Renewable energy law and regulation in North Macedonia

1. Brief overview of the renewables sector 

The energy sector, as one of the strategic areas of the Government of the Republic of North Macedonia (“Government”) is a highly regulated sector of the national economy. This means that many laws and regulations govern energy projects, some of which are subject to frequent change.

As part of the EU harmonisation process, the Macedonian Parliament adopted the new Energy Law in May 2018 (“Energy Law”) which harmonised the energy legislation of North Macedonia with the EU Third Energy Package. To implement the provisions of the Energy Law, appropriate secondary legislation has been adopted. The purpose of the new law was to create an effective legal framework for cooperation, mutual reporting and coordination of the activities of the competent authorities of North Macedonia with the relevant institutions of the European Union Energy Community, such as coordinated crisis management, reporting on the imposition and monitoring of compliance with public and universal service obligations and coordinated activities related to the functioning and development of regional markets of energy. Also, the Energy Law set the foundations for stability, competitiveness, and economic functionality of the energy sector. As a priority, the Energy Law fostered the promotion of renewable energy sources (RES) and encouraged energy efficiency. This, in a short time, has contributed to increased investments in the field of renewables.

As the Government has a strategic goal to invest in renewables, it regulates supportive measures such as the Energy Law, to help electricity producers that use renewables and looks to assist investors hoping to obtain the status of privileged power producer. For the first time, the privileged power producer may now obtain the right to use premiums, alongside the existing option to use the feed-in tariffs. The premiums can be awarded to privileged energy producers producing energy from wind power plants and photovoltaic power plants only.

Based on the Energy Law and the Energy Development Strategy of North Macedonia until 2040 (“Strategy”), the ultimate goal is to significantly increase the use of RES sustainably, to a point where renewables make up 45% of total energy consumption. According to the Strategy, this is expected to be achieved by promoting the use of RES in a way that ensures sustainable development. The share of RES in total final energy consumption should increase in the forthcoming period and it is expected to reach 35-45% by 2040. Also, it is expected that photovoltaic and wind power plants will be the fastest growing technologies for electricity production in all scenarios (up to 1,400 MW for photovoltaic and 750 MW for wind). 

2. Recent developments in the renewables sector 

In 2019, the Government adopted the Decree on Support Measures for Electricity Production from RES (“Decree”), which regulates the conditions and manner for determining the Premiums and Feed-in Tariffs.

Pursuant to the Decree, the Feed-in Tariffs could be awarded to privileged power producers that produce energy from hydropower plants, wind power plants, and biomass and biogas thermopower plants. Previously, Premiums could only be awarded to privileged energy producers that produce energy from wind power plants and photovoltaic power plants.

Furthermore, since the adoption of the Energy Law, several procedures for construction of photovoltaic power plants have been realised, such as: 

  • Construction of 35 MW photovoltaic power plants on state land; 
  • 10 MW photovoltaic plant in TPP Oslomej; and 
  • Construction of a photovoltaic power plant of 100 MW in the former coal mine TEC Oslomej. 

With all these investments, as well as the planned photovoltaic power plant in REK Bitola, which is projected at 20 MW, it is expected that installed capacity will reach 200 MW, which is a strategic priority of North Macedonia. These developments confirm the commitment to invest in RES and further attract interested investors in this area.

As a most recent development, in May 2020 the Government announced that the tender procedure for awarding premiums for electricity generated by photovoltaic power plants on private land was completed. In total, 44 bids were submitted, and, after a thorough evaluation process, including deadlines for appeals, the Government signed agreements for right of premium usage with a total of 23 investors in 16 municipalities for a total of 21 MW. The investors will have three years to complete the construction of the photovoltaic power plants, and after completion of the construction, an agreement for premium usage for 15 years will be signed.

To further improve the conditions for large investments in general, particularly for foreign capital, the Parliament of the North Macedonia in January this year adopted the Law on Strategic Investments of North Macedonia (SIL). 

The SIL is the latest legal instrument designed to encourage, attract, and create conditions for conducting strategic investments in North Macedonia which offers new opportunities for the potential investors in general.

With this opportunity, potential investors in RES could initiate a large investment cycle in the country. This could have a positive impact not just in the energy sector as a strategic priority, but could improve the country's competitive advantages and economic growth as well as the living conditions of the citizens of North Macedonia in general.

3. Forthcoming developments / opportunities in the renewables sector

North Macedonia welcomes investments in the energy sector. The Government has shown its intention to promote and provide good conditions for investments in this sector. In accordance with the Strategy, the Government intends to grow the energy sector, by pursuing the following objectives:

  • Aiming to increase installed solar energy capacity and to increase wind power capacity to 100MW;
  • Inviting companies to design, build, and operate new large and small hydropower plants; and
  • Introducing concessions for building small hydropower plants.  

Furthermore, pursuant to SIL, the Government in May, 2020 announced a Public Call for submission of a request for determining the status of a strategic investment project (SIP). 

According to the SIL and the Public Call, the execution of the SIP is determined as a public interest. Hence, the SIP should cumulatively meet the following requirements:

  • the proposed investments must comply with environmental standards;
  • the proposed investments must not be contrary to the Constitution of North Macedonia and ratified international treaties;
  • SIP must comply with the strategic priorities of the Government of North Macedonia.

Priority areas to be covered by this call are projects in the fields of energy and infrastructure. Therefore, potential investors in the field of RES will get an additional opportunity for investment that would be set as a SIP by the Government of North Macedonia.

Therefore, in the coming years we can expect the Government to further encourage investment in the RES sector, in order to boost usage of RES which would allow sustainable development of the energy sector in general.

Portrait of Marija Filipovska
Marija Filipovska
Partner
Skopje
Portrait of Dusan Bosiljanov
Dusan Bosiljanov
Attorney-at-Law for Energy and Employment
Skopje