agripolicy wp2d2 serbia final

8/8/2019 AgriPolicy WP2D2 Serbia Final

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AgriPolicy

Enlargement Network for Agripolicy Analysis

ANALYSIS OFRENEWABLE ENERGY AND ITS IMPACT ON RURAL

DEVELOPMENTIN SERBIA

NOVEMBER 2009

Work Package WP2: Studies Deliverable D2.2 Study 2Coordinators Axel Wolz, Klaus Reinsberg, Gertrud Buchenrieder (IAMO)Author BOGUNOVIC ALEKSANDAR, BOGDANOV NATALIJA


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ACKNOWLEDGEMENT

This report forms part of the deliverables from a project called "AgriPolicy" which has beenawarded financial support by the European Commission under the 7th Framework Programme.

The project aims to establish a network of experts involved in agricultural policy analysis andrural development in the 12 New Member States, in 8 Candidate and Pre Candidate Countries.More information on the project can be found atwww.agripolicy.net .


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CONTENT

1 Introduction ........................................................................................................................ 52 Overview of the use and relevance of renewable energies ................................................ 7

2.1 Relevance of renewable energies in national energy supply...................................... 72.1.1 Production and share in total electricity supply ................................................. 92.2 Sources of renewable energies: implications for farms ...........................................112.2.1 Biomass for energy production ........................................................................112.2.2 Other energy sources: wind energy, solar energy, hydro-energy.....................202.3 Main effects with respect to agricultural and forestry production ........................... 242.3.1 Change in land use patterns.............................................................................. 252.3.2 Change in cultivation practices, innovation and investments .......................... 252.4 Overview of the installations producing bio energy ................................................ 272.4.1 Number and capacity development over the last years .................................... 292.4.2 Relations with supplying farmers..................................................................... 31

3 National policy and concepts promoting renewable energies..........................................313.1 National policy ......................................................................................................... 323.2 National concepts and programmes ......................................................................... 33

4 Impact of the promotion of renewable energies...............................................................354.1 Impact on the agricultural sector.............................................................................. 374.2 Impact on rural development....................................................................................37

5 Strengths and weaknesses of renewable energies ............................................................405.1 Strengths and weaknesses ........................................................................................405.2 Opportunities and Threats ........................................................................................41

6 Conclusions...................................................................................................................... 43Annex 1 Consulted literature List of Key interviewed persons..........................................45Annex 3 List of internet sites .............................................................................................. 47


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List of abbreviations

CHP- Combined Heat and Power CDM- Clean Development Mechanism

DSO- Distribution System Operator GWh- Gigawatt-hour EC- European Commission or Commission of the European CommunitiesEE- Energy EfficiencyERC- Energy Regulatory CommissionGcal- GigacalorieGHG- Green House GasesHPP- Hydro Power PlantMtoe- Million tonnes of oil equivalentRE- Renewable EnergyRES- Renewable Energy SourcesSHPP- Small Hydro Power PlantsSME- Small and medium enterpriset- TonTJ-erajouletoe Ton of oil equivalent


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1 Introduction

Tradition and introduction of renewable energy resources, beside the utilization of hydro

power, has significant history in Serbia. During the 80, following the pioneer attempts andnew technology developments at that time, Vojvodina Province Secretariat had a special fundfor support for utilization of renewable sources of energy. During this period biomass wascombusted in about 1200 boilers, mainly straw and leftovers from wood factories, and insmall amount mealie after harvesting. Also maize cob and sunflower heads were combustedon industrial level. Total power of these facilities at that time was estimated on cca 140MW.Today barely 25% of these facilities is still in function. Straw and mealie, sunflower heads,leftovers from pruning of orchards and vineyard were used for briquette in several facilities but none of these is in function today. At that period of time, construction of 9 biogas plantswas initiated in Serbia. Only one was accomplished and operated for several years, but noneof others were completed or utilized. Today none of these facilities is in function and the

existing equipment is out of date and in most cases cant be used or modified.Due to a low level of punishments for environment pollution, most of the farmers are not pushed to invest in proper manure management, although there is a raising awareness amongfarmers that this issue will become very important in near future. One of the problems is thatat this moment Serbian farmers are facing big challenges in the period of transition andgovernment has no sufficient funds to assist them. Having in mind the latest tendencies in EUand the economic situation in the country, related to decrease of subsidies for agriculture producers and the market turmoils of agriculture products, farmers are looking for newresources and possibilities to increase farm income. Having the available support schemesfrom the Government large number of farmers are introducing new actives on their farmtrying to provide an added value to their products. Knowing the tradition and good knowledgeof farmers about the possibilities for utilization of biomass, and latest more frequent dialogson this topic, more and more farmers are making inquiries about the possibilities and meansfor introduction and utilization of agriculture biomass. Recognizing the importance of implementation of modern technologies and frequent demands from farmers which areinterested in energy production, MAFWM organized the first conference on the topic- GreenDrop for the future in May 2006 - trying to bring some new developments in this sector inSerbia, to a larger number of farmers. Several small workshops were held and some pilotinitiatives for construction of biogas plants were initiated in cooperation with foreignconsultants and potential investing companies, but none of them have initiated the process of construction.

However, one of the obstacles for introduction of the proper support mechanism from theGovernment is the lack of sound and valid Analysis of potentials on renewable resources inAgriculture and available technologies. Also, the lacking elaboration of following legaldocuments and regulations related to this issue is very big obstacle for faster introduction of utilization of renewable energy resources in Serbia. Recently the Serbian government initiatedthe preparation activities for elaboration of National Strategy for Renewable EnergyResources.

According to the Agreement on Energy Community of SEE Serbia is obliged to adopt EU

Directives related to utilization of renewable resources. At this moment the share of renewable energy resources in Serbia is about 6% (including the big hydropower plant) and itis estimated that that it will remain stable until 2015.


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Situation on EU directives related to RE in the country

Directive 2001/77/EC on Promotion of electric energy from renewable resources oninternational electro energy market. Serbia has prepared the plan for implementation of this directive, although there are a lot of other obstacles that have to be resolved like

(nomination of national goal, establishment of support system and guaranties of origin,green certificates, short and simple administrative procedures, definition of conditions for attachment to the grid...)

Directive 2003/30/EC on promotion of utilization of bio fuels or other renewable fuels for transport. This regulation is referring to use of bio fuels on the market in share of 5.75%related to total amount of fuels in traffic until the 2010. Serbia is in the preparation phasefor implementation of this directive.

Directive 2001/80/EC on limited emission in the air from big facilities with combustion.This directive is referring to big facilities for heating, thermo power of 50 MW. It is prescribing the limit figures of emissions in the air for new and existing power plants. Full

implementation of this directive is planned for December 2017. Directive 1999/32/EC on reduction of sulphur in liquid fuel. Implementation of thisdirective is planned for end of 2011, and it is referring to reduction of emissions andintroduction of limits for sulphur dioxide.

Directive 96/61/EC on integrated protection and pollution control (IPPC directive). IPPCDirective goal is to accomplish the integrated protection and monitoring of pollutionscaused by different activities (including the whole energy sector)

By signing of the Agreement on establishment of energy economic community of SEE andEU, Serbia accepted the responsibility to apply directives linked to bigger utilization of renewable resources (2001/77/EC and 2003/30/EC).

In 2004 Law on integrated protection and pollution control was adopted but still some of the by laws are missing for full implementation of this Law. Deadline for acquiring of theintegrated licence for existing enterprises and activities is year 2015.

Kyoto Protocol was ratified in the Parliament of Serbia in 2007. And establishment of theCDM infrastructure, including the elaboration of CDM Strategy is in the process.


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2 Overview of the use and relevance of renewable energies

2.1 Relevance of renewable energies in national energy supply

From available statistic data, it can be seen that the share of renewable energy sources(excluding large hydro power plants) is negligible. It is well-known fact that in the majority of country households and even in some urban households, the wood is used for heating andcooking. As there was no reliable information about that kind of consumption it was neglectedin this report.

Serbia has very diverse energy supply sector, composed of coal extraction, coal and hydro electricitygeneration and oil and gas production. According to the energy balance, in 2006, total primary energysupply in Serbia was 14.8 million toe. Coal represented 55% of primary energy balance in Serbia. It isfollowed by oil (27%), gas (13%) and renewable sources (6%) as presented in the Figure 1.Figure 2. Indicates the balance of domestic production compared with import of energydepending of the source of energy.

Figure 1. Quantitative data considering energy consumption

Source: Market survey- Croatia, Serbia and Bosnia-Herzegovina - Renewable energy- EVD International business and cooperation. January 2009 .


