to increase the use of waste are numerous:

y the awareness about limitated natural resources and the need of rational use of what we have at our disposal;

y regulations on environmental protection prescribe more severe criteria for waste disposal, therefore it is necessary to reduce the volume of waste to be disposed to the landfill by recycling;

y problems in finding locations for new landfills indicate that recycling could be considered as one of the options to reduce the need for new landfills.

Typical components of recycling system in view of materials recovery and separation of useful waste are, as follows:

y separation of different components at source of waste generation – in households, shops, institutions, streets or in centers where recyclable waste is collected (primary recycling);

y separation of recyclables out of the total waste volume in waste separation plants;

y preparation of separated materials in waste baling lines (paper, plastic), pressing (metal) or grinding (glass, con-struction waste).

3.2.4 Composting

Composting is defined as a fast and partial decomposition of wet solid organic substances, wastes from food, garden waste, paper, cardboard and similar, by means of aerobic micro-organisms and under controlled conditions. As a product a useful material is obtained, similar to humus, without unpleasant smell and that can be used as soil conditioning agent or as a fertilizer.

The advantages are as follows: the end-product has a certain market value that should result in the return of a certain part of invested funds; the space required for the plant location is relatively small and transportation prices are not that high. On the other hand, such plants may require significant capital investments as well. The market for the obtained product is not always secured, and storage of the end-product may also be a problem for producer. The quality of compost as a product is important in case there is respective market. Practice shows that although the organic waste from landfill may successfully be transformed in compost, the contamination (particularly from polluters from the landfill) and the one from glass, metal and plastic particles reject potential users. Thus the organic waste for composting should be separated at source and before disposal to the landfill.

In principle, composting is conducted in two phases: y collection and separation of organic components (kitchen

waste and garden waste) for composting in compost fields or in special plants (most often of regional type);

y independent composting “in own yard” through education and development of small vessels for composting.

With regard to the EU Directive on Landfills and the prohibi-tion of disposal of biodegradable waste to landfills, composting became important as an alternative for treating biodegradable waste.

3.2.5 Anaerobic digestion

Decomposition of organic, biodegradable part of solid waste in gases with a high amounts of methane may be achieved by anaerobic decomposition or anaerobic fermentation in reactor. After the fermentation of organic waste separated at source, the remains of the fermentation (digestat) is normally treated aerobically up to the level of compost. In this way, the final result of waste fermentation is in most cases similar to aerobic composting. The result of the decomposition process is biogas, compost and water. Wastewater, resulting from the treatment process, is treated and one part of it may be returned into the process.

The substances obtained - biogas and compost, i.e. treated slugde, have good energy value and can be used in the incin-eration process with other flammable waste components.

3.2.6 Waste incineration

The technology of burning (incineration) of waste represents the oxidation of flammable materials contained in waste. The incineration of waste is applied to reduce the waste volume, and the energy generated in the process may be used to obtain thermal or electrical energy. However, economic viability of the use of energy is not always acceptable at first sight, and it should be taken in consideration that the investment and oper-ational costs of incinerators in accordance with the EU regula-tions are high, and in general higher than the costs of waste disposal to sanitary landfills for municipal waste. It means that the incineration is an important and useful way to reduce waste, and the problems accompanying disposal of waste to landfills may be avoided on a long-run.

Waste incineration with energy recovery should present full and integral part of local and regional solutions to be developed in the next period in order to develop a sustain-able waste management system. The incineration of waste together with energy use must be considered in the context of integral approach to waste management, i.e. reduction, re-use and recycling.

If incineration with energy recovery is the most practical envi-ronmental option, it is necessary to consider the possibility of obtaining combined thermal and electrical energy in view of increasing efficiency of the process.


3.2.7 Solidification

Solidification is term used to define different treatment options changing physical and chemical characteristics of waste in order to make it suitable for disposal. Solidification is applied for treatment of liquid waste and slugdes containing heavy metals and hazardous wastes. The objective of solidification is to turn waste in a form that would immobilize waste constitu-ents from its spreading in the environment.

3.2.8 Disposal of waste to landfills

There are three types of waste disposal landfills: y landfills for disposal of non-hazardous waste; y landfills for disposal of inert waste; y landfills for disposal hazardous waste,

Certain types of waste are disposed on landfills designed for that type of waste. Sanitary landfills are used for disposal of inert and non-hazardous waste and they represent sanitary-technically arranged space in which waste generated in public areas, households, production process, work process, sales or use, that contains no hazardous substances and that cannot be processed i.e. rationally used as industrial raw material or energy fuel, is disposed.

The landfills envisaged for disposal of hazardous wastes are designed according to special technical requirements. Hazardous waste disposed in such landfills must be previously treated in accordance with regulations.

Landfills are required in each chosen waste treatment option, because there is always a part of waste that can not be treated, and must be disposed.

3.3 Possible solutions based on best available technologies (BAT)

To the analysis of possible solutions in aspect of selection of the best available technology in the practice must be approached taking into account the opportunities and needs of future users. This analysis has a conceptual sense and in that sense, the valuation approach by examining several criteria, some of which were previously defined - the ability to extend life of landfill “Duboko” economic parameters, respec-tively amount of investment, maintenance costs, return on investment period etc., and some will be dealt with through further analytical considerations - the impact on the environ-ment, the specificity of the organization, expertise and skills of staff etc.

3.3.1 “Zero waste” concept

This approach to waste management is gaining more and more supporters in the European countries although in general can be compared with the model of “perpetuum mobile” in the management of waste. Essentially it is primarily based on the activities of high-quality organization with practically no

weak points. In the hierarchy of waste this concept has strong support to the environmental consciousness of users, admin-istrative authorities, management structures and the social responsibilities of companies. In addition to this the entire program has a firm reliance on the strong media campaign, uncompromising work of inspection and communal police and close cooperation with the environmentally oriented civic associations (NGOs).

The first and basic step of the “zero waste” concept refers to avoiding the creation of waste. This includes complete custom-ization of industry, retailers, administration and citizens to the new circumstances; from the production of consumer good, the commercial network, administrative and management systems, media activities, to purchase household necessities and treatment of waste at home. It also includes an extremely high level of social development, because the waste manage-ment costs in this way are very high.

Some experiments which were carried out in several German cities led to the fact that people in households have up to 12 different dishes and that the small collect station located at 1 km of mutual suspension, so that the system has proved cumbersome and difficult acceptable by the population and required the employment of large numbers of people, vehicles and machinery.

Certainly this concept itself carries the high costs of collec-tion, storage and removal of waste, and according to the “German model - a pilot project” citizen would pay a fee for unselected garbage disposal. In a complex system of calcula-tion included the cost of care of unuseful waste disposal and household waste disposal costs of hazardous characteristics etc. Although the pilot did not give the expected results, but proved that cumbersome organizations carry high costs, the experience after the performed analysis applied selectively to certain types of waste. The expected goal of the organization of waste management in this concept nevertheless is reduced to 5-10% of the components of waste that cannot be treated otherwise than heat and at high temperature.

3.3.2 Waste collection concept without previous separation

This, the simplest concept is based on the principle of secondary separation and although it is not explicitly specified, it means the separation of certain (common) type of waste from citizens on the voluntary basis. The simple organization of the collection follows the technological process of waste separation by type, which can be organized as a manual or partially automated. Experience has shown that even when using the most modern automatic machines must establish visual control by the present staff.

In practice there are a number of developed technology solutions to the separation of waste from the total mass, but the lack of it is getting dirty secondary raw materials, which have lower cost because it requires pre-treatment, while the extracted organic material are most suitable for thermal treatment.

Complex technological equipment includes a variety of magnets, air and ballistic separators, and the conveyer belt


on which workers are assigned to set aside with the task to separate certain material.

The remaining waste, after the separation, shall be deposited in sanitary controlled conditions.

The rate of separated secondary - useful materials in this concept rarely exceeds 50%.

3.3.3 Concept of using technology for processing waste into secondary product form for the purposes of thermal treatment

A number of technological procedures have been developed in order to as better as it can adapt the waste to future thermal

treatment. Most often it is about making small briquettes, which are made from unuseful organic waste part. Technology known as pelleting, includes pre-separation of solid materials (metals, glass, rubble, etc.) and technological process requires grinding of the remaining waste, bringing in specific humidity and making briquettes with properties suitable for burning in power plants (cement factories, power plants, etc.).

Briquette received from palletizing process has a modest energy value and may contain a number of harmful ingredi-ents, so it is recommended for burning in the plants with double or multiple combustion, to avoid the occurrence of harmful gases. The technological process of making small briquettes is certainly designed to give a better effect of combustion due to low calorific value waste as fuel mixture.

Briquettes from waste - pellets, prepared for the heat treatment

3.3.4 Biological-mechanical treatment

Biological mechanical treatment of waste involves decompo-sition of organic matter under influence of bacteria, microbes and insects. The resulting products, the bio gas and compost has a market value and application, because the gas can be obtained for energy, either heat or electricity, and reworked organic content can be used in agriculture, re-cultivation of degraded area and also as fuel. In some processes the animal remains are added in the organic material (example Sweden). Certainly it goes without saying that the basis of processing organic waste is contained in the primary separation, where except recycling consumer materials (metal, paper, plastics, glass), separately collecting of the organic waste is organized.

In this way the unselected waste can be processed. Thus, the resulting material is not suitable for agricultural use due to the impurities content of inorganic origin (glass, metal, plastics), which, even though physically removed, are leaving harmful substances such as oil residues, detergents, chemical agents, etc. In this case the technological process is thermal processing which requires prior removal of mineral noncom-bustible materials.

The most widely used process based on biological-mechanical treatment is a process of cogeneration, which is successfully applied in many European countries. Cogeneration plants can be done modularly and have more treatment options depending on how the process will be designed: to produce heat, electricity or combined.

The treatment residue shall be deposited in sanitary controlled conditions. Cogeneration process ensures that (taking into account the primary selection) 70-80% of the total mass of waste processed in an appropriate manner, and that only 20-30% deposit.

Technological process may include some of these conceptual method (production of pellets out of dry residue) or directly burn the unuseful waste content which cannot be recycled (small fraction of paper and plastic, foil, dirty waste, wood residues, textiles, etc.).

3.3.5 Other procedures of waste treatment

If we want a sustainable system of waste management, it is necessary to consider all options of waste treatment. New


technologies, if they are reliable and competitive compared to other options, may also take place in the system. These options are mainly contained in the concept of energy produc-tion from waste. Many of them have the potential to produce more energy than the same amount of fuel in direct combus-tion. Some of these options are as follows:

y Thermal Technologies y gasification (fuel gas, hydrogen or synthetic fuels are produced),

y thermal depolimerization (the product is synthetic crude oil, which can be refine later)

y pyrolysis (the product is tar or bio-oil and soot) y plasma gasification process (PGP) (products can be enriched with a synthetic gas that contains hydrogen and carbon monoxide, usable in fuel cells, useful sili-cates and metal blocks, salt and sulfur)

y Non-thermal Technologies: y anaerobic digestion ( product is biogas rich in methane) y fermentation (examples are ethanol, lactic acid, hydrogen)

y mechanical-biological treatment (MBT) (may include anaerobic digestion or processing of waste in the bio-fuel)

GASIFICATION

Gasification is the high temperature process of the waste treatment in the presence of air or water vapor in order to obtain fuel gases. The technology is based on the familiar process of gas production from coal. Reaction product is a mixture of gases. Gas obtained in this way can be burned or used in plants for cogeneration. Due to the high tempera-ture process occurs vitrification slag formed in the process. Gasification is still not widespread waste treatment process, because the fuel must be of relatively homogeneous composi-tion, which means that the municipal solid waste required a pre-treatment.

