Serbian Energy Sector 2018

Serbian Energy Sector 2018 Sustainability As An Energy Sector Development Challenge

COMMENT

INVESTMENT PROJECTS OF THE LARGEST SERBIAN ENERGY COMPANY

EPS Dedicated To Strategic Investments

The strategic aims of EPS from 2018 to 2027 focus priorities on security of supply, the fulfilment of environmental obligations, modernisation, economic sustainability, and the further realisation of investments.

Viewed as a whole, investments until 2027 will total 4.9 billion euros

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With the support of the Government of Serbia, in the last two years Elektroprivreda Srbije (EPS) has been completely dedicated to the implementation of large, strategic investment projects like introducing the latest technologies, increasing energy efficiency, building new, modern facilities and revitalising old and reliable ones.

- In the period from 2015 to 2017 alone, EPS invested 1.2 billion euros through revitalisation projects, the procurement of modern equipment, environmental protection and preparations for the construction of new capacities. Such a pace of investment has made it possible for many projects to 2 |

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be successfully restarted since the end of 2015 – not EPS management.

Among the projects launched are construction of the new thermal block at the Kostolac power plant, modernisation of the ‘Zvornik’ hydroelectric power plant and construction of small hydro plants, the first

EPS wind farm in Kostolac and desulphurisation plants, while the “green” project at Kolubara has been stepped up. The EPS production base comprises thermal capacities and their power has been increased by 220 megawatts through works on TENT A, TENT B and TE ‘Kostolac B’.

One of the strategic directions in which EPS is moving is towards revitalising its hydroelectric power plants, with which a significant increase is gained in the power outputs and lifespans of these plants

A lot has been done in a short period, which is an even greater success if one considers that the energy sector is a sector with lengthy deadlines, where the passage from idea to completion takes several years, due to complicated procedures, permits and the resolving of property issues.

One of the strategic directions in which EPS is moving is towards revitalising its hydroelectric power plants, with which a significant increase is gained in the power outputs and lifespans of these plants. Every kilowatt-hour obtained from water is very important, because it comes from a renewable source and has a lower price than when produced from coal. With works on ‘Đerdap 1’, HPP ‘Zvornik’ and HPP ‘Bajina Bašta’, EPS’s hydro capacities increased by 140 megawatts.

And that’s just the start, with preparations underway to revitalise all 10 aggregates at HPP ‘Đerdap 2’, which will yield 50 new meg-

awatts of power for electricity production.

For this project, but also for the revitalisation of aggregates at HPP ‘Vlasina’, RHE ‘Bajina Bašta’, and the ‘Potpez’ and ‘Bistrica’ hydro

provides capacities for connecting new factories and encourages employment, and with it the local economy.

The strategic aims of EPS from 2018 to

1.1 billion euros will be invested in the mining sector, 1.7 billion in the thermal sector, 700 million in renewable sources and 1.4 billion in distributive and corporate projects. Viewed as a whole, investments until 2027 will total 4.9 billion euros power plants, we are testing the condition of equipment and preparing investment and technical documentation. These investments will not only bring renewed capacities and increased power to EPS, but will also encourage local development.

Every EPS investment is significant in manifold ways, as, for example, building substations and improving the network

2027 focus priorities on security of supply, the fulfilment of environmental obligations, modernisation, economic sustainability, and the further realisation of investments.

As such, 1.1 billion euros will be invested in the mining sector, 1.7 billion in the thermal sector, 700 million in renewable sources and 1.4 billion in distributive and corporate projects. Viewed as a whole, investments

– saw Serbian companies receive about 60 per cent of the workload.

The trend of the highest possible participation of Serbian companies in the implementation of EPS investments is also supported on one of the most important projects, the construction of the new ‘Kostolac B3’ thermo-block, with power of 350 megawatts. This is the first large thermal capacity to be built in Serbia for almost three decades. The investment is worth 613 million euros, and apart from increasing EPS’s production capacity by five per cent, it will also provide additional security to the Serbian energy system. The project is being financed through a loan from the Chinese Exim Bank and EPS funds, while the main works contractor is the China Machinery Engineering Corporation (CMEC).

In order to secure sufficient amounts of coal for Kostolac B3, a project is underway to increase coal production at the Drmno mine from nine to 12 million tonnes a year.

However, the main support pillar of EPS’s until 2027 will total 4.9 billion euros.

The opening of the electricity market, the shift in focus towards renewable sources, technological advancements and increasingly stringent environmental protection regulations have largely prompted major energy companies to be compelled for their plans to encompass more business segments than was the case a decade or two ago.

Implementation of the project to construct a wind farm in Kostolac has also begun, with which EPS, the entire Serbian energy system and Serbia move with assured strides towards fulfilling commitments to increase the share of renewable energy in total consumption to 27 per cent. The first wind park that EPS will construct is a significant investment worth a total of around 100 million euros. With power of 66 megawatts in 20 wind generators, this wind farm will provide enough energy to supply 30,000 households.

- EPS generates around 70 per cent of its electricity from lignite at thermal power plants, and in order to ensure stable production in the decades to come, large capital investments are being implemented 4 |

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EPS provides a stable and secure supply of electricity to 3.5 million customers and planned, which should ensure the most efficient and environmentally-friendly use.

In environmental protection projects for thermal capacities alone, EPS will invest more than 600 million euros by 2025 – stress representatives of Serbia’s largest energy company.