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Figure 2. Import/ domestic production of energy in Serbia

Source: Ministry of Energy and Mining During the presentation of data considering the energy consumption in Serbia, all data aregiven in million tons of oil-liquid fuel equivalents (Mtoe ). This has been done for the purposeof better inspection and more accurate presentation of the data. Some other conversion unitsare presented in the Table.1

Table.1.1 Conversion Equivalents between Units of EnergyTJ Gcal Mtoe Gwh

TJ 1 238.8 2.388 2.388 x 10-5 0.2778Gcal 4.1868 x 10-3 1 10-7 1.163 x 10-3 Mtoe 4.1868 x 104 107 1 11630Gwh 3.6 860 8.6 x 10-5 1 IEA: ey World Energy Statistics, 2006

Units of measure:TJ =erajoule

Gcal =GigacalorieMtoe =Million tonnes of oil equivalentGWh =Gigawatt-hour t =Ton

Table 2 Structure of energy sources in SerbiaSource Energy consumption (Mtoe) Share (%)

Hydro 1,0 7 N. Gas 2.1 Oil 4,0 27Coal 7,9 52Total 15,0 100,0

1 All presented Tables in this document will be created according to the indicators that are available in Serbia,and not always in the requested forms, because of the missing informations and easier treacability


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2.1.1 Production and share in total electricity supply

The electricity generation in Serbia is in hands of the state company the Electric Power Utilityof Serbia (EPS) owing the capacities: Thermal power plants- 3.936 MW (55,3%), Thermal

power-heating plants- 353MW (5,0%) and Hydropower plants- 2.831MW (39,7%). At thismoment production of electricity from renewable resources is not present in Serbia, at leastnot in the industrial or economic way. In last couple of years, the interest for production of electricity from renewable resources is becoming very popular topic but legal constrains and prices of electricity, as well as other obstacles are slowing down this process. Total installedcapacities for production of electricity in Serbia, including the hydropower plants as onlyrenewable significant resource at this moment, are presented in the Table 3.

Table 3. Installed capacities for production of electricity in SerbiaInstalled net capacitiesPlants

MW %

Thermal power plants 3.936 55,3Thermal power-heating plants 353 5,0Hydropower plants 2.831 39,7TOTAL 7.120 100,0

In 2006 around 1.4 mil. tones of diesel fuel were spent in Serbia. There are no records of biodiesel production in Serbia in 2006; there are also no viable records on biodieselconsumption. It is estimated that biodiesel consumption makes less than 0.5% of dieselconsumption in Serbia in 2007.

First attempts of production of biodiesel started in middle 1990s during the sanction period

and scarcity of diesel fuels in Serbia. During this period several chemical facilities wereconstructed or reconstructed for production of biodiesel. Although the plan was to produce50.000 t of biodiesel, due to undefined role of state and support system, these quantities werenot achieved.

In 2007 Serbia got new factory for biodiesel production, when the factory Victoria Oil inid, which fulfils the requirements of the standard EN 14214, was constructed. The same year they started the production of the first quantities of biodiesel- around 25,000 t of biodiesel.Installed annual capacity of this factory is 100.000 t of biodiesel. At this moment it is hard toestimate at what time the factory will reach the full capacity since there is no stable market for biodiesel in Serbia.

Diesel consumption

Every year about 4 mil tones of oil is processed in Serbia, out of which 645.000 tones arederiving from domestic production. Domestic production of raw oil is declining- in 2003 itwas 690.000 t, and in 2004- 645.000 t. On the other hand, the increase rate of import of oil is6% annually. Some calculations are showing that average consumption of oil per 1000citizens is about 324 t in Serbia, much less than it is in EU. Considering the constanteconomic growth in last couple of years, the rate of oil consumption is increasing as indicatedin the Table 4. There are no accurate statistical data on biodiesel production in Serbia for 2006and for consumption of this fuel. It is estimated that consumption of biodiesel accounts lessthan 0,5% of diesel consumption in Serbia in 2007.


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Table 4 Diesel Consumption in Serbia in the period 2003-2007.Year Indicator 2003 2004 2005 2006 2007

Diesel consumption inSerbia (t) 994.000 1.298.000 1.291.000 1.384.000 1.455.000

Source: Data from Province Secretariat for energy and mining

Due to significant available potentials for production of plants for production of biodiesel inSerbia, ideally, the production of domestic biodiesel could substitute 13-15% of domesticconsumption of diesel (calculated on energy level). Since agriculture is strongly linked to production of biodiesel it can be expected that this sector could be the biggest consumer of biodiesel, and according to estimated results, it could substitute about 45-50% of total dieselconsumption in agriculture sector.

Petrol consumption

According to the data from the Ministry of Energy and Mining, annual consumption of petrolin road traffic and air transport is about 1.465.600t. Production and share in national heatingconsumption

In 2005 gross production of heating energy was 48.799 TJ, and 47% was produced in thermo power plants with own production, 45% in city heating plants (CHP), 4% in power plantswith cogeneration and 3% in thermo power plants.

The largest consumer of heat energy is the industrial sector with a share of 56% in 2005. It isimportant to emphasise that consumption as well as production of heat energy is very low dueto a lack of modern technologies, which influence the low energy efficiency.

Households are consuming 37% of heat energy. About 50 larger cities have their own heatingsystem. Total installed capacity of city heating plants (CHP) is 6.600 MW, and 50% of theseare located in the capital city. Share of fuels used in CHP is: 67% natural gas; 19% heavy oil (fuel oil); and 14% coal

Efficiency of centralized production and distribution of heat energy is small with losses up to20%.


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Table 5,Balance of HeatBalance of Heat in 2005 Balance of Heat in 2006

Heat (TJ) Heat (TJ)Transformation output 48.799 44.999

Thermal power plants 1.543 1.533

CHP-other 2.163 1.491

Auto producers 22.947 20.550

District heating plants 22.146 21.425

Consumption in the energy sector 1.018 890

Thermal power plants 17 17

CHP-other 89 65District heating plants 912 808Final Energy consumption 44854 41387Industry 25181 20972Household 16397 15699Agriculture 219 382Other users 3057 4334

REPUBLIC OF SERBIA REPUBLIC STATISTICAL OFFICE- ENERGY BALANCES, 2005. and 2006.electricity, heat and coal

2.2 Sources of renewable energies: implications for farms

With a territory of 77 474 km2 and 7,4 million inhabitants (not including the territory of Kosovo and Metohija) Serbia belongs to a group of middle-sized European countries.Generally, the northern half of the territory of Serbia is a plain agricultural area, while thesouthern half is a mountainous region rich in forests.

Agriculture is the basic occupation of a large part of Serbian population. Somewhat belowhalf of the total population (44%) lives in rural areas, and most of them of agriculture andassociated activities. Agriculture represents a very important factor in the countrys economy,(14% of GDP in 2005), as well as foreign trade (trade of agricultural products makes for 12,8% of countrys total foreign trade).

2.2.1 Biomass for energy production

Agriculture land in Serbia is occupying the area of 5.100.000 ha out of which, 3.600.000ha iscultivated. The main area for crops production is the northern part of the country, with production of maize, soya, barley, rye wheat and other. Livestock farms that generate liquidmanure are disbursed through the country, and three regions, Sabac, Vrbas and Pozarevac arewith the highest density of farms. The main area of fruit growing, another source of biomasswaste, is the southern hilly region, notably producing plums, apples, cherries, peaches, andgrapes.

Annual crops

Field crops are traditionally grown in Serbia, mainly due to the fact that until 2007. there wereno plants for industrial production of bio fuels. Beginning of this type of production started in


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2007. after the first factory for biodiesel was constructed. Traditionally grown crops with potential for utilization for bio fuel production, are soya, sunflower, corn and oil rape seed.

There are many small individual landowners who deal with production of cereals or industrial plants, like sunflower or soya. A great deal of crop farming production, almost 75% is

achieved in small or medium size private companies, while only about 25% of crop farming production belongs to agricultural companies of relatively larger size. These two groups of agricultural producers have different practice of using biomass residues. Presently, in largeagricultural farms much less biomass residues are used for livestock breeding than at small private farms. But, at small agricultural farms, if the owners do not have cattle, from their point of view it is useless to collect biomass residues after harvesting. The reasons are: noneed for using biomass residues for cattle breeding, their existing domestic stoves or boilersare not adjusted for burning of large pieces of straw or similar unprepared biomass residues,and there is no market for selling biomass residues. As a result, they often burn down thestraw and other biomass residues at the field. In addition, it is not easy for another entity toorganize and achieve low cost collecting of biomass residues from many small scatteredfields.

