JPM & Partners Senior Partner Jelena Gazivoda talks about energy in Serbia in 2025.
CEELM: What is in the pipeline in terms of legislation that you believe will have the most impact on the energy sector in Serbia?
Gazivoda: The second half of 2024 was marked by several important regulations. This includes the adoption of the Integrated National Energy and Climate Plan of the Republic of Serbia for the period up to 2030 with projections up to 2050, the Energy Sector Development Strategy of Serbia up to 2040 with forecasts up to 2050, and amendments to the Law on Energy. Additionally, a set of regulations that were a prerequisite for organizing the second round of auctions for the market premium expired on February 5, 2025, and we are waiting for its official results.
In light of the above, I do not expect further significant changes in regulations in 2025, except possibly in the sector that governs nuclear energy (on which we are still waiting for the results of the feasibility and justification studies for which the Ministry of Mining and Energy organized an international public tender in mid-summer 2024). It is certainly one of the topics that will be relevant in the coming period toward enriching Serbia’s energy mix.
CEELM: In which types of energy projects do you expect most activity this year?
Gazivoda: Clients are, without a doubt, most interested in the sector of renewable energy sources, which shows a strong growth trend in Serbia, thanks to the improved regulatory framework and the clear commitment to persevere on the path of the Green Agenda. In this sense, the official results of the second round of auctions, for which there was great interest, are eagerly awaited. Positive elements are the total number of projects that are being developed, the increase in interest in solar power plants compared to wind farms, and the diversity and multi-nationality of investors and the increasing readiness for significant investments in Serbia, complemented by the willingness of banks and international financial institutions to support a wider range of projects than in the past.
CEELM: On the flip side, which ones seem less appealing?
Gazivoda: The impression is that the biomass market is not sufficiently developed, although, according to expert studies, there is significant potential for it. We believe that two grants worth close to EUR 10 million with the German Development Bank KfW for the second phase of the Renewable energy sources – development of the biomass market in Serbia program will contribute to the development of this sector. The project will provide financing for the construction and reconstruction of up to five district heating systems that replace polluting and inefficient fossil fuels, and several Serbia municipalities will participate in it.
CEELM: What are the main/largest energy projects you expect to be finalized in Serbia in 2025?
Gazivoda: The Petka solar power plant, with an expected installed capacity of 9.75 megawatts and a planned annual production of 15.6 gigawatt-hours will likely be completed in the first half of 2025. At the same time, the Kostolac wind farm – being built on an old mining dump – is expected to be completed in the middle of 2025. 2025 is supposed to result in the further continuation of modernization and transformation of EPS, as well as upcoming large investments in strengthening the capacity of the transmission and distribution network.
CEELM: What is the biggest challenge for the energy sector in Serbia at the moment, in your view, and what is the likelihood you’ll see it overcome in 2025?
Gazivoda: The biggest challenge will undoubtedly be solving the issue of sanctions imposed on the Oil Industry of Serbia (NIS). On January 10, 2025, the Office for the Control of Foreign Assets at the US Department of Finance placed the NIS on the list of sanctioned companies. The full implementation of sanctions against NIS should occur on February 27, 2025. On February 4, 2025, NIS sent an official request to the US OFAC to postpone the sanctions for 90 days, and this activity was supported by the governments of Serbia and Hungary. According to publicly available sources, there has still been no official response to this request. Due to the sanctions, trading of NIS shares on the Belgrade Stock Exchange was temporarily suspended. One thing is certain: the ownership structure of NIS will not be able to remain as it is now and it is expected that this issue will be worked on in the coming period. There are different scenarios, but the solution should be found in negotiations between OFAC, NIS, and the Republic of Serbia. Otherwise, the consequences could be severe and long-lasting, with everything made worse by the fact that NIS contributes significantly to the budget of the Republic of Serbia.
This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
