Maja Turkovic, expert in electrical power systems and renewable energy economy
Exclusively for EGO
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Fotografije: RADE KOVAČ, www.radekovac.com
It was a set of circumstances. The Wind Energy Association (SEWEA) I joined as a founding member, as a representative of “Energowind” (which invests in the wind farm projects development in Serbia). That was three years ago. People are now connecting me with a wind energy term: „Maja is someone who is powered by wind!“. In the meantime, I have learnt all the steps towards realization of these projects in Serbia, and I know a lot about wind farms themselves.
After I had finished my studies, I worked at the only Institute of electrical power systems in Serbia (the „Nikola Tesla“) which is still a prestigious institution. There we made projects and studies for industry. I was satisfied, but I’ve always wished to finish MBA (master of business administration). In 2001 I had left the Institute to join the Department of Energy. Regulations were changing in accordance with European standards for the first time, the first energy law was amended, the first „blue print“ energy agencies, so we had very responsible job. It was precious knowledge, although it wasn’t technical. Although it has always been managed in Power Industry of Serbia (today in Serbian Electric Network) as it should be, and not in the Department, my knowledge of system was helpful. That was an exit from my profession, and I have never returned. Good engineer that wants to work in industry stays in Power Industry or Electric Network of Serbia. Through the call of the British Council I managed to get Chevening scholarship. I graduated Imperial College – Tanaka Business School in London. That was a great experience because I was in touch with another world, I have studied everything from economy, through marketing, finances, project and process management, IT management, to entrepreneurship.
There is no project without investing. First of all, project development has to be financed by someone’s own resources, because there are not project development loans. This means that one project starts as an idea and business decision of entrepreneur who invests his means in it and takes all the risks during its development.
Situation changes during the realization phase. No one has ever built anything with his own money, but borrowed. Getting finances from banks for wind farm projects is very complicated and much harder than for other renewable energy projects. There is a little knowledge about this in our country, so the idea of consulting financial institution during the preparation of bylaws is very good. Bad projects certainly won’t be realized, but it would be very harmful if the good ones fail just because of defective and discouraging regulatory framework.
Bank’s requirements are often stricter than authorities’.
I don’t know about the Republic, because we have cooperated with the provincial administration only, both with the Secretariat of the Environment and the Institute of environment protection. I have to say that people who work there are professional and competent, possibly because wind farms first appeared in Vojvodina, so they have already known a lot.
Biannual observation of birds and bats precedes the Study of environmental impact. One of the important aspects of wind farms’ impact is the one it has on the birds’ and bats’ population and habitats in the area. For the activities that nobody here is dealing with – noise modeling, visual pollution and shadow effect – it is necessary to engage foreign companies. This study should show all the wind farms’ impacts on the environment and recommend precautions so they would be on minimum. At the same time, we should keep on mind there is no facility that man built that hasn’t (negative) impact on the environment – the only question is society’s assessment of its eligibility.
Before the Study of environmental impact, it is necessary to „solve“ wind farm’s location through urban planning, in fact to secure location permit. For example, wind farm has to be at the proper distance from towns…
At first, windmills mustn’t threaten local population in any way. There is so called shadow effect which bothers people, rhythmic alternation of light and shadow which occurs when Sun is low and propeller turns around. There is also the ice that forms on propeller blades during the winter. There are various systems which melt the ice on propellers, but ice flakes’ flying off must be predicted (maximum estimated distance is 300m from wind turbine). In the UK visual pollution has great attention. British are known as birds’ observers and windmills distract them visually. However, the goal has to be considered: what is the purpose of the wind farms? Wind farms are facilities for electricity generation, they are not projected to beautify the landscape. Anyway, if we compare pictures to see what facilities damage environment more, traditional or these using wind energy, there wouldn’t be any dilemma.
Wind turbines don’t pollute air or water. There are small quantities of hydraulic lubricating oils within wind turbine construction, which change manually on scheduled maintenance so there is no danger of their contact with surrounding soil or groundwater.
Because of noise measuring it is necessary to model levels around each wind turbine. There is another reason to put windmills on a proper distance from towns. Noise level reduces with distance significantly, so 300 m from windmill’s base it’s on the office sound level.
