Renewable energy law and regulation in Slovenia

1. Brief overview of the renewables sector

While the official figures are not yet available, it seems unlikely that Slovenia will have achieved a 25% share of renewable energy in gross final energy consumption by the end of 2020, as required under the EU Directive 2009/28/EC on the promotion of the use of energy from renewable sources (RES). Nevertheless, the country has made progress with respect to RES, implementing changes and proposing ambitious targets for the future. 

The main developments in the renewables sector include the introduction of the National Energy and Climate Plan and the adoption of secondary legislation, aiming to make Slovenia a climate-neutral society in the coming decades and motivating private finance to invest in projects including renewable sources. The feed-in support scheme continues to play an important, albeit diminishing role. 

2. Recent developments in the renewables sector

National Energy and Climate Plan

In February 2020, the Slovenian government adopted the National Energy and Climate Plan (NECP), outlining the energy strategy targets for 2030, with an outlook for 2040. By 2030, Slovenia aims to have renewable energy (RES) make up at least 27% of total energy usage, while making up 43% of total electricity consumption. It is also expected that two thirds of energy consumption in buildings will be sourced from RES. 

The NECP sets out the overarching goals Slovenia will strive towards in the next decade of energy development: 

  • Decarbonisation, by
    • Reducing and discontinuing fossil fuel incentives and subsidies
    • Reducing coal use in electricity production by 30% by 2030 and phasing it out by 2050 at the latest, by
      • Retiring unit 5 of the Šoštanj Thermal Power Plant
      • Reducing lignite excavation
      • Abandoning imported coal for electricity production at the Toplarna Ljubljana Thermal Power Plant
  • Energy efficiency, with a 35% target across sectors
  • Energy security, by reducing dependence on imported fossil fuels and increasing resilience of the electricity distribution network to interference
  • R&D, by dedicating 3% of GDP to research and investment in human resources and the new skills needed for the transition to a climate-neutral society

While the NECP offers a good foundation for decarbonisation and further reduction of fossil fuels, it only sets a goal of 1% reduction of greenhouse gas emissions resulting from agriculture. The targets regarding public passenger transport are also low and no goals have been defined for the use of geothermal energy, which has great potential in Slovenia.

Alongside the adoption of the NECP, Slovenia is preparing the Spatial Development Strategy of Slovenia 2050, which also defines the impact of various RES on environment and nature. Accordingly, the strategy prohibits the installation of wind power plants in protected areas and restricts it to areas far away from settlements. Furthermore, the use of solar power is currently envisaged only on areas of construction land, infrastructure facilities and devalued areas (e.g. abandoned areas of mineral excavations, waste landfill, etc). Read more on the topic in our article.

The Strategy is currently being prepared by the Ministry of the Environment and Spatial Planning and is expected to be completed in 2021.

Feed-in support scheme

Investment in the renewables sector has been dependent on the availability of financing mechanisms. The Slovenian Energy Agency is the competent authority for tenders for the feed-in support scheme. Power plant operators, awarded by public tender, may choose between guaranteed purchase and operating premium. If they choose guaranteed purchase, the Centre for RES/CHP (CP), under the aegis of Borzen, d.o.o., takes the electricity from the power plant and sells it to the market (the producer is thus included in the special balance group, operated by CP). If they choose the operating premium, the producers sell the energy on the market, while CP only pays a premium as a difference between the full (guaranteed purchase) price and the market price, which is determined yearly exante, based also on plant type. Eligible for the feed-in support are the producers with power plants of installed capacity up to 10MW, excluding wind power plants, where the installed capacity may be up to 50MW. 

In May 2020, the Slovenian government adopted amendments to the Rules on Support for Electricity Generated from Renewable Energy Sources and from High Efficiency Cogeneration, introducing the obligation for investors to provide an adequate insurance for the performance of the project applying for the feed-in support. The insurance amount could be up to 5% of the investment value of the project, with the exact amount, type and validity of the insurance determined by the Slovenian Energy Agency alongside its decision on whether the project qualifies for the feed-in support scheme.

In 2019, electricity production within the subsidies scheme – in the 3,858 power plants with a nominal power of 417MW – amounted to 947.5GW, which is 1% more than in 2018. The subsidies were awarded as follows:

  • Solar power plants – EUR 61.9m for producing 261.4GWh
  • High-efficiency cogeneration powerplants on fossil fuels – EUR 27m for producing 346.4GWh
  • Biomass power plants – EUR 18.3m for producing 133.5GWh
  • Hydropower plants – EUR 4.6m for producing 110.4GWh
  • Biogas power plants – EUR 9.6m for producing 84.4GWh
  • Wind power plants – EUR 0.3m for producing 6.1GWh
  • Other plants – EUR 1.3m for producing 5.2GWh.

In total, EUR 123 million has been paid out in 2019 – 9% less than in 2018.

Installation of a small solar power plant does not require a building permit

In March 2020, the Slovenian government adopted the Decree on Small Installations for the Production of Electricity from Renewable Energy Sources or Through High Efficiency Cogeneration. It sets out the types of installations for energy production from renewable energy sources and high-efficiency cogeneration that do not require a building permit, i.e. “small power plants”. Solar power plants with the maximum power of up to 1MW are, according to the Decree, considered small power plants and do not require a building permit to be installed. The Decree simplifies investing in renewables and is a welcome change as procedures for obtaining building permits in Slovenia can be time-consuming. 

3. Forthcoming developments / opportunities in the renewables sector

The potential to increase renewable energy in Slovenia is significant. The country enjoys abundant sunshine, its forest areas (58% of the country) are a major resource, and it has an existing network of hydro power plants. After a period of stagnation in the hydro power plant network, a EUR 1.3billion project to build a chain of ten hydro power plants is envisaged on the middle course of the Sava river. If the project comes to fruition, the electricity production from RES will be increased by 1TW, which amounts to 10% of current total electricity production in Slovenia. 

As certain regions in Slovenia are windy, opportunities for construction of wind power plants exist. Three are planned in the Eastern region of Slovenia by the investor Dravske elektrarne Maribor d.o.o., with a total capacity of 46MW and 122GWh annually, as well as another project being developed by Stiria Invest. 

The main obstacle on the path towards building new hydro and wind power plants are NGOs and locals, who oppose the construction of such power plants. Recently, the government identified the development of hydro power plants in Mokrice and on the Sava river as a priority. Moreover, recent changes in the law restricted the influence of NGOs in the process for obtaining building permits. 

Slovenia is also in the final stages of adopting the Energy Efficiency Act, which sets out measures to promote and increase energy efficiency, particularly to improve the energy efficiency of buildings, achieve security of energy supply and boost the use of renewable energy sources. 

There are many (co)financing opportunities for investment in the energy sector, especially in renewables. In addition to tenders for the feed-in support scheme, which are published around twice a year, additional co-financing mechanisms are available. Loans by SID Bank, the Slovenian development and export bank, are available to public sector and ESCO companies for the energy renovation of public sector buildings. Eco Fund, the Slovenian Environmental Public Fund, provides several options for obtaining non-refundable monies for investment in energy efficiency. 

It is expected that new opportunities will arise in the near future, following the adoption of the aforementioned National Energy and Climate Plan. 

Portrait of Dunja Jandl
Dunja Jandl
Partner
Ljubljana
Portrait of Tamara Žajdela
Tamara Žajdela
Associate
Ljubljana