1. Primary Energy Efficiency Law

In March 2014 the new Energy Act (Official Gazette of the Republic of Slovenia No. 17/14, as amended, "EZ-1") entered into force. Representing a new framework law for the energy sector and as such, one of the most extensive amendments to Slovenian law, EZ-1 transposed several EU directives into the national legislation, including, inter alia, Directive 2012/27/EU regarding energy efficiency, amending Directives 2009/125/EC and 2010/30/EU, and repealing Directives 2004/8/EC and 2006/32/EC.

The main purpose of the new EZ-1 is to introduce more transparent and coherent regulation to the energy sector in general. In particular, energy efficiency is regulated in a special chapter of EZ-1, together with renewable sources of energy.

Comparison

Until the deadline of 5 June 2014 for the transposition of Directive 2012/27/EU, Slovenia transposed most of the requirements set out in the Directive in the new EZ-1. Nevertheless, the transposition was completed only after the following legislation was adopted: (i) Long-Term Strategy for Mobilising Investments in the Energy Renovation of Buildings; (ii) Decree on Energy Management in the Public Sector; (iii) Decree on Physical Assets of the State and Local Government; (iv) Regulation on Energy Audits; and (v) Decree on Energy Savings Requirements.

2. Specific Provisions of the Law

The main programmes that have been implemented are the following:

National Energy Efficiency Action Plans

In accordance with Directive 2006/32/EC, Slovenia has implemented several National Energy Efficiency Action Plans.

-National Energy Efficiency Action Plan for the period 2008-2016 ("AN URE 1")

AN URE 1 provided for Slovenia to achieve cumulative savings of at least nine percent (9%) compared to the baseline end-use energy consumption or at least 4,273 GWh until 2016. Achievement of savings was envisaged through various sector-specific as well as horizontal and multi-sectoral actions in all sectors (households, general consumption, industry and transport).

Most energy savings until 2010 were achieved in households (fifty eight point five percent (58.5%)), followed by multi-sectoral measures (twenty three point one percent (23.1%)), industry (seven point three percent (7.3%)) and transport (seven point zero percent (7.0%)). Those instruments provided under AN URE 1 with the greatest savings in the first three (3) years were: (i) energy labelling of household appliances; (ii) financial incentives for households of Eco Fund (see more information below); (iii) regular inspections of boilers in wide use; (iv) energy advice for citizens; and (v) mandatory division and calculation of heating costs in conjunction with thermostatic valves in multi-apartment residential buildings.

Evaluation of the implemented measures evidences that Slovenia achieved the intermediate savings target of two point eight percent (2.8%) of the reference end-use energy for the period of 2008-2010. This objective was reached only after taking into account the early activities in the period from 1995 to 2007 (since this approach was allowed under Directive 2006/32/EC in order to demonstrate achievement of the energy savings target).

-National Energy Efficiency Action Plan for the period 2011-2016 ("AN URE 2")

In 2011, AN URE 2 entered into force. Planned additional activities under AN URE 2 were primarily focused on: (i) accelerated development of the energy services market, mainly in the public sector, which is the generator of demand; (ii) the  development of energy efficient products and production processes, with the aim of achieving and exceeding the base; and (iii) a series of additional short-term and long-term goals – in particular, the accelerated renovation of buildings in the public sector, achieving the target share of nearly zero-energy buildings among new and renovated buildings, increasing the share of renewable energy, further reducing energy consumption and sustainable economic development.

-National Energy Efficiency Action Plan for the period 2014-2020 ("AN URE 2020")

The latest National Energy Efficiency Action Plan (AN URE 2020) was adopted in May 2015 and regulates the anticipated energy savings for the period 2014-2020.

AN URE 2020 stresses the national objective of improving the efficiency of energy use by twenty percent (20%) by 2020. The target is for primary energy consumption in 2020 to not exceed 7.125 Mtoe (82.86 TWh). This means that compared to 2012, it cannot increase by more than two percent (2%).

