New PPA to support Serbian energy plans by 2027

• Serbian utility EPS inks long-term PPA from 168MW wind farms
• This could accelerate energy plans, boost PPA plans and have a bearish impact on spot power prices in the region
• The country plans to have 1.3GW renewable capacity by 2027

WARSAW (ICIS)–The signing of a new power purchase agreement (PPA) is set to support Serbia’s energy transition plans by 2027, local traders told ICIS.

This comes as state utility Elektroprivreda Srbije (EPS) announced a 15-year PPA from two wind farms (Alibunar 1 and Alibunar 2) with a total 168MW capacity, EPS said on 8 May.

“EPS will take over all the produced electricity, and the purchase and balancing price is determined on market principles, which provides an incentive to investors and allows EPS to make additional profits. This energy will also provide significant, additional security for the operation of our electricity system and the supply,” said Dusan Zivkovic, CEO of EPS.

“EPS receives cheap green energy, while investors benefit from a guaranteed 15-year PPA and an auction premium. As an association, we advocate for the third round of auctions to take place as soon as possible, alongside the adoption of appropriate regulations and a new three-year auction plan,” said Danijela Isailovic, manager at local renewable group OIE Serbia, in a statement on 8 May.

In 2028, this capacity will be increased by 1GW from self-balancing power plants EPS is developing with a strategic partner, and renewable production is expected to reach 50% of EPS’s total electricity output, added Zivkovic.

MARKET IMPACT

“This PPA is a milestone for Serbia as it will be a bearish driver for the local market spot market as renewable capacity takes over a large percentage of the current coal output,” a local trader told ICIS.

EPS’s PPA will encourage the local industry to forge more PPA deals, added another market participant.

“Over the coming years, we expect at least an additional 1GW of auction-winning plants to be built and new PPAs to be signed,” a local developer told ICIS.

TRANSITION PLANS

The large investors’ interest in Serbia’s recent second renewable tender is set to support Serbia’s energy transition plans by 2027, energy minister Dubravka Dedovic Handanovic said in February.

The total capacity awarded was 645MW and the offered prices were “competitive”, resulting in €50.9/MWh for solar and €53.5/MWh for wind, “significantly below market levels”, said Handanovic.

Both auctions are supported through a contract-for-difference (CfD) scheme for 15 years.

All renewable plants should be online by 2027 as the country targets at least 1.3GW of new renewable capacity by the same period.

Currently, Serbia has 4.4GW of coal-fired power, with coal and gas units representing 75% of the country’s energy mix, grid operator EMS data indicated.