During the last couple of years there was some kind of stability in production of cereals and planted area didnt change much in time, although some increase of production can beobserved in the field of industrial crops (Table 6.). The only significant change could benoticed in the increase of production of oil rape seed and slight switch from wheat toindustrial crops. Increased areas with oil rape seed is influenced by construction of the first biodiesel plant in Serbia, and because of the initiative of the factory to contract the productionwith farmers in advance. All other changes cant be observed as impact of the utilization for energy production, but only as results of the diseases, government policy, price and marketchanges, etc.Table 6 Changes of the area of the major annual crops adopted for renewable energies

(000 ha)2000 2001 2002 2003 2004 2005 2006 2007 2008

Wheat 651.0 691.0 694.0 612.0 636.0 563.0 540.0 559.0 487.4Corn/Maize 1203.0 1217.0 1196.0 1200.0 1200.0 1220.0 1170.0 1202.0 1274.0Rape and turnip rapeseed 6.3 3.2 4.4 3.0 2.0 1.7 3.9 12.9 18.0Rye and Maslin 5.9 5.8 5.8 6.1 6.1 7.2 6.9 5.5 5.6Barley 107.0 131.0 131.0 110.0 110.0 105.0 94.0 94.0 92.4Sugarbeet 44.7 43.3 52.1 65.0 60.4 64.3 72.0 79.0 48.0Sunflower 146.4 163.2 148.8 200.0 188.7 199.0 187.0 154.8 187.8Soya 141.6 88.0 100.1 131.0 117.0 131.0 157.0 147.0 143.6

Source:Agripolicy project (draft report)

Important parameter for calculations and predictions of production is the prices of the crops,and it is interesting that prices of almost all crops increased more significantly in 2007 andremained at that level (Table 6.1-2). For easier comparisons the prices were converted in euroaccording to the exchange rates presented in the Table 6.3.


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Table 6.1. Average annual prices for crops in Serbia (RSD/kg) 2000 2001 2002 2003 2004 2005 2006 2007 2008

Maize 4,57 8,71 5,57 6,82 9,02 6,46 7,47 12,24 12.75Rapeseeds 6,03 9,00 11,00 11,00 11,50 12,00 15,33 17,49

Sunflower 6.26 11.91 12.02 12.00 11.48 14.77 15.07 25.64Rye 4,99 7,61 8,28 8,66 12,74 8,72 11,19 21,12

sugar beet 1,56 1,79 1,76 1,75 1,90 2,07 2,41 2,42

Barley 4,64 7,38 6,53 7,71 8,19 7,95 9,37 11,92 18,90

Wheat 3,89 7,41 6,87 8,19 6,96 7,51 9,14 11,06 17.12

Soya 8,25 13,46 13,06 13,02 12,30 16,67 15,92 23,20 29.16

Source:htpp://webrzs.stat.gov.rs/axd/poljoprivreda/rezultat12.php, except for 2008 where data were taken fromthe internet site www.proberza.co.rs for the period first week of January and last week of December

Table 6.2. Average annual prices for crops in Serbia (EUR */t) 2000 2001 2002 2003 2004 2005 2006 2007 2008

Commonwheat 123.4 112.6 126.6 99.3 91.8 108.6 143.7 185.8

Corn/Maize 130.7 89.3 105.7 103.1 75.0 89.5 156.6 120.1Rye 129.5 138.9 176.2 115.7 112.7 112.4 116.2 222.4Sunflower 197.7 198.3 184.7 160.5 174.1 178.0 315.4 285.3

Oilseedrape 172.6 166.3 159.7 158.7 157.4 184.8 215.0 374.2Soya 226.6 219.7 203.5 182.0 200.9 191.8 279.3 298.7

Sugar beet 30.7 30.6 27.8 26.2 24.8 27.7 29.9 32.6Source: Source:Agripolicy project (draft report)

Taking into account all aforementioned conditions, it is considered that about half of biomassresidues at large agricultural farms can be used for energy purposes, while only about 20% biomass residues generated on relatively small private farms can be used for energy purposes.

Greater amount of biomass residues generated on small agricultural farms can be used for energy if these owners would have appropriate ovens and boilers for burning biomassresidues, or if they find an interest to collect residues and sell them. In that case theavailability of biomass residues would be increased, and the energy potential would bevirtually increased.

Residues of fruit growing and viniculture

One of main activity in fruit growing and viniculture is pruning of small branches, and thesecut small branches can be available for energy purposes. Total number of registered fruit treesis about 94106. Half of this number are plum trees, about 20% are apple trees and almost15% are cherry trees, both sour and sweet cherry (tab. 6.4).

The quantity of pruned branches depends on species and fruit assortment, ranging from 1 kg per tree for some assortment of apple, up to 7 kg per tree for some assortment of peach and


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plum. The pruning of vine yields from 4 up to 8 t/ha of vineyard. This data are important because of the significant area that covered with vineyards- about 77,390 ha in Serbia.

On the basis of these data the total biomass residues from fruit growing could be estimated atabout 475,000 t, with average heating value of 14 MJ/kg the energy potential of biomass

residues from fruit trees pruning is about 159,000 toe. The energy potential of vine pruningresidues alone is about 155,000 toe.

Stones of plums, cherries, peaches, and apricots together with peels and seeds of apples, pears, and grapes are wastes derived from processing of fruit. The quantity of these wastesamounts to about 200,000 t. With a relatively modest heating value of 9 GJ/t, the energy potential of fruit processing wastes is about 46,000 toe. This value is relatively smallcomparing to the energy potential of other fruit residues derived from growing. But animportant advantage of these wastes is that they are already collected in every companydealing with fruit processing. Therefore, this energy potential can be a remarkable source of energy in these fruit processing companies. A disadvantage of these kinds of wastes is their relatively high water content. That is why for some wastes, like grape peel and seeds, a pre-drying process will be necessary before these wastes would be used for energy conversion.

Table 6.4 Energy potential of biomass residues deriving from fruit cultivation and processing

SpeciesNumber of

trees (100ha)

Fruitproduction

(t/year)

Type of BiomassResidues

Biomassresidues (t)

Annualenergy

equivalent(TOE)

Plum 50,630 382,400 Prunning, stones 393,500 132,600

Apple 17,570 198,400 Prunning, peel 36,200 10,900

Cheries 12,280 99,950 Prunning, stones 55,000 16,500

Pear 7,080 70,000 Prunning, peel 14,000 4,300

Peach 4,450 44,400 Prunning, stones 35,100 11,700

Apricot 1,900 27,500 Prunning, stones 15,500 4,100

Walnuts 2,100 21,500 Prunning, shell 55,000 14,100

Grape 77,390 213,000 Prunning, peel,seeds 515,000 166,300

TOTAL 360,500Source:THE STATE OF BIOMASS ENERGY IN SERBIA, Mladen Ilic, Borislav Grubor, and Milos Tesic,Original scientific paper, UDC: 662.636/.638 BIBLID: 0354-9836, 8 (2004), 2, 5-19

Additional source of biomass residues in fruit growing and viticulture is replacement of oldtrees with new ones. This replacement occurs each 10 to 25 years, depending on fruit typesthat are cultivated. This activity is regular for well organized and maintained orchards. Theannual energy potential of fruit trees and vines that are extracted with roots is about 245,000toe.

The overall energy potential of biomass residues from fruit growing, viniculture and fruit processing is about 605,000 toe.

Wooden and forestry materials


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An area of 1,98 million ha in the Republic of Serbia is covered with forests, which accountsaround 25,6% of the total area of the Republic of Serbia. The forest area is mainly in the south(See Figure 4). About two thirds of the forests are property of state owned public companies,the rest privately owned. About half of all forests are pure deciduous tree forests (mainly

beech and peak), with only 5% pure coniferous tree forests (mainly spruce).The main species of forest trees are: broadleaves, beech, poplar and oak, and conifers, whichinclude black pine and spruce. But remarkably the greatest share is beech trees, which makeover 40% (Table 7a) of forest trees.

Since the market for wood residue-based fuels is very poor, briquetting and palliating of biomass residues is not widely used. Only a few primary processing wood companies haveinstalled machines for production of pellets or briquettes, but they supply only a narrow localmarket. From the point of view of energy potential of biomass in Serbia, some value of the potential is hidden in the low efficiency of all biomass facilities in operation. If, for exampleevery small boiler fired with biomass would increase its efficiency by 5%, the consumption of fuel wood for the same demand of heat would be decreased by the 30,000 TOE.