PYROLYSIS

Pyrolysis is a process during which occurs the decomposition of organic waste at high temperature and in the absence of air. During the process is coming to the thermal decomposition of organic matter in the trash, with resulting pyrolytic gas, oil and solid phase rich in carbon. According to the temperature range at which it took place, can distinguish three variants of pyrolysis can be distinguish:

y low temperature to 500°C; y medium temperature from 500°C to 800°C; y high temperature higher than 800°C.

By increasing the reaction temperature increases the share pyrolytic gas in the reaction products, while reducing the share of solid and liquid phases. Pyrolytic gas is usually burned. Smoke gases are used for heating or getting electricity.

PLASMA PROCESS

An alternative system of treatment, plasma process, release energy by electrical discharge in inert atmosphere. This

process reached a temperature from 3,000 °C to 15,000 °C. Due to high temperatures comes to decomposition of organic matter from the waste and melting of inorganic materials. In gas phase comes to the intense decomposition of organic molecules, which almost completely eliminate harmful emissions. It is also the main advantage of plasma process. Inorganic materials are vitrificated after melting, so that they can be used in addition to the building material or can be safely putt off. This system is extremely costly and still is very little in the application.

WASTE AS FUEL

Some industrial processes and plants for the production of energy work under conditions that allow the use of waste with high power of heat rather than high conventional fuel. The most common example is the production of cement, where high temperatures and long holding time provide complete combustion of waste. Typical waste that is burned in these processes includes municipal waste, tires and spent solvents. Urban heating plants that supply the cities with thermal energy can also be a significant infrastructure for waste combustion. Integrated pollution prevention and control given the extent to which a given technological process can replace the primary fuel waste. EU Directive on the incineration of waste also prescribes allowable emission limits for facilities that use alternative fuels.

4. Tehnical and economical analysis of rationality for considered options

From the above presented the following undisputed facts: y Landfill everywhere in Serbia is a very limited receiving

capacity, and y To reduce amounts of waste and extend the life of the land-

fill, recyclable waste facilities must be treated, including its organic component.

It is also undisputed that the waste management must be organized in accordance with prescribed procedures and criteria, and based on the recommendations of the National Waste Management Strategy.

Rational organization and management can be achieved by introducing the principle of primary separation, or separate collection of certain types of waste in the area of its origin.very indicative sample is as part of a regional landfill “Duboko”, the secondary separation plant (which is under construction), with the primary process of separation that has already begun to take place in the participating municipalities of the regional system, we come to the conclusion that the life of landfills, essentially based on:

y separation and processing of organic waste component, and

y separation of small fractions of municipal waste that can not be recycled, but they can be thermally processed.

The concept of a regional system is based on the construc-tion of transfer stations, where the emphasis is just on the primary separation of recycable materials, while other waste


is transported by special vehicles to a regional landfill. This materials previously passes through the secondary separation plant - select center.

In such projected conditions, if the organic waste is used for composting in order to get the compost, it would be necessary to build a separate facility, which construction dimensions requires a large open space that location “Duboko” does not have.

Minding all the specific reasons and conditions of the site, as the only reasonable proposal there is a heat treatment, respectively building facilities where an organic component of waste would be used for energy production. At the same time must be aware that there are different concepts, as mentioned above, which in general can be reduced to the three most commonly applied technology solutions:

y incineration or burning of waste, with or without prior preparation

y cogeneration or energy getting from waste that was previ-ously treated, and

y plasma gasification or combustion of waste at extremely high temperatures.

4.1 Economic parametersAnalysis of economic parameters approached through the consideration of experiences in countries where the quality management of waste has reached the level of organization that at least burden the end-user. As will be seen in the subse-quent analysis, the structure of costs is based on the quality of services, level of organization, construction cost, maintenance costs, labor costs, benefits received and the final product. The following table shows the cost of waste disposal in some European countries:

Cost of waste disposal in some EU countries

The fee for care- Heat treatment - €/t Tipping fee

€/t

Denmark Fee for waste delivered to the incinerators

44 (without the combined energy use) 38 (with the combined energy use)

50

Belgium Commision for insineration (with or without energy recovery)

6.2 - 20 52-55 (depending on the utilization of landfill gas)

France Not charged - 9.14

Netherlands Commision for incineration adopted as 0 € 75 (for combustible nonhazardous waste)

12.5 2 (for noncombustible hazardous waste)

Norway Basic and additional compensation 9.93 - 29.80 39.75

Sweden Not charged - 31

As can be seen from the table above, the payment models are different in economically strongest countries in the EU. Certainly, however, that the waste disposal in landfills is the most expensive and the most unreasonable form of waste management. At the same time minding that in all these countries a primary principle of separation of waste and recycling is developed, and many of them uses composting as a method of treatment of organic waste components. Of course, that the compensation by the end-user pays for burning is not small, however, it depends on several factors, such as the way, and applied technology of burning, amount and manner of using the obtained energy (heat and elec-tricity), the political decisions of public authorities to subsidize utilities and energy cost thus obtained, stimulating effect to be achieved in the population etc.

In any case, waste management is not a social category but a business that has its economic requirements which must be covered, either from the end user’s pocket or with partial or full assistance from the state.

4.2 Concluding remarks

If carefully considered, the results of a SWOT analysis leads to the following conclusions:1. Production of briquettes and pellets out of waste is not

in conflict with insineration and cogeneration, can be arranged in smaller towns with smaller capacity and is directly dependent on the local organization of waste collection;

2. Incineration and cogeneration are largely compatible procedures, with similar effects, but differ in terms of technology, where cogeneration presents improved and slightly more complex variation of incineration;

3. Waste treatment in plasma plant is without doubt tech-nologically most sophisticated system with minimal negative impacts on the environment, but with two major disadvantages:

y extremely high value investment value and long term of payability (which is why very developed and rich countries are avoiding this technology) and


y the destruction of waste that can be recycled (con-trary to the principles of sustainable development and savings of natural resources).

4. The economic power of the state or its by law enabled economic instruments must be one of the key followers of the future system, the sensitivity of this issue is very high: to cover the costs of waste disposal facilities and plant operations, while achieving a stimulating effect on the population.

The following will detailed consider the technologies and cogenerations as recommended from techno-economic point of view, after which it will propose the optimal and technical solution of thermal treatment of waste as a measure for the effective and long-term waste management in the regional system,how PE EPS predict for project in Kragujevac and Uzice .

5. Technological features of the energy-from-waste process

5.1 Characteristics of municipal solid waste, contents and combustible features

The internal energy content of the municipal waste is labeled as “calorific value”, which directly depends on the origin of waste and its components. The calorific value is an important indicator in determining the amount of energy that can be achieved and returned through the process of incineration. Plastic, for instance, can acheive 15% participation in the overall mass of waste in densely populated urban environ-ments. This practically means a much higher calorific value of communal waste per 1 MJ/kg (typical calorific value of waste is 10,6 MJ/kg). Since the calorific value of waste depends primarily on its contents, table below provides a generalised analysis of communal waste per representative elements in weight ratio.

Cost of waste disposal in some EU countries

Material % weight

Carbon 24

Hydrogen 3.2

Oxygen 15.9

Nitrogen 0.7

Sulfur 0.1

Water 31.2

Chlorine 0.7

Ashes and inert substances 24.2

Net calorific value 10.6 MJ/kg

Combustibility

With a view to the above data, research has been undertaken to identify the balance of meterials that result from the incin-eration of communal waste. The research was undertaken in the conditions of open incineration, with 100% presence of outside air to ensure high combustion efficiency. The research results are presented in the next table.

Balance of Masses from Incineration of 1 kg of Solid Municipal Waste

Material Volume (kg)

Input

Municipal solid waste 1.0

Dry air 6.4

Total input 7.4

Output

CO2 0.881

H2O 0.288

O2 0.738

N2 4.9

HCl 0.007

Ash 0.242

Water steam (from waste) 0.312

Total (rounded) 7.4

Energy equivalent for the incineration of 1 ton of solid municipal waste can be expressed as the quantity of energy required for producing:

2.5 t steam, t= 400ºC, 40 bar or

30 t hot water, t= 180-130ºC or

500 kWh electric energy

which is equivalent to incineration of 200 kg of oil.

Carbon Dioxide Emission

In the technology for production of energy from waste, almost the entire carbon content in the waste is released into the atmo-sphere as carbon dioxide, even in cases where final combus-tion is the result of pyrolysis or gassification. Communal waste contains an approximately equal mass of carbon to that of the released carbon dioxide (27%). In the case of disposal, one metric ton of communal waste can produce approximately 63 m3 of methane through anaerobic decomposition of the biodegradeable waste components. This quantity of methane is more than twice the quantity of the critical value of emission of 1 metric ton of CO2 produced by combustion. Although methane is used in some countries as an energent, the critical emission is still greater than that resulting form combustion (1999 research conducted in the USA show that the emission is greater by 32%). The explanation is simple: biodegradable


waste is mostly composed of biomass originating from plants that use atmospheric carbon dioxide during their growth. This is the reason why biomass is used as a renewable energy source. The remaining waste, consisting mostly of plastic and liquid derivates of the oil industry, is considered to be non-renewable.

The percentual content of waste combustion gasses is presented in table below.

Material %

CO2 12.3

Neutral H2O 8.37

Neutral O2 10.3

Neutral N2 68.4

Pollutants 0.015

Total (rounded) 100.00

It should be emphasised that approximately 85% of carbon-dioxide is created in the process of combustion of organic materials, which is why the above table provides the CO2

emission data against the base of 500 kWh of energy per one ton of waste.

Heating plant and thermal power plant CO2 emission comparison

Coal-fired TPPs 410 g/kWh heat 950 g/kWh electricity

Gas-fired TPPs 226 g/kWh heat 525 g/kWh electricity

Combined cycle – gas turbine 400 g/kWh electricity

CO2 emission savings under electricity generation from waste compared to:

Coal 686 g/kWh electricity

Gas 261 g/kWh electricity

Combined cycle – gas turbine 136 g/kWh electricity

If the facilities include cogeneration, the reduction in the emission of the fossile carbon is reduced by as much as 76%.

Determining Biomass Fractions

There are several methods developed by the European Taskforce to determine the content of biomass in waste energents. Two initial methods (CEN/TS 15440), with their respective technological limitations, incorporated manual sorting and selective dissolving. The first method uses the principle of radio-carbon terminology. The technology incorpo-rates the method for applying the radioactive carbon isotope C14. The other method dubbed the balance method is based on the most common composition of the communal waste and the methods of mathematical statistics, i.e. probability

calculations. Currently, this method is used by three Austrian incinerators.

