Serbia has entered the implementation phase of a €31.9 million biomass market-development programme focused on renewable district-heating systems, with financing support from KfW, the European Union and the German government. The programme is scheduled to run until 2029 and includes investments in Prijepolje, Novi Pazar, Knjaževac and other municipalities.
The initiative represents the second phase of Serbia’s biomass market-development efforts and is aimed at expanding renewable heat generation through municipal heating infrastructure upgrades and new biomass facilities.
New Biomass Heating Facilities Planned in Municipal Systems
In Prijepolje, the programme includes construction of a new 6 MW biomass heating plant, along with approximately 3,255 metres of distribution network, replacement of 43 substations and installation of equipment for wood-chip production. The heating system in Novi Pazar is planned for expansion through the addition of a 5 MW biomass boiler and a solar energy installation.
Across the programme, the second phase is expected to deliver approximately 55,000 MWh of renewable heat annually and reduce emissions by around 20,000 tonnes of carbon-dioxide equivalent per year.
Financing Structure Supports Municipal Energy Upgrades
The programme introduces a financing approach combining concessional capital, grants, engineering activities, district-heating network reconstruction and development of local biomass supply chains. While the investment scale is smaller than utility-scale electricity projects, the programme establishes a framework that can be replicated for municipal heating systems.
Potential supporting business activities connected with the investments include wood-chip production, logistics services, boiler maintenance, metering solutions, heat-network rehabilitation and energy-performance contracting.
Biomass Supply Chain Requirements Remain Critical
Project preparation for biomass facilities requires documented evidence of sustainable fuel availability and operational supply conditions. Key requirements include verification of feedstock availability, moisture levels, calorific-value specifications, storage capacity and transport distances. These factors are essential for ensuring reliable plant operation, as inadequate fuel planning could increase operating cost volatility and create supply risks despite reduced dependence on fossil fuels.