Windmill’s pillar height, where wind turbine is placed, depends on wind’s speed and profile. I like to say that every wind has its turbine. In south Banat, for example, we have III a (third A) wind class based on IEC classification. The first wind class is present in the Baltics and northern Europe, where winds have higher average speeds so the pillars are shorter there. In our country pillars have to be higher than 100 meters to make one location profitable for electricity generation from wind. As in real estate business – the best locations are „sold“ first. Wind turbines’ producers make series of models for each wind class. Equipment producer mustn’t sell a turbine that is not certified for certain wind class and he has to verify the location for certain wind classification or wind turbine.
Wind farm development investor evaluates wind potential at location himself, based on years of wind measuring. In this phase the investor is „project company“ and he invests only. Project development is expensive. One megawatt costs between 30 and 40 thousand euros in our country until construction permit for the wind farm is issued and it takes 4 years. We should keep in mind this is the end of the project phase only: this price includes elaborates, studies, various projects, agreements, permissions, taxes. Nothing of the equipment is bought yet and bank financing isn’t provided. This means that 100 megawatts project requires between 3 and 4 million euros to get to the end of project phase only, or to provide all permits to start the construction. After that, it is necessary to provide a loan, and banks require 30% participation of investor in total financial construction. This is a bad period for loans and investing in general. Political risk in our country is very high, money is the most expensive thing in Serbia. Laws change permanently, and adoption of bylaws late. Do you know what does it mean for an investor when law is changed halfway? I am a „technician“, but I have to point out that investors are under the jurisdiction of the planning and building laws during the development and building until work is started and occupancy permit secured. Energy law should guarantee status and legal security for privileged producers (which produce green energy). Everyone is speaking about energy permits, but not about the fact that we – investors – don’t get any rights with it. To outsiders this can look like a permission which includes certain rights, but that is wrong. It neither allows building, nor gives location exclusivity. In order to increase competition between investors many more permits are issued than the purchase of electricity from these sources is planned. Even in the same region. Everyone who applied for the permit and was ready to pay huge tax for it got one, I believe. Only with a location permit (which is preceded by urban planning and resolving property issues) and construction permit after that, we get the right on the location, and we can start the building. Projects can qualify to obtain temporary status of privileged producer only then, and that way enter the quota which has stimulating purchasing price of electricity. Even the access to the network is guaranteed only after building permit and by that point all the risk takes the investor. For some investors this unfortunately means their project will fail in advanced development phase. Their dissatisfaction is completely expected!
If the country has such political turmoil where laws and „game rules“ change constantly without consulting investors, is it real to expect investment influx? Why investors are „infamous lobbyists“ because of protecting their investments and interests? It is completely legal to fight for survival of the project which took huge resources, much money and time, personnel education, salaries, trainings, state taxes, employment of dozens of local consultants and designers.
At first, there are no concessions on wind or sun as on basic energy sources, they belong to the planet. Afterwards, if the wind farm is placed on a private agricultural land, investor agrees with farmers to buy it or take it in rent while the only role of the government is to issue a formal approval (because the land is not public) through Ministry of Agriculture. With all the impulses regulated by Energy law regarding renewable sources, it is absurd that we cannot build a wind farm on a public agricultural land. We have been waiting for three years for a bylaw to enable leasing of public agricultural land for non-agricultural purposes. The usual practice is that republic authorizes municipalities to lease that land under certain, predefined conditions. Public agricultural land usually has bigger parcels while private soil is divided to smaller ones. There are fields where the base of wind generator cannot be placed! We have one which is 12m wide, and the base is 20 times 20.
Yes, the pillar is 119m high, like 30 floors building, for example. Diameter of the rotor is approximately as football field, propellers are 55m each, and body is between, 120m total.