A comparison between the two methods resulted in an exact ratio, while tests conducted in Switzerland showed that both methods achieve the same results. The C14 carbon can precisely determine the participation of the biomass fraction in the communal waste, however this can not determine its calorific value which is an important prerequisite for obtaining ’green certificates’, such as the Renewable Obligation Certifi-cate program in the UK. The certificate is issued on the basis of the quantity of energy produced from biomass. The other (balance) method incorporates all available information, such as morphological content of waste, balance between energy production from waste and fossile energents, balance of the overall organic and fossile mass, ratio of carbon in waste materials, etc. Since it does not require additional measure-ments, this method is easy to apply and very affordable.

Determining biomass fractions is of key importance for deter-mining the energy value of waste.

5.2 Energy potential of wasteThe most important element of energy evaluation of waste is determining its energy potential. Following their use, materials largely loose their original qualities and can be used in producing items of lower quality or for less demanding uses (they become secondary raw materials). When waste is used as an energent, there are no such limitations. The only condition is that waste is used in adequate facilities and that combustion products are treated in an appropriate manner. The compromise between evaluating waste as an energent or secondary raw material lies in defining the best available tech-nology (BAT - Best Available Technology).

Evaluation of waste as an energent has a number of advan-tages in comparison with the ‘classic’ types of treatment (recycling, disposal, etc.). These include the following:

y production of energy, which saves natural non-renewable or slowly-renewable resources;

y reduced quantity of waste disposed on landfills; y elimination of non-usable residue after waste separation; y minimal volume of disposed waste (incineration results in

10-15% ash content); y perfect hygienisation of waste; y detoxication of organic half-products. y On the other hand, thermal waste treatment has a number

of recognised shortcomings: y energy use of waste requires expensive and technologi-

cally complex facilities; y constant control of waste; y for energy use of mixed and communal waste, continu-

ing measurement of contents is required, which increases operation costs;

y treatment of polluting gasses for emission reduction (PCDD/PCPF) requires adequate facilities;

y the investment return period is long.


The real potential of energy evaluation of waste is repre-sented in the next figure. Storage of waste that incorporates its energy evaluation can be broken down in three phases: regulation, transformation and use. Implementation of the

respective phases and corresponding technologies depends on the condition of waste and the type of evaluation, as well as on the required reporting form.

Possibilities of energy use of waste


5.3 Energy wastesEnergy waste includes biological, synthetic and mixed waste. For a more detailed assessment of the options for energy use of waste, the example of Slovakia has been provided due to Slovakia’s numerous similarities to Serbia.

Kinds of energy valuable wastes

5.3.1 Biomass

From the perspective of energy use, biomass can be divided into three basic groups:

y Biomass suitable for incineration (purpose: production of thermal energy for heating, heating of water for house-holds and technical water, drying of agricultural produce and, alternatively, production of electric energy) which includes phytomass (straw), wood waste (orchards and vineyards, trees in permanent green areas, particularly in mountain and sub-mountain regions), the so called “energy plants” like sorghum and hemp, etc.

y Biomass suitable for the production of bioenergents in the form of methyl alcohol, herbal oil components of biodiesel (rapeseed, cereals) or in the form of bioalcohol as a com-ponent in gasoline (corn, cereals, beet, potato).

y Biomass suitable for the production of biogass through combined production of thermal and electric energy by cogeneration (green biomass, silage waste, etc).

Table below lists the annual production of agricultural biomass suitable for incineration and its energy potential on the example of Slovakia.

Type of biomass Potential annual production for energy purposes (t)

Energy equivalent

TWh PJ

straw 730,000 2.80 10.4

corn 670,000 2.61 9.4

beet 200,000 0.82 2.9

sunflower 220,000 0.81 2.8

wooden waste 210,000 0.90 3.1

Biomass total 2,030,000 7.94 28.6

Source: Official data of Slovakian Ministry 2006

The potential of agricultural biomass suitable for energy evaluation


From the theoretical quantity of energy produced by incinera-tion of biomass (28.6 PJ), 10-30% can be used in agriculture as energents (balled straw, briquettes, pellets), and a further 10-20% for the production of energy (heat, electric energy).

The usable potential of forest biomass (dendromass) in Slovakia amounts to the annual value of 1.81 million tons with the energy equivalent 16.9 PJ. After 2010, the balance of the available forest dendromass can realistically be increased by the energy production based on the growing of the so called “energy forests” consisting of fast-growing poplar and willow trees with a short life cycle (3-5). Cutting of tree tops can be used as a new, previously unused resource. It is estimated that 20-30% of the annual production of thin trees – some 300,000-900,000 m3 can be thus used. Experience shows that from cleaning and grooming of trees, parks, green areas in inhabited localities and other green ares some 300,000 t can be yielded for energy production on the annual level. The potential of dendromass will by 2020 grow to approximately 900,000 t on the annual level, and the overall potential of energy usable sources may reach the figure of 2,500,000 t on the annual level. In order to meete the requirements of the EU Directive 2003/30/EC on the incentives for the use of bioenergents, Slovakia must allocate100.000 ha for the growing of rapeseed as the raw material in the production of methyl alcohol which is a component of biodiesel. The planned annual production of bioenergents is 200,000 t with the energy potential of 7.0 PJ. In the process, some 400.000 t of waste is produced in the form of biomass suitable for incin-eration or production of biogass. The energy potential of the biomass is estimated at approximately 8.4 PJ.

5.3.2 Agriculture biomass

One of the forms for the use of agricultural waste is related to phytomass waste.

Some 800,000 ha (the area in Slovakia planted with cereals) on average produces 4 t/ha of cereals and an equal quantity of straw. Of the overall quantity, approximately ¼ can not be used (wheat straw. The humidity of fresh straw can vary depending on the climate conditions between 40 and 80%. The advantage of using straw lies in relatively quick removal of moisture, as well as in the technologies for collection, balling and storage. The suitable humidity of straw for energy use is up to 20%.

Another raw material from waste suitable for energy evaluation is the rapeseed straw. With approximately 40.000 ha, approxi-mately 2.5 PJ of energy can be produced on the annual level. Also suitable for energy use are korn, flax, sunflower, moved grass, waste from parks, vineyards and distilleries.

5.3.3 Livestock excrement

Growing livestock produces a large quantity of biologically active material that can be used to produce biogass. From the manure produced by one cow in one day approximately 16-25 MJ of thermal, or 4.5-7 kW of electric energy can be produced. From the manure that one pig produces in one day the quantity is around 7 MJ (approximately 2 kWh), and from the waste produced by one hundred heads of poultry in a day, we can produce approximately 17 MJ of energy (approximately

5 kWh). Therefore, a herd of 200 cows has an energy potential of approximately 900 kWh, which makes 328,000 kWh on the annual level. The most effective treatment of biogass is the combined production of thermal and electric energy in cogeneration units. For the annual production of 1 PJ of heat, some 3,000,000 m3 of biogas is needed, which means 1,500,000 t of excrement.

The first bioreactor for anaerobic fermentation of excrement in Slovakia encompassed a farm with 1,300 pigs and 220,000 poultry (in 1996, at the farm in Batka, near Nitra). The gas is used in a cogeneration unit with two gas engines, with a total power of 1.6 MWh/year.

5.3.4 Plastic masses

Plastic masses are organic compounds produced from oil and their waste is a source of energy. They have a high energy potential, however from the combustion perspective, plastic masses that contain chlorine (PVC, polychlorine aromatic compounds, etc.) are problematic, as their combustion releases chlorine and other highly toxic substances. Conse-quently, incineration of plastic masses is undertaken in special facilities with strict emission control.

5.3.5 Sludge from waste water treatment facilities

Sludge created as residue in the treatment of used (waste) water has its energy value. Different waste water treatment applies to communal and industrial waste water. The latter is particularly important for energy production, as it may contain various hazardous matters in concentrations that are dangerous for the environment.

Options for the treatment of sludge have been oriented to its use as an energent. Studies considered six different tech-nological procedures, The criterium for finding the optimal solution was that during the incineration of the sludge the emission of hazardous gasses does not exceed the legal limit, while retaining the energy value of the sludge.

Optimal technological procedure incorporates gradual reduction of the moisture in the sludge, its hygienisation and stabilising. Adding dry sawdust reduces the moisture of the processed mixture and at the same time regulates the emission of gasses. Pelleting of the mixture further reduces the level of moisture and stabilises thermal and mechanical propeties of the resulting energent. Following the treatment, pellets even loose their characteristic odour.

Research has tested various ratios of sawdust and sludge in the combustible mixture: 100% sludge, 75% sludge : 25% sawdust, 50% sludge : 50% sawdust and 25% sludge : 75% sawdust.

The results of calorific value measurement show that the calorific value of dry sludge is 12 MJ/kg, as well as that the calorific value rises with the ratio of the sawdust in the mixture. With the ratio of 25% sludge to 75% sawdust, 18 MJ/kg were produced with moisture level of 18-20%. The alterna-tive fuel thus produced is thermally processed at tempera-tures 1100ºC.


5.3.6 Waste as alternative fuel

The production of alternative energents from waste is a rela-tivelly well known technology that is most commonly used in cement furnaces. The technological procedure generally consists of grinding down the waste which is then mixed in an adequate proportion with the principal combustible material.

The particle size of processed waste does not exceed 1cm. To create a combustible mixture, industrial hazardous waste, waste oil, emulsions, oil residue and distillation residue are used. Combustible materials include waste tyres, plastic, plastic packaging, waste from chemical, farmaceutical, shoe, leather and textile production, waste sawdust from wood processing, etc. The resulting mixture, which is of suitable consistency – alternative fuel – is then used to produce cement.

In thermal energy production from alternative fuels, 0.5 PJ replaces approximately 20,000 t of bituminous coal.

5.4 COMPARATIVE ANALYSISAlternative fuels are classified by their organic waste component as ”young fuels” – fuels that have a limited density of energy flow. In comparison with the classic ”old” – fossile fuels (coal, ground gas, oil), these fuels have a lower calorific value. Therefore, the investment return period is longer. From the long-term perspective, alternative fuels can be counted on as energy sources that will in the future partially replace the conventional methods of energy production.

An important factor in the use of alternative fuels are local requirements and conditions (existence of, and potential for the creation of distribution networks).

The subject of quantitative analysis is evaluation of waste against the real energy equivalent. Environmental require-ments and economic parameters have to be observed as well.

The importance of the above criteria varies with each indi-vidual case. In some instances, waste processor can procure waste at zero purchasing price, or with its negative value (subsidised evaluation).

With a view to the relatively wide spectrum of factors that can impact the viablility of the use of the respective types of waste as energy, the development of an ”individual approach” will be required to evaluate all factors relevant to the proposed technical solution. Final decisions are made only once the Prefeasibility and Feasibility Study have been developed.

5.4.2 Environmental Perspective

When using waste for energy production, basic environmental requirements have to be respected. Incineration of waste is a chemical reaction during which the combustible components of the energent react with oxygen, releasing reaction heat. The process of combustion can be broken down in four phases:

y Heating and drying; y Thermal decomposition; y Combustion of volatile components; y Combustion of solid components.

