By Nikola Catovic
Only 10 years ago, drifting cooling towers and open coal mine pits were the profile picture of the Serbian energy sector. With the lion share of installed capacities used for the generation of electricity on brown coal and lignite, Serbia was topping the international polluting charts for decades. Some studies indicate that annually close to 2,000 premature deaths and thousands of respiratory and cardiovascular cases are linked to air pollution due to utilization of fossil fuels to meet the energy needs in the country.
For many years, renewable energy sources were only associated with massive hydropower plants on the Danube and Drina rivers, built during the former Yugoslav times. Solar PVs and windmills could only be seen abroad, often raising questions like: “Why are there no wind parks in Serbia?”
Even though abundant with natural resources, the instable political situation and lack of adequate laws and regulations halted the utilization of renewable energy sources at large scale for decades.
Small but decisive steps were taken only with the Energy law changes back in 2010. Since then, the country is trying to stick to its green agenda. However, there is no easy path to success. The adoption of the new regulations towards green technologies took off-guard all stakeholders in the market. Investors rushed in but were immediately hit by the harsh reality of an environment inexperienced to embrace the new technologies. Lack of local technical know-how, unaligned regulations and financial sector inexperienced in green project finance came back as a boomerang to the ambitious plans to transition from an extremely polluting environment to a much greener one.
So, where does Serbia stand today, 10 years after? Well, still approximately 60% of electricity is being produced in thermal power plants running on coal. Overall, in the past 10 years 10% of the generation capacity based on coal was replaced by renewable sources such as wind, small hydro, biogas and PV. But more work still needs to be done. As signatory of the Paris Agreement, Serbia has set its National Determined Contribution (NDC) to the United Nation Framework Convention on Climate Change (UNFCCC) with the commitment to reduce by 2030 its greenhouse gasses emissions (GHG) by 9.8% compared to 1990.
We at MACS had the opportunity to be at the forefront of that development wave by supporting both investors and financial institutions in building up the needed capacities and a profound understanding of renewable energy systems.
One of the landmark projects we supported was the 2 MW solar power plant Solar Matarova. Built close to the town of Kuršumlija, one of the poorest municipalities in the country, Solar Matarova still stands as the biggest PV project in Serbia, supporting also rural development.
The plant provides clean electricity for about 500 households. That may not sound like much, but the importance of this investment goes beyond the Kilowatt provided, as it is a lighthouse project for the local community and the wind power community of local investors, financiers, engineers, and workers involved in the implementation, operation and maintenance of the facility. For Solar Matarova, one of the first commercial renewable energy projects in Serbia, with our DD Plus concept we supported the investor in fine-tuning the project concept as well as the financier with the technical risk appraisal.
As the economy still suffers from the pandemic and slowly prepares for post-Covid recovery, the investment mood of private businesses has changed, inclining more toward investments that address short-term urgent needs of the business, hence ensuring the survival of the businesses during the current stressful period. As a result, the confidence and interest of private entrepreneurs to make long-term sustainable investments that bring slower, long-term benefits for the company, have decreased. Investments in energy efficiency (EE), resource efficiency (REFF) and renewable energy (RE) which are considered to be longer-term investments, have lost out on the priority of the investment agenda of private businesses due to other priorities resulting from the Covid crises. The rationale of the Project is to incentivize the interest of the private sector to increase these types of investments since they bring long-term benefits to the companies as a microcosmos as well as to society and the planet on the macro level.
The overall objective of the project is to utilize Green Investments as key driver for MSME competitiveness and thereby contribute to a Green Recovery of the economy after the Covid pandemic. Guarantees and technical assistance can incentivize and enable such investments with a longer-term horizon in a context focused on short-term needs.
MACS has been assigned to support the KCGF to optimize the design and implementation of guarantees provided to PFIs to promote PFI’s capacity and willingness to provide financing for MSMEs in Kosovo for EE and RE investments. Additionally, MACS will support awareness raising measures among PFIs and the community of MSMEs for the benefit of relaizing Green Investments and capacity development to identify Green Investment Potential and financing potential in PFIs and MSMEs.
Holger is Energy and Process Engineer and the Head of our Energy Department. He holds an engineering degree from the Berlin Technical University and has about 20 years of experience in the evaluation, design and management of energy projects, including energy service companies (ESCO).
At MACS, Holger plays a key role in developing and steering the company’s activities in the field of renewable energy and energy efficiency (RE/EE). As a chief engineer, project manager and deputy project manager, he has led several expert teams during the implementation of RE/EE credit lines in Southeast Europe. Currently his focus is on the technical operations lead in the MACS role of the Technical Advisor of the GGF (Green for Growth Fund). Moreover, he has carried out market studies for RE/EE in countries like Turkey and Mozambique.
Driven by the vision of sustainable solutions of RE and EE measures counteracting climate change and the carefree depletion of natural resources, he has been key for the development of our standardized validation approach for energy savings and CO2 emission reductions (eSave).
Heading the Energy Department, he is also representing the company in our relations with clients and partners.