Logistic study of transport and location access is preparing at the beginning of project development. This is necessary because there are many fantastic locations with wind potential which are unfortunately unreachable. Wind turbine’s parts are not critical when it comes to weight. The body is the heaviest with its 70 tones. However, it’s nothing comparing to big power transformers. Propellers are critical because they are producing and transporting in one piece. Because of them we have to make bends with 40m radius along the entire route when accessing location. People in charge of transport study thoroughly pass entire route, record every bend and barrier, examine every underpass, overpass, bridge. When transport companies check the route, houses in route also displace, and not just fences, lampposts…
Wind turbine’s parts mainly transport through water to the nearest port because this is the cheapest transport. It is necessary to provide a crane to reload these parts on special trucks which transport them from the port to the location. It is necessary to provide proper space for parts storage close to wind farm location. For example, steel pillar comes in parts and puts together on the spot. When they arrive to location, all pillar parts have to be clean and protected by a tarpaulin, they mustn’t be oily or dirty because they have to fit perfectly one to another. Crane driver puts down parts with 130m arrow one to another and they are fastened from inside. After that, the body with the equipment which is already assembled on the ground rises and the propellers at the end… entire assembly process looks great!
With wind turbine’s erection transport costs by a windmill can be up to 500 thousand euros. Crane is very expensive and it rents daily. It is very important to plan building time carefully in order to avoid long machine stopping because of windy and bad weather. The costs are huge, and all of them go into the investment cost of 1,7 million euros per megawatt of installed energy.
Windmills are wide apart and they place „into the wind“, so the wind park range is big (depending on windmills’ strength or number, it can occupy dozens and even hundreds of hectares) but occupation by windmill is very small, 400 m2. The wind rose is very useful to show dominant direction during the windmills’ positioning. Distance between windmills is bigger in dominant wind direction in order to reduce attenuation effect (or to reduce loss of wind’s kinetic energy), it shouldn’t be less than 5 rotor’s diameters what is at least 600-700m, and it could be even 1km. In the direction transverse to dominant wind’s direction the distance is less, but not less than 3 rotor’s diameters, usually 400-500m.
That area has good winds, higher altitudes and different climate from Banat, so it is expected that another turbine’s type with shorter pillars should be appropriate. Roads must expand so the equipment could pass, and hilly terrain problem can be solved with smaller cranes which move cargo from one spot to another, skipping the bends. This is very expensive way, but it is possible. All these expenses are included in CAPEX (capital expenditure) which shows whether project is profitable or not.
Windmills are installing at the location. Today, one windmill installs and its test run starts in a week. It is 3MW per week. Any other energy facility cannot compete with wind farms regarding building speed.
Of course, it is necessary to build complete traffic and power electricity infrastructure and to build foundation for wind turbine before constructing. For example, we are putting cables in traffic zone and majority of European countries through the agricultural fields. Generally, we have so specific problems sometimes that are so hard to explain to investors – for example, stealing copper cables even with deadly issue.
For wind farm of 100 megawatts is necessary to build 30-40km of roads in average. These are not asphalt roads, but field roads located at wind farm which are also used to reach some windmills and are useful to everyone who needs to come to their own fields. Those roads belong to municipality, not to investor. I am not an expert for road construction, but I have followed project development in all segments. We have worked very seriously on soil mechanic characteristics along complete rout, but especially bearing capacity of soil for windmill’s foundation. Those are very serious, long and expensive soil mechanic examinations.
There is no an institution. It is investor’s business only. Each project’s start point is good location, regarding wind aspect. However, it is necessary to do 2 years of continuous measurements on location in order to make project desirable for bank. It is important where measuring pole is placed, what is its height, what height are anemometers on. It is necessary to purchase proven equipment, it is not thing for economizing. Measurement continuity is also very important. Based on these measured data, energy potential evaluation is made. I don’t know if there is an institution in our country whose evaluation banks accept. Two foreign companies have done this job for us, so we could get two independent opinions when bank requires them.
It is necessary to invest in high-quality measurements on location in order to get valid data which all the investment depend on. Bank’s and investor’s logic is to reduce risks. That’s exactly what investors should do, because good project development reduces risk. There are certainly investors which don’t work this way, but I am sure their projects will not realize, because no one will finance them. I don’t believe any project has ever happened because someone said: „Here’s windy, let’s go!“. In the beginning, during location evaluation from wind aspect, and later for correlation, referent meteorological and satellite data are used, but measurements on location are crucial. After six months, when preliminary data are obtained, other preparation activities begin.
Meteorological stations usually own data about measurements on 10m height. Wind turbines are ten times higher! Extrapolation would give data for this height. However, these data can be used only for correlation with real measurements on location. This is considered as a huge risk by banks, so when investors realize how this risk is quantified, they regret they didn’t have higher measurement pillar.
