Once an investor has decided to pursue an RE project, they should focus on three primary considerations: i) Determine if it is possible to resolve property rights at the desired location or if the land is already owned by the investor. ii) Verify if the site is suitable for an RE project in accordance with spatial planning regulations (consult local municipal or city planning authorities). iii) Confirm if there is sufficient network capacity in the area for connecting the RE facility (check with the relevant electricity utility or transmission operator).

Investors often seek to purchase RE projects already in development. As outlined in points 1 and 2, it's critical to perform thorough due diligence on three main aspects: i) Whether property rights are resolved (or can likely be resolved), ii) Whether the RE project complies with spatial planning documents (typically, projects for sale have at least a location permit or the seller commits to securing it at their own expense),– iii) Whether the RE project has secured grid access (generally, projects on the distribution network have “Preliminary Electrical Energy Approval” (PEES or EES), and those on the transmission network have “Conditions for Connection” and project balancing confirmation). Good legal counsel with experience in RE projects is vital for these checks, along with technical and financial advisors who verify project documentation and financing structures.

There are two main ways to acquire an RE project in development: i) purchasing shares in the company that owns the project (“share purchase agreement” or SPA), or ii) purchasing the project permits (“asset purchase agreement” or APA). Advisors (technical, legal, and financial) from points 1 and 3 play a key role in conducting comprehensive due diligence analyses, known as “due diligence reports.” The purchase agreement (whether SPA or APA) must be thoroughly drafted, clearly defining the project’s development status, the permits required to reach “construction-ready” or “operational” status, and detailing the rights and obligations of both parties, timelines, force majeure conditions, applicable law, and other essential terms. Complex contracts like these should be prepared by a qualified and experienced attorney.

RE project-generated electricity can be used for self-consumption (e.g., rooftop solar on a house or business) or sold on the market. i) Self-Consumption – The payback period for self-consumption solar installations in BiH is typically 5 to 7 years, given current energy prices, equipment, and service costs. New BiH regulations allow prosumers to sell surplus energy to the grid or offset it for future use. Additionally, self-produced electricity helps prepare for the EU’s upcoming Carbon Border Adjustment Mechanism (CBAM), which will require businesses to produce renewable energy for certain goods. Globally, the transition from fossil fuels to green energy is widely encouraged, with the EU targeting 50% RE by 2030 and 100% by 2050. ii) Market Sales – Electricity can be sold in two main ways: public purchase (e.g., utilities/Operators via preferential pricing for small facilities up to 150 kW or incentives for larger facilities) or on the open market. Public purchasing provides favorable rates, e.g., 0.20-0.25 KM/kWh, and access to incentives through public tenders. Open market sales involve agreements with licensed energy traders who can resell energy domestically or internationally. The BiH-EU Energy Community Treaty ensures access to international markets. Current payback periods for RE projects are relatively short: around 5-8 years for solar and 5-7 years for wind, with a trend toward even better returns.

A PPA is a crucial step in the realization of an RE project, typically signed in the later stages of construction. Due to high demand for electricity, PPAs are increasingly signed earlier in development, even when a project has only a location permit and PEES. Important PPA terms include i) contract term, ii) purchase method – e.g., “purchase of all produced energy,” iii) designation of the balancing-responsible party (RE projects are often variable, requiring balancing services from the buyer), iv) type of purchase price – fixed or variable based on market conditions, v) force majeure, and vi) contract termination options.

Energy storage – or balancing – is a major challenge for RE projects. New regulations in BiH now permit energy storage solutions, such as batteries or other technical devices. Certain RE facilities use reversible storage, where, for example, a solar or wind facility powers water transfer between reservoirs. Future plans include advancing “green hydrogen” production, where hydrogen is produced using RE. Such systems already exist in the EU, and BiH is currently drafting regulations to create a clear roadmap for green hydrogen development.