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Model Contracts on Long-term Supply of Wood and Agricultural Biomass

The model contracts on long-term supply of wood and agricultural biomass have been developed in scope of the project “Reducing Barriers to Accelerate the Development of Biomass Markets in Serbia”. They are intended to investors and operators of biomass fired energy facilities as well as to biomass producers and suppliers. Model contracts are developed as complex documents that regulate in detail all important aspects of a long term biomass supply (such as the scope of the contract, contract period, characteristics of biomass, contract price, place of delivery, obligations of the parties, determining the quantity and quality of delivered biomass, transfer of risk and ownership, method of payment, contractual penalty, security of delivery, compensation for damages, termination of the contract, etc.).

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In total five model contracts have been developed:

Model contract on long-term supply of wood biomass from privately owned forests for energy generation purposes;
Model contract on long-term supply of wood biomass by public utility companies for energy generation purposes;
Model contract on long-term supply of wood biomass from industry for energy generation purposes;
Model contract on long-term supply of agricultural biomass for energy generation purposes;
Model contract on long-term supply of biomass of animal origin (manure) for energy generation purposes.

The purpose of model contracts is to secure certainty and continuity of supplying biomass fired energy generating plants with raw materials. These contracts are at the same time also an instrument ensuring financial sustainability of investing in biomass fired energy plants, precisely because they ensure raw materials for energy generation. As such, these contracts will have a decisive role in process of loan approval by banks. The process of elaboration of model contracts included intensive consultations with several banks dealing with financing of RE projects.

Besides model contracts, the elaborate wood and agricultural biomass product catalogues have been developed. The key purpose of biomass product catalogues is to provide clear and unambiguous principles for product specification, specification of product dimensions, units of measure in which they are produced and distributed to the market, and other elements relevant for efficient trading and good understanding between sellers and buyers. The biomass product catalogues are also a good tool for reporting by producers and traders to relevant authorities, chambers, associations and other organisations. The biomass product catalogues will serve as support to establishment of the biomass market of biomass as a raw material for energy generation, to programmers and other actors involved in the process of establishing the data base for the purpose of trading in these products in the biomass exchange and direct participants in trading in order to better understand the characteristics of products which are traded.