Authorisation Procedure for Construction of New HPP in Kosovo, Dr Lorenc Gordani, 18 June 2017

In Kosovo, all formal conditions for hydropower generation development, including institutional framework and necessary legislation exist, but there are no mature projects in the pipeline. HPP Zhur I and II (262+43 MW) are part of the NREAP and are expected to be developed by 2020, however, there has not been any progress since completion of the WB-supported feasibility study in 2009.

The process for construction of new generation capacities in Kosovo is implemented by the ERO (article 43 of the Law on Energy Regulator) in accordance with the authorisation procedure. However, according to article 44 of the same law, tendering procedure for construction of new capacity can be authorised by the Government, if ERO issues a written decision that the authorisation procedure has not resulted successfully in building of generation capacities to ensure security of supply or accomplishment of objectives related to the use of RE. In accordance with this Article 44 (paragraph 3) a tendering procedure would then be conducted by the Public Private Partnerships.

We shall stick to the authorisation procedure as being the preferred procedure to be employed for developing of new generation plants, especially noting that the tendering procedure has not been used so far. But before starting the application process, the HPP Developer needs to have registered local company, developed Feasibility Study, business plan, land use rights, water terms, application for support scheme (FiT) and grid connection terms. These elements represent precondition for application submission.

A further important element of the legal and regulatory framework is the Rule on Authorisation Procedure for Construction of New Generation Capacities  (the Rule on Authorisation) adopted by ERO in 2014, which describes the procedure for authorisation of power generation projects. The authorisation is a right issued by ERO that enables applicants “to commence with construction of generation capacities within specified period of time”.

Even though the Energy Regulatory Office is the ultimate authority, which grants authorisation for the construction of RE generators, the overall process involves different authorities responsible for the required permissions. The authorisation procedure has two stages: The first stage – the preliminary authorisation, is considered as first filter for developing a project, providing “go or no go” decision. Typically, ERO asks for necessary documents as required by the Rule on Authorisation at this stage. The rejection of the application as incomplete may be announced by ERO only if the applicant could not provide relevant documents as requested by the Rule on Authorisation.

Once the applicant gets the preliminary authorisation, the RE developer should turn to every institution to acquire other necessary permits and consents for the project. The second stage – the final authorisation stage – is the period when the developer performs additional studies and applies for permits at other institutions. When all required documents are presented, the final authorisation is issued by ERO, and the construction of the plant may start.

Kosovo established a FiT incentive system that applies to wind, PV, biomass and SHPP technologies. Concerning the length of the period for payment of the feed-in tariff (the guaranteed offtake), Kosovo adopted that the Power Purchase Agreement (PPA) between power generators and the public power supplier of Kosovo is limited to ten (10) to twelve (12) years depending on RE type (12 years only for PVs).

SHPPs PPA term is limited to 10 years, fixed to 6.33 €cents/kWh and subject to yearly inflation adjustments. HPPs with larger installed capacity of 10 MW, are not eligible of FiT. Moreover, in April 2016 ERO published a Consultation Paper on the Methodology on calculation of FiTs for Energy from Wind and SHPPs for public consultation. This consultation paper states supports increase of FiT for SHPPs to 6.747 €cents/kWh.

In conclusion, the legal and regulatory framework in the energy sector in Kosovo is well prepared and advanced and thus constitutes a decent framework for developers in the renewable energy sector that, by all means, does not deter potential HPP Developers. Still, partially as a result of the inconsistencies in the legislation and its application authorisation process (both pre-authorisation and final authorisation), instead of the proclaimed three (3) months under the legislation deadlines may prolong to over two (2) years in practice.

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the editor at the “lorenc_gordani@albaniaenergy.org”.

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