Serbia’s state aid authority, the Commission for State Aid Control, has looked into draft regulations on support to renewable energy production, assessing the compliance of the assistance with the country’s state aid legislation.

What regulations did the state aid watchdog look into?

The state aid authority examined the drafts of the following three regulations:

• Regulation on market premium and feed-in tariff,
• Regulation on a model contract for market premium, and
• Regulation on market premium quotas.

All three regulations are to further implement the provisions of the Law on the Use of Renewable Energy Sources, enacted this year.

Did the watchdog establish the existence of state aid?

Yes, Serbia’s state aid authority found that the proposed scheme will indeed be the basis for granting state aid. Specifically, the watchdog found that there is aid involved due to the following four elements being present:

1. Public funds. The financial incentives for the production of renewable energy are collected by the fee for privileged producers, payable by all end users of electricity in Serbia. The Commission found the element of public funds was present since the Serbian Government prescribes how the fee is calculated, paid, and distributed to privileged producers.

2. Economic advantage and selectivity. The Commission found that the envisaged support to renewable energy production was selective, as it is available only for the production of electricity from renewable sources, whereas conventional producers cannot benefit from this support measure.

3. Distortion of competition. The watchdog found that the planned incentives to producers of renewable energy may give such undertakings an advantage which would not be available under normal market conditions, which in turn may lead to distortion of competition on the Serbian electricity market.

4. Potential to affect trade between Serbia and the EU. Finally, the Commission for State Aid control found that the planned support measures may affect trade between Serbia and the EU. This requirement for existence of state aid was introduced by the current Law on State Aid Control, enacted in 2019 (for an overview of the most important aspects of this law, please click here).

Did the state aid watchdog find the support schemes compatible with state aid regulations?

Yes – the Commission for State Aid Control found that the proposed scheme for support to renewable energy producers was in accordance with Serbia’s state aid regulations.

Key takeaway In the area of state aid, the energy sector in Serbia is something to keep an eye on – not only because of the amounts of state support in that field, but also considering Serbia’s international obligations. Specifically, apart from being a party to the EU-Serbia Stabilization and Association Agreement, which inter alia has state aid provisions, Serbia is also a member of the Energy Community, which has its own mechanisms in the area of state aid.

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For additional information about state aid control in Serbia, please contact Dr. Dragan Gajin, Head of Competition at Doklestic Repic & Gajin.