Serbia Lifts Hydro Power Incentives, Cut Wind, Solar Fees

Serbia plans to increase incentives for electricity produced in small hydroelectric plants and cut feed-in tariffs for wind farms and solar parks to boost power generation from renewable sources.

Hydro plants of up to 30 megawatts will be eligible for the support, up from 10 megawatts now, while the subsidized rates for the facilities will be increased by about a third to between 7.4 euro cents ($0.0975) and 13.7 euro cents per kilowatt hour, depending on size, Energy Minister Zorana Mihajlovic told reporters in Belgrade yesterday. The changes may take effect Jan. 1.

The tariff for wind farms will be reduced to 9.2 euro cents from 9.5 euro cents per kilowatt hour, while the subsidized price for solar parks bigger than 0.5 megawatts will be cut 30 percent to 16.25 euro cents, she said. The solar parks need less support after the cost of equipment for them has fallen more than 40 percent since 2008, she said.

“The changes reflect our strategy and our priorities as we work to increase the use of renewables to 27 percent” by 2020 from 21.2 percent, under a European Union-backed regional agreement, Mihajlovic said.

Cutting the tariff for wind farms and curbing the capacity that can be subsidized to 250 megawatts until the end of 2015, from 450 megawatts, may delay or cancel most projects, the Serbian wind Energy Association said in an e-mailed statement. The limit is to increase to 500 megawatts as of 2016.

The changes are “bad policy” and risk missing the 2020 target for bigger use of renewables, the Belgrade-based association said. “Without large wind farms, the goal cannot be achieved,” said the group, whose members include Continental Wind Partners, Energowind and Vetropark Indjija/Kelag.

The duration of electricity purchases at the subsidized rates will remain at 12 years, which should help cover the cost of initial investment, while any profit would be derived from purchases at going rates after that period, Mihajlovic said.

Serbia has only 19 megawatts in facilities eligible for the support, mostly small hydro facilities and a few solar and wind farms. The new incentives will replace the old ones in place since early 2010, the minister said.

To contact the reporter on this story: Misha Savic in Belgrade at msavic2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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