Energy Resources and Security of Supply in Serbia

ENERGY AGENCY OF THE REPUBLIC OF SERBIA Energy Resources and Security of Supply in Serbia Energy Balances and Infrastructure Development Ljiljana Hadžibabić Head of the Technical Department Energy Regulatory Partnership Program The Energy Regulatory Agency of the Republic of Serbia & The Pennsylvania Public Utility Commission Belgrade, October 29 th, 2007 1

Contents Energy Resources and Security of Supply in Serbia: Energy Balances and Infrastructure Development 1. Generation infrastructure expansion: Progress and challenges 2. Transmission infrastructure expansion: Progress and challenges 3. Distribution infrastructure expansion: Progress and challenges - Site profiles (installed capacity, fuel source) - Approval process (licenses and permits) - Integration into existing grid - Regulatory, policy, legal, technical considerations 2

Serbia geographic position 3

Serbia Land Area 88,173 sq km (34,449 sq miles) Population 10.2 Million The main religion - Christian Orthodox Estimated GDP for 2007 around US$7, 200 per capita (IMF). Capital Belgrade, - Latitude 44 00'N - Longitude 21 00'E - Population 1.6 Million 4

Energy Resources Serbia is not particularly rich in energy resources. The yearly needs of primary energy is app 15 M t oe. Import: app 47% Oil 83% Gas 91% Electricity periodically (winter season) 5

Primary Energy Demand Forecast (1) 20 Total primary energy demand 16 12 M toe 8 4 0-4 2003 2006 2009 2012 2015 Coal Oil Natural gas Electricity Renewables 6

Primary Energy Demand Forecast (2) 8 Primary energy import demand 6 M toe 4 2 0-2 2003 2006 2009 2012 2015 Coal Oil Natural gas Electricity 7

Company: EPS 1 - state POWER SECTOR - Basic Information - state-owned, vertical integrated Holding www.eps.co.yu 5 generation companies 1 coal-production company Wholesaler 5 distribution companies with retail for tariff customers 1 - EPS Electric Power Industry of Serbia 8

Electricity Generation - Basic Data - Generation facilities 8.355 MW (1200 MW at KiM * ), 2006: Generation 38.5 TWh Gross Consumption C 37.1 TWh Import 0.9 TWh Export 2.1 TWh Transit 6.0 TWh Lignite Production P 36,1 mill t * - KiM Kosovo and Metohija, under UNMIK responsibility 9

Generation infrastructure 10 000 MW 8 000 6 000 4 000 2 000 0 1970 1980 1990 2004 2005 2006 TPP CHP HPP 10

7155 MW (+ 1200 MW at KiM) Structure of Power Generation (without KiM) Pumpedstorage PP 8,6% TPP 55,5% HPPs vith reservoir 5,2% Run-of-river HPPs 25,8% TPP-HP 4,9% Lignite 11

New capacities preconditions for construction Energy permits responsibility of the Ministry of mining and energy: generation facilities of power > 1 MW; power transmission and distribution facilities with voltage > 35 kv, permits issued in accordance with: nergy Strategy and Strategy Implementation Programme result of adequate analyses public tender concesion Optimal integration into existing grid The Technical Codes define all necessary analyses and technical criteria (Grid Code and Distribution Code). 12

New capacities preconditions for operation Licenses The Agency responsibilities: issuing licenses in accordance with License Code revoking licenses keeping the licenses register, monitoring of compliance with license requirement License Code - rules are defined by the Ministry. 13

GWh 45 000 40 000 Balance 1990-2006 (with KiM) 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 '90. '92. '94. '96. '98. 2000 '02 '04 '06 TPP TPP-H Ps HPP Consumption 14

GWh 40.000 Balance 1990-2006 (with KiM) 35.000 30.000 25.000 '90. '92. '94. '96. '98. 2000 '02 '04 '06 TPP TPP-HPs HPP Consumption 15

4.500 GWh 4.000 3.500 Balance 2006 (without KiM) Monthly Consumption - Max/Min = 1.63 3.000 2.500 2.000 1.500 1.000 500 0-500 I II III IV V VI VII VIII IX X XI XII -1.000 TPP TPP-HP HPP Import Consump. Ex port Ex p-imp 16

Max Peak Load / Generation Capacity 80 % 77,5 75 74,1 70 65 60 55 50 53,8 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 17

UCTE Oct 2004 Power System = 500 MW 18

Serbia s Power System Advantages Favourable position in the Region Significant share of HPPs (40%) Great Problems Big seasonal difference in consumption Delay with: New generation capacity construction and Revitalization and modernization of existing generation facilities 19

4.300 GWh 3.800 3.300 2.800 2.300 1.800 1.300 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 proizvodnja konzum 20