In brief, the process of producing energy from waste can be described as follows: At the beginning of the process, waste is heated and dried. When it reaches the temperature of approximately 150ºC, some components transform into the gasseous state and the gradual thermal decomposition of the most unstable components (hemicellulose, cellulose, lignina). At the temperature of 200-270ºC, the main product of cellulose pyrolysis is created – levoglucosan, as well as a number of other volatile components and products that ignite at 225-250ºC and combust in the gasseous phase in the presence of secondary air. Following the release of dissemi-nated combusting mass, at the temperature of 600ºC wooden coal is ignited.

From the perspective of the emission norms, the important substances are CxHy, CO, CCl, SO2, NOx and dust. Only CO and NOx can be regulated by primary measures. Carbohydrates reflect the quantity of organic carbon in energents. As an example, wood contains more hydrogen than other energents and its combustion produces more carbohydrates. Combus-tion of quality dried wood or wood briquettes reduces the quantity of carbohydrates.

Specific values of quantities of hydrocarbons (per unit weight and unit of calorific value)

Fuel Wood (large) wooden chips lignite brown coal anthracite coke

CxHy (g/kg) 10.9 - 37.3 11.6 - 26.6 2.5 6.8 5.0 2.9

CxHy (mg/MJ) 580 - 2180 610 - 1410 80 330 150 95

In terms of the concentration of oxides of carbon (CO2), they are dependent on the supply of primary and secondary air in the incineration chamber, as well as on the moisture of the energent. The fact remains that the same quantity of CO2 would be released into the atmosphere in the process of anaerobic decomposition of biomass, however over a longer period. Organic waste, or biomass, is also consid-ered a suitable energent from the perspective of the carbon monoxide concentration, because the quantity of carbon

monoxide created by the combustion of biomass corresponds in weight to the quantity of this substance in the assimilation process.

Wood contains a minimum of 0.2% of nitrogen bonded in amino acids, which results in the creation of hazardous nitrogen oxides (NOx). Reduction of the high temperature oxidation of nitrogen is achieved by re-circulation in the incin-eration chamber.


Comparative values of NOx emissions for different fuel types

Fuel Wood Natural gas Propane-butáne Fuel oil Brown coal

NOx (mg/MJ) 30 – 120 48 48 76 220

The following table shows the quantity of ash for different types of fuels. As can be seen from table below, the level of ash residue following the incineration of biomass is far

lower in comparison with coal, which represents classic fossil energents. Of course, heating oil leaves no ash residue.

The percentage of ash for different materials

Material Coal Fuel oil Briquettes of wood Briquettes bark

Ash quantity 7 – 20 % 0 % 0.4 - 1 % 1 -2 %

5.4.3 Economic Perspective

Economic indicators are an important element of every project – viability of production, return on investment, produc-tion costs, etc. For the comparison of costs on this level, the important criterion is the price per unit of energy.The example of Slovakia developed for the 2001-2003 period can be transposed to our current conditions. It compared costs of the average annual energy expenditure for a middle sized family home or a 100 m2 apartment, which are 28,000 kWh or 100.8 GJ. The analyses showed that the lowest energent expenditure was when propane-butane was used, however the price per unit was the highest. Optimal values from the energy aspect of the energy cost estimates for price per unit

were linked with the use of wood, coal and wood briquettes, as well as for non-renewable and slowly renewable energy source as long as biomass was incorporated in the waste used as the energent in a high ratio. Use of mixed waste was on the borderline for viability as it directly depends on the pricing policy for the produced energy.

The fact remains that the prices of fossile fuels are constantly on the rise, and their natural reserves are diminishing. Where the use of waste materials as energents is concerned, the price per unit of produced energy may be high, however the difference fades when this is compared with collection costs and government subsidies, and the full strategic importance of using waste lies in the saving of natural resources.


4.4.4 LARGE HYDRO-POWER PLANTS

HPP Upper DrinaThe river Drina represents the most significant unharnessed hydro-power potential in the region. Its catchment area stretches across 19,570 km2, and average annual precipita-tion is about 1,100 mm. It is characterised by a highly variable water flow pattern, with minimum flow rates over 200 times lower than annual peak flow rates. Annual average flow rate at the source is 157 m3/s, and at the river mouth – 425 m3/s. Its course totals 346 km, and the head is about 357 m.

HPP and PSHPP Bajina Bašta, HPP Višegrad and HPP Zvornik have been built on the Drina, with a total head of about 130 m, or less than 40% of the available capacities.

The unutilised potential of the Drina may be divided into the Upper Drina – the untapped potential upstream from HPP Višegrad, the Middle Drina – the potential between HPP Bajina Bašta and HPP Zvornik, and the Lower Drina – the potential downstream from HPP Zvornik.

The main technical parameters of the hydro-power facilities on the Upper Drina are presented in the following table:

HPP Vkor (hm3) Ni (MW) Esr (GWh/g)

Total 54.4 237.9 797.3

Project value

According to the investment and technical documentation, the investment cost of all four hydro-power plants is estimated at EUR 435 million.

Project status

In view of the prepared documentation, it is certain that activi-ties towards the construction of hydro-power facilities on the Upper Drina should be continued. The first of these hydro-power plants is expected to be commissioned in 2015.

Technical documentation, i.e. conceptual designs with feasi-bility studies are being developed for all four foreseen hydro-power facilities on the Upper Drina; following this, investment decisions will be taken, the financing framework will be agreed upon and their construction will commence.


PSHPP BistricaAmong the most attractive new hydro-power facilities is certainly the new 680 MW pumped-storage hydro-power plant Bistrica, in the vicinity of the existing HPP Bistrica. The upper reservoir of PSHPP Bistrica is the newly designed reservoir of Klak on the river Uvac, immediately downstream from the Radojnja reservoir, with an energy storage capacity of about 60 GWh, while the lower reservoir is the existing reservoir of

HPP Potpeć. The importance and role of PSHPP Bistrica are particularly prominent on the regional energy market, in partic-ular owing to the existence of upstream storage reservoirs on the river Uvac (Kokin Brod and Uvac), whose regulated water could be used for peak operation, together with the existing HPP Bistrica, with installed capacity of 104 MW.

The main characteristics of PSHPP Bistrica are as follows:

Power plant type pumped-storage

Normal backwater elevation 812 mASL

Live storage 80х106 m3

Tail water elevation 430 – 436 mASL

Type and number of units single-stage pump-turbine x 4

Discharge per unit 42/54 m3/s

Pump head/hydraulic head 397/381 m

Nominal motor-generator capacity 180/180 MVA

Installed capacity 680 MW

cos φ 1.0 / 0.95

Project value

From 1973 to 1980, project documentation was prepared and exploratory works carried out. The main design for the construction of the Klak dam was prepared. According to the feasibility analysis, the total investment is worth EUR 553 million, i.e. 813,000 EUR/MW.

Project status

The feasibility analysis for PSHPP Bistrica is being finalised; as part of the analysis, investment appraisal of the technical

solution defined by by the Conceptual Design has been performed. Construction works should last six years. The specific investment cost indicator of 813,000 EUR/MW shows that this is an attractive renewable energy source that contributes to system security, may have a significant role on the regional electricity market, and enhances the quality of the existing system of HPPs Drinsko-Limske.

Implementation modality: own funds/loan

Planned construction start: 2015

Future PSHPP Bistrica site


HPPs on the Middle DrinaThe middle course of the Drina, between the existing HPP Bajina Bašta and HPP Zvornik, is also attractive in energy terms. For this reason, HPPs on the Middle Drina are included in the spatial planning documentation of the Republic of Serbia and the Republic of Srpska, i.e. Bosnia and Herzegovina. The area is all the more important owing to the existing upstream reservoirs in the Drina catchment (HPP and PSHPP Bajina Bašta, HPP Višegrad, HPP Piva, HPPs Drinsko-Limske) and the planned reservoirs on the Lim and the Upper Drina in near future.

Owing to the spatial planning aspect of this portion of the river Drina with its littoral area, in particular the land development level, it is necessary to plan and technically elaborate cascade HPPs to utilise this renewable energy source, with due attention to protecting the littoral area, already being used for

other purposes, such as housing, industrial and tourism facili-ties and farming.

The Outline Design and Pre-feasibility Study for hydro-power plants on the Middle Drina are being reviewed and adopted; as part of this, several options have been considered, aiming to make the best use of the hydro-potentials, taking due account of the conditions required for the operation of other assets located within the area affected by them.

According to the findings of the Outline Design and Pre-feasibility Study, the hydro-potential of the Middle Drina may be used to optimum benefit by building three impoundment hydro-power plants. Of the total head of 63 metres, 60 m would thus be used.

The main technical parameters of the HPPs on the Middle Drina are presented in the following table:

HPP Ni (MW) Esr (GWh/g)

Total 321.0 1,197.0

Project value

According to the abovementioned technical documentation, prepared in 2010, the investment costs of the proposed three hydro-power plants are estimated at EUR 819 million.

Project status

In view of the extent of the prepared technical documentation, the issue of selecting the optimum approach to utilising the

Middle Drina hydro-potential will be addressed in the following steps of developing documentation. The construction of these facilities is expected to start after the completion of the planned upstream cascades.

Implementation modality: strategic partnership/loan


HPPs on the river IbarThe river Ibar, the largest, right tributary of the Zapadna Morava, contributes over 53% of its water on average, or about 25% of the Velika Morava’s water, on average.

The technical documentation developed to date and endorsed by the adopted planning instruments of the Republic of Serbia

identifies the possibility of utilising the hydro-potential of the Ibar between the towns of Raška and Kraljevo by means of a series of 10 cascade impoundment hydro-power plants. The river valley morphology and its use for other infrastructural facilities, in particular the railway, could not be overlooked in identifying the modality of using this hydro-potential.

HPP Qi (m3/s) Ni (MW) Esr (GWh/g)

Total 100.0 103.0 418.6

Elaboration within the Conceptual Design indicates the possi-bility of increasing the installed capacity of these HPPs, which would result in more efficient utilisation of the potential.

Project value

According to the abovementioned General Design of 2010, the investment cost of these 10 HPPs totals EUR 284.1 million.

Project status

The on-site explorations carried out to date and the designing activities under way (the Conceptual Design) suggest that

there will be no unforeseen developments that might signifi-cantly increase the investment cost; the HPPs on the Ibar can, therefore, be considered an attractive project opportunity.

IImplementation modality: strategic partnership/loan


In 2010, the General Design and Pre-feasibility Study were developed for utilising the hydro-potential of the Ibar between Raška and Kraljevo; the resulting solution was 10 cascade impoundment HPPs. The next stage in developing technical documentation is in progress – the Conceptual Design is being

prepared; this includes carrying out the associated on-site exploratory works.

The main technical parameters of the HPPs on the Ibar, based on the General Design, are presented in the following table:


HPPs on the Velika MoravaThe river Velika Morava, with a catchment area of over 37,000 km2, has an average flow rate of over 230 m3/s. Its course is about 182 km in length, with an elevation difference of 62 metres. On about 20 km of its course, downstream from the Ljubičevo bridge, the river is under the HPP Djerdap 1 backwater, i.e. the 5 m head downstream from that point has already been utilised for hydropower purposes.

