Marija Filipovska Jelčić (photo: CMS)
North Macedonia has adopted the new Law on Energy and prepared the new draft Law on Renewable Energy. Marija Filipovska Jelčić, a leading legal expert in North Macedonia and Partner of the CMS Macedonian office, spoke to Balkan Green Energy News about the new provisions in the two laws, focusing on the ones important for the business community and investors. She also presented the challenges in practice for the implementation of renewable energy projects and the legal solutions for such matters.
While the procedure for constructing new energy facilities, including batteries, may now be more demanding, due to the introduction of financial guarantees and the requirement to submit project initiatives for inclusion in the annual construction plan, the process is expected to become more predictable and institutionally supported, according to Marija Filipovska Jelčić.
She is recognized among the top ten legal advisers in the country. Through work on regulatory reform, energy transition, and large-scale infrastructure restructuring, Marija Filipovska Jelčić plays a key role in shaping a more resilient and sustainable energy landscape in North Macedonia and in the region.
What are the main new provisions in the new energy law?
The main aim of the new law is to harmonise the Macedonian energy legal framework with the EU’s Clean Energy Package, more specifically with the EU Directive 2019/944 which focuses on the internal market and its functionality, the balancing, congestion and allocation of transmission capacities and liberalisation of the national markets.
The new law introduces numerous novelties, but I would focus on the main ones which may be of interest for the business community and the international and domestic investors which are scanning the Macedonian market for developing their renewable energy projects.
A key reform is the introduction of a new authorization regime for the construction of power generation facilities. Going forward, the legal basis for construction of renewable energy projects will be an Annual Construction Plan that will be adopted by the Government based on the Ministry of Energy’s proposal.
The idea is for this plan to govern the authorization of medium and large-scale electricity production facilities (with capacity above 1 MW), high-efficiency cogeneration plants, facilities for the production of synthetic fuels and hydrogen and energy storage systems.
The new authorization regime also introduces construction guarantees calculated based on installed capacity of the project
In these procedures, investors may request inclusion of their projects in the Annual Plan by submitting an initiative, regardless of whether the project is planned on public or private land. If managed wisely, transparently and efficiently this mechanism should introduce a new, more organized and systematic approach when it comes to development of these projects.
However, the new authorization regime also introduces construction guarantees calculated based on installed capacity of the project to be submitted by the investors with the authorization application, which are intended to ensure project execution.
Although this legal concept is already existent in the region (e.g. Croatia, Serbia, etc.) it appears that it proved to be problematic in practice due to several reasons but mainly as it limits the entrance on the market and additionally burdens the project and the investors.
That said, we expect that the Government will be business oriented when examining the known practice connected to such guarantees in the region and identifying the main risks for the business community prior to further regulating this mechanism in the expected bylaws.
The law also introduces energy storage, aggregation?
Yes, another significant novelty is the recognition of energy storage as a distinct energy activity. The new provisions define who may own and operate storage facilities and clarify that transmission and distribution system operators are generally prohibited from commercial ownership or operation of storage assets.
However, limited exceptions are foreseen, such as use for system balancing or when approved by the regulator under strict conditions. The law also regulates access to and use of storage facilities, aligning the framework with broader goals of energy transition and market efficiency.
Final analysis of the new energy legal framework will have to be done once we have the whole picture
New reliability criteria are added, and a framework for potential capacity mechanisms is set out, including cross-border participation rules. In a nutshell, the new energy law in addition to the day-ahead mechanisms also set the basis for introducing the intraday mechanism for operators from other countries which will additionally connect the market to the region and other countries.
The new law also introduces the mechanism of aggregation which has existed in the EU since 2023, where a natural or legal person may combine the consumption of multiple consumers and/or the electricity produced by multiple producers for sale, purchase or auction on any electricity market.
It should be marked that many of the mechanisms and institutes introduced in the new energy law will be further regulated in detail through secondary legislation that is expected in the next 9 to 18 months. Also, a separate new law on renewable energy sources is likely to be expected this year which will additionally regulate the renewable energy market. Having said that, final analysis or breakdown of the new energy legal framework will have to be done once we have the whole picture.
When do you expect bylaws to be adopted?
The new law in its final and transitional provisions prescribes that the bylaws related to the energy supply security, crisis management, Energy Regulatory Commission roles, licensing, new energy facilities, third-party network access, and the electricity and gas markets are to be adopted within nine months of its adoption.
On the other hand, the bylaws related to energy balances, statistics, heat energy, crude oil, oil derivatives, transport fuels, energy facility management, and electricity quality control are to be adopted within 18 months of its adoption.
Thus, we expect the bylaws to be adopted gradually within these timeframes, and some may even be adopted earlier as we see that the Ministry of Energy and the Government are making real effort in that regard. Until the appropriate bylaws are adopted, the existing bylaws under the previous energy law shall remain in effect.
What new provisions have the potential to make the biggest difference?
As liaised, it appears that the new authorization regime and the introduction of the Annual Plan are likely to have the greatest impact.
Projects must now be included in the Annual Plan to be eligible for authorization, meaning investors have to submit initiatives by specified deadlines each year. This mechanism could improve transparency and organization in the project development process, provided it is implemented carefully and the documentary requirements are proportionate and business friendly.
A key change that will make a difference for the investors is the introduction of the previously mentioned construction guarantee in the amount of EUR 25,000 per MW of planned installed capacity, which should be issued as a bank guarantee or deposit by the investor.