Average age of TPPs 28 years, HPPs 34 years, A The basic equipment in open-pit pit mines 255 years 21

Problems in the period 1990 2000 INTERNATIONAL SANCTIONS Lack of liquid fuels and natural gas Lack of money for sustainable development Lack of spare parts for maintenance DETERIORATED AND OPSOLET EQUIPMENT especially in TPP s and open-pit pit mines LOW ELECTRICITY PRICE SIGNIFICANTLY INCREASED ELECTRICITY COMSUMPTION FOR HOUSEHOLD HEATING DAMAGE FROM NATO AIR STRIKES IN 1999 22

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700 mil.usd Average Annual Investment 600 500 400 300 200 100 0 1976-80 1981-85 1986-90 1991-95 '96-2000 2001-06 24

mil.usd 300 Annual Maintenance 250 200 150 100 50 0 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 25

Security of supply Key Policy Goals after October 2000 Electricity sector restructuring Market opening and development Incentives for private capital investments To reach the important role in the regional electricity market Internal efficiency increase Improved environmental protection Reduction of losses (technical and non-technical) 26

International Community Assistance After October 2000 450 mil donations - mostly from Main areas of assistance: Electricity imports Fuel for heating mostly from EU through EAR Spare parts and equipment for PP s and open-pit mines Overhauls of TPP s District heating systems of Belgrade, Novi Sad and Niš Reforms, capacity building and technical assistance 27

Insufficient production Low efficiency of PP s Damaged transmission network Key Achievements (1) 2000 2006 / 07 Increased production of coal and electricity Repaired and renewed transmission network during winter season 2000/01 55 days of power cuts despite International Community Assistance average final price for all consumers 0.8 $/KWh Since winter season 2002/2003 no power cuts October 2007 4.77 e/kwh + new tariff system implementation TPP s EFOR 34% TPP s EFOR 13,2% 28

Key Achievements (2) TPP s EFOR (without KiM) 29

mil.usd 250 Annual Maintenance 200 150 100 50 0 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 30

Development and Investments (1) REBIS: GIS Study, (WB, 2004) Data on South East Europe, 2005-2020: SEE region will require 12,700 MW of new capacity 9,400 MW of rehabilitated capacity (to extend life time) Serbia will require 640 MW of new capacity 2,800 MW of rehabilitated capacity (to extend life time - partly accomplished) 31

Development and Investment (2) Demand Forecast : Anticipated yearly increase (without KiM) REBIS-GIS Study (WB, 04): 1.6% -1.1% LCIP for Serbia (EAR, 05): 1% Serbian Energy Strategy ( 05): 1.9% EPS ( 07): 1.3-0.6% EPS s Assumptions: Economic electricity price Development of district heating systems Development of gas sector Effects of rationalisation 32

TWh 40 35 Demand forecast by EPS Gross Consumption (without KiM) 30 25 20 15 10 5 0 '90. '92. '94. '96. '98. '00 '02 '04 '06 '08 '10 '12 '14 33

Development and Investment (3)( Rehabilitation and modernization of existing facilities Construction of new capacities Domestic resources Lignite Hydro potential Renewable sources Imported resources Natural Gas 34

Development and Investment (4)( Rehabilitation and modernization of existing facilities The most important rehabilitation projects: HPP Đerdap, 6*176 MW HPP Bajina Bašta, 4*91 MW 35

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Development and Investment (5)( Lignite - New Capacity Priority projects: I. TPP Kolubara B 700 MW (2x350 MW) lignite fired power plant App. EUR 750 million II. TPP Nikola Tesla B3 (TENT B3) 700 MW lignite fired supercritical power plant App. EUR 900 million with adequate capacity in Open Pit Mines 37

Lignite Development and Investment (6)( Energy Resources Serbia will have a supply of coal for the next 50 years (excluding KiM). Kovin basin Kostolac basin Kolubara basin Reserve: 13.4 Bill.tons Activeted Metohija basin Kosovo basin

Development and Investment (7)( Energy Resources Hydropotential Danube Drina Morava Lim Smal HPP, P < 10 MW Total 17300 GWh/god. Nonactivated 7100 GWh/god. Drim

Development and Investment (8)( Renewable sources - Potential Assessment Small Hydro PP CADASTRE of Small PP s ( 87) 850 Sites 450 MW 1,500 GWh/year Biomass Wind power plants - farms Waste incineration.. 40

Natural gas Development and Investment (9)( Reconstruction - Upgrading CHPP Novi Sad (208 MW) Optimization of existing plant and new unit up to 450 MW gas-fired combined heat and power plant with combined cycle gas turbine. Approximately EUR 120 160 million 41

New generation capacities securing energy balance after 2013 Power and energy balance 1500 500-500 2008 2009 2010 2011 2012 2013 2014 2015 2016 600 300 0-300 GWh -1500-600 MW -2500-900 -1200-3500 -1500-4500 -1800 year import-export energy GWh power MW 42

