EBRD €30 million loan to Serbia for renewable heat generation

• EBRD providing a loan of €30 million to finance investments in renewable heat generation
• District heating firms in 10 Serbian cities will be modernised
• Investment to provide significant environmental benefits and energy security

The European Bank for Reconstruction and Development (EBRD) is providing a loan to Serbia of up to €30 million to finance investments in renewable heat generation in several district heating companies in the country, along with related energy-efficiency measures including the modernisation of heat substations and district heating networks.

The project will be supported by donor-funded assistance of up to €12 million mobilised by the EBRD from the Swiss State Secretariat for Economic Affairs, the European Union under the Regional Energy Efficiency Programme, and the government of Austria through the Renewable District Energy in the Western Balkans Programme. It will be implemented by the Ministry of Mining and Energy, in cooperation with the participating municipalites and district heating companies.

The signing of the loan was attended by Minister of Finance Siniša Mali and Minister of Mining and Energy Dubravka Đedović Handanović, as well as by EBRD President Odile Renaud-Basso, who signed the agreement on behalf of the Bank. Present at the signing were also H.E. Urs Schmid, Ambassador of Switzerland in Serbia and H.E. Christian Ebner, Ambassador of Austria in Serbia and Elvira Angulo Rodrigues, Head of Operations I to EU mission in Serbia.

Siniša Mali, Minister of Finance, said: “The signing of this contract is extremely important for the Republic of Serbia because, in this way, we contribute to a healthier environment through the improvement of air quality, the use of renewable energy sources in the production of thermal energy and the increase in energy efficiency. In the coming period, we will continue to invest in the energy sector, where we will realise large investments foreseen in the Leap into the Future - Serbia 2027 programme, thereby ensuring security of supply and monitoring the accelerated development of our economy. In addition, investments in a healthier environment, which directly contribute to improving the quality of life of our citizens, remain at the top of the priorities of the Serbian government, and that is why we will continue with investments in that area as well.”

Dubravka Đedović Handanović, Minister of Energy and Mining, commented: “With today's signing, we completed the complete financial construction for this project, worth 40.5 million euros with a total of 10.5 million euros worth of grants, for which I thank our European partners. Citizens of Bečej, Bogatić, Kragujevac, Kraljevo, Kruševac, Novi Pazar, Niš, Pancevo, Paraćin and Vršac will receive a cleaner and more modern district heating system. In the previous period, we worked on the introduction of biomass into district heating systems, while through this project, heating plants in Serbia will start using solar collectors, heat pumps, waste heat, geothermal sources, along with the accompanying modernization of the hot water network... With the implementation of all planned projects, production thermal energy from RES in Serbia will be doubled, with a significant increase in energy efficiency and a reduction in carbon dioxide emissions.”

Odile Renaud-Basso, President of the EBRD, said: “We are pleased to provide financing for this groundbreaking project aimed at transforming district heating systems in Serbia. Given the current dependence of Serbia's district heating systems on fossil fuels and their significant energy inefficiencies, this project promises substantial environmental benefits and enhanced energy security for the country. In addition, local communities will experience notable improvements in air quality and living conditions.”

Emanuele Giaufret, EU Ambassador to Serbia, said: “Removing dependency of fossil fuels and energy security are important questions in the current climate, both in terms of environmental protection and geopolitics. Regional Energy Efficiency Programme is one of the tools the Europen Union has to help the region achive these goals. The objectives of REEP are supporting the Western Balkan beneficiaries achieve their sustainable energy objectives, help create a sustainable market for energy efficiency in the region, promote renewable energy and energy efficiency and stimulate energy efficiency investments. The initiative signed today checks all the boxes and we are proud to support it”.

Currently, Serbia's district heating systems rely heavily on fossil fuels and are notably energy inefficient. This project, the first of its kind in south-eastern Europe, aims to address these challenges by providing significant environmental benefits and boosting energy security. With Serbia importing up to 90 per cent of its natural gas supplies, the increased use of renewable and waste heat in district heating systems will reduce the country's dependence on imported petrol products and natural gas for heating and cooling.

The project is expected to deliver considerable environmental benefits, by producing 115 GWh of renewable and waste heat per year, reducing annual carbon emissions by approximately 14,600 tonnes of CO2 equivalent and making significant savings in water and energy.

It will invest in district heating companies in Pančevo, Vršac, Kraljevo, Niš, Bogatić, Bečej, Kruševac, Novi Pazar, Paraćin and Kragujevac, integrating cutting-edge solar-thermal technology, heat pumps, and urban and industrial waste-heat and geothermal technologies into their existing systems.

The EBRD is a leading institutional investor in Serbia and has now invested more than €9 billion through 355 projects in the country, of which the majority have supported the private sector. The Bank’s focus in Serbia is on supporting private-sector competitiveness, green-energy transition and sustainable infrastructure.