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Slovenia: A Path Towards Efficient Energy Consumption

Slovenia: A Path Towards Efficient Energy Consumption

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Efficient energy consumption, reducing CO2 emissions, and energy from renewable sources have been in the spotlight of the European Union for a while now. Although the Republic of Slovenia has not attained the goals envisaged by the EU by 2020 – i.e., a 20% share of energy produced from renewable sources (i.e., 20% increase in energy efficiency and 20% reduction in CO2 emissions) – it remains above the EU average in that regard. Renewable energy sources amount to less than 3% of the overall energy produced in Slovenia, with the rest acquired through nuclear power (40%), fossil fuels (33%), and hydro energy (25%), allowing for substantial growth of the former in the future.

Still, without significant investments into renewable energy sources, Slovenia will not be able to attain the EU-envisaged results of 32% energy produced from renewable sources by year 2030 either. In February 2020, Slovenia adopted a new strategic plan, setting forth national development and energy efficiency plans (NEPN), until the year 2030. According to the NEPN, the pertaining goals predominantly emphasize lowering CO2 emissions. As per NEPN, the production of energy from nuclear sources is to remain unchanged until 2030, and the plans to construct a new nuclear power plant will only be addressed in 2027. After the (impending) completion of an ambitious decade-long project to construct five hydro power plants on the lower Sava river, NEPN does not envisage the imminent construction of new hydroelectric power plants either.

To achieve the envisaged efficiency, NEPN therefore relies on reducing fossil fuels usage by up to 36% by 2030 (compared to 2005), to be achieved by increasing investments into those renewable energy sources which are currently sparsely used, such as solar, windmill, and waste co-incineration plants, resulting in renewable energy sources amounting to 27% of final electricity consumption by the year 2030, thereby almost achieving the pertaining EU goals.

Trends and Investment Plans

The NEPN-set goals, substantiated through the local Energy Act, are thus to be achieved through a two-fold process, namely (i) increasing investments into renewable energy sources; and (ii) reducing CO2 emissions, as briefly outlined below.

First, investments into renewable energy sources such as windmill plants and solar plants are to be expected in the next decade, in spite of some past environmental issues related to the former, and economic issues related to the latter in light of subsidies being cut-down. It is also worth noting that construction of all objects connected to the public energy grid that exceed 1MW power output are subject to an Energy Permit evidencing that strict safety, regulatory, and compliance standards set forth by the EU and Slovenia are met, which has often proved to be a stumbling block for investors, with certain legislative amendments expected to mitigate such issues. Subject to positive public feedback, investment into a new nuclear power plant can also be expected in the next decade.

Reduction of Emissions

Goals concerning energy efficiency cannot be attained without simultaneous emission reductions. In order to achieve the reductions envisaged by NEPN, the Slovenian Eco Fund was established. The Eco Fund promotes the reduction of emissions by drafting and implementing the programs for improving energy efficiency, such as: (i) energy consumption efficiency; and (ii) transition from fossil energy sources to electricity.

As an EU Member State, Slovenia is obliged to reduce energy consumption by 1% each year. In order to ensure this increase in energy efficiency, the Energy Act prescribes, among other things, that suppliers of electric and heat energy are obliged to ensure that the final customers save energy. In order for suppliers to attain such savings, investment in energy-efficient projects is required, or monetary contributions made to the Eco Fund.

In order to promote the transition from fossil fuels and further increase energy efficiency, the Eco Fund provides various financial incentives, such as loans and grants for households, private undertakings, and the public sector. The most popular incentives among households include subsidies for the purchase of electric/hybrid vehicles and subsidies for efficient home heating (e.g,. insulation, heat pumps, etc.). Private undertakings can apply for competitive financing (loans), while the public sector can benefit from grants.

Conclusion

Slovenia has set forth challenging goals for energy efficiency in the upcoming decade, which can only be attained by simultaneous investments into renewable energy sources and further emissions reductions. Consequently, suppliers are obliged to ensure savings for consumers or invest into energy efficient projects, and/or provide monetary contributions to the Eco Fund, with the latter distributing financial incentives accordingly.

By Tine Misic, Partner, and Hrvoje Smicibrada, Senior Associate, ODI Law

This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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