CMS outlines energy project development rules in Slovenia for investors

Aiming to resolve the main dilemmas for investors and other participants in the energy market in Slovenia, CMS Reich-Rohrwig Hainz answered several frequently asked questions. Lawyers in Slovenia 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 Slovenia can be addressed to ljubljana@cms-rrh.com.

What are the current investment opportunities in Slovenia?

As an EU Member State, Slovenia is obliged under the EU legal framework to meet its renewable energy targets. These targets will continue to rise and need to be approached both because of international commitments and because of the real environmental consequences of inaction. Slovenia is generally well behind its targets and still heavily dependent on imports.

By the end of 2022, 30557 solar power plants had been installed in Slovenia, with a total capacity of 632 MW, representing 301 W per person and 6.3% of all energy. This year the total capacity already exceeded 1 GW. Most of the new capacity is in the commercial sector (52%), followed by small solar plants (35%) and large solar plants (10%).

In the longer term, Slovenia urgently needs investment in new low-carbon generation units and renewable energy sources, as the average import dependency in 2022 was more than 30%. Another one of the primary areas for RES investments in Slovenia lies in enhancing the electricity distribution network by investing in the distribution system, investing in active grid management and the need to develop smart grids.

The electrification of many energy consumption sectors (transport, heating) and the connection of renewable energy sources, notably solar power, make investment in grids essential. By upgrading and expanding the network infrastructure, Slovenia will be able to ensure a more efficient and reliable delivery of renewable energy to consumers.

Modernizing and upgrading the distribution infrastructure is essential to meet the growing demand for electricity, integrate renewable energy sources, enhance energy efficiency, and adapt to technological advancements. In its Development Plan for the electricity distribution network in the Republic of Slovenia for the period from 2023 to 2032, Slovenian Distribution System Operator (SODO) foresees investments of EUR 3.5 billion.

The key hurdles for RES in Slovenia as well as other EU Member States are practically the same: “Lengthy and complex zoning and permitting procedures”. The length of administrative procedures has already been addressed to some extent by recent legislative changes, and most recently with the addition of Act on the siting of installations for generation of electricity from renewable energy sources.

What is the latest renewable energy law adopted in Slovenia and what novelties and thus new investment opportunities does it bring?

The new Act on the siting of installations for generation of electricity from renewable energy sources (Act) regulates the specifics of the spatial planning and authorisation of installations generating electricity from RES, including the technical equipment necessary for their operation, energy storage facilities and grid connections. The new law introduces important innovations aimed at speeding up and streamlining procedures, and thus improving investment opportunities.

What are “Regulatory sandboxes” introduced with the new Act?

As research into (ways of) generating electricity and other energy from RES is constantly evolving, new technologies that are not yet regulated by the current legislation can be expected in the future. In order to avoid the constant need to adapt the legislation, and consequently hinder the development and deployment of innovative technologies and approaches, the new law allows for so-called regulatory sandboxes.

Innovative projects (innovative technologies, products, services or processes) in the field of RES will thus be able to obtain a government decision allowing a “regulatory sandbox” or a “derogation from the existing rules”, provided that the legal conditions are met. The decision will be time-limited and will specify the precise conditions and scope of the derogation allowed, for the sole purpose of implementing the project.

The flexibility provided by the above mentioned updated legal framework encourages entrepreneurs and investors to explore innovative solutions in the renewable energy sector. This openness to innovation positions Slovenia as a hub for cutting-edge technologies that can revolutionize the RES landscape.

Does the new law bring any obligations?

The installation of photovoltaic systems has been encouraged in various ways, but the new law makes it mandatory. Mandatory installation of photovoltaic (PV) installations is required for new buildings, reconstructions, hardened parking areas with a roof area of at least 1000 m2 and for existing facilities with mandatory installation of photovoltaic installations after a transition period (2 years – 10 years) for existing roofs and hardened parking areas with an area of at least 1700 m2.

The owner of the facility is responsible for fulfilling the obligations, who can also fulfill his obligations through a third party. The obligation has, of course, its exceptions, which will be regulated in more detail in a forthcoming Decree on detailed spatial management rules for the siting of photovoltaic devices.

What is meant by “Dual use” or “multiple use”

The new law removes restrictions and prohibitions that prevent use and utilization of the same space for different purposes and provides for the possibility of “dual use” (also “multiple use”) in areas with untapped opportunities, by allowing construction of solar or wind energy installations in areas where they would otherwise not be possible due to various restrictions in the applicable sectoral regulations (e.g. the construction of solar power plants over fields or orchards which would also serve as a roof to protect against hailstorms).

Despite the changes in legislation, which are welcome, the procedure is still not simple, but it brings opportunities for new investments that were not possible before, for example Agrivoltaics.

What are other regulatory solutions?

In an effort to accelerate the integration of solar energy into the urban landscape, other regulatory measures are reshaping the landscape for PV installations. One notable shift is the reduction of the consensus requirement for PV installation on buildings in co-ownership or condominiums from 100% to 75%, recognising the challenges associated with achieving unanimous agreement.

At the same time, regulatory adjustments are being made to raise the threshold that triggers the requirement for a preliminary Environmental Impact Assessment (EIA) procedure, which is now proposed to be above 1 MW. In addition, the simplification of cultural heritage consent requirements is reflected in exemptions for above-ground PV installations, removing unnecessary hurdles for off-ground solar projects.

The overall approach to promoting the use of solar energy is further underlined by the mandatory planning of PV installations in all national and municipal spatial plans. The new law defines priority areas for photovoltaic and wind energy installations. In order to avoid lengthy and complex administrative zoning and permitting procedures, the law requires the state to identify potential locations for the development of solar and wind energy projects through spatial planning laws. These (potential) priority areas will be defined by a national strategic law and further specified by a national implementing spatial law.