In fact, banks don’t ask about „in house“ men, what matters to them is that every step during project development, every single document is made by their standards. If the investor hire other companies for certain work parts it is important they are credible and have banks’ confidence. Technical projects are only that can be made by local companies with appropriate license.
Experienced investors have a lot of experts „in house“. It is matter of preference. If someone hasn’t portfolio, but only one project, it is probably more profitable to hire external experts and companies instead of investing and personnel training in his own company. Besides other functions, in my company we have all profile engineers: construction, electrical engineering – energetics, telecommunication, mechanical engineering, even surveyors. Besides them, we have hired dozens of local experts in various phases of project development. For the activities which our companies are not experienced in we had to hire foreign supervision.
We certainly have enough capacity to make „pool“ of experts here, because we have highly educated employees who would get valuable experience and references through these activities. The problem is in the fact there are no enough projects for expert’s „market“ creation, so demand for local experts is very limited now, although exists. It’s a real shame we are often forced to hire foreigners, because some of these activities perform men with a technician degree.
The second employment opportunity occurs during building phase, when local companies and contractors are hired, so even up to 30% of entire investment can stay in country. When the exploitation begins, everything is automatized, so there are no many openings, except in services and maintenance. Wind turbines’ producers are expected to open service centers which would hire and train local people in our country.
Local community has the greatest benefits. At first, investors invest in local infrastructure which stays in local community, and it is not small contribution. In addition to this, local population has extra income from fields’ rent, because wind farms don’t substitute agricultural production, it is undisturbed. Companies that generate electricity has to register in Serbia, no matter if owners are foreign citizens/companies or not, so all the taxes and contributions, including VAT stays in country during all 25 years of exploitation.
Wind farms also help greenhouse gas emissions reduction, because they substitute generation from some other polluting source. There are already many studies which show that wind farms have the least negative impact on the environment.
Widely, wind farms will dominantly affect increasing of renewable sources share in the entire gross consumption in the country, what is our international commitment.
At the end, windmills mainly work during winter, when the consumption in system is the highest, and conditions for generation the best (minimum density of air). Wind farms would reduce electricity import during winter, when it is the most expensive.
That wasn’t our main goal. I agree it is problematic and frustrating, because of slow public administration which always prolongs projects, but it won’t stop them. We have spent four instead of two years, but we got construction permit. The main problem was missing of bylaws, because in that meantime energy law was inapplicable and we couldn’t move further.
The law brought in the term „temporary status of privileged producer“ which is good because we could not finance our projects without that. The essence was this: condition for permanent status of privileged producer is use permit for the object (that is the moment when the investor gets right to incentives and signs the electricity purchase contract with public supplier, Serbia electrical industry). This means the investor has already provided finances, built wind farm, connected it to network, passed through test run and technical approval in order to get use permit and license to perform activities after that.
Investors need to have electricity purchase contract and guaranteed purchase price (feed in tariff) before they request bank loan! And this is completely logic: imagine you are applying for bank loan for an apartment and you don’t have any incomes which prove you can pay off the installments. So, introduction of the term „temporary status of privileged producer“ moved obtaining rights to incentives forward, before facility’s construction, in order to enable project financing. Bank guarantee in value of 2% of total investment is imposed so the country could protect itself from unserious investors and from possibility that some investor takes place in quota and then quit facility’s building. Somehow, this is a guarantee for not quitting the project. For example, for project of 100 MW, bank guarantee is 3 million euros. If the investor doesn’t build the object during the temporary status and doesn’t come to permanent status of privileged producer, he loses this money. I hope so there won’t be any abuses in the form of investors which falsify investment values in order to pay less, because in that case this entire well planned system fails.
No, but there certainly were more than 50, if we count just documents from administrative procedure, all the agreements, reviews, permissions. These projects’ development is under the jurisdiction of energy law, but also under the planning and building, agriculture, environment…
Conditions are not perfect, but they certainly exist. Our bureaucracy is learning from us even when it is the best-intentioned, so investors also have to be very patient. Just during the procedure of urban development project we address to over 20 institutions for a review. There are all public companies, ministries, Directorate of civil aviation, Environment protection institute… it is happening that the case spends two months in the clerk’s office, that it doesn’t even reach the referent, so we are lucky when someone takes it into processing. It is enough to be stopped in a few places for a few months, and the entire year goes away. Later, in the process of location permit we address to most of these institutions for conditions again, and to some of them for the third time because of building permit.
