New Law on Renewable Energy Sources has entered into force in Republic of Srpska

Author: Miran Šestan, Junior Associate at CMS BiH

The National Assembly of the Republic of Srpska has adopted the new Law on Renewable Energy Sources of Republic of Srpska (“Official Gazette of RS”, No. 16/2022) (hereafter: the “Law”), which entered into force on 5 March 2022. On that day, the Law on Renewable Energy Sources and Efficient Cogeneration (“Official Gazette of RS”, No. 39/2013, 108/2013, 79/2015 and 26/2019) ceased to be valid.

The general aim of the Law is to stimulate both the production of electrical and thermal energy from renewable energy sources as well as the use of energy from renewable sources in transport for domestic market consumption and the increase in the share of gross final energy consumption, and to ensure the development of incentive mechanisms, a regulatory framework and a technical infrastructure for renewable energy sources.

The Law is largely harmonized with the EU Directive 2018/2001/EC of the European Parliament of 11 December 2018 on the promotion of the use of energy from renewable energy sources, and introduces innovations that have not been present in Bosnia and Herzegovina thus far.

The Law introduces a division into small and large plants for production of electricity from renewable sources

Small plants include hydroelectric power plants, wind power plants and solar power plants on land with an installed capacity of 150 kW or less, and rooftop solar power plants, biomass and biogas power plants, landfill gas and gas for municipal wastewater treatment plants with an installed capacity of 500 kW or less, while large plants include wind power plants and solar power plants on land with an installed capacity of more than 150 kW (up to 50,000 kW), and rooftop solar power plants and biogas and biomass power plants with an installed capacity of more than 500 kW.

The previous system of subsidies, which included feed-in tariffs or guaranteed purchase prices, has been retained solely for small plants, while large plants (excluding hydroelectric power plants with a capacity of more than 150 kW) will receive subsidies at premium auctions, i.e., public bidding procedures, which will be conducted every two years, in order to collect bids for the construction of plants for the production of electricity from renewable sources and to exercise the right to incentives. The auction procedure will be conducted by the Incentive Operator, a non-profit organization, which will perform administrative-financial and other operational activities of the incentives system for the production of electricity from renewable sources.

The Law introduces two new categories: Prosumer and Renewable Energy Community

In this regard, the end customer is entitled to build and connect a power plant that uses renewable energy sources to the internal electrical installations of its facility for self-consumption. The end customer will acquire the status of a prosumer by connecting the power plant to the internal electrical installations of its facility, as well as by obtaining a certificate for the production plant. The prosumer will thus have the opportunity to produce electricity for self-consumption, to store it (without having to obtain a building permit), and to deliver the surplus electricity produced to the distribution network.

In addition, the Renewable Energy Community is defined as a legal entity established with the aim of using renewable energy sources for electricity production primarily to meet the energy needs of community members in a way that includes environmental, economic and social benefits for community members and the wider society. The Energy Community is entitled to produce, consume, store and sell electricity from renewable sources, exchange electricity produced from renewable energy sources in community-owned installations between members of the Community, access all energy markets, directly or through aggregation, in a non-discriminatory manner and incentives in the form of a premium for self-consumption and benefits when connecting to the network.

The introduction of these categories will result in an increase and a simplification of the construction of plants on end customers’ facilities.

The Law abolishes incentives for small hydropower plants

Whilst under the previous law, power plants up to 10 MW were entitled to feed-in tariffs, resulting in high investment interest for the construction of small hydroelectric power plants, the new Law abolishes incentives for small hydroelectric power plants with a capacity of more than 150 kW.

In general, the adoption of the new Law will facilitate the construction of renewable energy power plants and increase the green energy share of the total electricity production in Republic of Srpska. The establishment of the Incentive Operator and the adoption of the legally defined bylaws is planned for 2022.