The project to construct a flue gas desulphurisation plant is underway, which ensures the future of TPP ‘Nikola Tesla A’,, the largest thermal power plant in Serbia. This “factory of electricity” will be harmonised with European environmental standards. The flue gas desulphurisation system on four blocks of TENT A, with power exceeding 300 megawatts, is worth 167.2 million euros and will reduce sulphur dioxide emissions nine-fold.

In addition to the ecological significance, this investment is also an example of good practise of EPS’s impact on the national economy, because the job – spearheaded

by Japan’s Mitsubishi Hitachi Power System

thermal power plants is the Kolubara Mining Basin, with annual production of about 30 million tonnes of coal. In order to maintain and improve its production, intensive work is being undertaken on the opening of the new Radljevo Mine. Coal production should begin there in 2019, while the first quantities of coal have been discovered at the new Polje G Mine. Preparations are also underway for the opening of the Polje E Mine, and with that EPS will have secured additional coal quantities until the middle of the century.

ENERGY SUPPORT PILLAR Capacities for generating electricity that are managed by EPS produce a total power output of 7,355 megawatts, with annual production of around 34 billion kilowatt-hours of electricity, which makes EPS the most reliable support pillar of the energy system.

EPS provides a stable and secure supply of electricity to 3.5 million customers. ■

INTERVIEW

SRDAN SRDANOVIĆ, HEAD OF THE ENERGY MANAGEMENT DIVISION FOR THE ADRIATIC REGION AT SIEMENS

New Times Require Modern Solutions

Unique engineering and solution expertise makes Siemens a trusted partner that ensures its clients’ lasting success. Together, Siemens and its clients shape the power infrastructures of Serbia in a sustainable, profitable and socially responsible way

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wing to our innovative technologies, we contribute to the stability of the power network, which is best proven through the conducted delivery of solutions for renewables in Serbia and the region, the goal of which is to enable their reliable connection to the national power grid.

• Electricity consumption is growing all over the world, which is why the energy sector faces great challenges on a daily basis. What kind of role does Siemens play in the energy market?

- Today’s megatrends of digitalisation, urbanisation, globalisation, demographic and climate change dictate an increase in electricity usage. Ensuring that power is available in sufficient quantities wherever and whenever required has become a demanding challenge for the energy sector.

By covering all aspects of energy management with our own products, solutions and services, we supply the technologies, solutions, services and knowledge needed for all aspects of the energy challenge. We have been following those trends in Serbia for more than 130 years, motivated by “the power to make power happen”, with strong

customer proximity. The Siemens Energy Management Division team, which consists of educated and experienced engineers, offers various solutions for all customer challenges in the energy sector, while our company participates in capital projects and thereby provides a significant contribution to the revitalisation and further development of Serbia’s energy system.

• You offer clients the opportunity to integrate and optimise the production process – electricity consumption according to the ‘turnkey’ system. What is encompassed by all of this?

- These turnkey projects include steps from initial planning and design, commissioning and operating, all the way to maintenance, updates and dismantling, where Siemens engages as a consultant, system integrator, supplier and partner to provide a comprehensive range of customised services. They ensure reliable and efficient operations of any power transmission and distribution asset. In order to achieve these goals, we follow Siemens’ key market drivers for project execution – decarbonisation, decentralisation and digitalisation.

MindSphere connects products, plants, systems and machines, enabling customers to harness data and utilise analytics to identify areas in which enhancements can be made to ensure the best possible outcome

Recognising potential is one thing, while taking advantage of it is another. That is why Siemens has developed MindSphere, Siemens IoT cloud-based system, via which gathered digital data enable power consumers to have more benefits in their processes.

We are currently working on its implementation, while the main goal of our team is to be the first in Serbia to offer our clients a complete MindSphere solution.

• Renewable energy sources and digitalisation are two postulates that form the basis of energy efficiency, in which Siemens is a world leader. What can we expect in the immediate future when it comes to new technologies?

- Major technological innovations will be needed in the energy sector in order to keep pace with energy efficiency trends and the future needs of electricity production, transmission and storage. New installations of energy generation capacities will mainly take place in the scope of renewables, such as hydropower, wind farms, solar, geothermal and biomass. *Research conducted at the global level shows that the share of renewables (without hydro) and distributed generation in the energy mix will more than triple by 2030. Electrification and automation have provided a reliable basis for today’s energy landscape, while digitalisation holds the key to mastering these new challenges. ■ *Source: IHS Autonomy Scenario – July 2017

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INTERVIEW

ERSTE BANK

Credit Line For Improving Energy Efficiency In Households

Erste Bank has started the placement of loans under the GEFF credit line programme for green economy financing, for all residents wishing to invest in energy efficient solutions for their homes.

First credit line of its type in Serbia; return of investment up to 20%; payback up 120 months

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his is the first contract of its kind in Serbia and confirms Erste Bank’s commitment to participate actively, together with partners from the EBRD, in protecting the environment and promoting energy efficiency in households.

Eligible under the credit line are measures for replacing windows or doors, insulation adaptation, heating and thermal insulation equipment purchase, procurement of photovoltaic panels, heat pumps, efficient lighting and other measures that contribute to energy saving and efficiency.

“The clients are granted a financial incentive that’s also financed by the EBRD, amounting from 15 to 20% of the total investment amount”, noted Slavko Carić, CEO of Erste Bank, adding: “clients will have the chance to improve efficiency in energy consumption, improve the quality of living conditions and realise 6 |

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significant cost savings in their budget due to reduced energy bills.”