The network and connection on it are responsibility of Serbian electricity network. In case of smaller wind farms, up to little MW strength, there are local electricity distribution companies. Serbian electricity network evaluates transmission network’s possibilities to connect new production facilities, including wind farms. In fact, Serbian electricity network evaluates system’s technical limits. For wind energy penetration into our system, evaluated limit is 1000 MW, at current system’s condition, so without further investments in infrastructure. Connection to network in our country is always financed by the investor, but transmission lines and transformer stations stay in Serbian electricity network’s ownership, because it is the only institution that can own and manage these objects legally.
The problem is that we also break the ice regarding connection on network of new production capacity which is outside of the system of Serbian electricity industry. That’s why we met a lot of illogicalities. For example, only after getting building permit, which is in our case preceded by 4 years of work and few million euros of investment, investors can get approval to connect to network. In that moment only they get formal right to connect to network. Why would anyone go in project investment if he doesn’t know if his facility will be able to connect to network at all? It is one more reason why Association for wind energy was formed with the aim to point out to illogicalities and incompatible regulations to lawmaker, because it is valuable when someone who has passed through entire procedure point out to problems he had met. This is the only way we can make regulatory framework which really works, and doesn’t hold investments back.
Another example is conflict of deadlines and procedures in energy law with those in planning and building law. The time that is enough to finish procedures by one law breaks deadline by others, so the permissions we have already got and paid for expire, and we start all over again…
Yes, it is. The thing that lasts equally everywhere is evaluation of the environment impact process. However, designing and licensing procedure is significantly shorter. In other countries with wind farms’ expansion – to mention neighboring countries only: Romania, Croatia, Bulgaria – investor’s legal security is higher so the risks are much smaller. That reduces financing costs. The price, or feed in tariff, is not the only thing that determines someone to invest in these projects. This job is a complex equation with multiple variables.
I think all of us, at first our administration, are still learning, because wind farms are developing in our country for the first time. We usually face the matter ignorance if I can it call that way – no bad intentions.
It is a technical detail which is commented by many people who don’t understand it. Here it is: wind is variable, but predictable. Why is this important? There are short-term forecasts, made one day in advance, what means today we can predict every wind farm’s tomorrow’s production, with deviation less than 10%. When the wind blows so strong it draws maximum strength from wind farm and then suddenly stops, dispatcher has to find missing strength in order to balance the system (production and consumption). He finds it in the system or buys it on the market.
This is expensive, and all these are balancing expenses which we bring in system, and which are included in stimulating price. Privileged producers don’t pay balancing expenses during feed-in period, and after 12 years they will have to act as every market’s participant – to pay balancing expenses or to buy missing quantities on market.
I expect the errors and therefore balancing expenses to be much less than predicted. Turbine is turning on when the wind reaches 3m per second. Our turbine slowly reaches its nominal speed of 3 MW at wind speed of 12m per second. At speed of 23m per second turbine turns off and doesn’t produce electricity. So, the most critical moment is when turbine from maximum strength suddenly crosses in non-producing mode. In the case of southern Banat’s wind, after 4 years of continuous measurements, I can say there wasn’t any 10-minutes period with wind speed over 23 m per second, which means there wasn’t any situation that concerns dispatcher.
Feed-in tariffs which everyone is talking about are stimulating purchase prices for electricity for privileged producers, those who produce green energy, and they are given for certain period, in our country for 12 years. Feed-in tariff’s height depends on source kind or technology, because this stimulating price has to enable certain investment repayment period, so investors would come in the first place.
Maybe I’ll partly demystify wind farm rumors: these are certain, but long-term profitable investments. So, investing in wind farms is not speculative investment with a high rate of return in the short term. The investment is repaid during the feed-in period, so in 12 years. During that time, wind farm “works” for the bank and for equipment manufacturers, and after 12 years of exploitation begins to work for itself, or the owners.