The measures in AN URE 2020 have been planned for the household sector, the public sector, industry and transport. Most of the measures include already existing measures that were implemented and in which (until now) intermediate objectives have been achieved. This new action plan has brought some new measures in the public sector, since it is necessary to fulfil the obligation to annually renovate three percent (3%) of government buildings. The objective is to ensure that all new buildings, which are owned and occupied by public authorities, will achieve nearly zero-energy targets from 2018, and in other sectors from 2020. Additional measures such as energy performance contracting, which includes private investments, are planned for the economy since the efficient use of energy is also an increasingly important factor for improving the competitiveness of the economy.

According to AN URE 2020 the existing building stock represents the sector with the greatest potential to achieve energy savings. To achieve this objective, the energy renovation of a quarter of the building stock (which represents around 22 million m² of building land) will be necessary by 2020. With this, the energy use in buildings will be decreased by almost ten percent (10%). In addition, these measures will also accelerate economic growth, since they are generating investments of EUR 500 million per year. The effects of these investments are in addition to high savings in energy costs and a consequent reduction in energy imports also in workplaces, namely at the level of 10,000 jobs.

The funds necessary to address these existing and new measures are collected from a special contribution for the efficient use of energy1, resources of EU cohesion funds and funds of the Climate Change Fund2.

In Slovenia, several incentive programmes aimed at increasing energy efficiency and greater use of renewable energy resources have been carried out over the years. Moreover, a number of regulations have been issued which relate primarily to energy efficiency in buildings, as well as household appliances and other products.

Programme areas that are being implemented in order to promote efficient use of energy include:

-information, education and training of energy consumers investors and other target groups,

-energy advice to the public;

-promotion of consulting services; and

-promoting investment in energy efficiency and renewable energy sources.

Certain financial instruments are also available:

-the allocation of grants from the State budget or loans with subsidised interest rates for investments for companies and individuals;

-providing favourable purchase prices for electricity produced from renewable energy sources or cogeneration of electricity and heat from fossil fuels with high efficiency; and

-exemption from fees for pollution from CO2 for companies that implement certain energy efficiency measures.

-Programme for free energy advice for citizens

Eco Fund3 (together with interested local communities and municipalities) has organised the network ENSVET, which offers individual, free, independent energy consulting, education and awareness activities for the promotion of energy efficiency measures and renewable energy sources for citizens in the local environment.

The offices of the ENSVET network are spread across Slovenia, and employ qualified independent energy advisors. Advisors assist with advice and interviews in the selection, design and implementation of investment measures for energy efficiency and use of renewable energy sources in residential buildings. They try to increase energy awareness of citizens, energy savings and reduce greenhouse gas emissions and thereby facilitate the implementation of certain measures and programmes related to energy policy.

Furthermore, in accordance to EZ-1, general education, trainings and awareness-raising campaigns for different target groups with regard to efficient energy use and renewable sources of energy are offered by the Centre for Support of Green Energy Production (Center za podpore proizvodnji zelene energije).

Comparison

Through AN URE 2020, Slovenia has pledged to achieve the one point five percent (1.5%) annual energy savings target mandated by EU Directive 2012/27/EU. It reduced the target in line with Article 7 Paragraph 2 Item a of the Directive by the maximum allowed twenty five percent (25%). In line with Article 7(9) of Directive 2012/27/EU, Slovenia chose to combine alternative policy measures (through Eco Fund) and an energy efficiency obligation scheme to meet the national target. The two measures will thus be the basis for achieving the one point five percent (1.5%) annual target in order for Slovenia to comply with the energy savings requirements of the Directive.

1Contribution for the efficient use of energy efficiency is paid by final consumers of electricity, gas and heat from the network and final customers of solid, liquid and gaseous fuels.

2The Climate Change Fund is funded by the sale of emission credits at auctions.

3Under the Slovenian Environmental Protection Act (ZVO-1) Eco Fund is defined as Slovenian Environmental Public Fund, which promotes sustainable development by financing investments to prevent, eliminate or reduce pollution of the environment.

3. OBLIGATIONS

In accordance with Directive 2012/27/EU, Slovenia has established a target to improve energy efficiency by 2020, in a way that primary energy consumption by 2020 will not exceed 7.125 Mtoe (82.86 TWh).