The maximum loan repayment period for clients is 120 months, while the maximum loan amount is 3,000,000 RSD. Zsuzsanna Hargitai, EBRD Director and Regional Head of the Western Balkans, said: “This is the first time the EBRD is extending funds to a Serbian bank to support energy efficiency in the retail segment. We are very pleased to join forces with Erste Bank and are confident that

we can leverage our partner’s extensive branch network to reach households throughout Serbia. We are also grateful to the EU for providing incentives that make loans more accessible to homeowners, and to Austria and the Western Balkans Investment Fund for their much needed technical support. We encourage Serbian households to invest in energy-saving home improvements that will also save money, make homes more comfortable and help the environment.” ■

This is the first time the EBRD is extending funds to a Serbian bank to support energy efficiency in the retail segment. EBRD is very pleased to join forces with Erste Bank and is confident that they can leverage their partner’s extensive branch network to reach households throughout Serbia

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UNITED NATIONS DEVELOPMENT PROGRAMME

Biomass – The Most Significant Renewable Energy Source In Serbia

The use of biomass is a technically feasible and cost-effective solution for a great part of Serbia’s renewable energy needs

MILOŠ BANJAC, Assistant Minister of Mining and Energy, and MAJA MATEJIĆ, UNDP Energy Portfolio Manager

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iomass is geographically well distributed across Serbia. It has a 61% share of total renewable energy sources (RES) potential, with 63% of biomass sourced from agriculture and the remainder from forestry.

Biomass is currently used intensively in Serbia for energy purposes and accounts for 10% of the primary energy balance. Unfortunately, mostly forestry biomass is being used in the form of wood fuel for household heating or, to a much lesser degree, for combustion in boilers for heating buildings.

Energy generation from agricultural biomass (harvest and cutting residues, manure, residues from slaughterhouses and the food processing industry etc.) is very rare, although it creates added value 8 |

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in terms of reducing waste from agricultural production, which has long been a significant source of intensive water and soil pollution in Serbia.

Agricultural biomass can be used for direct combustion in boilers to produce heat or as raw material to produce biogas, which is then used as fuel for combined heat and power generation (CHP). CHP plants can also utilise significant quantities of waste from farms or food processing industries.

Due to the high investment in the construction and operational costs of CHP plants, power generation from biomass must be subsidised. Serbia introduced the so-called “feed-in” tariffs for privileged power producers from biomass/biogas as

early as 2009, after which investment in this field started becoming more intensive, though not yet sufficiently so.

Despite the aforementioned incentive measures, there are nevertheless numerous barriers to the development of the biomass market for energy production in Serbia.

On the supply side, these barriers include inefficient collection and distribution of the available biomass, problems with logistics, insufficiently developed mechanisms for long-term and safe supply. On the demand side, the factors acting as barriers to investment are the high initial investment costs and the banks’ perception of high-risk when approving loans for the construction of biomass plants. Moreover, investors face

The United Nations Development Programme (UNDP) in Serbia, in partnership with the Ministry of Mining and Energy of the Republic of Serbia, is implementing a five-year project entitled “Reducing Barriers to Accelerate the Development of Biomass Markets in Serbia”, with the aim of advancing biomass from being an area with attractive potential to a broadly used source of renewable energy

In November 2015, the Serbian Ministry of Mining and Energy, in cooperation with the UNDP, successfully conducted a public call for awarding grants for the construction of combined biomass/biogas-fired combined heat and power plants. Six projects were selected to construct biogas-fired CHP plants with a total installed capacity 6.35 MW, reaching a total investment of $22.6 million. The amounts granted per project equate to up to 15% of the total investment, or a maximum of $275,000 per plant, while the total investment of each project exceeds $1.2 million.

All plants have been completed and connected to the power grid within the deadlines set. Thus, the total installed capacity of biomass/biogas CHP plants in Serbia has increased by 130% relative to the 2015 baseline .

“All six CHP plants that were supported in their construction by the project we are implementing with the UNDP have been connected to the grid and have started producing green energy. The capacity of biogas plants in Serbia has, thus, increased significantly, which is an exceptional result and a rare example of direct, tangible and well-designed donor support to investments. The Ministry of Mining and Energy is extremely satisfied and proud of this outcome. We can already say now that this is one of the best projects we are implementing with our partners,” says Miloš Banjac, Assistant Minister of Mining and Energy. numerous problems in the process of plant construction as a result of inconsistent construction procedures, difficulties in connecting to the grid, insufficient knowledge of new technologies etc.

By accepting the October 2012 decision of the Energy Community Ministerial Council and applying the 2009/28/EC Directive of the European Parliament and Council on promotion of the use of renewable energy, Serbia committed itself to achieving the ambitious goal of increasing its percentage of renewable energy to 27% of gross final energy consumption and increasing the share of biofuels in the transport sector to 10% by 2020. This goal is to be achieved by increasing the share of renewables in power generation, heat generation for heating and cooling, and in the transport sector.

The United Nations Development Programme (UNDP) in Serbia, in partnership with the Ministry of Mining and Energy of the Republic of Serbia, is implementing a five-year project entitled “Reducing Barriers to Accelerate the Development of Biomass Markets in Serbia”, with the aim of advancing biomass from being an area with attractive potential to a broadly used source of renewable energy. The Project was launched at year’s end 2014 and is financed by the Global Environmental Facility and the UNDP, with a total budget of $3.2 million.