To repeat what I’ve already said – before these mentioned 12 years, someone had invested money and knowledge in project development, which took 4 years, then he gave 30% participation for loan, after that it is necessary to add building period and test run time and so on, what lasts about 2 years, in order to come to the exploitation, or investment repayment start.
That’s right, the final customer is paying the price, and it is usual model everywhere. Because of high technology prices of renewable sources comparing to conventional ones, they cannot resist competition and they are looking for incentives because there are not any investments without them. No megawatt from the wind, sun or some third renewable source has ever been built without stimulating purchasing prices. These incentives are not observed as twenty years ago when the industry was on its start, so the purchase price of solar energy, for example, was 40 cents. Today, electricity prices for final customers are higher than our stimulating prices in the most of European countries.
We shouldn’t forget also that every installed MW in Serbian electricity industry system, thanks to which we have electricity today, is financed by the citizens who pay their electricity bills. My attitude is that we have to use maximum renewable sources potential because not-using it is a luxury for any country. These sources are more expensive during the feed-in period, or investment repayment time, but after that they become the cheapest source with the lowest marginal production expenses, because primary source is free, so they have final customer’s price reduction effect. So, Serbian electricity network will buy electricity from wind farms in the future, because it’ll be the cheapest. And, this will reflect on price reduction for the final, tariff customer.
If we had all 500MW on network from the wind today, with this electricity price level and with assumption it would be held at the same level during next 12 years, electricity price for final customer would increase for less than 3%.
There is no any dilemma for me whether we want renewable sources or not. The point is that our usable potentials are articulated in state energy policy. Is it necessary to raise public awareness? It certainly is. Is it necessary to ask citizens who finance that what they wish: wind farms, solar farms, nuclear power plants, more conventional sources? If we are searching for the cheapest one, it is certainly nuclear energy. Is it dilemma? I don’t remember if anyone has earlier asked us if we support opening of some colliery or rising of new dam. Legally elected government creates our country’s energy policy and strategy and it has the greatest responsibility. This time also.
I think it is important that people who create future of energy understand climate changes economy. There are experts’ teams today that make sceneries of those changes and models which are recommendations for a national energy policy based on. We see that only on movies. There is no „plan B“ for the future, because we have only this one planet. As soon we realize this, it will be easier. Therefore, either we will realize what to do ourselves, or International community will force us to. Serbia reminds me on one „Gallic village“ which resists to Roman Empire persistently (those who like Asterix will know what I am talking about…). The rest of the world will not let us to act in a way which is inacceptable to others, no matter how poor we are. What we pollute doesn’t stay in „Gallic village“ because pollution doesn’t recognize state borders.
I have recently had polemic about „there is no more“ subject. Coal. Its supplies are enough for the next 30 or 50 years. As a mother whose children live here, I’m very interested in the future of energy, I would even say in a vision for this country. We will manage this winter, and the next one… When all the resources of coal are spent, most of us won’t be alive anymore. But, our children will. What is expecting them? Are we hoping the liberalized market will solve all the problems?
At the other hand, production from coal was the cheapest technology, but it is not anymore. With new technologies which eliminate water and air pollution, and which are only acceptable today, price of electricity from coal is 8 eurocents per kWh. In many European countries price of electricity from wind competes the one produced from conventional coal plants.
Entire world’s and European energy policy is very aggressive in directives’ implementation: in 2011. 6300 MW of nuclear plants are shut down in Europe, 1000 MW of oil fuel plants, almost 1000 MW of gas power plants and 840 MW of coal-fired plants. We are expecting data for 2012, but the trend continues.
There is mandatory directive that all the coal-fired plants which use old technology or – those which don’t have closed system for pollution treatment are closed until 2017 which regards our country as well. Serbian power distribution will have to invest in equipment modernization because of this, what will inevitably lead to electricity’s price increase, or it will get budget subventions what citizens will pay as well. Otherwise, our coal-fired plants which produce 60% of our electricity will be closed.
These pollution reduction solutions are for our lifetimes only. The changes are inevitable.