The one point five percent (1.5%) of yearly energy reduction and its corresponding values per year are defined in AN URE 2020. According to the permitted scope of reduction of target under Directive 2012/27/EU, the Slovenian Government decided to reduce the target of one point five percent (1.5%) by twenty five percent (25%). Thus the target percentage of yearly energy reduction will rise gradually (one percent (1%) in 2014 to one point five percent (1.5%) in 2020, one percent (1%) in 2014 and 2015, one point two five percent (1.25%) in 2016 and 2017, and one point five percent (1.5%) in 2018 to 2020).

Slovenia has chosen to implement the provisions of Article 7(9) of Directive 2012/27/EU, by opting to combine alternative policy measures and an energy efficiency obligation scheme ("EEO") to meet the national target. The Slovenian legislator decided to opt out of providing those alternatives established in accordance with Article 7(10) of the Directive, except for the option of payments made to the Eco Fund (Eko sklad), a Slovenian Environmental Public Fund, which is a public fund (owned by the State).

The two measures (EEO and Eco Fund) are responsible for achieving the one point five percent (1.5%) target annually.

Considering the above, all companies are required to comply with the energy efficiency obligations with regard to the thresholds set out in AN URE 2020. In comparison to the old scheme for the mandatory achievement of end energy savings for companies under previous national energy efficiency action plans, the new scheme determined by AN URE 2020 does not regulate financial incentives for energy efficiency and therefore the burden of expenses of prescribed energy reductions is placed upon the suppliers. In this regard, the energy suppliers may ensure energy reductions by encouraging their customers to use energy efficient products (e.g. change of household appliances, use of energy saving light bulbs, etc.). Although the new scheme might be more costly for energy providers, it grants them more flexibility in the choice of specific savings measures.

In this regard, EZ-1 identifies the following measures which may be undertaken by the suppliers:

-efficient and greater consumption of renewable energy sources in the production of heat in the public and services sector and in industry and households;

-efficient energy consumption in buildings;

-efficient energy consumption in transport;

-measures to increase the efficiency of district heating systems; and

-energy audit programmes.

Pursuant to EZ-1 the energy reduction targets are binding upon suppliers of electricity, heat, gas and liquid and solid fuels to end customers. The alternative to the achievement of targets through customers is for the suppliers to fulfil their energy efficiency obligation by remitting funds to the Eco Fund in an amount equal to the total savings that should have been achieved by final customers and Eco Fund's special costs for energy savings. The target savings are determined on the basis of the amount of energy sold in the previous year.

The achievements of suppliers concerning the targets of energy efficiency are monitored by the Energy Agency. Furthermore, the suppliers must inform the Agency about the achievements of targets every year, by 31 March. The content and the form of the report are determined by the Agency. By 30 April, the Agency will then publish the achieved energy savings for each supplier. Upon the Agency's request, the suppliers are obliged to provide the Agency with the aggregated statistical data on their end-customers and current data on consumption by end-customers.

The Eco Fund aims at improving energy efficiency through financing investments in energy efficiency, mostly in households. The funds for subsidies of the Eco Fund are collected from the contributions-fee for improving energy efficiency and from charges levied on district heating, electricity and solid, liquid and gaseous fuels, which are paid by final consumers in addition to the price of energy or fuel paid to the operator or supplier of the energy or fuels. These operators or suppliers then pay the levied charges that have been collected to the Eco Fund. The Eco Fund provides various measures to encourage energy efficiency, especially loans for investments in the field of protection of the environment. It also grants collected funds to households in order to co-finance the increase of energy efficiency.

For natural persons, the Eco Fund provides financial incentives for the purchase of electric cars, and favourable loans for the use of renewable energy sources and greater energy efficiency in residential buildings. The Eco Fund also provides favourable loans for various measures in the field of water protection and water efficiency and waste management. The Eco Fund co-finances the following measures relating to efficient use of energy for natural persons:

-outer builder's joinery;

-insulation of facades;

-roof insulation;

-insulation of ground and basement;

-ventilation system with heat recovery;

-hybrid or electric passenger vehicles (car, motorcycle, moped and bicycle);

-electric vehicles;

-complete renovation of residential buildings; and

-nearly zero-energy use buildings.

For legal entities, the Eco Fund offers financial incentives in the form of soft loans for various investments in all areas of environmental protection. There are also non-refundable financial incentives for electric vehicles.