According to the Serbian planning documentation, the Velika Morava valley is an area of intensive development, featuring major road and rail routes, a gas pipeline, many communities, large areas of farm land, the Kostolac coal mining basin and other economic structures. The South Stream pipeline and an inland waterway are foreseen to run along the Velika Morava valley.

All this indicates the complexity of utilising the hydro-poten-tial of the Velika Morava, which has been studied on several occasions over the past decades without a single hydro-power facility built as a result. The only development was Prag na Moravi, in the vicinity of TPP Morava, a division of the Corporate Enterprise TPPs Nikola Tesla, for the purposes of the plant’s water cooling system.

Explorations and designing activities to date indicate that the water of the Velika Morava could be used for energy genera-tion purposes by building several cascade impoundment HPPs.

In 2010, the General Design of HPPs on the Velika Morava was prepared as part of efforts towards integrated management of the available water of Velika Morava, and the main technical parameters of the HPPs are presented in the following table:

HPP Qi (m3/s) Ni (MW) Esr (GWh/g)

Total 375.0 181.7 714.2

Project value

According to the aforementioned technical documentation, the investment cost of these five cascade HPPs is estimated at EUR 352 million. The construction duration for the HPP system on the Velika Morava is estimated at five years.

Project status

In view of the prepared documentation, its extent, the bases used for its development and the complexity of the terrain on the one hand, and the impetus that would be given to Serbian economy by building HPPs on the Velika Morava on the other,

the HPP construction project on the Velika Morava remains in focus. Therefore, the development of technical documentation will proceed to subsequent, more elaborate stages, with more detailed inputs and bases, appropriate to document level. This primarily pertains to more detailed topographic bases, geotechnical, engineering-geological and hydrological explor-atory works in order to appraise with sufficient certainty the investments in the required hydro-technical and hydro-power facilities on the Velika Morava.



PSHPP Djerdap 3The main concept of building PSHPP Djerdap 3 is based on using the existing HPP Djerdap 1 reservoir as the lower reservoir and establishing the upper reservoirs in the Pesača river valley (construction phases I and II) and the Brodica river valley (construction phases III and IV). The facility would have a head of about 400 m, and the selected location for the Pesača impoundment and the PSHPP powerhouse on the right bank of the Danube enables a relatively short headrace (∑L/H = 6.8), making this PSHPP an economically advantageous solution.

In view of negligible natural inflow of water into the upper reservoirs, all energy is obtained by using water pumped from the lower reservoir, and the facility’s cost-effective-ness is based on the peak and base energy price difference. Prominent features include favourable morphological, topo-graphic and geological conditions for establishing the upper reservoirs, whose total live capacity will be about 578 hm3

(Pesača reservoir – 32.5 hm3, Brodica reservoir – 545 hm3).

The Conceptual Design, prepared in 1973, foresees construc-tion in stages, as follows:

y Phase I: Building the Pesača dam, with live capacity of 18.5 hm3, 1915 m headrace, surge tank, 664 m steel pipeline and powerhouse with two units (pump turbines), and installed capacity of 2 x 300 MW = 600 MW.

y Phase II: Extending the Pesača dam by 20 m in height to provide an additional capacity of 14.0 hm3 and building two additional generation units and penstocks with the same properties as those from Phase I.

y Phase III entails building another set of penstocks with two units and extension of the Pesača reservoir by an additional 37.5 hm3 of live storage capacity; an alternative solution that was considered would entail building the Brodica dam, with reservoir capacity of about 545 hm3, thus providing the possibility of proceeding with Phase IV, i.e. building an additional 600 MW of generation capacity. The reservoirs of Pesača and Brodica would operate according to the communicating vessels principle and would be linked by an 8 km communicating tunnel. The energy storage capacity of these reservoirs would total about 460 GWh and would have seasonal relevance.

The 1973 documentation specified Phases I and II, while PSHPP Djerdap 3 with the Brodica dam was specified in 1990 at the level of outline design (general design).

Project status

In the feasibility analysis carried out in 2010, the invest-ment costs of the technical solution proposed in the Concep-tual Design were updated and the figure amounted to about EUR 400 million. Construction works would last four years. The specific investment cost indicator of 670,000 EUR/MW shows that this is an attractive renewable energy source that contributes to system security and may have a significant role on the regional electricity market.




Introduction“Smart Grid” simply put, is modernization of electrical grids to allow for real-time monitoring and control of power usage to avert the risks of system overload during the periods of peak consumption.

This modernization entails the deployment of advanced communication networks that allow energy providers to proac-tively monitor and a manage power usage and even automate much of the process. But once this kind is in place between the power station and the end user – be it a residence, a business or a public sector institution – the utility has a ripe opportu-nity to expand into providing a host of other services that can veiled new streams of revenue and allow it to play an even more integral in support of its community – provided that this network has been built using the right infrastructure.

Main drivers of a new flexible power systemModernizing Europe’s electricity system is vital for Europe’s energy policy ambitions. Indeed, the European electricity industry will have a key role to play in supporting these ambitions. The European Union has set three targets for 2020: it aims to reduce its CO2 emissions by 20%, achieve a 20% share of renewable energy sources (RES) in overall energy consumption, and be 20% more energy efficient.

The increasing share of variable RES will prove challenging to the electricity system’s stability, security and reliability. Already today, these challenges are making themselves felt in several European regions. By 2020. Intermittent RES such as wind and solar are expected to represent 17% of the EU’s total electricity consumption. On the one hand, this figure will include large scale renewable generation sources such as offshore wind farms, whose development will require substan-tial investment in the transmission grid. On the other hand, distribution networks will need to accommodate an increasing number of small-scale sources. In France, for example, 900 MW of variable RES are already connected to the distri-bution grid; in Germany the figure is about 50 GW.

At the same, electrification of transport will be needed to further decarbonise the economy. For significant deploy-ment of electric vehicles by 2050, Europe needs to target a 10% share of electric vehicle by 2020. These vehicles will need to be charged through the electrical system. Together

4.5 Smart Grid

with the electrification of heating and cooling, they will further contribute to the projected growth in electricity demand.

As a result, the assumption that the demand for electricity dictates the amount of electricity produced no longer holds. Power will not only flow in one direction from the power system to the consumer, but increasingly from the customer to the power system as well.

Bringing customers on boardThe traditional solution to the challenges ahead entails building additional distribution lines and enhancing the capacity of flexible generation sources for balancing purposes, so as to prevent congestion when variable RES run at their full production capacity. Notwithstanding the fact that lack of public acceptance currently hinders the building of new power lines in Europe, such a system would also be underutilized when variable RES production is low. For instance, wind plants generate electricity only about 20 to 40% of the time, for photovoltaic, the figure is about 10 to 20%.

To achieve flexibility, customers need to became actively involved. This will only be successful if electricity retail prices and grid tariffs reflect the actual market and grid situations. Both customers and the retail market must became more responsive, optimizing the use of electricity to the benefit of all. Well-functioning retail markets need to be boosted, allowing suppliers to deliver competitive, innovative and sustainable product to customer.

Increasing system flexibility and establishing new commercial services is a must. But it will only be achievable if distribution system operators (DSO) have real-time system information at their disposal which allows them to operate the grid safely and to dynamically manage distributed generation and demand. Not only power, but information too will need to flow in both directions. To achieve its overarching energy and climate policy goals, Europe thus needs more intelligent mid and low voltage grids by 2020 – the so called SMART GRIDS.

DSOs as key enablers for Smart GridsSmart grids imply a huge cultural change in the way electricity is distributed, touching upon issues from long-term network planning to real-time network operation. DSOs currently


responsible for transporting electricity from the transmission system to customers (excluding supply), will be at the heart of the new, intelligent electricity system. They will increasingly move beyond their traditional role of “building and connecting” towards “connecting and managing” and will become enablers for producers, service providers and customers to meet on an open market place. While smart grids will benefit all parts of the electricity value chain, DSOs will bear the lion’s share of the initial investments to encourage development of commer-cial solutions. Such solutions cannot develop before the intro-duction of smart grid functionalities that will provide all actors with swift, transparent and accurate information and help to maintain network stability.

Incentivising investment & cooperationThe International Energy Agency has estimated the invest-ment needs in Europe’s distribution grid at 480 bn euros by 2035. Yet DSO investments in smart technologies are currently being hampered by two things: sub-optimal rates of return and regulatory instability. Before anything else, action at the European level should thus encourage efficient regu-lation at the national level that focuses on longer term grid requirements and provides a fair rate of return.

Apart from strong political commitment to establish right regulatory conditions, movements towards intelligent power


have opted for the definition given by the following document:

Strategic Deployment Document for Europe’s Elec-tricity Networks of the Future, European Technology Platform for Smart Grids, 2010.

A smart grid is an electricity network that can intelligently integrate the behaviour and actions of all its users – genera-tors, consumers, and the ones performing both activities - to ensure a sustainable, economic and secure electricity supply.

Figure below illustrates this definition showing all the Smart Grid users.

systems will require increased cooperation among all players in this area, including customers. Given the opportunity to easily manage their electricity use and receive the information about its value, customer could be stimulate to change their consumption habits.

4.5.1 What is a Smart Grid?

4.5.1.1 Smart Grid Definition

The term Smart Grid is worldwide defined in several ways by various international organisations and institutions. Here we


4.5.1.2 Smart Grid Solution Deployment Reasons

The most important Smart Grid deployment reasons relate to the fulfilment of the following global objectives:

y Meeting the EU 20-20-20 targets by 2020, y Provision of high energy independence, y Security of supply improvements and y Application of the new technologies (e.g. electric vehicles).

To achieve the above global objectives, the power grid in the near future will have to adapt to the mass distributed electricity production, it should enable the widespread use of renewables, mass application of the electric vehicles and at the same time provide high reliability and security levels. Without implementing the modern (advanced) solutions and technologies, the existing power system will not be able to provide an efficient response to the indicated challenges, i.e. it will not be able to provide efficient electricity distribu-tion. Moreover, a wide range of stakeholders will benefit for the implementation of the advanced technologies (society as a whole, energy producers, customers, traders, distribution companies, transmission and distribution system operators, etc). It is difficult to predict at what pace the above solution and technologies will be implemented due to wide-ranging factors, primarily conditioned by the application of the latest techno-logical solutions and platforms, not easily deployed in practice owing to the insufficient standardisation levels, and the current economic-political barriers.

When it comes to the European power grid, where grids are in some cases considerably over-dimensioned in terms of their capacities, large funds have been foreseen for their revitali-sation, since they need to be the backbone of the advanced (Smart Grid) networks. According to the IEA data, almost EUR 480 billion will be invested for their revitalisation by 2030.

