The Government of the Republic of Serbia (RES) and its Ministry of Mining and Energy have invited bids from renewable energy producers to develop 400 MW of wind and 50 MW of solar projects and help set market premiums.

A market premium is an incentive for generating electricity through which the state protects the producers from changes in market prices.

The producers, once selected, will have to pay the state only the difference between the price offered at auction and the market price. If the market prices are higher than the price offered by the producer at the auction, the producer will pay the difference to the state.

The reference market price for calculating the market premium is the price of electricity on the Serbian power exchange (SEEPEX).

The last date to submit the bids is August 14. Bids will be opened on the same day.

The bidders must submit bids of a minimum of 3 MW or above capacity for wind projects and a minimum of 500 kW and above capacity bids for solar projects.

The auctions are the first within Serbia’s ‘Three-Year Incentive System Plan,’ which targets allocating market premiums for 1,300 MW of renewable energy for producers until 2026.

The maximum price set by the Government for the renewable energy source for a domestic producer is €105 (~$114)/ MW for wind and €90 (~$97.8)/ MW for solar projects.

With an aim to reduce the electricity cost, the government will grant incentives to investors offering the lowest price compared to the maximum price defined in the tender.

The fixed percentage of the maximum offered price to be paid by the producer to the guaranteed supplier is 5.81% for wind projects, while the same for solar projects is set at 2.65%.

Bidders must ensure that the offered capacity of the projects is equal to or above 70% of the project’s total capacity.

They must submit a bid security of €30 (~$32.5)/ kW of the offered capacity. The select developer must furnish a performance bank guarantee of €60 (~$65)/ kW of the allotted capacity.

The projects must be commissioned within four years of receiving the work order.

In a situation where two or more bidders offer the same price, their projects will be considered, given the total capacity of their projects is less than or equal to the remaining quota, i.e., within the 450 MW limit.

Serbia’s Minister of Mining and Energy, Dubravka Djedovic, said, “It has been estimated that following the successful implementation of the auctions, EPS (Elektroprivreda Srbije) will be generating more than €3 million (~$3.2 million) annually, taking into account the relevant market prices.”

Elektroprivreda Srbije is an electric utility power company owned by the Government of the Republic of Serbia.

The European Bank for Reconstruction and Development (EBRD) will provide technical assistance for developing the legal regulatory framework to conduct the auctions.

Swiss State Secretariat for Economic Affairs, along with EBRD as a shareholder, will provide financial assistance for the projects.

In April this year, the European Commission approved the inaugural cross-border tender to promote renewable energy-related collaboration among member states to expedite the achievement of clean energy targets. The tender is being carried out as part of the renewable energy financing mechanism and is a result of Luxembourg and Finland’s pledge to collaborate under this initiative.

Earlier this year, the European Parliament and the Council provisionally agreed to raise the European Union’s binding renewables target to a minimum of 42.5% by the end of the decade, doubling the continent’s existing share of clean energy sources.