Co-financing has been provided by institutions of the Republic of Serbia and other project partners. The total value of the project, including completed investments, will reach $30 million.

“The Project is supporting key stakeholders in creating a dynamic and strong biomass market in Serbia, by improving the institutional and regulatory framework,”

emphasises Maja Matejić, UNDP Energy Portfolio Manager, noting the significance of project activities aimed at strengthening the capacities of all stakeholders to identify, prepare, finance, construct and manage bankable projects that utilise biomass to produce energy.

According to Matejić, the Project is also developing instruments to ensure continuity in supplying biomass-fired power plants and reducing risks in biomass production and sales, as proven by the examples of contracts that are being prepared for longterm biomass supply and detailed technical specifications for biomass products.

“The Project also ensures mechanisms to support investments, such as grants awarded to selected investors who are investing in biogas-fired CHP plants, as well as providing support in technical preparation for the financing of similar projects.

A series of training courses is also being

delivered for municipalities, investors and banks, along with activities to strengthen institutional capacities at the national and local levels,” explains Matejić.

Assistant Minister of Mining and Energy, Miloš Banjac, emphasises another key project outcome - raising public awareness about the significance of using renewable energy, noting the significance of organising practical education for students at the University of Belgrade and the University of Novi Sad. “There’s no better way to introduce such technologies in practise than to have the students of faculties of agriculture, mechanical engineering and technology see such plants and learn how they operate through practical education. This type of education will become standard practise and I hope that we will soon have a new generation of engineers capable of designing, constructing and managing such plants,” concludes Banjac. ■ |

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ENERGY SECTOR

Sustainability As An Energy Sector Development Challenge

There is no doubt that the energy sector was, and is, the sector of particular interest for the whole economy and society

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f the energy sector becomes a stable, modern and well-organised sector, this will inevitably increase the wellbeing of the entire economy of the country. In contrast, if insufficient attention is paid to the energy sector from the position of strategic planning, the poor positioning and weak prospects of the entire economy will be inevitable.

The most likely global development scenario implies an economy based on the efficient use of relatively “clean” energy from various sources. According to all development scenarios, the energy sector will long continue to have the task of providing significant amounts of energy and energy products for the economy and society, but with a tendency to reduce energy intensity, i.e. consumption per unit of monetary product.

The second requirement is for the energy sector to be cleaner, i.e. to rely as much as possible on renewable energy sources and

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as little as possible on finite sources.

The third requirement that will dominate in the future is that the generation and consumption of “green” energy will have the lowest possible impact on the environment, water, air, land and also directly across the whole food chain, biodiversity and human health.

The fourth requirement for the energy sector relates to economic efficiency and the energy market. Energy is a product and its turnover and prices have to be defined by the market. The energy offer and demand significantly influence price, supply conditions and events at the international level. Considering that the energy sector has particularly high external effects (costs or benefits for indirect participants, who do not have to be direct customers, i.e. suppliers) for this market that represents a necessary corrective mechanism of the internalisation of externalities (application of the principles that the consumer/polluter

pays). This implies that both ecological and other external costs be included in the retail price - through charges, fees, taxes, penalties or other economic and financial instruments.

The external costs calculated in the price of some energy products must also include, in the option of future energy sector, transition costs, i.e. substitution and technological adaptation for the use of other, as a rule more expensive, energy products, when finite conventional sources have been completely depleted.

These requirements cannot be implemented without an adequate legal framework, institutions and responsible bodies. Ensuring energy efficient and ecologically adequate behaviour within the energy sector requires the non-selective application of laws and nondiscriminatory practise. Finally, the position regarding energy and the environment, as well as a knowledge-dispersal-based shift in the behaviour of energy customers, consumers and producers, are very important as a key development factor of today’s economy.

Development of the energy sector must be socially tolerable, i.e. possible sudden changes on the energy market cannot have a major and serious social impact on the majority of the population. The possibilities provided by dynamic development of the energy sector, in terms of rational cost allocation and benefits at the level of country, should be utilised. The key positive social consequences of such energy sector development include increased employment and living standards, and improvement in the status of human rights and possibilities to use public goods. New technological solutions, based on market stimulations, must act as a guarantee of greater efficiency and cleanliness, while - to a greater extent - the renewable energy sector should also be socially sustainable. ■ Source: Republic of Serbia, Ministry of Mining and Energy: Energy Sector Development Strategy of the Republic of Serbia for the period until 2025, with projections to 2030

INTERVIEW

LAW OFFICE ATANASKOVIĆ BOŽOVIĆ

With The Client From Start To Finish Experts at the Atanasković Božović Law Office provide a complete service and follow their clients from the moment they decide on a business plan, through the development phase, to the completion of work

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ment phase until the work is done. Clients require us to determine the most suitable legal structure for their projects and to stand beside them and take all legal actions during these projects.

• The energy sector has in recent years become one of the fastest growing areas of business, and your office is superbly specialised in it. Given its complexity and challenges, what services do your clients most often expect from you?

- Our team has been active in the energy sector for a decade, starting with projects in renewables: mini-hydro, biomass and cogeneration, and extending to the energy trading business and energy savings projects in the private and public sectors.

We provide a complete service and follow our clients from the moment they decide on a business plan, through the develop-

• Your speciality is “full service”. In the energy sector, what exactly does that mean?