Figure 3. Share of forests in total area of communities

Source: Statistical yearbook 2006


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Table 7a Main parameters of forest wood resources in Serbia in 2007.

total woodvolume ( 106 m3)

annual volumeincrease (10 6 m3/year)

wood cutting(m3/year)

cutting /increase(%)

beech* 80.35 1.832 1.009 55.1oak* 30.81 0.821 0.249 30.3poplar* 1.39 0.094 0.42 448spruce* 4.51 0.108 0.038 35.2black pine* 4.09 0.085 0.044 51.9other 83.46 2.288 0.825 36.1total 204.6 5.228 2.585 49.4

Source: FEASIBILITY STUDY ON WOOD WASTE UTILIZATION IN SERBIA- USAID (*) only pure stands of speciesAccording to the last inventory of forests, completed in 1979, poplar trees were not so prevalent inSerbia. But in the last few decades, there has been an increase in the number of poplar trees planted, especially in plains regions near rivers. This accounts for the discrepancy between thewood volume of poplar trees and wood cutting of poplar trees recorded in the official reports.According to reports completed within the last several years, wood cutting of poplar trees has aremarkable share of the total cutting volume. Poplar is a very suitable species for energy crops,since its annual growth of wood volume is much higher than is the case for other species of treesin Serbia. Wood-stock in Serbian forests amounts to about 204,6106 m3. Registered wood felling inforests is about 2.585106 m3. that represents 49,4% of the annual increase of wood-stock inforests of about 5,228106 m3. In developed countries of Europe, with well organised forestmanagement, the ratio between the wood felling and the wood-stock annual increase goes upto 75%. With improvement of forest managing, upgrading of the state of existing forests andwith development of forest roads, there is a possibility for an increased annual wood felling, based on the existing wood-stock. In addition, there is a national plan to increase area covered by forests from present value of 27.3% to 31.5% till the year 2010, and to 41.4% till the year 2050. These two measures, increasing of afforested area and wood stock and improvement of forest utilisation, will contribute to the increase of energy potential of forest biomass.

According to the statistical data about 1.2106 m3 or about 50% of production of forestassortments represents fuel wood. The remaining assortments are wood pulp for pulp and paper industry, saw-logs for cutting and wood for different technical purposes. Annual energyvalue of the fuel wood presently used is 239,000 toe.

Besides fuel wood, as a kind of forest assortments, there are different kinds of bio massresidues associated with tree felling in forests and with processing of wood. As results of treefelling about 58% of the total mass of the tree are different wood assortments for the market,for industry, different technical purposes, and for heating as fuel wood. The rest of 42% of thetotal mass of the tree are different biomass residues which do not have any value at the market(Table 7). Among these biomass residues there are: bark, small branches, tree stumps. Theestimation is that these biomass residues in forests account for about 2.9106 m3, which has anenergy value of 549.500 toe. Leaves and needles from the trees are not included in the balance, in spite of the fact that their share in the total mass of the tree is from 2 to 4%. Theseresidues are of different characteristics and usually dispersed in forests. Their collection

requires some energy for transportation vehicles. Depending on the terrain, collecting of residues can be easily and thoroughly performed. In some cases, under the present state of forest roads and machinery, it practically can not be done. In any case, one of the main


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conditions for utilisation of these forest residues is appropriate prices of wood residue-basedfuels and existence of the wood fuel market.

Table 7. Average share of different categories of wood in the total mass of the treeWood assortment Share in the total mass [%] CommentRound wood 16 For the marketStacked wood 42 For the marketBark peeled from wood for the market 4 Left in forestResidues of wood cutting in forest 9 Partly usedSmall branches 11 Partly usedStumps 18 Left in forestLeaves and needles IgnoredSource; FEASIBILITY STUDY ON WOOD WASTE UTILIZATION IN SERBIA, Energy Saving Group Wood waste utilization in Serbia

Residues of wood processing in saw mills, resulting from the production of veneer, boards,and furniture, and residues in pulp and paper and chemical industry, consist of small and large pieces: shavings, chips, cutting edge and bark. Estimated annual yield of these wood residuesis about 0.35106 m3, with energy value of 66,900 toe.

There are about 2,760 companies dealing with wood processing and furniture production. Themajority of them (2,360) are in the wood-processing sector producing sawn wood, panels, joinery, and veneer. The other 400 firms produce furniture.

In a well organized company, practically all wood waste is used in either board production or as fuel, to produce heat and electricity. However, some wood processing companies in Serbiahave available wood biomass, but arent making good use of it. Instead, they either spread thewaste around their property, or simply push it into rivers, discarding a potentially valuableenergy producing resource.

As recently as a few years ago, there was no pellet production at all in Serbia. Practically all production of pellets is exported because of higher prices abroad. Therefore, the price of pellets in Serbia is assumed to take into account prices in European countries where wood pellets are used in large volumes. According to the most current information on pellet plantsin operation and those now under construction, by year 2010 there will be six wood pellet producers in the country, with a projected production up to 250,000 tons.

At this moment, a market for pellets in Serbia effectively does not exist, since biomass use isthus far not supported by the state. Also, there is only one domestic producer of small boilers(up to 300 KW) with the auxiliary equipment required to feed pellets and automaticallyregulate combustion. Public buildings are not strongly motivated to invest in fuel switch inorder to be able to use cheaper fuel such as biomass. Also it is important to say that pellets arestill not the cheapest fuel in Serbia, since the price of fuel wood is still much lower.

The high price of pellets in Europe would probably drive up the price of pellets in Serbia.That, combined with the previously described conditions, is probably obstructing theutilization of wood pellets in Serbia. Assuming construction of a pellet plant with a capacityof 20,000 tons per year, financial analysis shows that the break-even price for the sale of wood pellets in Serbia would be 51 per ton, compared to 81 per ton in the EU.


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The present ratio between prices of different fuels in Serbia generally favours wood-basedfuels. The comparison of heating costs by different fuels shows that wood-based fuel is thecheapest (table 7.1). The price of pellets for customers in Serbia is assumed to be 80 /t,including transportation. VAT is added to that price, resulting in the retail price of 6912RSD/t.

Table 7.1 Prices of different fuels in Serbia and the cost of heatCost of heatRetail price*

(RSD/t)Heating value

(GJ/t)

conversion (/m) (/MWh)

Fuel wood incapital city 4000 14 0,75 5,8 31,2

Fuel wood insmall city 2000 14 0,75 2,9 15,6

Wood pellets 6912 0,78 4,1 22,2Source; FEASIBILITY STUDY ON WOOD WASTE UTILIZATION IN SERBIA, Energy Saving Group Wood waste utilization in Serbia*1 = 80 RSD

Prices for electricity and natural gas are not retail prices, as there is a special tariff system for these kinds of energy. VAT is afterwards included for obtaining cost of heat. VAT for all energy carriers is 18%, except for natural gas and wood it is 8%. Price for the installed electric power is 529,8 RSD/kW for customers connected at low voltage distribution system, excluding householders.

Wood cutting in 2006 in Serbia was 2,585 million m3 in forests, and an additional 25thousand m3 outside forests (parks in cities, trees along waysides, edges, channels), whichgives a total wood cutting of 2,61 million m3.According to the present utilisation of forests,forest tree felling and wood processing, the total annual energy potential of different kind of

wood residues, together with registered consumption of fuel wood, accounts for about1.02106 toe. That value of energy potential can be increased by the utilisation of presently notutilised forests, because it is estimated that almost 30% of forests are not utilised. Besidesstatistically registered forest felling, there is an unregistered tree felling as well. Itencompasses not only unregistered tree felling in forests, but also tree felling near local roads,small rivers, channels, and trees surrounding arable land. A rather uncertain estimationindicates that only 60% of the demand for dwellings heating by wood biomass is satisfied bythe registered fuel wood, while 40% (160,000 toe ) of the demand is satisfied by statisticallyunregistered tree felling.

Another possibility to increase energy potential of wood biomass is to cultivate energy plantations. According to domestic investigations, by poplar cultivation it is possible to produce wood biomass with annual energy value of 6.7 toe/ha. With assumption that the production of wood biomass could be accomplished at one third of the land currently out of use (200,000 ha), it means that the annual energy potential of forest energy crops accounts for some 382,000 toe.

It is interesting that about 3% of the volume of wood cutting remains in forests despite thefact that these forest residues are great in size (root swell, branch snag), which can berelatively easily collected and transported. Taking into account the present volume of woodcutting in forests, these big pieces of forest residues account for about 75 000 m3 per year. If all wood residues in forests were theoretically summed up, they would add up 1.1 million m3.

However, one part of wood residues is collected and sold as wood wastes. In addition, stumpsare not always removed from the soil. Poplar trees are usually young with relatively shallow


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roots, and after felling the tree the stump is usually removed. But beech and oak trees areusually older and have deeper root, therefore their stumps are usually left in the forest. About600 000 m3 wood residues (without stumps) remain in forests annually.

Serbia has the potential to increase the area of land covered with forests. In accordance with

the Spatial Plan of Serbia from 1996, the forest area in Serbia should be increased by 31,5%until 2010. Unfortunately, this target will not be achieved because of the economic crisis. Thenext target, according to the Spatial Plan, is to have the forest area increase by 41% by 2050.

Wastes of agricultural production, e.g. liquid manure

Liquid manure deriving from cattle and pig breeding, together with poultry litter, is another potential energy source. Because of high water content (up to 90%) these slurries are usuallytreated by aerobic digestion, primarily for reasons of producing environmentally friendlyfertilizers.

