SLED Electricity Modelling results – Serbia Slobodan Markovic 9.9.2016. Electricity Coordinating Center Ltd. V. Stepe 412, 11040 Belgrade 33, Serbia www.ekc-ltd.com Copyright 2016 EKC © This material may not be copied or distributed in all or in part without prior written permission of the copyright owner

Content – Serbia Scenario description Wholesale price impacts Generation mix, CO2 impacts Impacts on system costs: Investment costs, RES support costs Network impacts Contingencies NTC valuations Network loss impacts

EEMM model functionality (developed by REKK-Hungary) Comments: The map shows the geographical coverage of the model. Its results cover: Competitive market equilibrium prices by countries Electricity flows and congestions on cross-border capacities 36 countries are handled in the model. Morocco, Tunisia, Turkey, Moldova, Russia and Belarus are considered as exogenous markets In these markets the net export position are equal with the fact in 2013 (assumed a baseload flow) The model is calculating the marginal cost of around 5000 power plant blocks and sets up the merit order country by country. Taking into consideration the merit order and exports/import, the model calculates equilibrium prices. Power flow is ensured by 85 interconnectors between countries. 3

Scenario definition - summary

Gross electricity consumption Sources: Energy Strategy and NREAP and on the national expert input from TSO Main drivers: Energy efficiency improvements

RES capacity deployment (MW) Source: Latest renewable plans of Serbia

Results

Modelling result – baseload price, €/MWh in real term

Modelling result – peakload price, €/MWh in real term

Wholesale price evolution Both baseload and peakload electricity wholesale prices have a significant drop between 2015-2020, followed by a slight increase in the later period The main factors influencing the wholesale price developments in Serbia are the followings: Generation expansion in the fossil based generation in the region is high. Over 4000 MW capacity (mainly lignite and coal) is built in the countries: AL; BA; BG; GR; HR; HU; ME; MK; RS; RO according to the national plans RES capacities above 12000 MW are also contributing to the price drop till 2020 Higher interconnectedness in the region also allows trade of electricity (higher NTC) These new capacity expansion is illustrated in the following slide for the region

New PPs in the wider region* New RES-E generation capacity, MW New coal-based power generation, MW Region includes the following countries: AL; BA; BG; GR; HR;HU; ME; MK; RS; RO;

Electricity mix

Generation mix and CO2 emissions The assumed lower level capacity increase in GAS (only a smaller CCGT is built) in the ambitious scenario (AMB) shows that Serbia could cope with its increasing demand by higher hydro share. Export is reduced due to the development, so the country is rather focusing on teh domestic market. CO2 emissions are reduced significantly, it reaches close to 60% of the emissions of the Reference scneario in the year 2030.

Total investment cost of new PPs, m€, 2015-2030 Source of investment cost: Serbian Energy Strategy and Fraunhofer (2013) The AMB scenario shows a much lower investment cost of the scenario due to the acoided investment costs in the coal based generation Hydro investment cost increases. The electricity system is based on more hydro resources, that can raise SoS concerns in the country

Calculation of the RES-E support budget Support budget = (LCOEt-P)*Generated electricity LCOEt: Levelized cost of electricity generation of technology t ~ average cost of electricity production P: Modelled baseload electricity price (except PV, where peak load electricity prices are taken into account) LCOE figures are based on literature data (Ecofys, 2014) 55 €/MWh for hydro 90 €/MWh for wind 110 €/MWh for biomass 105 €/MWh for PV 80 €/MWh for geothermal Baseload and peakload prices are the results of the modelling RES fee = RES support budget / electricity consumption

Yearly RES-E support need, m€

Yearly RES-E support need, €/MWh

RES-E support Present FIT support for new hydro capacities is set between 50-100 €/MWh for capacities up to 15 GWh production, PV is at 150, Wind is at 96, while biomass is at 120 €/MWh LCOE values show that this level of support will be sufficient to cover all type of RES in the future as well, so there is no pressure to further increase support. The peak of the support is in 2020, than it shows a reducing trend, due to lower support needed for new capacities. RES support budget and support levels do not show steep differences amongst the scenarios as in other countries in the region.

Network modelling results - contingencies Network contingencies appear in Serbia and Albania, so Serbia has to take care of its domestic network and its interconnections with the neighbours. This contingencies appear in all scenarios, but the AMB scenario also shows additional contingencies

NTC change with neighbours 2025 summer Higher RES penetration generally increases NTC in the CPP scenario The AMB scenario reduces slightly the NTC values compared to CPP, but still higher than REF 2025 winter

Transmission losses In Serbia transmission losses show changing pattern. The CPP scenario reduces losses compared to REF, while the AMB increases compared to CPP

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