Serbia: State Aid Watchdog Probes Subsidies for Electricity from Renewables

Serbia

Serbia: State Aid Watchdog Probes Subsidies for Electricity from Renewables

Serbia’s State aid authority, Commission for Control of State Aid, has looked into state subsidies for electricity generated from renewable sources. Specifically, it examined the subsidies set aside for this purpose in 2019.

As part of EU accession process, Serbia inter alia assumed certain obligations with respect to supporting the production of renewable energy. Currently, by far the largest source of energy in Serbia is electricity from coal-based power plants. Serbia’s goal is that renewables reach at least 27% in the gross end consumption in the country.

To make the generation of electricity from renewables more viable, Serbia has adopted a scheme of subsidies for producers of this type of energy. However, before adopting the scheme, the Government did not obtain a green light from the State Aid Commission. As a result, the watchdog opened an ex post investigation to assess the arrangement under the Serbian State aid rules.

On the State Aid Commission’s radar were subsidies for renewables planned for 2019. Specifically, the cost of this support scheme in the current year is planned to be approx. EUR 10 million. Apart from direct subsidies, producers of renewable energy can also count on other forms of assistance, such as being free from the costs of balancing and having a free access to the power distribution system.

The funds for covering the costs of aid to producers of renewables are ultimately covered by end users of electricity, who pay it with their bills.

In its decision in this matter, the Serbian State aid authority found that the support scheme for renewables undoubtedly represents State aid. However, the watchdog eventually cleared the aid ex post, establishing that the state financing for this program was both necessary and proportionate and hence in line with the Serbian State aid regulations.

For more information, please contact Dr. Dragan Gajin.

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