The quantity of liquid manure produced depends on a series of factors, such as the type andcategory of domestic animal, keeping conditions and type of food, physiological state, phasein the reproductive cycle, degree and type of animal activity, meteorological andmicroclimatic conditions etc. Daily amounts of liquid manure can be expressed as the percentage body mass ratio. For pigs it is 6% of the average body mass, for sheep it is 7%,horses 8%, cattle 9% and for poultry it is about 10%. Gas production depends on the type of livestock, and basic characteristics of biogas production are given in Table below.

Table.8a Basic characteristics of biogas productionCharacteristics Cows Pigs

Average weight, kg 600 150Biogas, m3/day/head 2.26 0.184Obtained energy, kJ/day/head 46414 4325Electric energy production, kWh/day/head* 3.42 0.32Source: Serbia Analysis of Policies to Promote Low Carbon Energy Alternatives- World Bank (*)assuming 28% efficiencyThe major part of livestock is located in small farms, with only a few heads in each. Anorganised manure collection from these small farms is not likely to be easily technicallyfeasible, and the financial feasibility is uncertain as well. Therefore, in the analysis of energy potential, only manure in medium and great farms is considered as a prospective source of fuel, since manure from these farms does not need to be transported, and can be efficientlytreated in anaerobic digestion.

The present state of main species of livestock in medium and great farms is given in the Table8. Cattle are almost evenly distributed among flat and hilly regions, while pigs are mainly bred in flat regions. Cattle in these farms, 260,300 heads, produce about 5,270 m3 of manure,while pigs produce about 4,560 m3 of manure. With an assumption of a relatively restrictive biogas production of 20 m3 biogas per m3 of manure of the both origins, from cattle and pigs,it can be derived that energy potential amounts to 20,140 toe from cattle manure, and 17,500toe from pig manure. Poultry manure, with the assumption of biogas production of 50 m3 per m3 of manure, gives a little lower energy potential of 4,600 toe. Total energy potential of

biomass wastes from livestock breeding, from great and medium farms only, is 42,240 toe per annum.


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Table 8. Live stock in medium and great farms and energy potential of their manureLivestock Location of farms Number of heads Manure(m3/day)

Biogas(m3/day)

Annual energyequivalent (toe)

Flat regions 149.300Hilly regions 111.000Cattle

Total 260.300 5.270 105.000 20.140Flat regions 1.369.500Hilly regions 285.600.PigsTotal 1.655.100 4.560 91.200 17.500

Poultry 2.350.000 480 24.000 4.600TOTAL 42.240Source: THE STATE OF BIOMASS ENERGY IN SERBIA, Mladen Ilic, Borislav Grubor, and Milos Tesic,Original scientific paper, UDC: 662.636/.638 BIBLID: 0354-9836, 8 (2004), 2, 5-19

2.2.2 Other energy sources: wind energy, solar energy, hydro-energy

Wind energy

According to the recent reserches there is a significant number of locations for construction of wind devices in Serbia. The study concludes that under the assumption that average windspeeds at 50m height need to be at least 5 m/s or higher, based on ten-minute average speedsat the height of 50 m above the ground level, then Serbia has significant potential. The areawith suitable wind is some 471 km2 with 244 km2 where wind speeds of 6m/s are present atleast 50% of the time. At 20% annual average load factor, a 2300 GWh/year could begenerated at some 1300 MW of capacity at sites with average wind speeds of 5 m/s or greater.

Identifyed sites are:1. Eastern parts of Serbia - Stara Planina, Vlasina, Ozren, Rtanj, Deli Jovan, Crni Vrh etc. Inthis regions ther are some locations with average wind speed higher than 6m/s.2. Zlatibor, abljak, Bjelasica, Kopaonik, Divibare are mountain regions where sutablemicro locations for construction of wind devices could be determend.3. Panonian lowlend, northen parts of Danube are also rich in wind. This area coveres around2,000 km and is sutable for construction of wind devices because it has a sound roadinfrastructure, electric grid already exist and there is a large number of electicity consumer centers nearby.


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Figure 4. Average power of wind in heating season and in april (at altitude of 100m)

Source: World Bank (2007): Serbia: Analysis of Policies to Increase Renewable Energy Use- Study Funded bythe ESMAP In 2007 Ministry of Mining and Energy signed the contract for the realization of the project inthe field of utilization of wind energy with the support of the Government of Spain. This project selected 3 locations for annual masurments of wind speed (at the attitudes until 10, 30and 50 meteres). Upon completition of measurements for one of the selected locations adetailed fasibility study will be elaborated for construction of wind turbine generators.

Also in 2008 several protocols for cooperation on realization of following projects:

Windpark Bavanite Windpark Bela Crkva Windpark Dolovo

were signed.In January, maximal values of wind power occur in the lower Danube area and EasternSerbia: the area within the 300 W/m2 iso line includes South Banat, the south bank of theDanube from Belgrade to Negotin, and the Timok valley with surrounding mountains. In July,the patterns of regional variation are generally similar, but the intensities are lower.

Solar energy

Firm estimates of the potential of Serbia for installation of solar collectors and systems areunavailable. It is known that there are many solar installations throughout the country, but asystematic inventory of potential applications is unavailable.

As in the case of other countries in the area, solar levels in the former Yugoslavia includingSerbia and Montenegro are among the highest in Europe. The most favourable areas record alarge number of hours of sunlight, with the yearly ratio of actual irradiation to the total possible irradiation reaching approximately 50 percent. Of course, the monthly distribution is particularly important in determining utilization for heating; and whether back-up systems

will be needed during periods of extended cloudiness.


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In 1998 annual sales of solar flat plate collectors was around 250,000 m2. Some 28,000 solar thermal units were in operation, replacing the equivalent of 140 GWh of fossil fuel derivedenergy being used mainly for water and space heating in the domestic and tourist sectors.The total potential for solar active technologies has been estimated to be approximately 50-60 percent of heating demand in the cloudier central regions. The in-country manufacturing base

for the whole of FR Yugoslavia was reported as being strong, with about nine firms in production. But the majority were operating at less than one fifth capacity. And it is notknown how many the recent crisis survived. The available expertise, however, indicates thatas the economy recovers, it would be easy to accommodate growing demand. In 2009 firmestimates of the potential of Serbia for installation of solar collectors and systems are stillunavailable. However, it is known that there are many solar installations throughout thecountry, but a systematic inventory of potential applications is unavailable. Also one of themain reasons for low number of new installations is the fact that for individual homes theeconomics of domestic solar hot water heating appear less favourable at the present tariffs.

Figure 5. The average daily energy of global radiation on horizontal surface in January andJuly in Serbia

Source: World Bank (2007): Serbia: Analysis of Policies to Increase Renewable Energy Use- Study Funded bythe ESMAP


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Hydro-energy

There is undoubtedly a significant small hydro potential in Serbia. However, the presentinformation base is simply insufficient to beable to make any firm conclusions about thesupply curve of small hydro projects.Consequently we recommend as a next step thecompletion of a series of feasibility studies for which the prospects of economic and financialfeasibility appear to be good.

It is estimated that at least 3,000 MWs of newhydro capacity could be developed; one third of this capacity is medium size plants (10-100MW each). This encompasses 3% of total potential of renewable energy resources inSerbia. 60 SHP are said to be in existence, of which 50% are out of operation. The technicalenergy generation potential of this SHPP is

estimated at some 1,500GWh/year. Figure 4 shows the geographic distribution of this potential.

Small hydro power plants are objects for energy production with maximal power less than 10MW and they belong to the category of priviledge power producres.

Traditional dams

There are nine hydro-power plants (HPPs) within the power system of Serbia (generatearound 36% of electricity in the country), with fifty hydro-units of the total capacity of 2,831MW, producing on average 12 billion kWh a year. The total power content of the seasonalreservoirs is about 1,2 billion kWh.

Table 9 Number of installations and supply of hydro energy

Renewable energy sourcePresent installation/

generationFuture potential

(annual Mid-term)additional potential

Hydropower 2.8 GW/10.5 TWh 2.0 GW/7TWh

Number of Large Hydro power plans 2.8 GW/10.5 TWh 1.5 GW/5.2 TWh

Small hydro power plants 6MW/20 GWh 490 MW/1.8 TWh

Source: Government of Serbia

Geothermal

Geothermal investigations in Serbia began in 1974, after the first world oil crisis. Anassessment of geothermal resources has been made for all of Serbia. Detailed investigations in

Figure 6. Small hydro power potentials

Source : Naumov,op.cit.


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twenty localities are in progress. The territory of Serbia has favourable geothermalcharacteristics.