In our country the electrification process was practically finalised some 40 years ago. However, despite the highly degraded operational power grid performance due to the reduced maintenance scope, this grid represents a good starting point for the information-communication network integration, considerably expanding in the past decade, thus providing the advanced (Smart Grid) network. In PE EPS, we have so far adopted an Advanced Metering Infrastructure (AMI) solution integrated with the Meter Data Management (MDM) system, also implying the future Home Area Network (HAN) deployment. This will provide a sound basis to develop the advanced networks. Moreover, this type of network is already enabled by some solutions implemented within our distribution networks. Primarily the SCADA system solutions with the integrated DMS applications in the control centres, and the distribution network automation solutions, together with the substation automation. The current state of this field in Serbia is described in the annexed document (Annex 2).

Definition and adoption of the clear Smart Grid objectives and development and deployment directions in PE EPS are essential for the successful development of PE EPS, at the same time representing a development potential for the entire accompanying domestic industry.

4.5.1.3 Smart Grid Solution Objectives

Smart Grid development objectives fully aligned with the EU-level objectives are listed below:1. Provide integration and improve generator operation of

all sizes and technologies (e.g. renewables),2. Network (e.g. loss reduction) and network infrastructure

optimisation,3. Provide customers with more information and choice in

selecting their suppliers, as well as the chance to partici-pate in the power system optimisation,

4. Considerably reduce the power system environmental impact,

5. Maintain or improve the current high reliability, security and supply quality levels,

6. Efficiently maintain and improve the existing network functionalities (e.g. efficient and reliable oversight, distri-bution network failure management, adequate distribu-tion network protection concepts, adequate distribution network voltage control concepts, etc).

4.5.1.4 Smart Grid Solution Development Directions

To achieve the above-indicated objectives, the previously mentioned EU documents define six main power system development priorities (directions) aimed at implementing the Smart Grid solution.

Priority development directions include:1. Network operation and utilisation optimisation This direction should be achieved through a well-coordi-

nated distributed approach to control and operation, pro-viding reliable, secure and efficient power grid operation given all economic-technical barriers.

2. Network infrastructure optimisation This direction should provide more efficient asset man-

agement, as well as network planning under increased uncertainty of the distributed sources.

3. High renewables integration This direction should create preconditions for mass inte-

gration of diverse production capacities and technolo-gies (wind, solar, etc) in the power system.

4. Introduction of modern information and commu-nication technologies

This direction should supply the starting point to define the communication standards and to standardise the data model, one of the essential conditions to implement the Smart Grid concept.

5. Active distribution network implementation This direction should provide the necessary distribu-

tion network organisational, management and operation changes, transforming the current passive system into an active system with clear definition of the distribution system operator role. This is required primarily due to the complex network operations, planned distribution network development, as well as due to the growing challenges in providing the final customers’ security and


reliability of supply based on the established electricity supply quality criteria.

6. Energy efficiency, customers and new market participants

This direction should facilitate the creation of the market environment with clearly defined obligations of all the users.

The above development priorities have been defined as a meta level, i.e. they describe the overall actions and activities providing the Smart Grid vision achievement.

Each power system has a unique starting point in terms of system performance and the applied concepts and abilities, compared to the established Smart Grid solution deployment objectives, whereby, each system will have to face different challenges and adopt different final solutions. Therefore, the implementation of the above EU objectives depends on the existing power system development level in individual Member States. Depending on this, each country should plan its own development objectives. Our country should equally plan its own development objectives.

4.5.1.5 Necessary Smart Grid Solution Deployment Activities in PE EPS

We have opted for following the EU objectives and directions when it comes to implementing the Smart Grid solution in Serbia, since Serbia is a European country undergoing the EU accession process. In addition, the EU comprises of countries of diverse development levels and applied power system concepts. The EU Smart Grid strategy is precisely tailored to this diversity, whereas, it should be noted that it includes countries with similar development level to that of Serbia, conforming that this approach is applicable in our country.

To provide efficient Smart Grid solution implementation is Serbia, the following actions need to be taken:

y The Serbian Smart Grid Strategy development will be pro-posed to the Ministry of Energy. The development process will also include PE EPS experts.

y To accelerate the Smart Grid Strategy development, PE EPS will initiate appropriate actions (the Smart Grid Devel-opment Directions in the Distribution System of PE EPS

Study), until conditions are created to start working on the republic-level strategy development.

y Smart Grid solution and the PE EPS pilot project will receive efficient support, coordination and oversight at the PE EPS level.

y EU Smart Grid standards and recommendations will be adopted and their practical implementation intensified.

y The Smart Grid vision and solutions will be presented to all stakeholders, with potential feedbacks.

y We will participate in the EU developments in this field. y The PE EPS skills and know-how will be improved. y The final users will be included into the Smart Grid solution

deployment as much as possible. y An open power system performance data access will be

fostered.

4.5.1.6 Smart Grid Solution ConceptFigure provided under section 4.5.1.1 illustrates the defi-nition and shows all the users connected to the Smart Grid. However, it does not show the functional Smart Grid elements, their mutual relations and their relation towards the users and the DSO. This is the task of the concept model representing the logical Smart Grid matrix providing the connection to the concrete system implementation. There are concept models defined in the different ways by various authors. Essentially they provide different views of the same concept. We have selected the clearest one according to our opinion providing the best connection with the concrete physical Smart Grid solution implementation. Smart Grid is essentially an improve-ment of the existing distribution system aimed at achieving the desired applications by utilising the modern information and communication solutions. This is shown on the following figure. Some of these solutions have already been implemented into the existing distribution system. The Smart Grid comprises the layers from 2 to 5. Customer-oriented applications have been labelled with K+E, while the ones solely used by the DSO with E. Layer names and their respective numbers are listed below:

y SMART GRID foundation (2) y SMART GRID basic application (3) y Application provided by SMART GRID development (4, 5)


The Smart Grid foundation comprises three elements: y IТ infrastructure y Communications y Distribution system model

SMART GRID basic applications: y SMART METERING (AMM + MDM), (K+Е) y SN network automation, ( Е) y Basic DMS ( Distributed Management System) functions, (Е) y Substation automation, (Е)

Applications 2, 3, 4 have mostly been integrated into the existing distribution system. Levels 4 and 5 include applica-tions made possible by Smart Grid development. Such applica-tions cover:

y HAN (Home Area Network) integration, (K+Е) y PEV ( Plug-in Electric Vehicles ) integration, (К+Е) y DER-ES (Energy Storage ) integration, (K+Е) y DER-DG ( Distributed Generation ) integration, (К+Е) y DMS/SCADA ( Volt-Var Optimization Application, (Е) y DR (Demand Response), (Е) y MICROGRID, (Е) y Advanced DMS functions (Operational Efficiency), (K+Е)

Figure above indicates that one of the Smart Grid solution foundations is the telecommunication system and that the first step towards the Smart Grid solution implementation is the Smart Metering. For this reason, the specified elements will be more closely considered in the following sections.

4.5.2 Telecommunications System

4.5.2.1 Why fibre is the best infrastructure solution?

Public utilities have a number of options when it comes to deploying an advanced communication network for the Smart Grid, each with its own distinct characteristics and consider-ations – power lines, wireless or cellular, copper, or fibre.

When comparing these four infrastructure options, fibre often emerges as the top contender. Larger power companies have been using fibre communications to connect their generation network with their network control facilities for years. While the upfront costs of deploying fibre can be significantly higher than the other options, it nonetheless offers advantages that, in the majority of cases, trump the short-term hurdle of that capital expense: 1. Information at the speed of light. Communication

in both directions on a fibre network is instantaneous – allowing electric distributors to efficiently manage and monitor their power demand in “real-time.”

2. The more responsive, the more cost effective: The more easily and efficiently power usage can be monitored and managed, the more cost savings can be realized. The strain on overtaxed and aging power generation facilities is reduced, prolonging their life without costly investments in repairs, upgrades and replacements of equipment.

3. Ultimate reliability and performance. Fibre optic cables, whether buried or overhead, offer improved reli-ability and can transport vast amounts of information through a single fibre strand.


4. Self-healing: A fibre-based system can be designed with redundant pathways to ensure a continuous flow of information in the event of an interruption to the primary route.

5. Feeding the grid: “Green” residential developments are already taking hold across the world, in which homes generate their own power with a renewable source such as solar. A fibre-based Smart Grid allows for much more efficient management of the supply of power by these micro-producers back to the grid.

6. Future proof. Once a fibre pipe is in place it has almost limitless capability to handle more bandwidth and scale up to deliver more advanced services. The fibre itself will not need to be upgraded or replaced to increase band-width, only the electronics at either end.

7. Why stop at power management? That big fibre pipe allows a public utility to branch out into new broadband services that create new revenue opportunities, such as the triple play of ultra-fast Internet, HD and IP television, and telephone, with lighting fast connection speeds of up to 100 mbps.

8. Underserved and over charged. In many communi-ties, incumbent telecommunications providers without wire line competition will “milk” their legacy copper networks, delivering substandard service at often times higher rates. The expansion by a public utility into fibre-based triple-play services will introduce real marketplace competition, breeding innovation, improved customer service and better pricing for both commercial and resi-dential customers. Public utilities are local, have signifi-cant infrastructure experience, and the right “mission” to serve their community.

9. Stimulating the local economy. Fibber optic net-works provide tremendous communications capabilities to enable existing small, medium and large businesses to operate more efficiently, while positioning the community to attract new industry and skilled workers. Much like the interstate highway system 50 years ago, fibre optic net-works open businesses up to expanded markets, across the world.

4.5.2.2 The future EPS advanced network system infrastructure state

EPS already has a backbone of the telecommunications system based on the OPGW cables.

2010 – EPS Telecommunications Project StatusI. From the very beginning of the new EPS telecommunica-

tion network implementation there was an idea to build a company-level basic telecommunications network, therefore the Project and the Business Plans have been made with this idea in mind. The regional and the local levels were planned for development by the distribution companies and individual generation companies.

II. Implementation of all three telecommunications network levels and their appropriate equipping would create con-ditions for modern utilisation of all services provided by such a technologically advanced network.

The main network level has been completed under the initial design a long time ago and commissioned with small capaci-ties. This was one of the essential preconditions to reconnect with the UCTE.

Further main network utilisation depended on the lower network levels development. This additional development has so far unfolded very slowly. From the onset of the new EPS telecommunications network project development it was assumed that the surplus capacities of such network would after the development be offered in the free telecommunica-tions market both in the country itself and the surrounding countries. This was one of the points also made in the Business Plan.

Over the previous network development, special efforts were primarily invested in meeting the EPS and EMS requirements, while the surplus capacities would also be offered to others. The international experience has demonstrated that this is the best method to use the advantages of easy fibre-optics instal-lation along the transmission lines.

The current utilisation level of the new network in both companies is on the level of 10%. The installed capacity utili-sation level will reach 50% at the most only after all financial divisions are able to use it, once the computer centres become operational and integrated, when the substation and transmission line protection starts using it (since fibre-optics is the only solution for the modern protection systems), when the remaining phone lines have been modernised and trans-ferred to the IP technology, when all the control systems are upgraded, when the remote control and supervision is installed in the majority of facilities, when plants and facilities become unmanned and when the smart metering is introduced.

To update the existing Business Plan, the new status of the Serbian telecommunications market should be assessed, together with the status analysis of the neighbouring countries. In the meantime, the requirements have grown considerably, while other networks have not followed this growth in all their segments. Other networks are usually based on the optical cable ground routing or along some other structures (gas pipelines, railways, etc.).

