Wind park investment in Serbia in doubt

Tue Jun 24, 2014 10:04am EDT

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* Govt revokes permit to build wind park

* Permit had been given to unit of U.S. company

* Grid operator had appealed decision to give permit

By Maja Zuvela

SARAJEVO, June 24 (Reuters) - Authorities in Serbia have revoked a permit for the local subsidiary of a U.S. renewable energy company to build a 300-million-euro ($408 million) wind park, under challenge by the electricity grid operator.

Continental Wind Serbia, a subsidiary of Continental Wind Partners, planned to start construction this year on the 145 megawatt (MW) wind park, but Serbia's construction ministry said late on Monday it had revoked the construction permit.

The company planned to add another smaller farm costing 150 million euros at a later stage. The two combined would be capable of meeting around 7 percent of Serbia's annual energy demand and help diversify the country away from coal, the company said.

Serbian grid operator Elektromreze Srbije (EMS) had appealed against the project, in a dispute over who would own the power transformer station that would connect the park to the grid. The construction ministry overruled a regional authority's decision to grant the permit, saying the decision violated EMS's rights on ownership.

"We are stunned by such a decision and we are trying to find some solution, especially for the fact that it may affect the entire wind industry in Serbia because all permits were issued in the same manner," Ana Brnabic, general manager of Continental Wind Serbia, told Reuters on Tuesday.

While EMS had challenged Continental Wind Serbia's right to build the wind park, it also said on Tuesday that current legislation, requiring energy project developers to hand over ownership of all high-voltage facilities to EMS as the sole operator of the grid, posed problems.

"This means that under current law many developers will find it difficult to secure loans for their projects because facilities, such as power transformer stations, cannot be registered as the investor's ownership," an EMS official, who spoke on condition of anonymity, told Reuters.

"The only way out of this limbo is a change in the regulatory framework."

The construction ministry said it recognised the problem in the existing law and that an upcoming new law on planning and energy would try to streamline the procedure. However, energy developers fear it may delay their plans as they will be required to seek new permits.

Brnabic, who also heads Serbia's Wind Energy Association, said that red tape and an opaque regulatory framework could scare off investors and hamper Serbia's objective to secure 27 percent of total energy consumption from renewables by 2020. ($1 = 0.7357 euros) (Editing by Matt Robinson and Susan Fenton)

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