- In short, it means being able to resolve multidisciplinary legal issues of the project at hand. Our lawyers are experts in various fields of law, with specific knowledge of particular industry groups. They combine extensive experience in energy sector regulatory matters with other projectrelated matters. Our corporate department is responsible for advising clients on the best possible structure for implementation of the project; the real estate and construction department provide due diligence reports of properties under consideration, assist in acquisition and lease of properties and collection of documents for reconstruction, renovation and building of energy and

he energy sector has in recent years become one of the fastest growing areas of business, and at the same time a key area in the work of Law Office Atanasković-Božović.

We discussed this area with founders Vuk Božović and Uroš Atanasković, and partners Miloš Atanasković and Ognjen Božović.

The currently applicable legal framework is solid and wide-ranging, which offers investors opportunities to carry out energy projects through a range of legal/ business models

other facilities; the commercial department deals with contracts for realizing projects and conducting business, including energy trading. Finally, we have experts in public procurement, public private partnerships, concessions and ESCO projects. Altogether they form a team that can address any of the client’s needs and provide tailor-made solutions for any business plan.

• Energy requires a very special cooperation with state institutions and global systems, but also with small companies. How do you see the legislation in the sector?

- We believe that the currently applicable legal framework is solid and wide-ranging, which offers investors opportunities to carry out energy projects through a range of legal/business models, such as direct private investment, direct investment with State support, public private partnerships, concessions, ESCOs, public procurement procedures, etc. But there is always room for improvement, especially in the field of administration. Administrative procedures are still very complex and require collection and preparation of dozens of documents, permits, conditions and opinions during the development phase which can be timeconsuming. However, improvements are visible in this field and we expect further developments in the coming period. ■ |

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INTERVIEW

MILAN PETROVIĆ PH.D., PROFESSOR OF THE BELGRADE UNIVERSITY FACULTY OF MECHANICAL ENGINEERING

Science Has No Borders

Experts from the Belgrade Faculty of Mechanical Engineering, headed by professor Milan Petrović Ph.D., deal with thermal turbomachinery, thermal power plants, the development of methods and software packages for the aerodynamic calculation of steam turbines. They represent a reliable partner to electricity utility company EPS and many global companies

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iscussing solutions to the energy challenges confronting the world, the development of the energy sector and cooperation between universities and industry is professor Petrović, who is a tenured professor of the Department Thermal Power Engineering at Belgrade University’s Faculty of Mechanical Engineering and head of the Laboratory of Thermal Turbomachinery and Thermal Power Plants.

• Our country, just like the rest of the world, is facing huge energy challenges. Are possible solutions to this problem sought within government ministries, large energy systems and companies, or at the universities where future experts are educated?

- The challenges of the energy sector are complex and require the engagement of all resources available to any state and society. The degree of success in resolving energy problems is linked directly to economic development and living standards. The Ministry of Mining and Energy has drafted legislation that’s harmonised with modern European practises, while the Ministry of Science – through its financing of projects in the field of technological development – tries to maintain and stimulate research in the field of energy.

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• As someone who is an authority even beyond the borders of Serbia, what do you see as the biggest problem hindering the energy sector today?

- The task of the energy sector is to satisfy the energy needs of the population and industry. Energy consumption levels are constantly increasing as the number of people on Earth increases as well as their standard of living. Due to the level of electricity production and the fact that reserves of fossil fuels are largely depleted, there are also negative consequences for the environment. There are today three main directions in attempts to solve this problem. Energy efficiency measures are reducing energy consumption in households and industries; there are steady efforts to improve existing technologies and develop new technologies that consume less fossil fuel and pollute the environment less, or not at all; and technologies based on renewable

energy sources are being applied massively in an economically acceptable way.

• Do young engineers emerge from the Belgrade Faculty of Mechanical Engineering with essential knowhow?

- Energy comprises a significant part of the research and teaching activities of the Faculty of Mechanical Engineering. We have very deep and detailed teaching on energy modules for hydro power engineering, thermal power engineering, process engineering, thermal engineering and IC engines. The curriculum is constantly updated with the introduction of new content that’s in line with current advances in science, so our students attain good, contemporary and comprehensive knowledge in the field of energy technologies. When it comes to laboratory work with students, we are lagging behind the world’s best universities, because energy sector test facilities are complex and expensive.

By working for research & development projects and solving practical problems at EPS, we have become better experts, improved our teaching with practical examples and resolved the equipping of the laboratories of the Faculty of Mechanical Engineering

We are trying to overcome this problem by purchasing measuring equipment from the research project and including these resources in teaching work.

• Does cooperation exist between the Faculty of Mechanical Engineering in Belgrade and companies operating in the energy sector? How do you rate such cooperation; and do you see room for its improvement?

- Electric Power Industry of Serbia (EPS) is one of the most important partners of the Faculty of Mechanical Engineering. EPS has long since recognised the advantages of engaging domestic research resources and opened the door to cooperation with domestic faculties and institutes. This is beneficial both to us and EPS. EPS receives solutions to specific problems and institutions capable of solving future development problems, as well as the ability to successfully compete to foreign companies.

