Bosnia exclusive report: RES electricity production projects, framework for investors and case studies

10. December 2014. / SEE Energy News

Much of the current subsidies (52%) are consumed in small hydropower plants, and in BiH Federation there are about 50. This entity now has utilized 1,350 MW in hydrological terms, and could use another 2,300 MW. Of those 2,300 MW, “BiH Electric power Industry” and “HZHB Electric Power Industry” was awarded 1,000 MW, while the private sector has 1,300 MW at its disposal.

Bosnia and Herzegovina has huge potential for electricity generation from renewable sources; it is likely that four wind farms will be built on its territory. Republika Srpska, one of the entities in BiH could get first wind farm even in the next year, and the Federation in 2018th.

Subsidies of BiH Federation for the electricity production from RES are now around 3 MEUR annually and this amount is sufficient to achieve the planned production of 41% by 2020th. There will not be increases in subsidies in the coming year, said Erdal Trhulj, Minister of Energy, Mining and Industry for our portal.

– Subsidies are minimal and they will remain at the same level in the future, because our goal is not to burden the citizens. BiH Federation now has 36.5% of the electricity production from renewable energy sources, and never went below 32%. Four years ago, the electricity production from renewable energy sources was approximately 40% and 50% in 2013th, which depends on weather conditions – says Trhulj.

The citizens of this BiH entity pay 12 pfennig through electricity bills as compensation for renewable resources.

Much of the current subsidies (52%) are consumed in small hydropower plants, and in BiH Federation there are about 50. This entity now has utilized 1,350 MW in hydrological terms, and could use another 2,300 MW. Of those 2,300 MW, “BiH Electric power Industry” and “HZHB Electric Power Industry” was awarded 1,000 MW, while the private sector has 1,300 MW at its disposal.

Ministry of Energy, Mining and Industry plans to publish a new tender for the allocation of sites for small hydro power plants.

– It is expected a public call for the award of sites for the river Bosna. Previously, we have prepared tenders for the construction of five SHPP, but they were not announced because of the elections, so they are expected soon. It has to do with SHPP from 12 to 18 MW – says Minister Trhulj and adds that the concessions for SHPP to 5 MW are in the competence of the cantons.

In BiH Federation operates Operator for renewable energy sources and efficient cogeneration (Operator for OIEiEK) which the Government establishes in the beginning of this year. The operator is established as a non-profit entity that promotes the production and buys electricity from plants using OIEiEK.

As from the Operator told for our portal, the electricity producers from renewable sources have already signed contracts for the delivery, as by the reference, both by the guaranteed purchase price. These contracts were taken from the electric power companies from BiH Federation. They performedactivities of Operator for OIEiEK until the establishment of this body.

When it comes to wind farms, energy minister of FBiH emphasizes that they can be built without subsidies. The greatest potential is in Podvelezje and Vlasic. Otherwise, BiH electricity transmission networks can accommodate 350 MW, which is provided 230for FBiH and 120 MWfor RS.

Trhulj says that the Federation plans to build five wind farms. It is expected that this entity will get the first wind farm in 2018th.

-“BiH Electric Power Industry” and “HZHB Electric Power Industry” will build two wind farm – VF “Podvelezje” and VF “Mesihovina” and for the other three places are competing several investors from Livno, Kupres and Tomislavgrad.

All laws regulating the field of renewable energy sources in BiH Federation have been adopted in the last three years. Prospective investors still represents great passion bureaucracy.

– The fact is that there are three levels of government. To get the building permits it has to go over municipalities, cantons, the Federation as an entity. Only persistent finishes it. Great goal is just to speed up the whole process – explains Trhulj.

The money to encourage the electricity production from renewable energy sources and in an efficient cogeneration also is provided in Republika Srpska from the fees that will be charged to all final electricity customers. Energy Regulatory Commission RS determines the required amount of money for each year, based on the guaranteed purchase prices for electricity from renewable sources and premiums.

As they say in the Ministry of Industry, Energy and Mining it was amounted to somewhat more than 4 MEURin 2014thfor the encouragement of electricity production from RES. Even in September the quantity of produced electricity from renewable energy sources was higher by 8 GWh compared to the amount obtained in the whole 2013th.

– By comparison, the total electricity production from renewable energy sources in 2013thamounted to 25 GWh, while in the period January – September 2014th it was achieved production of 33 GWh, because a number of small hydropower plants have been put into operation in 2014th– said in the Ministry.

The Ministry reminds that the procedure for granting concessions defined by the Law on Concessionsin RS, which implies that the planned energy facilities must be in accordance with the strategic orientation of Republika Srpska and spatial planning documents. Thus, the concessionsare not awarded for solar power plants with installed capacity of 250 kW or for the greater power plant at the existing facilities.

When it comes to projects of wind farms building in Republika Srpska, VF “Trusina” with installed capacity of 51 MW, worth 72, 5MEUR has been builtin the municipality of Nevesinje. Concessionaire is “Eol prvi” from Nevesinje and the completion of the first wind farm in RS is planned by the end of 2015th.

In the Ministry told us that besides VF “Trusina”, the construction of VF “Hrgud” is planned in Herzegovina.

From the relevant ministry sent a message that area of use and encouragementthe renewable energy sources in Republika Srpska was completely renovated by adoption of the Law on renewable energy sources and efficient cogeneration and by adoption of bylaws, including the Action Plan of Republika Srpska for the RES use.

What is the BiH experts’ opinion about this?

Emir Avdic, the president of the Association of electricity producers from renewable sources in BiH (APEOR) and the first investor in renewable energy in BiH, said that the legislation in the RS was better than in the Federation. While the law in the Federation began to be applied at full capacity at the end of October this year, RS used real data and projections in their development plans, and therefore has become more competitive.

– The last legislation in RS, such as the Law on renewable energy sources and efficient cogeneration, and the new Regulations on encouraging the electricity production from RES, which involves significantly higher prices, especially for small hydro power plants projects have led investors in the entity in much more favorable position than those in FBiH entity. Prices are depending on the installed capacity of power plants, more than 10 up to 15% compared to those applicable in the Federation. This could encourage many domestic and foreign investors to start investing in these projects – says Avdic.

Otherwise, Avdic Company “Intrade energija” is the first private company in BiH, which has invested in renewable energy projects. Specifically, in 2004thand 2005th invested 10MEUR in the construction of four small hydro power plants in Fojnice.

– Even during 2005/2006 we launched the project of development the hydropower systemon the Upper Neretva for which three different FBiH Government announced on three occasions the so called public interest. In 2010thwe started negotiations with the Commission to negotiate the concessions award. However, at the end of the negotiations, the Commission has suddenly interrupted conversations and since then we have had the status quo. We have not given up on the project and expect the new FBiH Government to make the decision in the direction of the negotiations.

According to the APEOR, 100 MEUR has been invested so far in the renewable energy sources in BiH, and investors are domestic and foreign individuals and companies. All buildings built after 30 years become the state owned.

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