Despite electricity prices in Serbia being roughly three times lower than in the EU, this policy primarily benefits large consumers rather than low-income households. Low prices undermine Elektroprivreda Srbije (EPS) and increase the risk of transferring ownership to parties whose interests may not align with those of Serbian citizens. Targeted subsidies should focus on households with limited income, while others should pay market-based energy prices.
Serbia remains heavily dependent on imported oil and natural gas. About 80% of natural gas comes from Russia under long-term contracts, 13% from other sources, and only 7% is produced domestically. Annual gas consumption breaks down as 4.25 TWh by households, 5.5 TWh by district heating, and 17.5 TWh by industry. Planned mining projects could significantly increase fossil fuel consumption, creating supply challenges for natural gas.
To reduce import dependency, Serbia needs a long-term plan to substitute natural gas with green fuels. Industrial consumption can decrease by abandoning energy-intensive mining projects, while CO2 emissions from steel production can be reduced through hydrogen use. Regulation should cap any single supplier’s share of annual national gas consumption at 50% and redefine the role of Jugorosgas to prioritize citizens’ interests.
All district heating systems (SDG) should gradually shift to renewable energy or utilize waste heat generated by industrial processes. This transition aligns with Serbia’s strategic goal of energy independence and its obligations for European decarbonization. Coal and oil, contributing 8.8% and 13.5% respectively to district heating, should be replaced with waste heat, high-efficiency cogeneration, or shallow geothermal energy using heat pumps up to 200 meters deep. Verified geothermal water reserves, mostly owned by NIS, should be brought into public ownership. Regulatory procedures for geothermal energy use should be simplified, and the relevant legal framework should be included in the renewable energy law rather than mining legislation.
Biomass, particularly wood chips, is currently the only renewable source widely used in district heating, though its sustainability is threatened by uncontrolled harvesting and the CO2 emissions associated with cutting, transport, and combustion. Small-scale domestic and municipal use further contributes to pollution. To preserve this resource and ensure environmentally sound usage, Serbia’s biomass policies must align with EU regulations, including sustainable harvesting, cascade utilization, and the protection of primary and old-growth forests. Subsidies should support the transition to efficient biomass use and compliance with environmental directives.
Energy efficiency measures should target consumption, transmission, distribution, and production. Industry accounts for 47.4% of final energy consumption, households another 47.4%, and other sectors 5.2%. Laws should mandate an annual 1% reduction in primary energy use for industry, public, and commercial sectors, while households should benefit from simplified, transparent procedures to access efficiency incentives. Technical measures should support solar energy in buildings, gradual replacement of fossil fuel boilers, and the optimization of heating systems. Distribution networks must be modernized to reduce electricity losses from 10.4% to 6%, while heat networks should be upgraded to minimize losses.
Electricity production efficiency should be increased through the modernization of hydro and thermal power plants, as well as upgrading heat generation by replacing old boilers, implementing automatic regulation, utilizing renewable energy, and capturing industrial waste heat.
Current low electricity prices favor large consumers at the expense of the environment and public interest. Subsidies should be limited to households with low incomes, with measures like capped consumption bonuses and exemptions from taxes and fees. Other consumers should pay economic prices to ensure sustainability.
The governance of Serbia’s energy sector must be restructured. Following the division of EPS, EMS, EDS, and EPS-supply, these companies no longer operate in the public interest but serve private or political interests. A unified ownership structure and single supervisory board should manage all energy enterprises, guided by expert advice, to ensure decisions reflect the public good.
Regulatory authorities, particularly the Energy Agency of the Republic of Serbia (AERS), must be strengthened and insulated from political and narrow interests. A comprehensive legal framework should be enacted, including laws on electricity, hydrocarbons, heat energy, biomass use, and renewable energy. Existing sublegal acts and regulations should be reviewed and revised to eliminate provisions favoring private interests over public welfare.
Transparent management of energy-environment conflicts is critical. Regulatory bodies need expert reinforcement, public access to objective information should be guaranteed, and all societal stakeholders should be able to participate in dialogue. Comprehensive legal and regulatory reform is essential to align Serbia’s energy sector with citizens’ interests and sustainable development goals.