A second segment is represented by cooperation with companies gathered together within the business association ’Elektromašinogradnja’, which deal with various activities in the energy sector and which

contribution to science we are directed towards collaboration with major global companies. We decided to publish papers with our results exclusively at congresses and in journals specialised in the field of thermal turbomachinery, which has enabled us to achieve significant cooperation with the largest companies in the world. Among

Compared to developed states, our country has significantly higher energy consumption per unit of GDP, which makes our industry’s products more expensive and less competitive, while rendering the operations of the economy more difficult. Solving this problem requires a systemic approach – with around 8,000 employees – represent Serbia’s serious development potential.

Finally, we also have excellent cooperation with companies from the domain of the processing industry, where energy plays a major role in production.

• Do you personally, as well as the Faculty of Mechanical Engineering in Belgrade – which has engineers who are valued worldwide – collaborate with large multinational companies that deal with energy?

- Science has no borders. In Serbia we no longer have manufacturers of steam turbines, so if we want to realise a de facto

them are General Electric and Honeywell (U.S.), Siemens and MAN Turbo (Germany), Anasaldo (formerly Alstom, Switzerland), Mitsubishi Hitachi PS (Japan) and others.

• You have excellent development teams.

Which research are they involved in?

- We deal with thermal turbomachineryand thermal power plants. Within domestic frameworks, we work on projects aimed at improving the efficiency level , increasing power outputs and testing existing turbine plants, as well as the design of future thermal power plants. Another activity is the development of methods and software

packages for the aerodynamic calculation of thermal turbomachinery. For example, we had a four-year project with company Siemens on the development of their new gas turbine, while companies MAN Turbo and Honeywell use our methods and software packages for the design of existing machines and redesign of new ones etc.

We are currently involved in a large European research project, within the scope of the HORIZON 2020 programme, to develop a new generation of thermal power plants based on flexible turbines for the future electricity market. The consortium for this project consists of all seven European manufacturers of turbomachinery and 14 universities that they selected. The University of Belgrade found itself in this selection.

• Does the Faculty of Mechanical Engineering in Belgrade manage to keep pace with all global IT trends around the world and to what extent does the state encourage such initiatives?

- We’ve just returned from the ASME Turbo Congress in Oslo, where the word digitisation was one of the leitmotifs. We try, under the given conditions, to maximally introduce IT to the curriculum through special subjects, projects in practical exercises, bachelor’s and master’s thesis. We’ve also introduced a new special study programme for IT in mechanical engineering. ■ |

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OVERVIEW

Serbia, with a population of around 7.1 million, satisfies most of its electricity demand from domestic production.

Electricity production in Serbia relies around 70% on coal, while the remaining 30% is generated in hydropower plants. The electricity market in Serbia is dominated by the national power utility EPS (Elektroprivreda Srbije – Power Industry of Serbia), which owns all large generation capacities and supplies most consumers

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The Energy Sector In Serbia

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erbia has large coal reserves, with 4.5 billion tonnes of proven lignite deposits. The reserves are located in two main coal basins, Kolubara and Kostolac. The coal mines in Serbia are owned and managed by subsidiaries of EPS. The Kolubara Mining Basin provides around 75% of the lignite used for EPS’ thermal generation. It produces 29 to 31 million tonnes of lignite annually, which is supplied to the Nikola Tesla and Morava power plants, together producing more than 50% of Serbia’s electricity. The Drmno mine near Kostolac provides the other 25%, averaging 9 million tonnes.

Serbia has produced oil and gas in

small quantities since the mid-50s, but is heavily reliant on imports, mostly from Russia.

Serbia has undertaken commitments to increase the share of renewable energy under the Energy Community Treaty to 27% by 2020, however in 2015 it had managed only 21% renewable energy – mostly wood used for space heating. As of May 2018 wind power construction is finally speeding up somewhat and in its energy strategy implementation plan, Serbia has committed to bring online more than 500 MW of wind power by the end of 2020.

No new large hydropower plants have been built for several years, although several are mentioned in the energy strategy

as possibilities. In recent years, a proliferation of small hydropower plants has started to cause concerns as they are often sited in or near protected areas.

Inadequate planning and assessment of cumulative impacts means that they often cause a large amount of damage compared to the small amount of electricity they generate. Financiers of the plants are often hard to trace but include Austria’s Erste, Unicredit and the EBRD. As Serbia intends to join the EU, it should also be aiming for 80-95% emissions reductions by 2050, in line with EU policy. However Serbian government and EPS plan to remain locked-in to a carbon-

Serbia has significant potential for energy efficiency and has a target to increase energy efficiency be 20% by 2020 under the Energy Community Treaty intensive energy system, most notably through the construction of the 350 MW Kostolac B3 lignite power plant and the expansion of the associated mine from 9 to 12 million tonnes annually.

Although Kostolac B3 is the only plant expected to be built before 2025, the Serbian Energy Strategy also puts forward several more fossil fuel generation plants for construction: • Nikola Tesla B3 – 750 MW – lignite • Kolubara B – 2 x 375 MW – lignite • Novi Kovin – 2 x 350 MW – lignite • Štavalj – 300 MW – lignite • CHP Novi Sad – 340 MW – gas (may consist of separate plants) • Other gas combined heat and power plants – 860 MWe – gas The coal plants would also entail ex-

pansion of lignite mining, for example the opening of the Radljevo field in the Kolubara region.

Not only does this exacerbate climate change, but ironically Serbia’s coal mines have also suffered from its consequences.

