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Serbia: Costs curb uptake of solar panels

September 6, 2022

Interest in private solar panels in Serbia is high, and experts say that the country's potential is considerable. The government is keen for private households to install solar panels. So why is the uptake stalling?

Nenad Maricic takes a reading from the family's solar power plant, Ruma, Serbia
The Maricics' solar plant generates about 1,200 kilowatts of electricity a month, which is much more than the family's average monthly consumption of 500 kilowattsImage: Sanja Kljajic/DW

Serbia: frustration with solar power

Late last year, after much saving and planning, 16 460-watt solar panels were finally bolted to the roof of Dragana Maricic's two-story house in the town of Ruma in northern Serbia. These solar panels contain solar cells that generate electric power. Her four-person household is one of the first "prosumers" of solar photovoltaic (PV) energy in the country.

Prosumers are households that produce and consume electricity from their own solar plants, even if these plants are made up of just a few panels. In Serbia, home-generated energy in excess of a household's needs is sent to the grid. In return, the prosumer receives credits against future energy purchases from the utility company.

Karte - Serbia - EN

Just about everyone in Serbia — including politicians and scientists — agrees that this system has the potential to deliver a wide range of benefits for the environment, household budgets, businesses, and regional power grids alike.

Why then, ask Serbia's solar pioneers, isn't the country being swept by a solar revolution?

A dream come true

Dragana's son Nenad, an engineering student, has been dreaming about having his own solar plant since he was a boy. "He was still in elementary school when he presented his vision to us, but we were skeptical and couldn't believe that it would work," Dragana told DW.

Dragana Maricic and her son Nenad outside their home in Ruma, Serbia
Nenad Maricic (right) and his mother, Dragana, had hoped the panels would cut 50% off their electricity billsImage: Sanja Kljajic/DW

But this dream has indeed come true. The family invested about €7,000 ($7,000) in the project, which generates about 1,200 kilowatts of electricity a month — far more than their average monthly consumption of 500 kilowatts.

Comfort and savings

"It's great. I don't have to think about when I turn on the washing machine or worry about how long the program will run," says Dragana.

Graph: Total capacities of renewable energy in Serbia (2020)

The family also figured that the leftover energy that Public Enterprise Electric Power Industry of Serbia (EPS) "saves" for them in the form of credits would come in handy in the winter, when they plan to use electricity, rather than gas, to heat their home.

A complex and flawed system

In Serbia, the prosumer model only became feasible for private households this year. And with changes to the Use of Renewable Energy Sources Law, the state finally created a system that was ostensibly designed to motivate citizens to try their luck with solar power. But the system was flawed.

"They claimed that everything could be done in three steps, but that wasn't the case. We had over 100 pages of paperwork," says Nenad Maricic.

Poor communication

It also took the family half a year to get their hands on the relevant guidelines about becoming a prosumer. Neither the ministry, the municipality nor EPS could give them exact information.

Nenad Maricic reading his family's first electricity bill for 2022
The Maricic family was very disappointed when it received its first electricity bill for 2022Image: Sanja Kljajic/DW

"They just kept sending us back our application, asking for amendments. During all that time, nothing changed at our house. Only the papers changed and the costs piled up," explains Nenad.

As DW learned from conversations with experts who participated in the legislative process, a lack of communication between institutions slowed down the endeavor considerably. This spring, the Finance Ministry even stopped the whole process temporarily because neither the Energy Ministry nor the state power company had calculated taxes into the prosumer model.

The first electricity bill of 2022

When the Maricics received their first electricity bill from the utility for 2022, their buoyant enthusiasm dissipated. "The energy minister initially said that we would only have to pay some basic fees — no more than 1,000 dinars (around €8). Then, during the process, we were told that we will also have to pay excise duties and other taxes," says Nenad Maricic.

As it turned out, even these unwelcome costs weren't all they would have to shell out for the privilege of being a prosumer.

Paying for access

The fee that bothers them most is the one they have to pay to access the distribution system in the first place. All consumers pay for the grid, but prosumers now also pay a price for the energy that was saved for them by the utility.

Graph: Total energy supply in Serbia

"That means we have to pay for the energy we produce," says Nenad. He calculates that the cost of these fees and taxes means his family saves only 20% on their electricity bill.

No progress

The Maricics are now uncertain about the wisdom of their investment. Initially, they calculated their investment would pay for itself in ten years — even sooner if electricity prices jump as predicted. Now they estimate it will take 15 or even 20 years.

After DW reported on these issues in Serbia, the ministry met with prosumers and promised to set up a working group that would include prosumers to find a solution. Thus far, however, nothing has changed.

High interest and demand from private consumers

The rocky start to the solar power generation drive could dampen the zeal for rolling out clean energy that was evident when the new law was passed. The Energy Ministry, EPS and companies that install solar power plants all told DW that interest in increasing household solar systems is extremely high.

"Demand is currently three times higher than supply," says Miroslav Micic from Top Solar, a Serbia-based solar technology company.

High installation and operation costs

The independent Belgrade-based Environment Improvement Center estimates that the potential of solar energy in Serbia is 30% higher than in Central Europe.

In Serbia, however, says energy efficiency expert Slobodan Jerotic, the question is really how many households can afford to invest €5,000–6,000 in solar power systems. "We are talking at best about 10,000 families, and that would be around 30 megawatts in total, which is not a huge amount," he says.

This article is part of a five-part series on renewable energy development in South Eastern Europe conducted with the support of  journalismfund.eu.

Edited by: Paul Hockenos, Rüdiger Rossig, Aingeal Flanagan