Our market also has some new significant participants which need to be recognised. Moreover, others need to be advised that there is a higher quality, more reliable and a potentially cheaper network.

There are various international experiences in this field. As a result, there are some utilities with their own telecommu-nications and those outsourcing these services. The latest smart technologies introduction trend actually represents a maximum utilisation of the telecommunication – information technologies within the energy sector. This evidently implies data transfer via fibre-optics.

The basic task of such modern telecommunications network is full satisfaction of their company requirements in all appli-cation aspects of such technologies. This network segment can be completely independent and fully autonomous from other network parts. This especially goes for the network parts serving for control needs.


The telecommunications capacities surplus is viewed in a number of different ways. Some companies simply lease this surplus as the so-called dark fibre (the entire fibre). While others more market-oriented companies lease individual fibre capacities or even offer different provider services.

In general, it may be concluded that the above activities are highly profitable, while the systems are reliable requiring almost negligible maintenance. There are cases where tele-communication activities profits are even comparable with the principal business profits.

4.5.2.3 Technical characteristics – the new Electric Power Industry of Serbia optical telecommunications network

Based on the experience of the advanced west European utilities in terms of marketing the free telecommunications capacities, this network was also designed and implemented to primarily satisfy the EPS and EMS requirements, while the surplus capacities would be offered on the Serbian and SE Europe telecommunications market.

Its implementation was partly supported by the European financial institutions, while the remaining funds were provided by EPS. Currently the main network level development is in its final stage. The majority of routes, especially interconnections with the neighbouring utilities have already been commis-sioned. Investments so far are at the level of tens of millions of Euros.

Given that the modernisation of all EPS activities is an utmost priority, it is imperative to introduce a state-of-the-art tele-communications infrastructure with extremely high opera-tional reliability, whereby this has been taken as the basic planning and designing parameter. For this reason, the new EPS telecommunications network has some state-of-the-art equipment installed and the highest transport capacities in the country.

The basic technologies used to implement the EPS telecom-munications network include the optical transmission paths, SDH terminal equipment and IP network used for voice and business data transfer.

The optical network has so far been implemented along the transmission lines of all voltage levels at the total length of some 4 300 km. It covers the entire Serbian territory reaching the larger towns, i.e. substations situated in these towns. The network also extends towards the other neighbouring countries, except Macedonia. It is mainly constructed by using optical cables with 48 fibres, 24 fibres of G652 type and 24 fibres of G655 type. These fibres were manufactured by the best international companies and the measurements to date have confirmed the high quality of these optical transmission paths. The network is further expanded towards the regional and local planes to cover the requirements of the company’s generation or distribution segments. It has also been expanded in the urban areas for the potential needs of external users, naturally, primarily electricity customers.

To achieve the high operational reliability, the network is based on the node structure and it has been developed in such a way

to allow only maximum 5–minute outages throughout the year. This is one of its huge advantages.

Currently, the STM – 16 (2.5 Gb/s) capacity equipment has been installed along the main routes, while some other less important routes have smaller capacities. If necessary, such capacities can be increased by adding the appropriate hardware, which is a potential option.

At the moment, the network is developed along the regional planes under the EPS classification – this practically means that it is developed from the substations situated along the outskirts of the cities towards the more central locations in all larger cities throughout the country. It should be noted that commercially interesting levels have been reached in Belgrade, Novi Sad, Nis, Leskovac, Zrenjanin, Novi Pazar, Bajina Basta, etc. Further development unfolds daily.

The network of such quality is even further improved by intro-ducing the IP technology, at this moment only the phone lines inside EPS and EMS. Twelve sites are equipped with the devices serving to improve the voice data transfer. The following phase logically involves service expansion to cover all the sites within our company.

At this moment, some 2 500 km of optical network is actively used, mostly for control needs and our NDC connection to other NDCs in the neighbouring countries, as requested by the UCTE. Much lower capacities than the available ones were used for this purpose.

In general, all the installed capacities of the new EPS telecom-munications network have been designed and implemented to offer surpluses in the free market. At the moment, and in the following ten years, the company will use some 30% of the total transport capacity. The remaining capacity, even physically separated, may be used for commercial purposes as a highly reliable, quality transmission telecommunications network. The commercialisation precondition is to create a company registered for such activities.

This orientation has also been identified by the Republic of Serbia Telecommunications Development Strategy for the period 2006 – 2010. It states that large companies, including Electric Power Industry of Serbia among others, not having telecommunications as their principal business, but operating the telecommunications networks for their own needs may use such unused capacities for public use. This has also been confirmed by the current international legislation and practice. Starting from this, one of the strategic objectives of the Serbian telecommunications sector development is to improve and put to the public commercial use the unused tele-communication capacities operated by the public enterprises.

The legal framework was provided through the Telecom-munications Act stipulating that the legal entity with the principal business other than the telecommunications, already possessing or planning to obtain the public telecommuni-cations network licence and/or the public telecommunica-tions service licence should perform this business activity belonging to the field of telecommunications for which it already possesses or it intends to obtain the licence through a separate affiliated legal entity. This is the case of PE EPS, since its Incorporation Decision lists the designing, construction, maintenance and operation of the telecommunication facilities


and devices as one of the activities in addition to the energy activities. In accordance with the public enterprises and the public interest activities legislation, PE EPS is authorised to incorporate an affiliated company to perform activities estab-lished by its Articles of Incorporation, i.e. in this case an affili-ated company for designing, construction, maintenance and operation of the telecommunications facilities and devices.

The Incorporation Decision for one such special company is adopted the PE EPS Management Board, under the Serbian Government compliance. The process involving the Decision preparation, harmonisation and adoption with all the accom-panying documents and permitting procedures and the final Government compliance may last up to six months based on

the previous PE EPS experience with incorporating the similar affiliated companies. Further registration, company bodies’ nomination and existing infrastructure transfer activities, together with the commissioning may take up to a couple of months, given that the precondition to start the operation is the obtain the corresponding licence in accordance with the Telecommunications Act.

The following two figures show: y The telecommunications network architecture containing

the installed active equipment sites, network organisation and the connection capacities

y The EPS physical telecommunications network structure (installed fibre-optics topology)


EPS telecommunications network architecture


EPS physical telecommunications network structure


4.5.3 Smart Metering

4.5.3.1 The reasons for smart metering introduction in PE EPS

‘Elektroprivreda Srbije’ (EPS) is Serbia’s dominant power utility established in its present form in 2005 when the transmission system operator was unbundled from the previous vertically integrated utility... The company comprises 11 subsidiaries (5 generation/ mining companies and 6 distribution companies), with a total staff of about 37.000 serving a customer base of approximately 3.4 million. EPS (excluding Kosovo) has a total effective capacity of 7,124 MW, of which 3,936 MW in six coal-fired thermal power plants (TPPs), 353 MW in three gas/fuel-fired heating plants, and 2,835 MW in twelve hydropower

plants. Annual production in 2009 was about 36,000 GWh, two-thirds from coal-fired plants (with the lignite from EPS owned and operated mines) and one-third from hydro genera-tion (combined heat and power plants has a very small share in total generation, 139 GWh in 2009). Peak-load reached in 2009 was 6,383 MW. In the structure of electricity sales the residential sector accounted for 53% of total sales in 2009, while the industrial sector accounted for 38% and the commercial/ institutional sector for 9%. The distribution network is 141,482 km long, with an installed capacity of distribution transformers of 25,413 MVA.

In the past years no significant investments were made in the distribution network and technical and commercial losses remain high (with an increasing trend) as shown in the Table below:

Distribution losses between 2005 and 2009

Distribution company

Distribution losses

I-XII 2005 I-XII 2006 I-XII 2007 I-XII 2008 I-XII 2009

"Еlektrovojvodina" 12.47 12.65 12.29 12.62 13.82

"ЕDB" 15.04 14.01 14.54 14.69 15.26

"Еlektrosrbija" 13.45 14.40 14.05 14.31 15.31

ЕD"Јugoistok" 17.37 17.83 18.09 18.94 18.40

ЕD "Centar" 12.82 13.08 13.06 12.70 13.49

Total: 13.82 14.22 14.20 14.48 15.19

EPS also observed a significant reduction in the collection rate in 2009, as shown in the following table:

Collection rates between 2005 and 2009

Distribution company

Collection rates

I-XII 2005 I-XII 2006 I-XII 2007 I-XII 2008 I-XII 2009

"Еlektrovojvodina" 94.83 107.91 99.61 99.84 97.54

"ЕDB" 92.46 103.86 95.70 97.17 95.17

"Еlektrosrbija" 92.31 107.77 99.07 98.25 95.54

ЕD"Јugoistok" 81.98 97.40 92.20 94.35 84.95

ЕD "Centar" 84.72 103.83 88.57 93.18 88.61

Total: 90.95 105.01 96.38 97.41 93.90

In order to reduce losses and improve collections EPS is entering into a pilot phase of smart metering project with a total value of approximately €80 million.

The overall System deployment objective is to improve the energy efficiency and fostering of more rational energy usage in accordance with the European 20-20-20 target, i.e. 20% more of renewable energy sources, 20% less of CO2 emission and 20% increase of energy efficiency in EU by 2020, all under the broader SmartGrids platform.

The most important implementation objectives of the System include the following:

y reduction of reading costs and increase of the number of read electrical meters;

y increase of metering accuracy and reduction of the number of complaints;

y acceleration of invoice issuing and reduction of collection period;

y increase of customer analytics, possibility of remote dis-connection of customers and increase of collection rate;

y reduction of non-technical losses; y implementation of technological platform for application of

complex tariff system;


y improvement of network and load management (better usage of existing capacities and postponement of invest-ments into electric power system);

y improvement of network development planning; y reduction of maintenance costs; y shortening of interruption duration time and distribution

network reliability increase; y implementation of the basis for SmartGrids.

Fulfilment of these objectives will bring multiple advantages, enabling rapid return of invested assets, in some areas even in 6 months.

4.5.3.2 PE EPS Smart Metering System Description

The advanced system for electricity consumption metering and management, electrical meters reading, data processing and storage (Smart Metering System – hereinafter referred to as: ‘the System’) includes advanced metering infrastruc-ture (AMI), automated metering management and meter data management and repository (MDM/R).

AMI is the infrastructure under which data stored in meters marked by the exact date and time are periodically remotely collected by means of a concentrator (AMRC) and transferred to the advance metering control computer (AMCC) within the AMM Centre, and further on to the centralised MDM system. Remote data collection can also be realised in direct commu-nication between meters equipped by the corresponding communication modules (AMCD) and AMCC.

AMR/AMM systems have been characterised by a rapid devel-opment in the current decade. After initial attempts in the beginning of this decade, and by considering the standardised EU and USA trends, it is clear that full inter-operability of meters and other AMI components of different manufacturers will soon be achieved.

This will enable mass replacement of older generation meters (roll-out) and transition of electricity distribution companies (EDC) to a new business level and implementation of the Smart Grids concept.