The guarantee is a requirement in order for the project to obtain an authorization for construction by the Ministry of Energy. The bank guarantee is forfeited if investors fail to meet construction or procedural deadlines. The specific conditions for submitting, collecting, and returning the guarantees will be regulated through forthcoming bylaws.
Also, to obtain an authorization for construction, investors must first complete the procedure for obtaining a construction permit. However, the permit only becomes legally valid once the authorization for the energy facility is issued.
A new requirement mandates the installation of storage systems equal to 20% of the plant’s installed capacity
Furthermore, for plants that use variable energy sources (solar and wind farms), a new requirement mandates the installation of storage systems equal to 20% of the plant’s installed capacity (measured by inverter capacity for solar or generating units for wind). The storage system must support a full charge/discharge cycle of at least two hours.
Regarding grid connections, it is regulated that the grid operators cannot refuse connection to new electricity producers or energy storage operators who have obtained an authorization for construction by the ministry. Connection also cannot be refused based on possible future network issues.
However, with prior approval from the regulator, the operator may limit the available connection capacity or offer connection with operational restrictions to ensure economic efficiency. Such restrictions must be transparent, non-discriminatory, and must not create unnecessary barriers. If the producer or storage operator agrees to cover the necessary costs, the restrictions do not apply. Access to the grid can only be refused if there is no available capacity or if access would threaten the security of energy supply.
Finally, the recognition of standalone and integrated energy storage systems is expected to be transformative. Storage linked to generation facilities up to 40% of their capacity is treated as integrated, simplifying its regulatory treatment.
What will be the effect on the investments?
Overall, the process for constructing new energy facilities is expected to become more predictable and institutionally supported, particularly with the establishment of the new Ministry of Energy.
While the procedure may be more demanding, due to the introduction of financial guarantees and the requirement to submit project initiatives for inclusion in the Annual Plan, these changes are expected to enhance legal certainty and planning predictability, which are essential for serious investors.
Also, investments in storage projects are expected to increase, since the new law recognizes energy storage as a distinct energy activity and regulates it in more detail than the previous regime.
The new draft Law on Renewable Energy is prepared. What are the main new provisions?
The draft Law on Renewable Energy aims to transpose the EU Clean Energy Package into the Macedonian legal system, similar to the new energy law, and also to streamline procedures for investors (producers) of renewable energy by reducing procedural steps, minimizing conditions and requirements, and shortening the deadlines for processing their requests.
It establishes a legal basis and general guidelines to be further regulated and specified through sectoral legislation (e.g. construction, environment) and relevant bylaws.
The draft law regulates the promotion, production, and use of renewable energy sources in North Macedonia. It defines the responsibilities of state institutions, sets national renewable energy targets, and provides for support measures such as financial incentives, guarantees of origin, and facilitated procedures for producers.
Preferential producers are enabled to request issuance of guarantees of origin
It also aims to enhance access to information for potential investors regarding the procedures required to obtain various permits, as well as the support mechanisms available to them.
Lastly, it regulates guarantees of origin by enabling preferential producers benefiting from support measures to request their issuance, and providing a framework for the electricity market operator to not only administer but also trade guarantees of origin in an organized manner through an electronic platform.
Importantly, it prescribes that 12 bylaws must be adopted within six months of its entry into force, whereas the main bylaws are concerning support schemes and guarantees of origin.
What will be the effect on the investments?
The draft Law on Renewable Energy is expected to significantly facilitate new investments by introducing clear rules, simplified procedures, financial support measures, and guarantees for renewable energy projects. It would enhance transparency and predictability and also ease market access for these projects.
However, this is a draft law and it may undergo substantial amendments before its final adoption, especially considering its implications for business regulation, state aid, and environmental protection.
What are the biggest obstacles to the implementation of renewable energy projects in North Macedonia?
The main challenges for renewable energy project investors remain the acquisition of land and the limitations of grid connection and access.
Land acquisition is particularly complex when public land is involved. Public tenders for leasing or purchasing state-owned land are often unpredictable, and private land is usually fragmented and subject to legal disputes. Investors face high upfront costs for preparatory studies, land conversion, and urban planning without any guarantee of securing the land, adding significant risk.
Grid capacity is another major obstacle. Due to the rapid and uncoordinated growth of solar projects, the transmission and distribution networks are overwhelmed, leading to difficulties in connecting new projects. Additionally, the lack of integrated storage systems has made it harder to balance intermittent renewable energy generation.
How could these obstacles be legally solved?
It is expected the new framework introduced by the energy law, particularly the new authorization regime, the Annual Plan, and the introduction of financial guarantees, if properly regulated in the expected bylaws, will contribute to greater predictability and transparency in project development, which are essential for attracting serious investors.
The Annual Plan mechanism, if managed efficiently, should ensure better alignment between available land, grid capacities, and investor initiatives, reducing uncertainty in the early stages of projects. The obligation to submit financial guarantees should filter out unserious investors and promote commitment among investors, provided that the conditions for issuing and forfeiting guarantees are balanced and proportionate, when further regulated in the bylaws.
There is a need for targeted investments in transmission and distribution grids
Furthermore, proactive and coordinated spatial planning on a national level is important, especially to identify and pre-zone areas suitable for renewable energy development. This way the risks and delays related to land acquisition and urban planning procedures could be minimized.
Additionally, there is a need for targeted investments in transmission and distribution infrastructure, especially investing in smart grids to better handle energy from renewable energy sources. Regulatory incentives for the development of energy storage facilities will also be necessary to address grid issues and ensure stability.
Lastly, legislative amendments supporting simplified land conversion processes for renewable energy projects could also tackle some of these obstacles.
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