What’s new in Republic of Srpska’s draft law on renewables?

The Republic of Srpska’s new draft law on renewable energy sources envisages feed-in tariffs for small power plants with a capacity of up to 150 kW, or up to 500 kW for biomass, biogas, landfill gas, and rooftop solar plants. Under the existing law, eligible for feed-in tariffs are power plants of up to 10 MW, and solar and biogas power plants of up to 1 MW. The draft law also introduces auctions and premiums for all large-scale facilities, such as wind farms, hydropower plants, and solar power plants, as well as the concept of prosumer, which will make it much easier for citizens and businesses to produce electricity for self-consumption.

The entity’s government has adopted the draft law and sent it to parliament. The new law is expected to be passed by the end of the year, following public consultations on the draft. The adoption of most of the supporting by-laws is planned for the first quarter of 2022.

The new law is expected to be passed by the end of this year

Balkan Green Energy News has been told at the Ministry of Mining and Energy that the new law will be aligned to a great extent with the EU’s Directive on the promotion of the use of energy from renewable sources, which envisages the introduction of market-based incentives and more transparent criteria for awarding subsidies. This is expected to limit the growth of the renewables surcharge paid by consumers through electricity bills.

Investor interest in small hydropower plant projects is expected to decline

The draft proposes a division of power plants into two categories: small and large. Small facilities are those with a capacity of up to 150 kW, as well as biomass, biogas, landfill gas, and rooftop solar plants of up to 500 kW. These facilities will be eligible for guaranteed power purchase at feed-in tariffs, while large facilities will be able to bid for premiums in auctions.

Annual quotas for small hydropower plants will be very limited

Under the existing law, feed-in tariffs are awarded mainly to power plants of up to 10 MW, which has generated strong investor interest in the construction of small hydropower plants, resulting in the completion of around 40 such projects, whose total installed capacity is over 100 MW.

According to the ministry, due to the increasing opposition to small hydropower power plants among non-governmental organizations, the Republic of Srpska’s parliament has instructed the government to limit incentives for such projects when drafting the new regulations. In addition to the limitations regarding installed capacity, envisaged by the draft law, annual quotas for feed-in tariffs for small hydropower plants until 2030 will be very limited, which is expected to result in decreased investor interest in the construction of such facilities, according to the ministry.

Auctions to be held every two years, with construction permit as prerequisite for bidding

All facilities of over 150 kW (or 500 kW) will be categorized as large and will be required to sell the electricity they produce independently on the market, with the possibility to be awarded premiums if they are successful in auctions, which will be held every two years.

Auctions for locations will also be possible

An auction may be open for different types of power plants or for one technology only, and eligible to bid will be investors who have obtained a construction permit for the planned facility. An auction may also be held for a certain location if a power plant project is of particular significance for the Republic of Srpska, for example, hydropower plant projects on locations that require flood defenses.

Premiums will be awarded for a 15-year period

The criterion in auctions will be the lowest electricity price, and a successful bidder will be awarded a premium defined as the difference between the fixed offered price for a period of 15 years and a variable benchmark market price that will be changed in intervals determined under by-laws.

The ministry expects that the benchmark price will increase over time, decreasing the amount citizens pay to finance the premiums. Auctions will be held every two years in line with the program, and they will also depend on the pace of meeting the renewable energy targets.

New regulations will enable prosumer development

The existing law allows the production of electricity for self-consumption through net metering, which has not been widely applied in practice due to tax regulations, namely double taxation. The new draft law introduces the category of prosumer and renewable energy communities, with the aim of increasing the production of electricity for self-consumption.

Prosumers will have the right to produce and store electricity, and to deliver surpluses to the grid through net metering, net billing, or a standard supply scheme. Also, prosumers located in the same building or residential complex will be able to produce electricity collectively.

This should lead to a boom in the installation of solar panels and an increase in the number of prosumers.