There are four geothermal provinces. More than eighty low enthalpy hydro geothermalsystems are present in Serbia. The most important are located at the southern edge of the

Pannonia Basin. The reservoirs of this systems are in karstified Mesozoic limestones with athickness of more than 500 m. Geothermal energy in Serbia is being utilized for balneological purposes (60 spas), in agriculture and for space heating with heat exchangers and heat pumps.The total installed energy use is 74 MWt, out of which 36 MWt are in balneology, and 38MWt for other types of uses.

Exploration to date has shown that geothermal energy use in Serbia for power generation can provide a significant component of the national energy balance. The prospective geothermalreserves in the reservoirs of the geothermal systems amount to 400 x 106 tonnes of thermal-equivalent oil. The prospects for use of heat pumps on pumped ground water from alluvialdeposits along major rivers are very good.

For intensive use of thermal waters in agro- and aqua-cultures and in district heating systems,the most promising areas are west of Belgrade westward to the Drina, i.e. Posavina, Srem, andMacva. Reservoirs are Triassic limestone and dolomites >500 m thick, which lie under Neogene sediments. The priority region is Macva, where reservoir depths are 400-600 m, andwater temperatures are 80 C.

The economic blockade of Serbia stoppeda large project in Macva: space-heating for flower and vegetable green-houses over 25ha (1st stage). The completed studiesindicate that thermal water exploitation inMacva can provide district heating systemsfor Bogatic, Sabac, Sremska Mitrovica,and Loznica, with a population of 150,000.In addition to the favourable conditions for geothermal direct use from hydrogeothermal reservoirs in Serbia,geothermal use can also be made of hot dryrocks, as there are ten identified Neogenegranitoid intrusions. Geothermal

exploitation program have been prepared, but they have not been brought intooperation.

Source: World Bank (2007): Serbia: Analysis of Policiesto Increase Renewable Energy Use- Study Funded by the ESMAP

2.3 Main effects with respect to agricultural and forestry production

Production of energy from renewable resources in Serbia is still present only on some small project attempts and pilot facilities. As indicated in all presented tables, the production of energy from renewable resources, at this moment, is just a significant potential for Serbia.This is mainly because of the lack of regulations, feed in tariffs and other type of supportmechanisms. According to the existing documents, the only available data for production of

Figure 7. Distribution of geothermal resources


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energy from renewable resources can be found for the big hydro power plants. According tothese facts main effects with respect to agricultural and forestry production cant beelaborated.

2.3.1 Change in land use patterns

Cereals dominate crop production in Serbia, as they account for 40% of arable land, or 60%of total cultivable land. Maize and wheat are the most important crops in the cereals sector.Rye, barley and oats make up only 10% of the area cultivated with cereals. Yields and sownarea differ in last two decade due to the several reasons like appearance of disease, badtechnologies in production, low inputs of fertilizers, soil qualities, climate conditions,government support systems, market prices and possibilities for selling on foreign markets.

Maize is Serbias biggest single commodity with a production of 6.3 million tons in 2005,which was produced on approximately 1,200,000 ha (FAO data). Over the last 5 years thearea used for maize production remained stable with the overall maize production beingerratic because of weather conditions but generally increasing. Serbia has had between 2000and 2004 an average yield of 4.2 t/ha in the maize sector while the EU 25 has an averageyield of approx. 8 t/ha).

Wheat is the second biggest commodity in the Serbian cereals sector. In 2004 Serbia producedsome 2,700,000 t wheat on approx. 640,000 ha. Over the last 5 years the area used for wheat production has been on average 650,000 ha, with some fluctuation (mostly between 600,000ha and 700,000 ha). Production ranged in that period from 2 to 2.7 million t with 2003 beingan exception with extremely low yield due to drought (1.4 million t). No clear trend can beobserved in the wheat sector. Average yield of wheat over the last 5 years has been 3.5 t/hawhile the EU 25 has had an average yield of approx. 5.5 t/ha.

The value of 1.023106 toe of energy potential of biomass residues from crop farming can bechanged, depending on species that would be sowed in the future. Presently there is a slighttrend of replacing wheat with industrial plants.

Besides residues from crop farming for food production, there is a possibility of targeted cropfarming for production of biomass fuel. This is the case of oil rape seed cultivation for bio-diesel production. Rape seed has been already cultivated in Serbia at an area of around 6000ha only. According to some estimation there is a possibility to cultivate rape seed on 150,000-

200,000 ha. The yield of oil rape seed from that area is sufficient for production of about100,000 t of bio-diesel which could be easily processed in existing Biodiesel plant in Serbia.

Although costs for energy increased, there hasnt been a substitution of fossil power byanimal power. In some remote areas horse power is still used for some field works and asassistance in some farm works, but this is mainly linked to some poor elderly householdswhich didnt have possibilities for modernization of their farms. Also this kind of householdsare doing significant portion of land and are not producing for the market, but only for their needs, and because of that they cannot be observed as some significant example.

2.3.2 Change in cultivation practices, innovation and investments

There were no changes in cultivation practise influenced or induced by the production of resources for energy production. Manure is traditionally used in land cultivation but the use of


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this type of manure is not so much present in Serbia, mainly because of lack of proper mechanization for disbursement of manure on the land parcels. However the MAFWM isimplementing one big project that is promoting the proper utilization of manure and assistingthe farmers to obtain adequate new mechanization, like tanks for liquid and spreaders for solidwaists. In 2009 the MAFWM also introduced the support scheme for procurement of

agricultural mechanization for manure handling. All advisory stations are trained to provideassistance to farmers for preparation of Nutrient Management Plans and at the same time theyare providing the soil testings in order to elaborate the proper planning in line with croprotations for each individual household.

Also composting as a new form of utilization of manure is becoming more and more popular among farmers and several workshops were held on this topic.

Regarding the innovations in the field of production of Renewable energy, it is important tosay that during the 1980` Serbia was among the first countries who started introduction of new technologies in this sector. Due to the sanctions and a long period of isolation, theseinitiatives were very important but later on abandoned because of the lack of financialresources for improvement and further promotion of these facilities and technologies.Recently the Institute for Nuclear Science Vinca has patented the new type of boiler for soyastraw combustion and is already in the process of modification of this boiler to adopt it for utilization of other types of biomass.

According to the present situation in farm practise, there are no specific investments in farmcultivation due to RE that can be observed as an ongoing process. The only targeted plantingof plants for production of biomass can be linked to the smaller number of farmers whichwere involved in the contracted production by the biodiesel factory. In that sense it can beconcluded that, so far, the main barrier to investments is mainly the absence of market for thistype of products. Also there is no support mechanism from the Government level for production of plants that could be used for energy production. It can be expected thatdevelopment of market of energy crops will have strong impact on farm cultivation and that itwill foster the investments in this sector.

Although the land presents a non renewable resource that has to be protected and properlymaintained, the value and importance of the biomass residues is still not fully elaborated.Mainly because it is difficult to calculate the correct ratio which can be removed from thefields and be used for the energy production or other purposes. It also depends onagropedological and agro climate conditions, application of fertilizers, agro techniques etc.

According to some researches average ratio of the residues from crop production isaproximately1/3.


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2.4 Overview of the installations producing bio energy

Regarding the installations for production of bio energy, as mentioned in the introduction part,there were some installations in the previous period but only a small number of them are stilloperational. These facilities can be divided in three groups, one for production of biogas,second for bio fuels and third for combustion of biomass. Although almost 20 facilities for biogas production begin with construction during that period only few were accomplished andworked for short period of time. All of them were installed in big cooperatives which at thattime were the leaders in the agriculture production. None of these facilities is operational atthis moment but some of them are willing to reconstruct the existing remaining of oldfacilities and/or install the new ones. There are also a growing number of new big privatefarms which are considering the installation of new modern technologies for production of biogas. Awareness for production of biogas is rising but the knowledge of availabletechnologies and supporting instruments is not high. Recently there is an increased activity of

promotion of utilization of biomass for production of energy, and presentation of availableinstruments and modern technologies.

Production of bio fuels was more intensive during the sanction period in Serbia. During thattime, due to the scarcity of diesel fuel several chemical facilities were reconstructed or evenconstructed for production of biodiesel. The planned production was 50.000 tones, but itachievement was only partial. One of the main reasons was that Government didnt have anymeasures to promote utilization of this type of energy. In 2005 Serbia didnt have any decentfacility for production of quality biodiesel, although ten companies were involved in the production. One of the main reasons for reduced operation of these facilities was that thequality of biodiesel was very low, but in some way induced the need for elaboration and later on the adoption of biodiesel standards in 2005.Main factors that have driven/supported investments in this area

If we look at the main factors that influenced the investments in this area they can be dividedin three blocks, mainly according to the time period.

First period belongs to the 1980s, when investments were introduced as a result of researchachievements, introduction of modern technologies (at that time), and introduction of supportmeasures and added value to the agriculture products. At that time production of biogas andcombustion of biomass was introduced in Serbia for the first time.

