CMS outlines energy project development rules in North Macedonia for investors

Aiming to resolve the main dilemmas for investors and other participants in the energy market in North Macedonia, CMS Reich-Rohrwig Hainz answered several frequently asked questions. Lawyers in North Macedonia in cooperation with CMS Reich-Rohrwig Hainz based in Austria, have extensive legal expertise in the sector.

Any other queries about the regulatory framework in North Macedonia can be addressed to skopje@cms-rrh.com.

As an IPP, is it possible to do a long-term PPA directly with the utility to sell the produced electricity of a power plant?

Contracts for difference (CfDs) may be considered electricity derivatives. As such, they would be available as soon as organized electricity market in North Macedonia becomes operational. It is expected the organized electricity market in North Macedonia will become operational on 10 May 2023.

The North Macedonian Energy Law regulates “electricity derivatives” as financial instruments such as options, futures, swaps, advance contracts, and other derivative contracts that can be settled in cash, either physically or through recognized clearing houses, to protect the organized electricity market participants from possible fluctuations in prices.

What is the type of land where a developer is autorised to build a PV park? Is there a specific type of land to produce hydrogen?

A PV park can be built on construction land. If it doesn’t have the status of construction land, a conversion procedure should be conducted. A number of rules, restrictions and procedures apply for building PV parks.

There are no separate rules regarding sites for producing energy from hydrogen.

What are the main challenges in the development of wind farms in North Macedonia? What are the main practical restrictions for becoming a supplier with energy from wind farms?

The main challenges connected to the development of wind farms in North Macedonia are i) finding appropriate land (and conducting conversion procedure, if applicable), ii) defining a location and obtaining documents for the connection to the transmission network and/or distribution system, and iii) acquiring an appropriate construction permit.

The main practical restrictions for becoming a supplier with energy from wind farms in North Macedonia are i) procuring energy from wind farms (as now there is still no fully operational private wind farm), ii) lack of practical experience of buying energy from wind farms, and iii) providing the necessary transmission and/or distribution capacity from the respective operators.

What are the main pros and cons of developing of renewable projects (wind and solar) on publicly owned land vs. private land?

The main “cons” for developing renewable energy projects on publicly owned land (and “pros” for developing renewable projects on private land) are that i) developing renewable projects and the sale-purchase procedure for publicly owned land is more regulated and practically lasts longer, and ii) in case the intended project land is agricultural land, the conversion procedure depends on public bodies (and not the investor).

The main “pro” for developing renewable projects on publicly owned land (and “con” of developing of renewable projects on private land) is that renewable energy projects generally involve large spaces and number of land plots. In the case of private land, that would mean the number of sellers. Such a fact makes the procedure more complex as the land plots often have unresolved real estate matters (e.g., incomplete inheritance procedures).