Electricity used for heating during winter seasons 1990/ 91-2005/ 06 8.000 GWh 7.000 6.000 5.000 4.000 3.000 1000 MW for heating! 0.8 c$ 6819 22% yearly generation 5204-24 % max 14% 2.000 1.000 0 1990-'91 1993-'94 1996-'97 1999-'00 2002-'03 2005-'06 43

Improvement of Energy Efficiency Serbian Energy Efficiency Agency http://www.seea.sr.gov.yu/english Constituted in 2002 Supported by EU (EAR) grant from CARDS programm, 3.8 mill Energy Efficiency programs primarily for: Municipal Sector Industry Buildings stock Transport RES CHP 44

Environmental Protection (1) Plan for period 2007 2015 Environmental measures on existing TPPs in accordance with the requirements of recent legal regulations 18 TPP Units: 2x600 MW, 6x300 MW, 3x200 MW, Coal with low sulfur content: a) Kolubara lignite 0.45% b) Kostolac lignite 1.30% No measures taken for sulfur and nitrogen oxide reduction 45

Environmental Protection (2) Anticipated effects of planned air protection measures Without modernisation T O T A L t / a After modernisation Dust 66.900 5.850 SO 2 360.440 40.720 NO x 43.200 16.350 Fulfilment of EU regulations for air emission reduction Reduction of cross-border sulphur transport Air quality improvement around power plants Reduction of the number of people with respiratory illnesses 46

Environmental Protection (3) P R O J E C T S Reconstruction or replacement of existing ESPs on TPP units Primary measures for NOx emission reduction from TPP units Flue gas desulphurization on TPP units (FGD) Reconstruction of ash and slag handling system to the new ash pit introduction of new technology 47

Environmental Protection (4) Estimated Implementation Funds T y p e o f p r o j e c t TPP ESP reconstruction Primary measures for NO x emission reduction Flue gas desulphurization Reconstruction of the existing ash and slag handling technology to the ash pit and introduction of new technology T o t a l F u n d s (x 10 3 EUR) 33.000 48.000 545.000 40.000 677.000 48

TRANSMISSION SYSTEM - Basic Information - Company: EMS 2 independent, state-owned www.ems.co.yu TSMO: Transmission Network System Operator Market Operator 2 - EMS Electric Network of Serbia 49

Transmission infrastructure (1) MVA 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 TRANSMISSION NETWORK 7 150 5 794 6 135 4 050 2 169 1 649 400 / x 220 / x 110 / x 400 kv 220 kv 110 kv Transformers Lines km 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 2006: Electricity delivered: 45,834 GWh In-flow Losses: 2.75% Out-flow 8,567 GWh 8,489 GWh 50

Transmission infrastructure (2) Development program The main areas of EMS Investment and Development Plan: Transmission system Rehabilitation and Construction IT Telecommunications Other investments Estimated Costs of investments till 2015-400 m (in 4 levels of priority). 51

Transmission infrastructure (3) Transmission Investment Plan Millions 70 Priority I/II 60 Priority II 50 Priority I Priority 0 40 30 20 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 52

DISTRIBUTION SYSTEM - Basic Information - Company: EPS - state-owned, vertical integrated Holding www.eps.co.yu 5 Distribution Companies, responsible for Distribution Network Distribution Operator Retail for tariff customers 53

Distribution infrastructure 12.000 MVA 10.000 DISTRIBUTION NETWORK (Without KiM) 11.010 91.067 100.000 km 80.000 8.000 6.000 6.186 6.292 60.000 4.000 4.261 28.786 40.000 2.000 0 523 6.790 7.743 110 /x 35 /x 20 /x 10 / 0,4 110 kv 35 kv 20 kv 10 kv 0.4 kv 20.000 0 Transformers Lines 54

Distribution companies (1) 3,3 mill consumers (without KiM) 21% of market is potentialy opened for 350 consumers with annual consumption > 3 GWh); consumers are not interested in market due to low prices for tariff customers. 55

Distribution companies (2) 2006: Delivered to customers in Serbia 26 933 GWh The biggest share - households 53% High level of losses >13% Programme for reduction of technical losses Low level of voltage in 0.4 kv network The metering system modernization programme - almost three million meters are to be replaced within the following ten years; 2006 international tender (the EBRD loan) 130,000 meters were purchased 56

Resime The troubles are behind us! The Regulator and energy enterprises are ready for new challenges! 57

Thank you for your attention! Ljiljana Hadzibabic Head of the Technical Department Energy Agency of the Republic of Serbia Belgrade, Terazije 5/V Phone: +381 11 30 33 829 Fax: + 381 11 32 25 780 www.aers.org.yu 58