The road to developing renewable energy projects is challenging in many countries—and Bosnia and Herzegovina (BiH) is no exception. However, with the right partner, such as the law firm Ibrahimović & Co., the process can be significantly smoother.
Ibrahimović & Co., a law firm based in Brčko with offices in Sarajevo and Mostar, frequently assists both domestic and international clients with navigating Bosnia and Herzegovina’s complex energy and investment laws. This guide outlines the key steps—commonly referred to as the “permit roadmap”—for investing in renewable energy projects in BiH.
ENERGY & INVESTMENT LAW IN BiH
Renewable Energy Potential in BiH
Located in the Western Balkans, bordering the EU, BiH covers 51,209 km² and has substantial energy resources. Thanks to its geography, the country enjoys a significant electricity export surplus. Its hydro potential comes from numerous rivers, while strong wind currents from the Dinaric Alps and over 2,000 hours of sunshine per year offer solid wind and solar energy prospects.
Alignment with EU Energy Law and Investment Protections
BiH is part of the European Network of Transmission System Operators for Electricity (ENTSO-E) and joined the Energy Community with the EU in 2006, integrating major EU energy and environmental directives into its legal system.
From an investment standpoint, BiH offers a reliable legal framework. Foreign investors have the same rights as local ones under the Law on Foreign Direct Investment. The country has competitive tax rates: 10% corporate tax and 17% VAT, with import duties waived for production equipment. Setting up a limited liability company (LLC) typically takes about a month and is open to both domestic and foreign entities.
DEVELOPING OR BUYING RENEWABLE ENERGY PROJECTS
Project development generally begins with a business feasibility study. Average investment costs for solar plants range between €600,000–850,000 per MW, depending on the location and technical specifics. Development takes 9–18 months for solar and 18–48 months for wind projects.
Greenfield Projects must assess:
- Land-use and zoning regulations
- Property rights and ownership
- Grid connection feasibility
Existing Projects can be acquired via:
- Share Purchase Agreement (SPA)
- Asset Purchase Agreement (APA)
A detailed legal, financial, and technical due diligence is typically required before acquisition. Transferring ownership or permits requires approval from relevant authorities.
THE PERMIT ROADMAP
Permits are issued at various levels: state, entity (Federation of BiH and Republika Srpska), district (Brčko), and local government.
1. Land Rights
Power plants can be built on state or private land, depending on the location. If it involves state land, the investor must acquire a concession or construction rights.
2. Concession Agreement
Concessions are usually granted for periods of 30 to 50 years. A concession is required for the use of public goods, such as land, watercourses, and wind. Each canton or entity regulates this differently. In some cantons, no concession is required for the construction of smaller facilities on private land.
3. Water Acts
Depending on the type of power plant, it may be necessary to obtain:
- Water conditions (design phase);
- Water permit (construction phase);
- Water usage permit (operational phase).
4. Environmental Impact Assessment (EIA)
The EIA is required for certain types of power plants, and the competent ministry decides whether it is mandatory. If not required, the investor must obtain a decision stating that the project does not require an EIA.
5. Location Permit
Issued based on planning documents. If the land is classified as agricultural, approval must first be obtained to change the land’s use.
6. Energy Approval / Grid Connection Terms
Determined based on whether the connection is to the transmission or distribution network. It is necessary to conduct a connection study, after which connection conditions or energy approval are issued.
7. Energy Permit
Mandatory for power plants over 1 MW in the Federation of BiH. Not required in Republika Srpska or Brčko District.
8. Construction Permit
Allows the start of construction work. Required in all jurisdictions.
9. Incentives
Include feed-in tariffs (FiT) and feed-in premiums (FiP), depending on the type and capacity of the plant. To obtain incentives, the project must gain the status of a preferred producer and be selected through a public tender. New regulations are under development.
10. Registration in the Renewable Energy Sources Registry
Mandatory after obtaining the energy permit or energy approval.
11. Grid Connection Agreement
Concluded with the system operator (transmission or distribution). The procedure is harmonized at the state level.
12. Technical Acceptance
Includes technical inspection and approval for commissioning the plant.
13. Usage Permit
Issued after successful technical inspection and test run.
14. Production License
Required for plants over 1 MW in all jurisdictions.
15. Preferred / Qualified Producer Status
In the Federation of BiH, this status enables the use of incentives. In Republika Srpska and Brčko District, a certificate for the production facility is issued.
16. Power Purchase Agreement (PPA)
A power purchase agreement can be concluded at different stages of project development. Both domestic and foreign buyers are present in the market, providing flexibility and price certainty.
Differences Across Regions
While the general process is harmonized, local variations exist. For instance, in the Herzegovina-Neretva Canton, a location permit is obtained before the concession. In areas without urban planning documents, additional approvals may be necessary.
Proper resolution of land ownership and access to state or forest land is also critical.
BiH offers a well-defined legal pathway for renewable energy development. With favorable investment terms, low taxes, and evolving support for clean energy, the country presents solid opportunities for both regional and international investors.
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