Deregulation in the power sector, liberalization of the electricity market, tendency to connect markets across Europe, introduction of incentives for construction and use of renewable energy sources (RES) and - consequently - their increasing presence in electricity systems, have taken a decisive impact on wholesale electricity prices. In addition, the introduction of CO2 taxes has further increased overall electricity prices. On the other hand, it reduced the profits of fossil fuel thermal power plants (TPPs). Also, in order to meet the prescribed requirements in the field of environmental protection, TPPs must apply pollution prevention systems that are very expensive, both in terms of investment and exploitation. As an alternative, investments in the hydro sector should be considered. However, this option is characterized by other issues; In contrast to the long-term construction and exploitation of hydro capacity, there are fluctuations in electricity prices on the day-ahead market which affect the work schedule and revenues of these facilities. To investigate this problem, hourly and daily prices in the regional electricity market were analysed. Trends in wholesale electricity prices on the day-ahead market have been determined. Their relevant values were estimated and used as one of the sets of input data for cost-benefit analysis and sensitivity analysis of the case study - future reversible hydropower plant (RHPP) "Bistrica". The impact of fluctuations in electricity prices on the day-ahead market was emphasized. The aim of this research was to draw a conclusion as to whether the movement of these prices is in favour of the construction of possible RHPPs in Serbia. Based on the conducted analyses, it can be concluded that the upward trend in the level of wholesale electricity prices (which began in 2019 and is expected to continue in the future considering the EU regulatory policy regarding CO2 emissions taxes) may positively affect the profitability of investment in RHE Bistrica (i.e. to shorten the payback period), but not so dramatically, since with the increase in electricity prices, the costs for pumping also increase.

Environmental protection and sustainable development cause a qualitative shift towards cleaner technologies in the field of electrical power. Countries with fossil fuel-based electricity generation have a questionable energy future regarding the independence and security of their end-users' supply. Therefore, it is necessary to explore all possible options for future development, taking into account the synergistic potential of other energy sources in electricity deficit compensation. That need will arise after the shutdown of fossil fuel power plants. It is necessary to mutually synchronize the development and application of different energy sources. For example, the large share of renewable energy sources with highly variable generation, without the presence of significant energy storage capacities or other sources that could compensate for these rapid power fluctuations, causes problems in energy balancing and disrupts power system flexibility and stability. Among the supporting pillars of a secure and decarbonised power system, special attention will be paid to the possible role and contribution of consumers; increasing their energy efficiency, using the heat capacity of buildings, demand response and direct demand side management.

This paper presents and elaborates the proposal for reorganization of district heating sector in the Republic of Serbia, in order to increase its efficiency, as well as the proposal for the introduction of a self-sustaining incentives system for investments in infrastructure and thermal systems using renewable energy sources (RES). The goal is to reduce the use of non-renewable energy sources, in order to mitigate environmental pollution, as well as to decrease the share of electricity used for space heating. That way, also the electric power system (EPS) would be relaxed and the degree of primary energy utilization would be increased, by avoiding its conversion into electric and then back into thermal energy. As a comparative example of the applicability of the reorganization proposal, the paper presents experiences from the process of reorganization of the electricity sector in the Republic of Serbia. Within the presented proposal of the incentives system, descriptions of the methods necessary for the establishment of such a system are given, too. Acceptance and implementation of these proposals would contribute to increasing the participation of RES in district heating systems and result in achieving the aforementioned, positive effects of wider social impact and significance.

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