In light of the latest amendments to the Law on Spatial Planning and Construction, which put the topic of energy efficiency and energy features of the building in the spotlight, it would be interesting to remind ourselves of the already existing legal in regard to energy efficiency improvement in Serbia, and above all, what laws and especially bylaws at the local level offer and provide to housing communities – buildings (in srb. – stambena zajednica) and individuals and in which manner they may obtain financial support in case that they intend to carry out certain measures/works that improve the energy efficiency of the building, i.e. apartment.
In addition to the Law on Spatial Planning and Construction, the topic of energy efficiency is the subject of other laws, especially the Law on Energy Efficiency and Rational Use of Energy and the Law on Housing and Building Maintenance.
Among other goals, these laws tend to encourage owners of the buildings, facilities, and/or separate parts of the facilities to undertake measures that improve the energy efficiency of the building/facility/separate parts of the facility by providing them with incentives at the local level for such measures.
The Law on Housing and Building Maintenance and improvement of the features of the building through financial support for housing communities
The Law on Housing and Building Maintenance delegates to the local self-government units the authority to determine under their acts the urban zones or blocks that fall under the obligation to carry out certain activities on maintenance of the building and/or mandatory improvement of the features of buildings, but this is limited to cases where these activities are needed to prevent damage. The law further leaves to the local self-government units the possibility to render decisions under which they shall provide non-refundable co-financing for such activities to improve the features of buildings, in which case the local self-government unit secures funding for co-financing of activities in its budget and renders the decision under which it prescribes the procedure of granting funds, the percentage of co-financing, that is, financial support, and conditions under which it shall participate in financing these activities.
When it comes to more detailed regulation of this provision of the law at the local level, we may look at the example of the City of Belgrade, that is, the Assembly of the City of Belgrade, which enacted in 2017 the Decision on non-refundable co-financing of the activities on improvement of the features of the buildings (followed by two sets of amendments and supplements) in 2019 and 2021.
The mentioned decision of the City of Belgrade prescribes that the City of Belgrade and its municipalities may co-finance the activities on the improvement of the features of the buildings with their own funds in a maximum amount of even 90% of the advance quotation of needed funds.
To apply for non-refundable funding, the following are necessary:
- The financed activities are the activities conducted within the project of improvement of the features of the building that are planned in order to prevent the occurrence of damages, that is, harmful consequences to life or health of people, environment, economy, or property of significant value.
- The activities are planned within the territory of the City of Belgrade.
- That the competent organizational unit of the City administration of the City of Belgrade in charge for communal and residential affairs, i.e. the administration of the competent city municipality, has published the public invitation for applying for granting of co-financing; and
- The authorized subject – the person authorized for management of the building (housing community, i.e., the manager of the housing community)–submitted the application for participation in public procedures for granting funds, that it meets the conditions set down in the decision of the City of Belgrade and in the appropriate public invitation.
Based on the conducted public procedure, the commission formed in accordance with the provisions of the decision of the City of Belgrade ranks, selects projects, and determines the final ranking list of projects.
This model of co-financing activities is especially popular for arranging and restoring the facades of buildings in Belgrade. These activities are especially interesting for the housing communities of buildings that were built before the Second World War, and such housing communities may keep track of publishing public invitations and apply for this type of support. For example, the city municipality Savski Venac published a public invitation for the co-financing of activities on arranging facades in March of this year, and rendered the decision on the co-financing of particular projects in June.
The Law on Energy Efficiency and Rational Use of Energy and financial support for households and housing communities for energy improvement/rehabilitation
The Law on Energy Efficiency and Rational Use of Energy promotes financing for the efficient use of energy, envisaging the budget of the Republic of Serbia, the budget of the Autonomous Province and of local self-government units, EU funds and other international funds, loans of international financial institutions, and others as potential sources of funding for the same. The law authorizes autonomous provinces and local self-government units to determine under their acts specific financial and other incentives, and to determine budgets, that is, funds for the implementation of such projects and other activities for the efficient use of energy within its territory.
We may take the City of Belgrade again as an example – based on this authority provided under the law, and already mentioned Decision on non-refundable co-financing of the activities on improvement of the features of the buildings, the City council of the City of Belgrade rendered in the year 2021 the Rulebook on co-financing of measures of energy improvement/rehabilitation of residential buildings, houses, and apartments on the territory of the City of Belgrade.
The Rulebook prescribes non-refundable co-financing of the measures of energy improvement/rehabilitation of residential buildings, houses, and apartments, more specifically for replacement (procurement and installation) of windows and front doors and of other transparent elements of thermal “envelope,” for the purposes of improvement of energy efficiency in residential sector.