Second period can be linked to the period of sanctions, during the 1990s, when Serbiacouldnt import oil and it was important to provide stability in the country and to secure theminimum functions of the state main enterprises and facilities. That was wary difficult timealso for all other citizens and private subjects in the country. At that time provision of sufficient quantities of bio fuels was also one of the strategic tasks of the Government. This period is linked only to the production of bio fuels like bio diesel and bio ethanol.

Third period is the one that is coming in the following years. At this time Serbia has signedseveral international treaties, and is also in the process of harmonization of the regulationswith EU. Also new technologies are better known and awareness of needs and benefits from production of bio fuels is rising. Also the Government is in the process of introduction of newsupport measures that will support all interested parties to invest in the production of energyfrom renewable resources.


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At this moment it is still not easy to invest in this business because of: very high investment costs The low prices of electricity and other available fuels. the feed in tariffs are not yet in place Clean Development Mechanism (CDM) mechanism is not operational. Investment in on farm installation is linked to a large number of licences and

permissions that are costly and very difficult to obtain. It takes to much time to collectall these documents that are just a precondition to start the investment.

Issues related to the ownership of the land, legal regulations linked to giving of concessions and locations are problematic.

The increased investments can be expected when support mechanisms come in power andwhen the CDM mechanism becomes operational. Also, one of the important elements thathave to be taken in to consideration is the actual price of the electricity, licence acquiring procedure (long process and high number of needed licences), availability of favourablecredits for investment and availability and price of modern technologies.

The main barriers to further expansion of on farm installations are numerous: the absence of adequate support measures, especially The low awareness among farmers on available technologies, Lack of favourable credit lines, Limited availability of modern technologies in the field of renewable energy is also an

important barrier to installation of facilities for energy production on farms. There aresome companies which are offering these technologies but they are not constructed inSerbia but imported from abroad, which influence the higher price of theseinstallations and not proper fitting for different individual farms.

Absence of long term contracts with producers of green energy and absence of functional CDM mechanism

In the case of preparation of the documentation for the application for the CDM project,additional funds are needed, since preparation of this type of projects are usually done bysome agencies or international consultant companies. CDM projects are still in the initial phase and so far there is not a single project that has passed the whole CDM approval procedure. Once this process becomes easier and more people trained for preparation of CDM projects, it can be expected the there will be much more interest in on farm installations,specially because this type of mechanism is providing additional source of income throughcarbon trade, and a link with potential investors and creation of partnerships.

Absence of support mechanism and high interest rates for credits are significant obstacle to provide funds for construction of on farm installations. Average interest rates range between12% and 16% annually and aside from that fact it is still very difficult to provide guarantiesfor the bank. Together with all other mentioned obstacles, it is clear why this type of supportis not used now but on the other hand, in the future, according to Energy Strategy and EnergyPolicy in the Republic of Serbia, it will play a significant role in installation of facilities for production of renewable energy. Legal regulation for obtaining of the status of privileged producer (producer of renewable energy resources) is not yet adopted.


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Finally the delivery of electricity to the grid is free of payments for compensation for transfer of electricity but still green producers have to pay the fee for attachment to the grid. Althoughelectric company is obliged to buy product electric energy produced from renewableresources, so far only several practical steps were undertaken. National Electro Company isnot too much interest in support to potential competitors, no matter how small they are. Also

the guaranteed prices for energy produced from renewable resources are too small and makesthese small producers of electricity les competitive. Regional distributors of electric energyare not technically capable to organize the system which is becoming more complex withintroduction of larger number of smaller producers.

2.4.1 Number and capacity development over the last years

Thus far, the only investments in Renewable Energy Sources (RES) are small hydro plantsthat produce symbolic amount of energy (1.6% of total electricity production), severalisolated attempts of getting the energy from waste, wind, geothermal and other sources, andone large business venture in first generation bio-fuels (Victoria Oil, supported by EBRD loanof EUR 25 million). The level of foreign investments in the facilities for the RES usage islow, although there is interest of the foreign investors, which offer both knowledge transfer and green field projects. The level of this interest and foreign investments will dependdirectly on the institutional and legal reforms in the Republic of Serbia, particularly theintroduction of the incentives, as well as introduction of less complex administrative procedures for the construction of these facilities.

Table 10: RES in Serbia, Private investors-biomass boilersInvestor Description Producer Tarket, Backa Palanka,Serbia 3 MW, production of heat by burning sawdust Kirka SuriFrigonais, Kurumlija,Serbia

1500 kg/h, production of steam by burning fruit pits Kirka Suri

Victoria Group, biodiesel plant,Serbia

15 t/h, production of steam by burning sunflower skin and cut straw Kirka Suri

Soya Protein, Becej,Serbia

10 t/h production of steam by burning Soya andwheat straw and silos residue Kirka Suri

PKB, Belgrade, SerbiaSupported by the Ministry of Finance andMinistry of Agriculture a 1.5 MWt for heating of greenhouses using biomass was constructed

InstituteVinca, TipoKotlogradnja

Ravnjanka doo. Ravnje, Serbia

350 KW, wood and confiscate fromslaughterhouse Nigal

Jogosan, Novi Sad,Serbia

Sawmill and wood from a furniture factory2x500 KW n/a

In addition to these, biomass boilers have been installed in DP Mitrosrem, Sr. Mitrovica(straw), and edible oil factories in Sombor, Sid, Nova Crnja, Zrenjanin, and Vrbas.


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Table 11. Private investors briquette factoriesEast point, Boljevac Wood pallets, investment 4 million euro, August, 2008

Inter briko, Akmacici, Nova VarosBriquette factory, investment 1 million euro, August2008

Briket, IvanjicaBriquette factory, May 2007, export to Slovenia andGermany

Varotech, Mladenovo, BackaPalanka

Briquette soy straw - factory, investment 1.4 millioneuro, 2006

There has been little progress in development of small hydro power plants. Revitalization of Ovcar Banja" (5.8 MW) is under way and hydroelectric Power Plant "Meduvrje" 7 MW isnext planned for revitalization.

In thermal energy there have been little investments. One of the largest is the construction of greenhouse heating system in Farkom MB in 2003.

During the last 20 years, some entrepreneurial ventures have appeared, and they could easilyturn towards activities in RES sector if it becomes economically viable. Good example isSerbian company Kirka Suri that has been building energy equipment and boilers from 1989.The company nowadays has good references, both domestic and foreign, and can produce biomass heating systems if needed (of course, it is important to notice that the number of biomass projects conducted by this company is also extremely small compared to their regular activities, which points out the popularity of conventional sources on the market). Also, theequipment for the biomass combustion, which can be found at the domestic market, mostlydoes not represent the equipment for burning biomass, but the equipment for burning highquality coal. This could make problems during biomass exploitation and decrease the effects

of using biomass as a fuel since fuel switch on all these boilers demands additionalinvestments and the quality of these equipment is not up to date with the latest technologyinnovations stipulating the lower efficiency in production.

Solar systems in Serbia are almost entirely imported goods. They come from all around theworld, and can mostly be bought at fairs or at a few specialized companies. However, they arerather expensive, and yet they provide only partial solution (hot water for technical use, notheating). Some domestic companies have started the cooperation with solar system producers, but the trend of general use of this source is still stagnating. In October 2008, a newcompany for production of solar panels KM Mont was opened in Sremski Karlovci. Theinvestment in this facility was Euro 825 000. The panels are to be sold on the domestic

market, and exported to Russia and CEFTA countries.In wind sector, Locher Energo has local production of wind generators for its mother company Flender Loher Gmbh from Ruhstorf. When it comes to tradition and possibledevelopment of RES usage, a state owned giant company Energoprojekt could play animportant role. With more than 70 international projects, ownership in more than 50companies worldwide, and almost six decades long tradition, it can play the major role in popularization and production of RES utilization systems.

In 2007 new private factory for biodiesel production Victoria Oil in id, was constructed. Itfulfils the requirements of the standard EN 14214, was constructed. The same year theystarted the production of the first quantities of biodiesel- around 25,000 t of biodiesel.Installed annual capacity of this factory is 100.000 t of biodiesel.


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Currently, the research and development in the RES field is based on the National EnergyEfficiency program, prepared by the Ministry of Science. However, the implementation of theestablished technical knowledge is very slow, especially in realizing demonstration (pilot) projects, due to the lack of incentives.

2.4.2 Relations with supplying farmers

The only model that can be elaborated for the relation with supplying farmers is the one thatexists on the example of the first biodiesel factory. Factory has made an annual contracts withfarmers which are going to be involved in three productions of oil rape seed. According tothat contract the factory was providing the know how, seeds, fertilizers and other chemicalinputs for protection of the plants, biodiesel for planting and growing of the crop and fixed price for purchase, according to the calculation of the provided inputs. The interest among thefarmers was quite strong and it can be noticed from the provided Table 6 where increase inthe area sown with this culture can be noticed.