Legal entities that are financed by the Eco Fund may use these funds in the following areas:

-district heating;

-insulation of facades;

-thermal insulation of the roof;

-optimisation of the heating system in an multi-apartment residential building;

-a comprehensive energy renovation of buildings;

-energy renovation of existing buildings;

-electric vehicles;

-energy efficiency measures in manufacturing, commercial and public buildings; and

-construction of new buildings using the nearly zero-energy technology.

Financial incentives in the form of soft loans for various investments in all areas of environmental protection are also available for the local authorities, namely for investments in:

-district heating;

-the construction of nearly zero-energy use buildings of general public importance;

-renovation of existing lighting;

-type of connection to the pipeline or installation of combustion plants, which use gas as an energy source;

-charging stations for electric vehicles in protected areas and nature areas of Natura 2000; and

-grants, intended for the Ministry of Defence of the Republic of Slovenia for new investments in energy renovation of buildings in the public sector.

Comparison

Slovenia implemented legislation to define the scope of energy audits and to ensure that relevant subjects comply with the Energy Efficiency Obligation. To comply with Article 7, Slovenia has opted to implement a set of other policy measures in accordance with Article 7(9) of the Directive 2012/27/EU, namely the Eco Fund, which provides for various measures to encourage energy efficiency.

The obligation of energy distributors to achieve energy savings has already existed in Slovenia since 2010 under the Decree on energy savings of final customers. However, the obligations have been increased with the adoption of the new Decree on energy savings requirements in the process of transposition of Directive 2012/27/EU.

4. MANDATORY AUDIT OF LARGE INDUSTRY

EZ-1 requires the Ministry for Infrastructure to incentivise energy efficiency through different measures, including, inter alia, the encouragement of energy audits.

The energy audit programme is further specified in AN URE 2020. Under EZ-1 large companies are obliged to perform energy audits every four (4) years. Pursuant to the Slovenian Companies Act ("ZGD-1") large companies are those that: (i) have more than 250 employees in a financial year; (ii) have net sales revenues over EUR 35 million; and (iii) have assets totalling over EUR 17.5 million. The methodology for performance of the audit and its mandatory content is specified in more detail in the Regulation on Energy Audits.

According to the minimal requirements of the Regulation on Energy Audits, the basis for the performance of energy audits are up to date, measured, traceable operational data on energy consumption in a building, process or transport of end-user and energy load diagram of the previous period of at least three (3) years on a monthly basis. The energy audit includes a detailed review of energy use of a building or group of buildings, technological processes or industrial installations, including transport. In an energy audit, the costs for the entire life cycle of a building, process and transport are considered (if possible), in order to take into account the long-term savings, residual value of long-term investments and discount rates.

A report on the energy audit has to be drawn up. The report provides a complete overview of the overall energy performance of the building process and transport, as well as an indication of possible measures to improve the energy efficiency of the end-user. Based upon detailed calculations made within an energy audit, the end-user is provided with information about the possible measures and their savings.

The energy audit may be performed by a legal entity, natural person or internal auditor of the company, which fulfils the criteria regarding knowledge, experience and personal characteristics in accordance with the SIST EN 16247-5 standard. The system of certification of the providers of energy audit services is not yet established.

Due to extensive implementation of the energy audit requirement, large companies are obliged to perform their first energy audit no later than 31 December 2017.

The energy audit obligation is deemed to be performed in the following cases:

-if on the basis of voluntary agreements, the company performs an audit of energy usage in accordance with the Regulation on Energy Audits;

-if the company administers the energy or environmental management system, which has been certified by an independent body in accordance with the EU and international standards, provided that the energy or environment management system includes audit of energy usage which fulfils the criteria of the Regulation on Energy Audits; or

-if an extensive environmental assessment is performed, which includes the audit of energy usage in accordance with the Regulation on Energy Audits.

If a large company can demonstrate that it meets one of the above conditions, it may request from the Slovenian Energy Agency to be exempt from the energy audit obligation. Noncompliance with the energy audit obligation under EZ-1 may be penalised with a fine ranging from EUR 5,000 up to EUR 125,000. The responsible person at the company may also be individually fined from EUR 2,000 up to EUR 10,000.