The system possesses the following functions: y remote reading of all metered (registered) values with ele-

ments of the System; y remote change of parameters of System components; y remote connection/disconnection of customers; y storage and archiving of remotely read data; y review, graphic presentation and analysis of data; y automatic detection of newly-installed meters in the

System; y automatic reconfiguration of the path and finding of optimal

repeater routes; y potential access of other users to the memorised data; y potential usage of pre-paid meters; y potential data collection from other types of metering

devices such as gas meters , water gauges, heat meters, etc. (multi-metering);

y potential HAN (Home Area Network) connection.

Smart Metering system

Electricity buyers

Advanced meters

LAN

WAN

AMI (Advanced Metering Infrastructure)

WAN

MDM system(Meter Data

Management)Data storage

(Meter Data Repository)

MDM/R system

«Firewall»

WAN

Electricity delivery

Regulatory agency

Customer support (informa�on;

accoun�ng and collec�on)

Metering display

Smart Metering system

AMRCAMM centreHouseholds

Industry

AMM system

Concentrator

AMCD

AMCD

Network planning

Billing

Management

Maintenance

EDC


The System is based on the following principles: y interoperability*, y reliability; y scalability; y flexibility; y modularity; y automatic recognition and introduction of components

into the System (‘plug and play’);

y bidirectional communication; y data security; y unification and standardisation of the System functions

and controls.

AMI/MDM system context from the aspect of directly affected EDC business functions (reference architecture) maintains eight main logic/abstract components (potentially deployed as the information sub-systems), as follows:

Smart metering system functional diagram and context

Metering point

Data acquisi�on

Management and reconfigura�on

Management of works

Outage management

(OMS)

AMM CentreMDM/R system

Load analysis

Loadmanagement

Load management

system

Metering point maintenance and

asset management

Networkplanning

Customer Support and Billing

Electricitydelivery

Network management

[1] Customer account informa�on

[2] Configura�on and installa�on

[3] Control and signalling

[4] Buyer informa�on

[5] Special consump�on reading

[6] Signals for required consump�on

[7] Connec�on/Disconnec�on

[8] Moun�ng , Dismantling, Repair, etc

[9] Load curves, metering archive

[10] Tariff policy

[11] Metering point state

[12] Consump�on data records

[13] Consump�on data

[14] Request for metering point repair

[15] Consump�on reading request

[16] Outages and verifica�on of restora�on

[17] Supply reliability and quality

[18] Readings, events and signals

[19] Special reading

[20] Parameters and tariffs

[21] Informa�on exchange

[22] Exchange of records

[18]

[3]

[2]

[19]

[8] [12]

[5]

[20][10]

[11]

[3]

[17]

[16]

[13]

[12]

[4] [12]

[6]

[7]

[18]

[1]

[9][9]

[14]

[14]

[9]

AMI

* Interoperability is the capacity of the device of at least three manufacturers to exchange and use infor-mation automatically within the System by recognising their scope, format and meaning.

Literature


Annexes 1. DIRECTIVE 2009/28/EC2. STOCK TAKING DOCUMENT3. ENERGY 20204. RENEWABLE ENERGY PROGRESS REPORT 5. COMMENT ON EU EMISSION TRADING SYSTEM 6. LEGAL FRAMEWORK W TO E

Literature

1. PE EPS Energy Generation Department documents 2. PE EPS Electricity Distribution Department documents3. PE EPS Electricity Trade Department documents4. PE EPS Strategy and Investment Department documents5. PE EPS Operation and Development Plan 2008-20156. Strategija razvoja energetike Republike Srbije do 20157. Program ostvarivanja Strategije razvoja energetike Republike Srbije do 2015. godine za period od 2007. do 2012. godine8. Uredba o merama podsticaja za proizvodnju električne energije korišćenjem obnovljivih izvora energije i kombinovanom

proizvodnjom električne i toplotne energije9. Vision and Strategy for Europe’s Electricity Networks of the Future, ETP SG, 200610. Strategic Research Agenda for Europe’s Electricity Networks of the Future, ETP SG, 200711. Strategic Deployment Document for Europe’s Electricity Networks of the Future, ETP SG, 201012. Mission of the Тask Force for the Implementation of Smart Grids into the European Internal Market, TF SG, 200913. Roadmap 2010-2018 and Detailed Implementation Plan 2010-2012, EEGI, 201014. Directive 2009/72/EC of the European Parliament and of the Council, 200915. Smart Grids Scope, History and Prospects / Update on Smart Metering Activities, Council of European Energy Regulators -

CEER, 200916. Funkcionalni zahtevi i tehničke specifikacije AMI/MDM sistema, PE EPS Advanced Networks Task Force, 201017. Analiza trenutnog stanja funkcije upravljanja i sistema daljinskog nadzora, upravljanja, analize i optimizacije pogona elek-

troenergetskih objekata i opreme svih naponskih nivoa u PD za DEE, PE EPS Advanced Networks Task Force, 201018. Peter Kallai and Kim Kersey, 10 Reasons Why Fiber Is the Right Choice for Your Smart Grid Network, 201019. Pavla Mandatova, 10 Steps to Smart Grids: EURELECTRIC DSOs Release 10-Year Roadmap for Smart Grid Deployment in

the EU, 201120. Terms of Reference, Serbia: EPS Metering Project, 201021. Katie Fehrenbacher, Does Fiber Have a Role in the Smart Grid?, 201022. Commission Staff Working Paper: Interpretative Note on Directive 2009/72/EC concerning Common Rules for the Internal

Market in Electricity, 200923. Kitti Nyitrai/ Cristophe Schramm, Energy policy, Security of supply and networks, Directorate -General for Electricity, Direc-

torate B-Security of supply and energy markets: Energy infrastructure priorities for 2020 and beyond, 201124. European Commission, Photovoltaic solar energy — Development and current research, 2009

About authors


Dragomir Marković

Education: – 1980: Faculty of Mechanical Engineering, Belgrade

Current position: – March 2009 - to date: General Manager, Electric Power

Industry of Serbia (EPS)

Employment History: – October 2005 – March 2009: EPS, Strategy and Invest-

ments Director

– January 2001 – September 2005: TPPs Nikola Tesla, Deputy Director

– August 1999 – January 2001: TPP Nikola Tesla B, Director

– October 1981 – December 1998: TPP Nikola Tesla B, various positions

Memberships in expert unions and organizations: – President of the Board of Association for Energy and

Energy Mining of Serbian Chamber of Commerce (2004 – 2010).


Bratislav Čeperković was born in Kraljevo 1962. He has a PhD in medical science. From the period 1996 – 2003, he worked on the international projects on recycling and waste management for several companies, including ALBA inter-national, Rethmann and ALT VATER-SULO GROUP in Serbia, Germany, and other countries in the region at the position of Executive and Corporate Development Manager. He is an expert in EU integration and energy diplomacy. Over the past 5 years he has been engaged in the EU integration process, in the development of the PEOP and White Stream projects and is one of the architects of the Energy community treaty, EU-SEE Gas ring. He has been the initiator of a great number of energy transport environment projects. He was also engaged in drafting numerous international agreements, including: Transport treaty EU-SEE, Open single sky agreement, air traffic agreement, strategy gasification SEE with EU DG TREN,

national strategy gasification Serbia, regional center for climate change and trading emission CO2 in Belgrade, regional center for monitoring transport for SEE WITH HQ in Belgrade, member PHLG for transport EU-SEE Road Corridor E7 and E10 in strategic priority EU for West Balkans and Serbia. He has participated in numerous conferences in support of strong relations between the EU and the West Balkans. From 2004 – 2008 he was minister – counsellor in the Serbia Mission to the EU Brussels. He is currently the chairman of the PE Transnafta Managing Board and Executive Manager at EPS (Electric Power Industry of Serbia). He is also special advisor to the Deputy Prime Minister of Serbia, engaged in foreign affairs and EU integration issues. He speaks English and German. He lives in Belgrade. Among his countless awards we may exctract Belgrade October award and Nikola Tesla award.


Aleksandar Vlajčić

Born on 30 July 1955. Present position: Thermal Power Plants “Nikola Tesla”, Obrenovac, Serbia, System Development Manager dealing with preparation works for new huge power plants; from 2007 to 2009: Thermal Power Plants ‘Nikola Tesla’, Obrenovac, Serbia, Deputy Manager, he was the Project Director in charge for energy efficiency increase projects; from 2004 to 2007: Ministry of Energy and Mining of the Republic of Serbia, Assistant Minister, engaged as head of South East Europe Energy Treaty negotiation team, also team member for the Energy Act and the Republic of Serbia Energy Strategy development; from 2001 to 2004: PE Electric Power Industry of Serbia, Assistant Manager for Investments responsible for IFI support to the energy sector in the Republic of Serbia; from 1990 to 2001: Thermal Power Plant ‘Nikola Tesla’, Obrenovac, Serbia; Plant Operation and Maintenance Manager; from 1983 to 1990: Thermal Power Plant ‘Nikola Tesla’, Obrenovac, Serbia Erection, Commissioning, Operation

& Maintenance Engineer; 1983 Mašinoprojekt, Belgrade, Project Engineer.

EDUCATION: Graduated from the Faculty of Mechanical Engi-neering of the University of Belgrade in 1981.

Graduated Mechanical Engineer; Master of Science,

PUBLICATIONS: • Dipl. Ing Mihajlo Gavric, Dipl. Ing. Alek-sandar Vlajcic, Dr. Bratislav Ceperkovic ‘Green Book of PE EPS’, Prof. Dr. Vera Sijacki- Zeravcic, Dr. Biljana Andjelic, Dipl. Ing. Gordana Bakic, Dipl. Ing. Dusan Milanovic, Dipl. Ing. Alek-sandar Vlajcic, Dipl. Ing. Petar Maksimovic ‘The Designed and Realistic Quality of Material and its Influence on the Reliable Operation of Power Plant Components’, ‘Elektroprivreda’ 4/2001 • A. Vlajcic, D. Popovic: “Ash Handling System and Availability of 600MW Lignite Fired Unit”, Budapest, Confer-ence on Pneumatic Transport 1990 • A. Vlajcic, D.Popovic: ‘Ash Handling, Operation and Maintenance’, Elektroprivreda, No 10-13 1992.


Stephan Ressl

Dipl. Ing. Dr. Stephan Ressl has a degree in mechanical engi-neering from TU-Vienna and a subsequent PhD focusing on economics and industrial policy. He specialised in energy related issues. He is partner and Managing Director in Mithras-Cleanenergy GmbH and Wattpic Energia intelligent focusing on solar energy projects. He founded his independent activity in October 2008.

Prior to the above position, he joined Econgas as Head of Business Development in June 2006 and was responsible

for strategy, internal and external business development including strategic projects, new markets and regulatory affairs. He served also as Vice Chairman of EFET Gas and in the Easee-Gas Board of Directors. Before he worked in the European Commission DG TREN C-2 for more than two years, dealing mainly with gas market liberalisation items and the creation of the energy community. He worked for GTE as Vice-Executive Secretary from 2002 to 2004 after having joined OMV in late 2001. He was previously project manager to set up the Austrian Energy Exchange EXAA and the Austrian Balancing Energy Agency AGCS.

the white book of pe eps

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