It can be expected that this practise will increase if the existing company continue withincrease of the production. This can be influenced by several factors, like price of diesel onthe global market, possibility for sale in the country and the price of food.

3 National policy and concepts promoting renewable energies

The Government of Serbia recognizes the importance that the European Community gives torenewable energy, and that the European Union accession process requires harmonization of energy policies. The Energy Community Treaty between the EU and nine southeast Europeancountries was signed in Athens on October 25. 2005, and ratified by Serbia on 14 July 2006.Treaty on Energy Union of SEE is obliging Serbia to adopt the EU Directives related toutilization of renewable energy resources. Therefore there is no doubt that Serbiasendowment of renewable energy resources is substantial and realized. According to thatSerbia adopted the sum of goals related to renewable resources. Today share of energy fromrenewable energy resources is about 6% (including the big hydro power plants, and it is predicted that it will not change much until 2015. Serbia is the process of the preparation of strategic documents which will also determine the share of renewable energy resources in thetotal primary consumption of energy. Strategy of development of energy sector in Serbia is predicting that the share of renewable energy resources (with out big hydro power plants) in primary energy production has to increase from zero to 1,1 in 2015, and that share in totalfinal consumption of energy has to raise up to 1,5-2% in the period 2006- 2015. Thisestimation is made for the scenario with dynamic economy development.

The National Energy Strategy for 2015 maps out the path ahead, calling for the developmentof 150 small hydro plants to provide 100 MW, and 4,000 small boilers to use biomass fromindustrial, agricultural and forest sources.

Almost all technologies for biomass energy conversion have been applied in Serbia.Unfortunately, some of them were installed more than twenty years ago and presently are outof operation. The reasons for their non-operational status are poor maintenance and lack of spare parts during the sanctions. In addition, the low electricity prices in Serbia in the last

Decade of the twentieth century caused a significant number of owners to find that it wasmuch cheaper to use electricity for heating than biomass.


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In the previous period demand for small solid fuel firing boilers for space heating has beenlow. Consequently manufacturers did not invest in development of modern solid fuel firing boilers, and most boilers designed for high quality coal are not suited for biomass. However, boilers expressly designed for biomass are now appearing on the market mainly as a result of the more intensive promotional activities of utilization of renewable energy resources and

environmentally friendly technologies.Since higher utilization of renewable energy resources, especially from agriculture, has notyet taken the place in Serbia, there were no discussions on the conflicts in relation to use of food to energy production. Although there are strong discussions in the international level,dealing with this topic, the use of biomass for energy production in Serbia, is just observed asa significant potential for additional income for farmers and nature protection. Agriculture production in Serbia is one of the most important sources of income for almost half of the population and agricultural products are already exported in a large number of countries. Onthe other hand there is a large portion of land that is available for agriculture production andthis land presents a strong potential for additional production of agricultural products.Obviously the price of the biomass and final agriculture products will play an important rolein discussions that will come in the future, and this market instrument will influence thefarmers choice. At this moment the Government is not influencing the farmers decisions onselection of crops and has no mechanisms to prevent them from redirecting to sowing theenergy crops. One of the promotional measures of the Government could be the supportmechanisms in subsidy form for energy crops, but because of the significant cuts in the total budget this measure is still not certain in the coming period.

The importance of energy potential of biomass fuel can be shown by comparison with presentannual production of coal in domestic mines and with consumption of imported fuel oil.About two third of electricity generation in Serbia is based on domestic coal, while one thirdof electricity is generated in hydro power plants. The total annual coal production is about6.2106 toe. It is less than 2.5 times greater than the annual biomass energy potential. Thetotal annual consumption of liquid fuel is about 3106 tons. Since a great part of this liquidfuel consumption is used in motor vehicles, it can be concluded that total consumption of fueloil consumed for heating in industry and dwellings, can be fully replaced with biomass fuel.

3.1 National policy

Starting from 2002. Serbia introduced the National Program of Energy Efficiency whereProgram for utilization of renewable energy was incorporated. Several pilot projects andresearch studies were conducted for use of renewable and alternative energy resources. In the process of harmonization of the national legislation with the EU requirements, the Ministry of Mining and Energy of the Republic of Serbia has prepared a reform of the energy sector,establishing a new legal, institutional and regulatory framework in order to create a moreefficient energy market. The above reform is based on the Energy Law (2004)3 and theEnergy Sector Development Strategy by 2015 (ESDS)4, adopted by the Government of theRepublic of Serbia at the end of 2004, and approved by the Serbian Parliament in May, 2005.The ESDS has foreseen the development of the Program for the Implementation of the ESDS,focused on the main priorities: modernization of the existing power plants, rational utilizationof the fossil fuel sources, utilization of the renewable energy sources and implementation of

the clean technologies, as well as construction of the new power plants. Beside the latter, theESDS identifies the implementation of the Kyoto Protocol as a useful tool in order to achievethe European standards on environmental protection.


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support in the previous period, and strong latest initiatives on the Government level,introduction of support measures can be expected in the near future.

Establishment of decentralised energy-supply systems is very important for assurance of thestable electrical grid and reduction of import of electricity and other fossil fuels. That is the

reason why the Government initiated the preparation of National Strategy Plan for utilizationof RE which is to be finalized until the end of 2009. For the purpose of preparation of thisdocument Government of Serbia has formed special inter-ministerial working group withrepresentatives from the Ministries of Energy and Mining, Ministry of Spatial Planning andEnvironment Protection, Ministry of Economy and Regional Development and Ministry of Agriculture Forestry and Water Management and several experts from institute and facultiesfrom related fields. This group already started with their work and with assessment of potentials and plans in line with actual legal frames and existing strategies and policy.

In 2006. MAFWM prepared the project proposal together with PKB Agro Combinate andInstitute for Nuclear Sciences Vinca (VINCA), in order to assist in realization of constructionand installation of first boiler for soya sow combustion under the Biom-Adria Project. For this purpose MAFWM allocated 5 mil RSD, and the project was realized in 2007 when the first pilot boiler was constructed and installed on specially constructed facility on one of the land parcels of PKB, near the glass houses. The PKB corporation management accept to add anew facility for combined heat and power generation to the existing boiler room. Also there isan agreement of the largest company in Belgrade and Serbia for distribution of thermalenergy, the Public Utility Company BEOGRADSKE ELEKTRANE, which guarantees skilledwork with the facility and by which the facility gets the formal owner. The fact that the city of Belgrade is owner of the Public Utility Company BEOGRADSKE ELEKTRANE indirectlymeans that the city of Belgrade is managing the facility which operates for the purpose of thecitizens communal needs. Major donor of this project was the Italian Region Emilia-Romagna(RER) and constructed boiler for heating of greenhouses is 1.5 MWt.

Since prices of electricity are very low and privileges have not been implemented (althoughdefined in Energy Law), privileged producers cannot compete with EPS, even if they manageto break trough the long list of permits and approvals, and connect to the grid. TheGovernment of Serbia is planning to introduce the Fund for support to production of energyfrom renewable resources as well as feed in tariffs until the end of 2009, as foreseen in the New Energy Law which should came in power in August 2009. This new changes in Lawshould provide better assistance for producers of green energy with feed in tariffs, tax reliefs,easier procedures for obtaining the permits and financial support through establishment of

special Fund for assistance in investments for construction of facilities for production of energy from renewable resources.

Producers with power of 1-10MW have to be licensed by the Serbian Energy Agency. Asuntil July 2008, Serbian Energy Agency has issued 618 licenses for energy related activities tocompanies in the electricity sector and in the natural gas sector. No privately-owned production facilities can be found in the Register of Licenses. However, there are privatecompanies active on the electricity market in Serbia. 33 licenses have been issued for electricity trade. Main interest of these companies is seasonal export-import transactions.

With the new legislation that should be in place in the second part of 2009, this situation is

expected to change. According to the recent announcements made by the Ministry of Energy,Electrical Company of Serbia will offer a 12 years contract with guaranteed price of Euro0,114 0,136 per kWh to all investors who want to produce electricity from RES.


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4 Impact of the promotion of renewable energies

One of the main preconditions of sustainable development and political stability of everycountry is the stability of energy supply. That is one of the main experiences that Serbia got

from the sanction period. Lack of energy was one of the key problems that Serbia faced on the beginning of the transition period. That is why one of the first supports from abroad, came inenergy sector facilitating the sufficient supply of energy and further development of economicactivities. All big investments were followed with co-financing from the Government side butmost of the project that were conducted were financed through donor support with small shareof investments from the beneficiary side.

Multilateral/ Bilateral Institutions for Support of the Sector

European Agency for Reconstruction has, on

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