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Serbia risks coal “lock-in” with a new 500 mln euros investment

Serbia is holding on to coal as a strategic pillar of its energy mix as President Aleksandar Vučić announced a 500 million euros investment in the development of the Radljevo-Sever open-pit coal mine in the Kolubara mining basin.

President Vučić pointed out during his visit that mining will start in 2022, with an annual output of 13-13.5 million tons of coal, that will guarantee about 60 years of coal supply for the thermal power plants (TPP) Kolubara B and Nikola Tesla A in Obrenovac. Coal reserves of Radljevo-Sever amount to 400 million tonnes.

The Minister of Mining and Energy Aleksandar Antić, who was also present at the visit, claimed that coal production increased by 5.3 per cent on an annual basis in the first four months of the year. In April alone it grew by 6 per cent, despite the difficult working conditions resulting from the pandemic.

“The increased production of coal in April secured energy stability of the country, as mining and energy companies showed strength and stability during the state of emergency and maintained a regular production of coal and electricity,” Minister Antić underlined.

Speaking of the Radljevo-Sever mine, Mr Antić stated that it bears “strategical importance for Serbia” and is connected with the construction of the new, 350 megawatts (MW) block of TPP Kolubara B, situated just 40 kilometres from the capital city of Belgrade and expected to replace older facilities Morava and Kolubara A.

In March, state-owned power utility Elektroprivreda Srbije (EPS) signed a preliminary agreement with PowerChina for the construction of the Kolubara B thermal power plant. Construction works are planned to start next year, while the new power plant is expected to start operations by the end of 2024.

For several years, the Kolubara B project appeared to be history after the European Bank for Reconstruction and Development (EBRD) abandoned the project in 2013 citing its policy shift away from coal. The idea of the new bock was revitalised when the Minister of Mining and Energy set up a working group to move the project forward in 2018.

Electricity production in Serbia relies around 70 per cent on coal. Proven reserves amount to 4.5 billion tonnes of lignite deposits, located in two main coal basins, Kolubara and Kostolac owned and managed by subsidiaries of EPS. The Kolubara Mining Basin provides around 75 per cent of the lignite used for EPS’ thermal generation that produces more than 50 per cent of the country’s electricity.

However, Serbia’s interest in relying on lignite power plants could threaten to put the country on a collision course with the EU as it has to comply with progressively stricter EU climate requirements as part of the EU accession process.

Serbia has undertaken commitments set by the National Renewable Energy Action Plan which created a target of 27 per cent share of renewable energy in overall energy consumption by 2020, but with investments on coal-based infrastructure such as the revival of the Kolubara B TPP Serbia could end up locked-into a carbon-intensive energy system.

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