April 2024.

The development and construction of renewable energy projects have experienced a significant global expansion in recent years. The instability of traditional energy markets (oil, coal, gas), the desire for energy independence among states, as well as mandatory EU guidelines and directives, represent key guidelines for the development of renewable energy projects.

Bosnia and Herzegovina (BiH) have a very favorable position regarding the utilization of renewable energy sources. Its water potential encompasses numerous rivers suitable for hydroelectric power plants, while significant potential also exists in the areas of wind energy (due to the positioning of the Dinaric mountain range) and solar energy (averaging over 2000 sunny hours annually). Currently, BiH hosts three operational wind farms, as well as a substantial number of built hydroelectric and solar power plants. However, in recent years, there has been a strong increase in the development and construction of renewable energy facilities. According to data from the National Energy Regulatory Authority, approvals are currently being processed for 11,000 MW of connection to the transmission grid. A significant incentive for investment in renewable energy lies in the security of investment return, considering the international electricity market, regulatory requirements mandating the use of “green energy,” and the willingness of end consumers to steer business and economic development by purchasing electricity derived from renewable sources. Additionally, reasons for investing in renewable energy include CO2 taxes (CBAM), already implemented in the EU and soon to be mandatory in BiH.

REASONS FOR THE NEED OF A LEGAL EXPERT TEAM

During the development of Renewable Energy (RE) projects, a competent legal team is essential due to the necessity to verify:

• The feasibility of construction in a specific area (compliance with spatial planning acts).
• The possibilities and methods of regulating property rights relationships (determining ownership of project land and establishing the optimal method of regulating property rights).
• The precise definition of the permit acquisition schedule (e.g., often competent authorities, either due to the vast number of applications for RE project development or sometimes due to insufficient knowledge of new regulations in the RE field, do not issue permits correctly).
• The timeliness of permit acquisition – because competent authorities often delay permit issuance (only 10% of RE projects are built and commissioned within a reasonable/legal timeframe), it is crucial for the investor to protect their rights and ultimately demand compensation in case of the authorities’ liability.
• The regulation of contractual relationships with service providers (preparation of project documentation, environmental protection documentation, fire protection, etc.), or the regulation of contractual relationships with construction contractors (construction of solar/wind/hydroelectric power plants) and with entities responsible for maintaining RE facilities, or with electricity purchasers.

Furthermore, it is very common for a certain RE project to be developed to a certain stage (usually to the “final building permit” phase) and then sold. In such situations, an experienced legal team will play a crucial role in conducting a so-called in-depth legal analysis (legal due diligence) and executing the sale-purchase, with the most important steps being:

• Verification of the project’s legality (if permits were not properly obtained, e.g., if all necessary documents were not collected during the location permit issuance, there is potential for the revocation of said permit even 5 years after construction, and in the worst case, the obligation to demolish the facility).
• Verification of the RE project holder company and its owners, in terms of identifying certain legal obstacles (e.g., if the RE project holder company is undergoing a process to determine the nullity of an environmental permit at the time of project sale or if there is any other legal action against the company that could result in a financial obligation).
• Quality preparation of the sale-purchase agreement (e.g., the sale-purchase agreement for the RE project should be drafted in a way that all rights and obligations of the buyer and seller are accurately determined, with precise deadlines and in a manner that avoids any misunderstandings regarding contractual terms).

The longstanding experience of the Law Firm “Ibrahimović & Co” in the field of legal counseling for RE projects, as well as experience in conducting Legal Due Diligence analyses, guarantees high-quality legal services and the highest level of protection of investors’ rights and interests (lawful and timely actions of competent authorities).