Bosnia and Herzegovina

1. Brief overview of the renewables sector

Thanks to its geographical position in Europe, Bosnia and Herzegovina (BiH) has enormous hydropower electricity potential and is well placed to generate renewable energy from wind power plants, biomass and solar energy. BiH’s potential for the production of electricity from renewable sources mostly lies in water and wind – hydroelectric power plants and wind power plants are therefore the main focus of the government’s energy strategies and most of the state incentives and subsidies are directed to them. For this reason, BiH has a high proportion of renewable resources in its total energy consumption compared
to other European countries.

BiH’s complex constitutional structure requires energy legislation to be adopted at the state and entity level. Therefore, the State Regulatory Commission for Electricity (Državna regulatorna komisija za električnu energiju) (DERK) has jurisdiction over the transfer of electricity, operations of the transfer system and international trade of electricity as well as the production, distribution and supply of electricity to consumers in the Brčko district. Since 2005, the Independent Systems Operator in BiH (Nezavisni operator sistema u BiH) (NOSBiH) has been managing the country’s electricity transfer system and is responsible for ensuring continuity of the electricity supply according to defined quality standards. Another entity – the Company for the Transfer of Electric Power in BiH (Elektroprenos – Elektroprijenos BiH” a.d. Banja Luka) (Elektroprijenos BiH) – is a body competent for the transfer of electricity and the related activities of electricity companies in BiH, including matters relating to the electric power grid.

At the entities level, in the Federation of BiH (F BiH), the Regulatory Commission for Energy in F BiH (Regulatorna komsija za energiju u FBiH) (FERK) is responsible for the supervision and regulation of the production, distribution and supply of electricity and for relations between the buyers of electricity in the electricity market. Its responsibilities also cover renewable energy sources through its supervision of the Operator for Renewable Energy Sources and Efficient Cogeneration (Operator za obnovljive izvore energije i efikasnu kogeneraciju) (OIEIEK), which was established in 2013 to create the institutional structure for production incentive systems and the redemption of electricity from plants using renewable energy sources and efficient cogeneration. In Republika Srpska (RS), the Regulatory Commission for Energy of RS (Regulatorna komisija za energetiku RS) (RERS) is responsible for the supervision and regulation of the production, distribution and supply of electricity and for relations between the buyers of electricity in the electricity market, and for renewable energy sources. RS is in the process of establishing an operator of the incentive system for the electricity renewables sector – in the interim, Elektroprivreda RS is performing this role.

BiH has adopted several important strategic documents referring to renewable energy sources. These include the Action plan for using the renewable energy sources of BiH for the period until 2020 (NREAP BiH), adopted by the BiH’s Council of Ministers in 2016. NREAP BiH is based on the responsible entities’ action plans for the use of renewable energy sources. These action plans are in line with the entities’ law on renewables and efficient cogeneration, and with the Energy framework strategy of BiH until 2035 (OES BiH), adopted by BiH’s Council of Ministers in 2018.

According to the entities’ action plans, indicative targets for producing energy from renewable energy sources in existing and new generation capacities in 2020 are:

F BiH

  • hydro energy: 1,566MW and 4,066GWh
  • solar: 12MW and 18GWh
  • wind energy: 230MW and 575GWh
  • biomass: 10.23MW and 61GWh

RS

  • hydro energy: 1,134.22MW and 3,632.08GWh
  • solar: 4.20MW and 5GWh
  • wind energy: 100MW and 200GWh
  • biomass: 25.50MW and 56.38GWh.

In line with EU Directive 2009 / 28 / EC, BiH has an obligation to reach its target of a 40% share of renewable sources in total final energy consumption by 2020for the entire territory of Bosnia and Herzegovina. Each of the entities in BiH and the Brčko district has its own target to reach in order to fulfil the state’s target. The 2020 sector targets required to achieve the overall 40% state goal are: heating and cooling – 56.9%; electricity – 52.4%; and transport – 10%.

These sectors are therefore the main areas for reaching the target of renewable sources in gross final consumption, and it is predicted that the required increases in renewables will need to be 9.1% in heating and cooling, 6.6% in electricity, and 10% in transport. Current predictions for reaching the target identify heating and cooling as having the biggest gross consumption of renewable energy, followed by electricity and transport.