Comparison

Slovenia has implemented legislation for methodology and mandatory content of the energy audit of buildings, processes and transport of end-users and has adopted minimal requirements for energy audits. Currently in Slovenia, the system of certification of the providers of energy audit services is not yet established.

Under the adopted Rules on Energy Audit, large companies in Slovenia are obliged to perform their first energy audit no later than 31 December 2017.

5. STRATEGIES

Long-Term Strategy for Mobilising Investments in the Energy Renovation of Buildings

In October 2015, Slovenia adopted the Long-Term Strategy for Mobilising Investments in the Energy Renovation of Buildings. The starting points of the strategy have been determined in two other strategic documents: the Operational Programme of measures to reduce greenhouse gas emissions by 2020 and the Operational Programme for the implementation of the cohesion policy 2014-2020 ("OP EKP").

With the adoption of the Strategy, Slovenia established the target of achieving a significant improvement in the energy efficiency of its building stock. The targets are set for the years 2020 and 2023 (final year of implementation of OP EKP) and 2030 where the expected energy savings, required public funds and jobs have been evaluated. For 2050 there is only an estimate of the expected energy savings.

The strategy provides for the following operational objectives:

-renovation of three percent (3%) of public buildings of the core public sector annually;

-renovation of 1.8 million m² of buildings in the wider public sector in the period 2014-2023;

-improvement of the relationship between the invested public funds and solicited investments in the public sector to 1:3; and

-execution of 5 renovation pilot projects of energy renovation of different types of buildings.

To use public bodies’ buildings as an example, in October 2015 the Ministry of Infrastructure established a special Project Office for Building Energy Renovation. The Project Office is a coordinating body concentrating knowledge and experience for the implementation of investments in the energy renovation of State-owned buildings, with special emphasis on the energy performance contracting model. It provides an expert team to assist in designing invitations to tender, conducting Public Private Partnership procedures, evaluating tenders, overseeing the implementation of measures, overseeing the implementation of the contract on the provision of energy savings and transferring knowledge and good practice to the entire public and other sectors.

Additionally, the Ministry of Infrastructure plans to publish a call on a yearly basis to all interested investors who plan comprehensive energy renovation of their public buildings, helping them with grants from the Cohesion Fund.

Most of the strategies relating to energy efficiency have been introduced in the National Energy Efficiency Action Plans:

-Measures on energy efficiency of buildings and facilities

-measures for efficient use of electricity in households – promoting the purchase of energy efficient household appliances;

-compulsory division and calculation of heating costs in multi-apartment and other buildings; and

-in the future more attention will be brought to the energy rehabilitation of cultural heritage buildings with regard to design and selection of measures, and in general consideration of architectural aspect of the energy rehabilitation (pilot projects, development and deployment of technologies, financial support schemes).

-Measures of energy efficiency in the public sector

-obligation to introduce an energy management system in the public sector;

-measures for efficient use of electricity in the public sector, in particular, incentives for energy efficient public lighting;

-the implementation of projects for the energy rehabilitation of buildings of the central Government with Public Private Partnerships – principle of energy performance contracting4; and

-preparation of sustainability criteria, as an instrument for decision-making regarding economic, environmental and social adequacy of public buildings renovation.

-Measures of energy efficiency in the industry

-introduction of energy management systems;

-increasing the efficiency of electricity use: installation of efficient electric motor drives, lighting, steering-control equipment, etc.;

-reduction of heat use and promotion of exploitation of renewable energy sources and waste heat: optimisation of the use and supply of heat by introducing advanced solutions for the exploitation of renewable energy sources (solar, geothermal, biomass, etc.) and waste process heat;

-increasing the volume of cogeneration with high efficiency and electricity production from RES: modernisation of existing and installation of new cogeneration with high efficiency units especially in processing-intensive industries (pulp and paper, chemical, rubber, etc.) to natural gas and renewable energy sources (biomass, biogas, sewage from treatment plants, etc.) and an increase in production of hydroelectric power, wind power and solar power; and

-development and production of new sustainable products and services: energy and material efficient technological solutions, technologies for the exploitation of renewable energy sources, IT-support (smart measurements and networks, energy management, etc.), in accordance with the industrial policy of Slovenia and smart specialisation strategy of the Republic of Slovenia.