The funds for financing these measures are secured in appropriate percentages and maximum amounts prescribed in the rulebook, partially secured by the City of Belgrade and partially by the Ministry of Mining and Energy.
The ultimate beneficiaries of these incentives are housing communities and citizens – natural persons (i.e., households)–with regard to real estate (residential buildings, houses, and apartments) that are used for residential purposes and in which the ultimate beneficiaries live.
Thus, to acquire this incentive, it is first necessary to select direct users – commercial subjects that may be engaged by the ultimate beneficiaries for the provision of services – conducting measures of energy improvement/rehabilitation, on the basis of the public invitation/tender, and afterward the public invitation for ultimate beneficiaries is published. The ultimate beneficiaries may apply, and if they meet the criteria and are selected in accordance with the rules set down in the rulebook, they may be granted the right to non – non-refundable co-financing. In this case, non-refundable co-financing does not assume direct payment to the ultimate beneficiaries, but the funds are paid to the direct user – commercial subject after the service is rendered and after the ultimate beneficiary has paid the entire amount of its portion of the price to the direct user.
The Project of Clean Energy and Energy Efficiency for Citizens
In addition to the mentioned regulations, the Project of Clean Energy and Energy Efficiency for Citizens, that is, the Loan Agreement executed between the Republic of Serbia and the International Bank for Reconstruction and Development, which was verified by the National Assembly in December 2022, is also worth mentioning. On the basis of this agreement, the International Bank for Reconstruction and Development ensures through loan financial means for financial support of the projects that aim to increase the uptake of energy efficiency, sustainable heating, and rooftop solar photovoltaics by households located in the local self-government units in the Republic of Serbia, and that participate in the project. This project is expected to last until November 30, 2027.
The ultimate beneficiaries of this financial support provided by the local self-government units on the basis of this project are the owners of single-family houses (e.g., family houses) and individual apartments, who plan to conduct clean and efficient energy measures, which, among others, are: ((i) replacement of windows and/or doors, (ii) roof and ceiling insulation, (iii) wall insulation, (iv) boiler replacement, (v) heat network renewal, and (vi) purchase of heat pumps, solar photovoltaic systems, and solar collectors.
In this case, same as in the previous, the ultimate beneficiaries may be granted this support if they have applied for co-financing of measures of energy improvement/rehabilitation on the basis of the public invitation of the local self-government unit, if they meet the published conditions and are elected in the public procedure, accordingly.
For example, this year in Belgrade, the city municipality Palilula published the public invitation/tender for direct users, and then also for the ultimate beneficiaries, for co-financing of measures of energy improvement/rehabilitation of family houses and apartments for different types of measures of energy efficiency that include: (i) replacement of windows and front doors and other transparent elements of thermal “envelope”; (ii) lining of thermal insulation of outer walls, floors connected to the ground and other parts of thermal “envelope” toward non-heated areas; (iii) lining of thermal insulation under the roof or ceiling; (iv) replacement of existing heating that uses solid fuels, liquid fuels or electric energy (boiler or furnace) with more efficient gas boiler; (v) replacement of existing heating that uses solid fuels, liquid fuels or electric energy (boiler or furnace) with more efficient biomass boiler; (vi) installation of heating pumps; (vii) the replacement of existing or installation of new plumbing, heating elements and accompanying utensils; (viii) installation of solar collectors in the installation for central system for preparation of hot water; (ix) installation of solar panels and accompanying installations for production of electric energy for individual use; and (x) for preparation of designing documents.
Some of these measures are only applicable to houses (e.g., installation of solar collectors and solar panels), while others apply to apartments.
Accordingly, the citizens of the municipality of Palilula who planned some of the above-mentioned works this year were provided with the possibility of obtaining financial support in maximum percentages (50%, 55%, 60%, or 65%) and in maximum individual amounts determined in the public invitation. For example, the maximum individual amounts for non-refundable funding for the replacement of windows and front doors in apartments amounted to RSD 120,000, while in the case of houses, in the case of individual measures, it amounted to RSD 160,000.
All citizens who plan to upgrade their homes – apartments or houses in terms of conducting works that improve the energy efficiency of the facility–may look out for public invitations published on web pages of their municipalities and cities, that is, the City of Belgrade, or get informed in the premises of their municipalities on the possibility of obtaining certain types of financial support for planned works. The same applies to housing communities as well.
By Marija Vukcevic, Senior Associate, JPM Partners