Powering clean energy in the Western Balkans
Marián Holúbek is an energy consultant from Slovak Republic. When he came up with the idea of setting up his private energy business in Serbia, he already had vast experience working on projects across different countries. Together with his business partner, they decided to build a biogas power plant in the small town of Bač, Vojvodina.
Marian explains that his business rationale was founded on the supportive business environment for energy investments in Serbia on the one hand, and the increasing need for such investments on the other.
“The Serbian government adopted policy and regulations that encourage both local and foreign investments, as Serbia is striving to increase its share of renewables and lower its dependency on coal and other fossil fuels,” explains Marian.
As the new Western Balkans Investment Framework (WBIF) publication explains, the energy sector in Serbia and the entire Western Balkans is currently facing a unique dual transition: from centralised state-controlled systems to open and competitive markets, and transition towards reducing green-house gas emissions. Aware of this challenge, countries have unlocked access to their energy markets for private local and foreign investors, who can provide experience and financing as solutions for ageing infrastructure and high reliance on fossil fuels.
Financing for clean energy
At the initial phase of project development, financing was one of the first considerations.
“We couldn’t get financing from local banks in Serbia at the time, and getting financing from Slovakia for a project in Serbia was too expensive. That’s when we turned to the EBRD for help,” recalls Marian.
Under the EU-supported Regional Energy Efficiency Programme, EBRD provides both financing and policy dialogue assistance to the countries of the Western Balkans to help them improve conditions for investment in renewable energy and energy efficiency. For investors, the programme provides loans accompanied by incentive payments funded by the European Union. Norway has also supported the programme from the start with funds used for technical assistance.
Today, Marian runs five biogas plants in Bač and Martonoš, producing around 18,800 MWh per year, enough to power around 3,000 households. The production process is closed, so nothing goes to waste. Agricultural leftovers from farms are converted into biogas, which in turn is used to generate electricity and heat. The electricity is then fed into the grid and supplies electricity to local households, while some of the heat is used in the digestion process. There are also two by-products from the process: the solid residues from the anaerobic digestion process are dried and then converted into pellets used for heating in households or industry, while the liquid residues are used as organic fertilisers by local farmers.
“One of the best things about biogas production is that it is a sustainable, zero-waste technology and a win-win story for all participants. A biogas producer receives biomass for fermentation and a farmer receives a long-term contract for the sale of biomass with a stable price. In addition, they also get organic fertilisers replacing the inorganic ones that may be harming soil on farming fields.”
Vladimir Bošković, owner of the dairy farm Bošković Agrar in Bač, confirms: “We use corn silage to feed cows, and we sell the excess of silage to the biogas power plants. In return we get fertilisers which we use on our corn fields.”
Serbia and EU
In addition to zero-waste benefit, biogas power also helps offset the CO2 emissions which would otherwise result from using fossil fuels. In a country where air pollution (mainly caused by coal plants, fossil fuels used for heating in households, and an ageing vehicle fleet) is increasingly becoming a concern for its citizens, helping combat this by using alternative energy sources is a very welcome development.
“Serbia’s objective is to reach a 27 per cent share of renewable energy in overall energy consumption by 2020. Thanks to recent developments, especially in wind energy projects Čibuk1 and Kovačica which the EBRD also supported, the country is making progress towards this objective”, explains EBRD’s Regional Head of Western Balkans, Zsuzsanna Hargitai.
Over the 2007-2015 period, the EU contributed more than €100 million to support energy efficiency investments in accession countries, while the EBRD has committed close to €2.5 billion in green economy projects in the Western Balkans to date.