It is granted we have 21,4% of renewable sources in entire structure of our production capacities, thanks to our ancestors who had thought about future and used hydro potentials well. However, no new production capacity has been built for more than 20 years. At the end of October 2012. Serbia got obligating percent of renewable sources share increase in the entire energy gross consumption. It is our international commitment now, toward Energy community whose member we are. Our assignment is to increase renewable sources share from 21,4% to 27% by 2020. There are only eight years until then. In this short period we can increase this percent mostly from hydro plants and wind farms. If the only criterion is the price, hydro plants are more profitable. However, much more time is necessary to build a hydro plant, for eight years period it is impossible to make another Djerdap. At the other hand, wind farms are built very fast, so I expect their share to be prevalent.
I think it is important to introduce each option’s expenses to the public, regarding electricity price for the final customer, but also regarding external production expenses which every technology brings to the society.
We should build renewable sources because it is good for ourselves. We should have already done it, but we didn’t, probably because no one forced us to. Maybe it is good we have this commitment now, so we will do something useful for ourselves because of others. These are long term goals.
Many things have already changed, this law is good and in accordance with international standards. We have reached building permit, few more projects will get permits in a few months, which means that dozens and even hundreds of MW from wind farms will spin until 2015. We will have to wait little longer for new hydro potentials. It’s little bit frustrating for investors when the officials go in public promising building of hydro plant in three years. If the business is led by this country’s laws, in three years it is impossible to get urban planning document, to solve property rights, to change purpose of land and to get all necessary permits. I think it is important that laws apply to all, because other way we will drive away even those investors which are still here.
As a renewable sources supporter, I would be the happiest if one huge solar project would realize in Serbia, but I am very skeptic. At first, such project cannot be subsidized because the quota for solar panels on the ground is very small. Another problem is construction of energy infrastructure that would support this strength placement. The third problem is (im)possibility to export green energy from these facilities to EU. This is not possible before the nationally aimed renewable sources percent is reached. At the end, there are land issues because between 2 and 3 hectares per MW of installed strength are necessary.
The thing our regulations stimulate now (through quota and purchase prices) is: construction of small systems for electricity production, regardless of export type. This is so called distributed production, which Germans are the best in. We will see the reaction of private sector to these incentives.
Although I’ve been criticized because I promote only wind, I have to say this: I think that economic potential of the biomass is much less than it is thought. It is truth that various cultures can be used as a biomass because they have sufficient caloric power, but it is important that they don’t substitute food; there are different leftovers from agriculture and forestry; so the entire energy potential of the biomass is defined; so – there is a lot of biomass. What’s the problem? When energy balances are made and energy potential of the one source is calculated, they are expressed in million tons of equivalent oil, but this information doesn’t mean anything commercially. The point is that someone who wants to invest in biomass facility doesn’t want to depend on anyone, no matter if it is country or farmer, regarding primary raw material. Investor wants to have and control raw material in his own chain. Another limiting factor is raw material transport which is expensive comparing with raw material’s price. Therefore, profitable potential of biomass is significantly less than its total estimated energy potential. It is important that people who make strategies and plans begin to think like those who invest money. In that case we wouldn’t have a situation that planners see a lot of potential here, and there are no investors at all, in spite of very stimulus prices.
What we could expect is building of smaller biomass facilities, with strength up to 1MW, because of higher stimulus purchase price. Implementation of biomass facilities is in heat energy primarily, or combined heat and power energy.
We have great potential in geothermal energy; there is atlas of Vojvodina’s geothermal potentials. This technology is followed by very expensive research work, especially in petro geothermal energy sector where new technologies are developing. Potential is theoretical for now, we will see if it will be used and how.
Government adopts the Strategy of energy development on the proposal of the relevant ministry. By the middle of 2013 Action plan for renewable energy should be adopted, in order to provide the answer to the question how Serbia will increase the participation of renewable sources by 2020. New regulations for renewable energy area are adopted. It’s all good, and it would be even better to set up a more active dialogue with investors and banks. It’s always good when a lawmaker have advisers from business and financial sector, in order to gravitate towards real, achievable solutions. Otherwise, we’ll change and repair laws now and then and wonder where investors are. I might be attributed to have lack of objectivity, because I represent a stakeholder? I agree… But it doesn’t call into question the validity of my arguments! I wanted to keep this conversation positive in tone, because – we aren’t deciding whether there will be any future or not. We certainly make decisions that determine how the future of our children will look like.