Through the development of Čibuk 1, we paved the way for others. The implementation of Čibuk 2 is advancing according to plan, while Čibuk 3 and a solar power plant are in the planning stage, says Masdar Taaleri Generation Director Vladimir Milanović
We spoke with Vladimir Milanović, director of this largest investor in renewable energy sources in Serbia, about Masdar Taaleri Generation’s current and future projects, new technologies and trends in the energy transition process, but also the commercialisation of battery storage systems and other challenges faced by the renewable energy sector.
Renewables are at the forefront of the global energy transition and are the main driver of the shift to carbon-neutral energy and economies. Do they represent a crucial step towards a more sustainable and resilient future?
— Yes, you could say that. To me, simply replacing fossil fuels with renewable energy sources seems like just the beginning of the energy transition. As we know, increases in the use and development of renewables stemmed from the need to reduce the impact of fossil fuels on climate change.
So, in this case, unlike previous energy transitions or transitions in other fields, the cause is not the development of a new, more efficient technology, but rather unwanted and excessive emissions of greenhouse gases. This negative externality of conventional energy sources initiated the development of renewables, which are currently leading the transition.
However, it is now clear that the energy transition will not end with the simple replacement and cessation of the use of conventional energy sources. Instead, it will lead to a paradigm shift that will impact the entire system significantly. I don’t think we’re fully aware yet of where this may take us, and the entire energy sector needs to be prepared to adapt quickly to changes.
A good parallel can be drawn with the changes that have occurred in the telecommunications sector. Landline phones have practically disappeared, while some technologies, such as fax machines, appeared and disappeared very quickly. We can find many similar examples. I expect similar things to happen in the energy sector. Some technologies will vanish, while others will emerge and be in use for only a short time, before being replaced by something new.
Many regulations and rules were established during the development of Čibuk 1 that later guided the development of other wind farms. You must be very proud to have paved the way…
— Yes, we are very proud of that. However, that project has been fully operational for five years now, and things have changed significantly during that time in terms of regulations, market conditions and technology. This doesn’t allow us to rest on our laurels, so to speak. If we want to remain the largest investor in renewable energy sources in Serbia – and we do – we must develop and invest in new capacities under significantly altered conditions. In a way, we break new ground again with each new project.
The experience of the Čibuk 1 project, and your successful cooperation with local partners, enabled you to launch the construction of Čibuk 2 and plan Čibuk 3, while also working on the development of a solar power plant. Is everything going according to plan?
— The development of Čibuk 2 is progressing as planned and we are currently focused on this project. As you probably know, in the first auctions held last August, the project secured the right to a market premium, while during the conference organised by the Renewable Energy Association of Serbia that was held just a few days ago, we announced that we had secured financing for the project through a financing agreement signed with two commercial banks: UniCredit and Erste.
Čibuk 2 will have an installed capacity of 154MW and will use 22 Nordex turbines, each with a capacity of 7MW. The next step is to complete construction by 2026
Čibuk 2 will have an installed capacity of 154MW and will use 22 Nordex turbines, each with a capacity of 7MW. The next step is to complete construction by 2026, when we will be able to state proudly that we are managing a total capacity of 312MW, thus maintaining our position as the leading group in the country.
The Čibuk 3 project, officially named Cubic, as well as the Solar Meadows solar power project, are at an early stage of development and face significant development risks. However, as with Čibuk 1 and 2, we expect to overcome all these risks and add another 211MW to our portfolio, which will then include 21MW of battery storage capacity, alongside wind and solar energy.
With Finland’s Taaleri Energia among your company’s founders, you are able to draw on the experience of a country that produces ten times as much electricity from wind farms as Serbia. Should Serbia look to Finland as a role model?
— Yes, certainly. Our team has learned a lot from our Finnish colleagues. However, I would like to emphasise that the entire renewable energy sector in Serbia has learned a great deal over the past few years – not only from the Finns, but also from other investors.
I would illustrate this best by paraphrasing Taaleri Energia Managing Director Kai Rintala. Speaking in one of the panel discussions during the recent Renewable Energy conference, he mentioned how he has witnessed the development of Serbia’s renewable energy sector over the past seven years and how it is clear to the approximately 300 panel attendees how much the sector has evolved, how much knowledge has been accumulated in our industry, and how much progress has been made in a relatively short period.
Wind energy currently brings more investment to Finland than any other industry. Can Serbia expect an influx of FDI in renewable energy?
— As I mentioned, Taaleri Energia’s MD was a participant in the recent conference. Apart from him, one of the keynote speakers was Masdar CEO Mohamed Jameel Al Ramahi. Alongside Taaleri CEO Peter Ramsay and Serbian Mining and Energy Minister Dubravka Đedović Handanović, he witnessed the signing of the agreement between Čibuk 2 and EPS at the celebration of the project’s financial closure.
The Čibuk 3 project, officially named Cubic, as well as the Solar Meadows solar power project, are at an early stage of development and face significant development risks
I am particularly pleased that the event was also attended by Finnish Ambassador Niklas Lindqvist. The presence of leading figures among shareholders from both companies, as well as the large number of foreign guests at the Renewable Energy conference, speaks volumes about foreign investors’ interest in this market.
As a board member of the Serbian Renewable Energy Sources Association, you often highlight the numerous challenges faced by producers of electricity from renewables in implementing projects. What are the biggest issues and are there solutions on the horizon?
— The biggest issue I see at the moment is the future commercialisation of battery storage systems, which all new projects will have to invest in, including our two aforementioned projects.
Some potential solutions are indicated in the proposed new Energy Law, but I expect things will only be resolved fully once these storage systems become operational. However, this is just one of the challenges. The development of renewable energy projects is a very risky business that’s full of challenges. After all, the high premiums paid to developers when acquiring projects ready to build correspond to the high risk associated with the process.
I began this interview by stating that, in my view, we still don’t fully comprehend all the changes that will occur as part of the energy transition. Just five years ago, the use of batteries was only a distant concept, while the issue of their commercialisation didn’t even exist. That is now a reality. The speed of change, coupled with uncertainty over which direction these changes will take, will create new challenges in the future. For some players, these changes may completely alter their role within the sector. However, uncertainty, new challenges and, of course, creative solutions to those challenges are what drive the entire renewable energy industry forward.