District Heating Assessment in Serbia

Client: World Bank Group, USA

Name of partner(s): EXERGIA Energy & Environment Consultants S.A., Greece

Start/Completion Date: July 2019-May 2021

Project description: District Heating (DH) is an important heating source in urban areas in Serbia. There are 58 DH companies in Serbia with a total installed capacity of almost 6,000 MWth and covering about 20-25% of the heat demand in Serbia. Comparing to other countries in the Western Balkan region, the market share of Serbia's DH system for meeting residential heating needs is the highest and accounts for roughly three quarters of the total installed capacity in the region. The overall objective of the DH assessment was to develop a roadmap to help inform sustainable and inclusive reforms in Serbia's DH sector with focus on cost-based billing (CBB) practices. The DH assessment was composed of an integrated analysis on relevant technical, financial and social aspects both on the heating supply- and demand-side. The specific objective of the DH assessment was to conduct the necessary diagnostic to inform these short- and medium-term recommendations to: (i) improve the operational and technical performance of the sector and the two selected systems in Nis and Novi Sad; (ii) scale-up CBB in a sustainable and inclusive way; and (iii) develop and implement residential EE programs targeting the residential buildings sector.

SEEC provided following services:

• Task 1 - Evaluation of the existing structure and overall performance of the DH sector (“the sector”): Preparation of the sector overview, aimed at mapping the sector’s overall operational and financial performance, identifying key challenges and opportunities going forward, and outlining typical arrangements and readiness relevant for CBB,
• Task 2 - Detailed analysis of the technical, operational and financial performance of DH systems in Nis and Novi Sad: The Consultant assessed in detail the operational and financial performance of the DH companies in Novi Sad and Nis,
• Task 3 - Assessment on CBB practices: As part of this task, the Consultant conducted a detailed analysis of below outlined aspects in order to develop targeted diagnostics and customized roadmaps on scaling-up CBB,
• Task 4 – Assessment of residential EE framework: Preparation of an overview of the existing residential building stock at country-level and for the two target cities (Nis and Novi Sad), Evaluation of the relevant policy, legislative/regulatory, market and institutional framework for EE with focus on residential buildings; Preparation of the summary of the ongoing and planned EE pilots and programs (supported by the Government, IFIs, other stakeholders) targeting the residential buildings sector, including objectives, scope, financing and implementation arrangements, lessons learned and results achieved, including in particular energy savings achieved in residential buildings after EE retrofits; Conducting a cost-benefit analysis for EE investments in Nis and Novi Sad based on 4 walk-through energy audits for typical residential buildings in each city (total area of audited and evaluated residential buildings for EE rehabilitations is 19,000 m2); Quantification of the EE potential in Serbia’s residential buildings sector overall and specifically for Nis and Novi Sad; Analyses to which extend cost-effective EE measure can help to mitigate the impact of heating bill increases on residential customers in Nis and Novi Sad, with focus on identified ‘losers’ of CBB; Review of recommendations on proposed design features for an EE program customized to Niš and Novi Sad.
• Task 5 - Stakeholder workshops: presentation and discussion about the key results, findings and recommendations from Tasks 1-4 at 2-3 workshops with DH companies, local self-Governments, Ministries, DH association and other key stakeholders.