Interview with Mr. Slobodan Ruzic - Energy Saving Group - ESG

InterviewSouth-East European INDUSTRIAL Мarket - issue 5/2009

An undeveloped market full of potential
Current state of the renewable energy sector in Serbia from a top expert in the field

Mr. Slobodan Ruzic is an electrical engineer with a PhD and more than 23 years of experience in the energy sector. Mr. Ruzic is the Director of Energy Saving Group (ESG), a private consulting company in Serbia dealing with renewable energy sources, energy efficiency, restructuring, engineering, and the development of the energy sector. He has vast experience in the restructuring and development of the energy sector, the development of energy efficiency projects in industrial facilities, and in developing renewable energy sources projects, particularly for small and mid hydro power plants and wind farms. Mr. Ruzic used to work as Researcher with the Mihajlo Pupin Institute, as Assistant Director for Development in the Department for Development and Investment of the Serbian Power Utility, as Energy Efficiency Expert in the Alliance to Save Energy, and as Deputy Minister in the Ministry of Mining and Energy.

Mr. Slobodan Ruzic, Director,
Energy Saving Group - ESG

What is the current state of the renewable energy sector in Serbia? In your opinion, how developed is this sector in our country?
Unfortunately, the renewable energy sector is very underdeveloped in Serbia. There are some companies that use wood biomass for pellet production but there are no new facilities for generating electricity from biomass. Many domestic and foreign private investors are interested in using small hydro resources but new small hydroelectric plants have not yet been constructed. The same is true for wind energy. Indeed, there are few companies involved in using solar panels for water heating. Such activities are still very limited. So, there is still a lot of work to do to bring this sector where it needs to be. This is a pity for Serbia, but, at the same time, it’s a great opportunity for new investments.

Tell us a little about Energy Saving Group: What does ESG do and what can it offer its clients? What are some of the more well-known projects ESG is involved in?
Energy Saving Group ltd., energy efficiency, engineering, and consulting company, was established in 2004. Today, ESG is the leading private organisation in Serbia which develops and implements projects in the energy sector, particularly in the fields of energy efficiency and renewable energy sources. ESG is a consulting company of regional importance and is capable of providing services in: energy sector restructuring, free energy market consulting, energy development strategy definition, energy systems operations planning and development, defining energy carrier tariff systems & pricing policy consulting, and services in preparing feasibility studies and bidding documentation for energy facility construction.
ESG has 6 full time employees and 2-5 contracted experts who work on different projects. However, our clients can employ up to tens of thousands of people at once. Our most noteworthty clients are: The EC Delegation, the World Bank, USAID, GTZ, RTE France, ECO Belgium, Kantor Greece, Eptisa Spain, Nipsa Spain, Integration Germany, REV Canada, Ecoosteel Italy, the Ministry of Mining and Energy of the Republic of Serbia, the Serbian Energy Efficiency Agency, the Serbian Transmission System and Market Operator, the Mihailo Pupin Institute in Belgrade, the Electro Distribution Company of Belgrade, FAD Gornji Milanovac in the automotive sector, Centroproizvod Surcin in the food sector, the Beogradske Elektrane Belgrade District Heating Plant, and many other industrial users and potential private investors in the energy sector of Serbia.
ESG participated in implementing two technical assistance projects dedicated to establishing transmission, a system and market operators in Serbia, and to forming the electricity market. We drafted a number of secondary legislation acts that regulate the energy sector of Serbia, in particular those regarding energy efficiency and the use of renewable energy sources. Finally, we have been working for a number of investors (mainly foreign) interested in developing small hydro projects, wind farms, and biomass for electricity generation.

What steps is the Serbian government currently taking to encourage the use of renewable energy sources and the expansion of this sector in Serbia?
The most urgent step that needs to be taken is the adopting a Decree on Feed-in Tariffs. Without a clear guarantee that a Power Purchase Agreement will be signed with a reasonable energy price and for a reasonable period of time, there will be no serious investments in the renewable energy sector in Serbia.

In your opinion, what more does the government of Serbia need to do to support the growth of the renewable energy sector?
Many believe that our government should make the necessary permit collection procedures simpler. That is true, but, in my opinion, this is not crucially important. The most important improvement would be if the government could force people working in state administration, local administration, and the relevant public utilities to respect the existing legal framework and given deadlines. In other words, these entities should avoid putting up unnecessary barriers to investors.

How can foreign firms benefit from the growth of this sector? How can domestic companies benefit from its development?
Foreign companies dealing in renewable energy sources should recognize Serbia as a new market which is still undeveloped yet full of potential. Serbia has about 900 identified locations where small hydroelectric plants could be constructed. Some experts’ estimations show even greater potential in biomass. Investments in some other resources such as wind energy, geothermal energy and biogas should also be taken into consideration. A company willing to invest in this sector should start initial development activities as soon as possible in order to snap up the most attractive facilities and locations. Companies should begin renewable energy projects in Serbia by obtaining an energy permit for the location and technology it is interested in. That way, investors could go through the most risky part of the procedure and ensure the best locations for themselves for 2-3 years with very low initial costs. Probably the most important condition for success is finding a good location for investments and to ensure the right of use.
Domestic companies like ESG could help investors go through this procedure in the most efficient way and to obtain energy permits in 3-4 months. It is very likely that subsequent regulation will be adopted by the early part of next year, which means that, after obtaining the energy permit, investors can move right to the next step of the project, which involves obtaining construction permits. Cooperation between foreign investors and domestic consulting and design organizations is the most efficient way to go through this phase of the procedure. Finally, in the construction phase of the energy facility, there are a lot of possibilities for companies to cooperate, namely when it comes to carrying out the actual civil works. In other words, close cooperation between foreign investors and different local companies is both parties’ mutual interest and the best way to finish different phases of a project successfully and with minimal costs.

Text and picture source: Serbia Investment and Export Promotion Agency /SIEPA/

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