-Measures of energy efficiency for transport

-modernisation of the existing transport infrastructure;

-construction of optimal transport infrastructure;

-introduction of modern means of transport;

-promotion of sustainable mobility;

-promoting of sustainable freight transport;

-increasing the energy efficiency of road vehicles; and

-construction of cycle paths and support facilities and promotion of cycling.

-Decree on energy management in the public sector

Under EZ-1, public sector entities are required to establish an energy management system, and in this context, define the objectives and measures to increase energy efficiency and use of renewable energy sources. In 2016, the Slovenian Government adopted the Decree on energy management in the public sector as an implementation of these provisions.

The Decree introduces the requirement that all public bodies perform energy bookkeeping and achieve energy efficiency and RES goals in those buildings owned and used by them.

Regarding the transposition of Directive 2012/27/EU, the Decree defines minimum energy performance requirements for buildings which central Government will purchase or rent.

Under the provisions of the Decree, energy management systems must be set up in buildings and parts of buildings which are owned by the Government or local authorities or used by State authorities, local communities, public institutions, public commercial institutions, public funds, public agencies and institutions whose founder is the Republic of Slovenia or a local authority, and the area of which is more than 250 m2. The Decree is setting an example to the private sector in the field of energy efficiency.

Energy management systems include also implementation of energy accounting, identification and implementation of measures to improve energy efficiency, increase in the use of renewable energy sources and reporting to the responsible person on energy consumption, the associated costs and implementing measures.

Comparison

Slovenia chose to address energy efficiency in all areas – production, transport and end-use of energy (e.g. renovation of buildings in both public and private sector). For that purpose, Slovenia addressed the requirements of Directive 2012/27/EU through appropriate adjustments in the national legislation – particularly concerning renewable energy sources and reduction of consumption of energy.

4For this purpose the Ministry of Infrastructure in cooperation with the Ministry of Finance prepared Guidelines for the implementation of measures to improve the energy efficiency of buildings in the public sector according to the principle of energy performance contracting.

6. TARGETS

As a Member State of the European Union, Slovenia has an obligation to transpose EU Directives into national law and must fulfil the requirements of the EU Regulations.

Energy Act (EZ)

In order to transpose the provisions of Directive 2006/32/EC of the European Parliament and of the Council on energy end-use and energy services and repealing Council Directive 93/76/EEC the first Slovenian Energy Act was amended. The EZ is no longer valid and was replaced by the new Energy Act (EZ-1).

Energy Act (EZ-1)

In 2014, a completely new Energy Act transposed several EU directives and among them also Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC.

Environmental Protection Act (ZVO-1)

The Act transposed the Directive 2008/1/EC of the European Parliament and of the Council of 15 January 2008 concerning integrated pollution prevention and control.

Several Governmental decrees and regulations have been adopted for the implementation of the efficient energy use, among others:

-Decree on energy management in the public sector (transposing Directive 2009/28/EC);

-Rules on the financial incentives for energy efficiency, district heating and use of renewable energy sources;

-Decree on energy savings requirements;

-Decree on labelling of energy-related products as regards the use of energy and other resources (transposing Directive 2010/30/EU);

-Decree on ecodesign requirements for energy-related products (transposing Directive 2009/125/EC); and

-Decree on green public procurement (transposing Directive 2009/33/EC and Directive 2010/30/EU).

Comparison

In its third national action plan AN URE 2020, Slovenia stressed the national objective to improve the efficiency of energy use by twenty percent (20%) by 2020 in accordance with the minimal indicative target of Directive 2012/27/EU. The target for primary energy consumption in 2020 should not exceed 7.125 Mtoe (82.86 TWh). This means that compared to 2012, it cannot increase by more than two percent (2%).

The national target is set at the primary level of energy, as energy transformations may also contribute to the increased energy efficiency. In terms of such energy transformations, efficiency improvements are planned as a result of technological upgrading and increasing the share of renewable energy sources.

This chapter was contributed by: Klemen Radosavljevic (Partner) and Petra Zupancic (Associate).

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