January 2021 – On 20 January 2021, the Serbian Ministry of Mining and Energy published a long-awaited draft of the Law on Amendments to the Energy Law ("Draft Energy Law") together with the call for public consultation lasting from 21 January to 9 February 2021. According to a press statement of the Minister of Mining and Energy, the current year will be an important year for the Serbian energy sector due to the planned adoption of several new laws in the energy and mining sector. Namely, besides the Draft Energy Law, the Ministry of Mining and Energy also published a draft Law on Energy Efficiency and Rational Use of Energy, draft Law on Amendments to the Law on Mining and Geological Explorations, and draft Law on Renewable Energy Resources. Also, the Serbian Government is planning reorganisation of certain public enterprises active in the energy sector and a new energy investment plan.

According to the published explanatory notes to the Draft Energy Law, the purpose of this draft is to transpose the remaining EU acquis in the field of electricity and natural gas following numerous decisions and recommendations of the Energy Community in this area. In addition, it is expected that the proposed changes to the existing legal framework will accommodate new investments, which, according to relevant public sources, include investment of EUR 350 million in the following three years in Serbia's distribution network alone, work on gas interconnection Nia–Dimitrovgrad, planned interconnections to Romania, Bosnia and Herzegovina, Croatia, and Montenegro, as well as construction of Trans-Balkan Power Corridor that would connect the electricity transmission systems of the entire region and put Serbia on the map as the main corridor for energy transmission.

Below is the high-level overview of the key novelties and amendments introduced pursuant to the Draft Energy Law.

Regulation of the renewables is excluded from the Draft Energy Law

For the first time, the renewables are completely excluded from this framework law regulating energy and will be separately regulated in the new Law on Renewable Energy Resources, which is supposed to be introduced as a part of the same legislative package.

Enumeration of energy activities as strategic projects

The Draft Energy Law lists energy activities in the fields of electricity, oil and natural gas that represent strategic energy projects, which development and interoperability will be further regulated pursuant to the bylaws that will be adopted by the Serbian Government. Based on previous experience on the Serbian market, it is expected that such categorisation of these activities as strategic energy projects is introduced with the aim to enable the Serbian Government to quickly act and adopt separate ad hoc rules when deemed needed for the purpose of development of the specific strategic energy project. Pursuant to the Draft Energy Law, the following energy projects are designated as strategic ones:

  • electricity: (i) electricity power lines with the voltage of 110 kV or higher; (ii) electricity storages; (iii) equipment and installations needed for secure, reliable and efficient operation of the aforementioned systems; and (iv) equipment and installations in transmission and distribution systems, which enable two-sided digital real-time communication;
  • gas: (i) gas pipelines for transport of the natural gas and biogas which are part of the transmission system; (ii) underground storages of natural gas connected with the aforementioned gas pipelines; (iii) facilities for reception, storage, regassification and decompression of liquefied natural gas (LNG) or compressed natural gas; (iv) equipment and installations needed for secure, reliable and efficient operation of the aforementioned systems or enable two-way transmission of the natural gas, including compressor stations;
  • oil: (i) oil pipelines for transport of crude oil; (ii) pump stations and storages needed for operation of oil pipelines; (iii) equipment and installations needed for secure, reliable and efficient operation of the aforementioned system, including systems for protection, supervision and management, as well as devices for two-way transport.

Public interest for expropriation

The Draft Energy Law determines public interest for expropriation, administrative transfer and incomplete expropriation of immovables for the purpose of construction of the line infrastructure objects (electricity power line, oil pipeline, gas pipeline and products pipeline), as well as objects in function of the aforementioned objects and connections to such objects in accordance with the valid plan documents relevant for construction of such object. In case the construction of the relevant line infrastructure object is not envisaged by the current planning documents, an urbanistic project may be prepared for the purpose of determining public interest, without a need to change the existing planning documents, except for determining of the public interest in the so-called protected zones.

The public interest is determined by the decision of the Serbian Government on case-by-case basis pursuant to the proposal of the Ministry of Mining and Energy. Public interest for expropriation, administrative transfer and incomplete expropriation of immovables for the purpose of construction of the line infrastructure objects is valid until obtaining of the use permit for the relevant objects.

Wholesale supply in natural gas enabled for foreign entities

The Draft Energy Law defines wholesale supply in natural gas as energy activity which may be pursued either by domestic or foreign entity that obtained energy license, which is besides wholesale supply of electricity, the only energy activity available to the foreign established entities. Such energy license is valid for 10 years.

Regulation of "new" fuels – LNG and hydrogen

The Draft Energy Law explicitly regulates LNG and hydrogen and enables trading in such fuels provided that they comply with the prescribed technical requirements. Trading in LNG and hydrogen are defined as energy activities, however, a license is not required for such trade.

Defining smart meters

Although the basic framework for implementation of smart meters is contained in the current Energy Law, smart metering system is now defined as an electronic system comprising advanced measuring devices for measuring flow of energy and natural gas, subsystem for transmission, storage, processing and analysis, as well as central control subsystem to allow communication with advanced measuring devices using some form of electronic communication. The Serbian Energy Agency will be in charge of determining technical conditions for introduction of smart meters and need for their implementation on the market.

Introduction of the Integrated National Energy and Climate Plan

Pursuant to the Draft Energy Law, the Ministry for Mining and Energy prepares the Integrated National Energy and Climate Plan in coordination with other competent ministries, which will define, among others, national goals related to decarbonisation in relation to the gas emission with the greenhouse effect and renewables, energy efficiency, energy security, research, innovations and competition. The Ministry for Mining and Energy is in charge of implementation of this plan and reporting on the progress to the Serbian Government every two years. The Ministry also informs the Secretariat of the Energy Community on adoption of the National Energy and Climate Plan and delivers the progress report to the Secretariat. It seems that institutionalisation of such an obligation of the Ministry will contribute to a more efficient implementation of the obligations imposed by the Energy Community to the Republic of Serbia.

Nominated operator of the electricity market (NEMO)

For the purpose of regulating connection of organised electricity market with the neighbouring markets, the nominated operator of the electricity market is determined as the new subject in charge of implementation of a day-ahead and intraday electricity market with other neighbouring organised markets. The nominated operator of the electricity market is appointed on the basis of the decision of the Serbian Energy Agency. Operator of the electricity market having its registered seat in the European Union and European Community may be appointed as operator of the electricity market in Serbia under reciprocity condition, following the expiry of four years as of the date of entry into force of the law, and/or when the Serbian Energy Agency determines that the conditions are met for having more nominated operators of the electricity market.

Additional competencies of the Energy Agency

The Draft Energy Law significantly increases the scope of work of the Serbian Energy Agency, introducing both day-to-day and additional regulatory competencies for it. For example, the Energy Agency will be additionally in charge of transposition of EU acquis related to the adoption of the transmission and distribution grid connection rules, adoption of methodology and criteria for assessment of investment in infrastructure projects in the area of electricity and natural gas, as well as will have the ability to temporary revoke the energy license of the energy subject on its own motion in case the energy subject no longer fulfils the relevant conditions on the basis of which the license was obtained or in case the energy subject does not notify the Serbian Energy Agency on the important changes relevant for the license.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.