In May 2014 the Kolubara mines were turned into polluted lakes. Each of the four mines was flooded, two of them completely. In the biggest open-pit mine, Tamnava West, ten huge excavators used for mining were flooded, and six of them completely underwater.

The Drmno mine also suffered serious flooding in 2014. During the May floods a heroic effort was mounted to save the mine, but between July and September of the same yearmore than 2 million cubic metres of water spilled into the mine, bringing with it around 800, 000 cubic

metres of sludge and mud, and engulfed mining machinery in mud.

With its traditional forms of generation not proving resilient to climate change, Serbia would do well to diversify its energy mix and work more on energy efficiency. Serbia has promising potential for renewable energy, but as with all the countries in the region, different sources put the exact figures at quite different levels, depending among other things on whether they use sustainability criteria.

Serbia has significant potential for energy efficiency and has a target to increase energy efficiency be 20% by 2020 under the Energy Community Treaty.

Inefficient use of energy represents a major concern in the country. It has the second-highest energy intensity in the region, nearly four times as much as the EU average. Incentives to save energy are limited due to artificially low electricity prices but this is going to have to change in the coming years as Serbia integrates into the European electricity market. ■ Source: CEE

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FUTURE OF THE ENERGY INDUSTRY

Working Together In Harmony With Others The energy industry needs to evolve if it is to meet the twin challenges of rising energy demand and reducing emissions

By Shunichi Miyanaga

W

hile renewable energies are developing rapidly, it is likely to take decades to transform the world’s energy systems from conventional to renewable power generation. To balance the priorities of energy security and lower emissions, the global power-generating industry needs to embrace-and invest more--in technological innovation.

The path we need to take is one paved with greater efficiencies and increasing reliability and safety.

To achieve these goals, we need to work together more collaboratively within the energy sector, drawing on the ancient Japanese concept of “chowa”— working in harmony with others—to jointly put our weight behind a mix of new technologies.

MAKING INNOVATION MOBILE Natural gas may become the world’s fastest-growing fossil fuel by 2040, and could reduce carbon emissions by up to 70% per unit of electricity compared to coal, Natural gas only used to be available via inflexible and complex networks of pipes in which the gas was highly pressurized.

However, technological innovation has led to the development of liquified natural gas

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(LNG), which is cooled down to extremely low temperatures and liquified so that it can now be transported wherever it is needed.

For example, “floating LNG power: combines LNG regasification, storage and electrical power generation on a single floating platform that will support efficient and effective LNG consumption.

LNG vessels can become part of “virtual pipelines.” These supply LNG to towns where mobile storage facilities can be connected to conventional distribution networks.

Trucks or trains can also supply virtual pipelines, and such transmission systems are already being used in isolated communities in Australia, New England, Alaska and remote parts of Canada.

IT’S TIME TO PRIORITIZE CARBON CAPTURE AND UTILIZATION Carbon sequestration must be a priority in dealing with CO2 emissions from coalfueled power generation, which is likely to dominate the sector until at least the middle of this century.

There has previously been little incentive to develop technologies to remove, store and even reuse carbon emissions.

But changes earlier this year to U.S. tax credits now offer more financial credits per ton of captured CO2 than were previously available.They also remove limits to how much can be stored at facilities like Petra Nova, the world’s largest carbon capture, utilization and storage facility in the power sector.

And while the move could encourage more U.S. companies to develop and install sequestration technology, the effects could be felt far beyond North America’s shores.

For example, in countries such as South Africa, China and Indonesia, new cost-effective carbon capture technologies could help reduce emissions from older coal and gas-fired plants.

Great strides are being made towards the production of synthetic fuels, such as methanol, which can be synthesized from captured CO2. Research shows that methanol can be used to generate electricity cost effectively while reducing carbon emissions.

HEARING THE ‘VOICE OF THE PLANT’ Digital Internet of Things (IoT) solutions are using artificial intelligence (AI) and machine-learning analytics to mine “big data” sets produced by turbines and other plant equipment in order to listen to “the voice of the power-producing plant.”

In 2017, Mitsubishi Heavy Industries Group broke ground on the world’s first 570MW power plant that will be able to autonomously communicate, predict and analyze what is happening within it, and use this information to control itself.

AI is also taking on tasks such as monitoring and tuning gas turbines. Thousands of power-generating turbines around the world are already remotely monitored, with IoT technologies predicting and preventing problems. This use of accumulated data can reduce operational costs and lower emissions.

For example, a similar plant in Oklahoma has set a global 60 hertz combined-cycle efficiency record of 62%. It also reduced CO2 emissions by 65% compared to the coal-fired power plant it replaced.

ROBOTS MAKE FOR A SAFER WORK ENVIRONMENT While renewable energy sources are growing in importance, the exploration and production of fossil fuels, in particular natural gas, will continue to be a major component of the global energy industry. The highest priorities in the front line of oil and gas development are human safety and asset integrity. As an industry, our ambition must be to create

a safe working environment for front-line workers while improving capital efficiencies.

With this aim in view, explosion-proof, remote-operated robots are being developed for oil and gas production facility inspections using the latest AI/IoT technologies.

Robots, which have already been deployed to inspect hazardous areas in industrial buildings and power plants, are equipped with cameras and tank-like crawlers that even allow them to climb stairs.

These can operate autonomously, freeing up working time and keeping human workers out of danger.

Robots have also been developed for other dangerous tasks, including one to tackle incidents few human firefighters would be able to deal with, such as petrochemical plant blazes.