Today, almost all the country’s renewable electricity comes from hydroelectric power plants and there is a reasonable expectation of increased electricity generation from wind power plants. Incentives for renewables are offered for hydroelectric power plants (up to 10MW), wind power plants, solar energy plants and biomass plants. By 2035, it is expected that the incentive system will result in the share of electricity produced by wind power plants overtaking that of small hydroelectric power plants.

The F BiH’s renewable energy incentives use a feed-in tariff model, under which the producer must obtain the status of privileged producer of electricity and meet other prescribed requirements. All the technologies in the system are based on a feed-in tariff. In contrast, RS has various models of feed-in tariff, premiums and net metering which require producers to fulfil prescribed conditions in accordance with the respective laws: the feed-in tariff is used for technologies up to 1MW or up to 10MW, depending on the technology; premiums apply for technologies over 10MW or over 30MW (also depending on the technology); and net metering is used for small producers, up to 50kW.

2. Recent developments in the renewables sector

BiH has recently started to further develop the renewable energy sources sector and is working towards global guidelines and goals. In the past few years, BiH has started to adopt renewables legislation, especially for wind power plants, as the country has significant potential for this source of renewable energy, as well as hydroelectric power plants. The country’s renewables legislation regulates the subsidies for using renewable energy sources and for building renewable energy plants according to the available quotas. By 2020, hydroelectric and wind power plants with a total capacity of 345MW resulting in total production of 1,197GWh of electricity will be included in the system of incentives. BiH is also starting to recognise opportunities and create a favourable investment climate to realise the unused potential of renewable energy sources.

To further these efforts, the Council of Ministers of BiH adopted the following strategic documents:

  • National emission reduction plan of BiH, adopted in 2015 (Nacionalni plan smanjenja emisija za BiH)
  • Action plan for using renewable energy in BiH, adopted in 2016 (Akcioni plan za korištenje obnovljive energije u BiH)
  • Action plan for energy efficiency in BiH for period 2016 – 2018, adopted in 2017 (Akcioni plan za energetsku efikasnost u BiH za period 2016 – 2018)
  • Energy framework strategy of BiH until 2035, adopted in 2018 (Okvirna energetska strategija BiH do 2035. godine)

The action plans prescribe the measures for increasing the use of renewable energy sources in order to achieve renewable energy consumption targets. These measures include:

  • continuous development and improvement of action plans at the state and entities’ level;
  • promotion of possibilities locally, regionally and worldwide;
  • reporting on the promotion and use of renewables to relevant bodies;
  • changes in the activities of BiH’s energy sector.

One of the recent positive examples of usage of renewable energy sources is the wind power plant Podveležje. Currently under intense development, the plant will have 15 wind turbines with an installed power of 48MW producing an annual output of 120GWh. Another potential wind power plant project, on Hrgud mountain, has planned power of 48MW and average annual production of 126GWh. This project is currently in its feasibility study review phase following a one-year wind potential assessment.

3. Forthcoming developments / opportunities in the renewables sector

As renewables are expected to increase, it is predicted that this will bring about an imbalance in the electric power system, mostly due to the increased number of wind power plants and their inability to accurately forecast the production of energy. It will therefore be necessary to implement future legislative changes aimed at improving and developing the technical infrastructure as well as to defining the process balancing mechanism for renewable energy producers.

While wind power is recognised having great potential, solar energy is still not considered as such in BiH. In that regard, the south of the country has a major opportunity to be used for producing energy from solar power – one of the globally increasing sources of renewable energy. The possibilities for the use of solar energy are unlimited and, as the construction of solar plants requires substantial investment, BiH’s relevant legislation should be amended to help ensure that solar plants are cost-effective within several years of their construction.

Therefore, continuous improvement and development of the renewable energy sector will be made in accordance with the strategic priorities and guidelines at the state and entities’ level and Directive 2009 / 28 / EC. This will include adoption of new action plans from 2020, better promotion of the use of renewables and further development of a favourable investment climate.

Picture of Nedzida Salihovic-Whalen
Nedžida Salihović-Whalen
Partner
Sarajevo
Zlatko-Masovic-CMS-BIH
Zlatko Mašović
Associate
Sarajevo