But it is important to note that the future we envisage is not one in which human engineers are replaced by machines. Instead, specialist workers will have more information that will help guide decision-making.

Reaching our destination together We have already embarked on the road to creating a secure and cleaner energy industry, but we will need to pass certain milestones to reach our ultimate destination.

In addition to the increased use of renewable energy sources, this will involve us continuing to innovate to make traditional power sources even cleaner and more sustainable.

But the commitment required to develop and deploy the technologies we need cannot be met by “lone fighters.”

Only by using the combined strength and scale of multiple organizations and investing in a range of developing technologies can the energy industry overcome some of its biggest challenges. ■ The author is president and CEO, Mitsubishi Heavy Industries

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RENEWABLE ENERGY

The Key Trends That Will Shape Renewable Energy

Throughout the entire modern age, mankind has used fossil fuels to meet its energy requirements. Coal, oil and natural gas have lit homes and powered machinery for centuries, driving civilisation forward. But as human development accelerated, the unsustainability of such energy became apparent. Global fuel supplies deteriorated and the atmosphere became more polluted.

The search for renewable sources of energy began, to ensure a sustainable future

T

oday, our civilisation stands at a critical juncture. We are on the cusp of adopting clean energy at a scale never seen before. But for renewable power to continue its rapid advancement, the right decisions need to be taken.

When clean energy first made headway in the global scenario, questions were raised about how stable and scalable it was. At a

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macro level, unstable policies for powering future growth were exacerbated by technological immaturity and lack of funding.

Nevertheless, clean energy installations continued to grow, albeit slowly, until a dramatic leap a few years ago.

Today, a fifth of the world’s electricity is produced by renewable energy. In 2016, there were 160GW of clean energy installations globally. This is 10% more than in 2015, but they cost almost a quarter less. New solar power gave the biggest boost, providing half of all new capacity, followed by wind power, which provided a third, and hydropower, which gave 15%. It was the first year in history that added solar capacity outstripped any other electricity-producing technology.

Several countries have set steep capacity installation targets over the next 10 to 15 years, following COP21. Emerging giants such as China and India, aware of the excessive levels of pollution in many of their key cities, are leading this charge. Despite the US withdrawal, the targets in the Paris Agree-

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ment are still expected to be key drivers for future sector growth.

An unprecedented drop in the cost of producing clean energy has occurred in the last couple of years. It is becoming the cheapest source of power for more and more countries. Both solar and wind power have undergone an annual average percentage drop in cost of production in the mid to high teens. These heady declines in cost are likely to continue over the next decade.

Given its increasing affordability, the applications and use cases of renewable energy have broadened. Alongside electricity production, it is providing new solutions for mobility and energy security worldwide.

The electric vehicle market is growing rapidly, with China leading the way, and European and American markets following suit. Countries like India are already targeting complete electrification of its vehicular fleet by 2030. The affordability and widespread use of electric vehicles is being driven in part by falling battery costs. These enable further energy stability solutions, including windsolar hybrid generation, grid management using utility scale batteries, and plausible alternative power storage options such as pumped hydro or a gas grid to create an adequate balancing mechanism.

It is also important to address the need for changing of load demand. Both wind and solar power are infirm in nature, so the pricing of the electricity has to match its availability.

The levelized cost of electricity (LCOE) for renewable sources of energy - that is, the unit-cost of electricity over the lifetime of a generating asset - is plummeting.

But large-scale independent power producers’ enthusiasm for gaining more market share is causing competitive clean energy

Given its increasing affordability, the applications and use cases of renewable energy have broadened.

Alongside electricity production, it is providing new solutions for mobility and energy security worldwide However, despite these positive projections and steep targets, we must ensure that the growing sector is managed well.

Massive renewables installations will be built. From them, it is important to ensure the right balancing loads from thermal and hydro power sources.

The infirm nature of the clean energy power supply will require smart grid management at scale. The capacity of more stable sources of energy will need to keep up.

However, once viable storage solutions are developed, it should be possible to balance the renewable load.

prices to fall at an unsustainable rate. Particularly in emerging countries, where cost of funding is high, it is important to ensure that sufficient access to funding is available for meaningful returns on capital employed.

The advent of new funding mechanisms and instruments should ensure that domestic companies in emerging countries can compete with global players and fuel sector growth. New funding sources are also essential for shortening the cycle and broadening technology innovation. Besides enabling new manufacturing techniques to create products with higher electricity

T U L S I TA N T I

generation capabilities, funding can rapidly advance the rate of innovation in areas as diverse as biofuels, robotics and micro grids.

Emerging countries are set to benefit immensely from these potential advances in funding and technology. New communities in these countries could be fully powered by a stable clean energy supply through a combination of generation, storage options and smart grids. Electric mobility could serve as a distributed load and an emergency power

source. Public-private partnerships should be encouraged, enabling the development of clean energy to complement progress in society.

Finally, careful protectionism or liberalisation of the renewables sector - according to each country’s requirements - is necessary so as not to harm sector growth in the long run. There must be a balance between fair competition on the one hand, and incentives for companies to focus on development on the other hand, while gaining good returns on their investments.

Governments must focus on technology and manufacturing commitments that support clean energy.

Renewable energy is a global phenomenon on the upswing. For the foreseeable future, its growth is set to accelerate. But we have to ensure that progress is made in the right way. Our priorities and decisions now will determine how future societies benefit. â– |

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