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 ofthe most extensive amendments to Slovenian law, EZ-1 transposed several EU directives into the nationallegislation, including, inter alia, Directive 2012/27/EU regarding energy efficiency, amending Directives2009/125/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 energysector in general. In particular, energy efficiency is regulated in a special chapter of EZ-1, together withrenewable sources of energy.
Until the deadline of 5 June 2014 for the transposition of Directive 2012/27/EU, Slovenia transposed mostof the requirements set out in the Directive in the new EZ-1. Nevertheless, the transposition wascompleted only after the following legislation was adopted: (i) Long-Term Strategy for MobilisingInvestments in the Energy Renovation of Buildings; (ii) Decree on Energy Management in the PublicSector; (iii) Decree on Physical Assets of the State and Local Government; (iv) Regulation on EnergyAudits; 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 EfficiencyAction 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 tothe baseline end-use energy consumption or at least 4,273 GWh until 2016. Achievement of savings wasenvisaged 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 threepercent (7.3%)) and transport (seven point zero percent (7.0%)). Those instruments provided under ANURE 1 with the greatest savings in the first three (3) years were: (i) energy labelling of householdappliances; (ii) financial incentives for households of Eco Fund (see more information below); (iii) regularinspections of boilers in wide use; (iv) energy advice for citizens; and (v) mandatory division andcalculation of heating costs in conjunction with thermostatic valves in multi-apartment residential buildings.
Evaluation of the implemented measures evidences that Slovenia achieved the intermediate savingstarget of two point eight percent (2.8%) of the reference end-use energy for the period of 2008-2010. Thisobjective 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 theenergy 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 primarilyfocused on: (i) accelerated development of the energy services market, mainly in the public sector, whichis 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-termgoals – in particular, the accelerated renovation of buildings in the public sector, achieving the target shareof nearly zero-energy buildings among new and renovated buildings, increasing the share of renewableenergy, 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 regulatesthe 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, industryand transport. Most of the measures include already existing measures that were implemented and inwhich (until now) intermediate objectives have been achieved. This new action plan has brought somenew measures in the public sector, since it is necessary to fulfil the obligation to annually renovate threepercent (3%) of government buildings. The objective is to ensure that all new buildings, which are ownedand occupied by public authorities, will achieve nearly zero-energy targets from 2018, and in other sectorsfrom 2020. Additional measures such as energy performance contracting, which includes privateinvestments, are planned for the economy since the efficient use of energy is also an increasinglyimportant factor for improving the competitiveness of the economy.
According to AN URE 2020 the existing building stock represents the sector with the greatest potential toachieve 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 energyuse in buildings will be decreased by almost ten percent (10%). In addition, these measures will alsoaccelerate economic growth, since they are generating investments of EUR 500 million per year. Theeffects of these investments are in addition to high savings in energy costs and a consequent reduction inenergy 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 specialcontribution for the efficient use of energy1, resources of EU cohesion funds and funds of the ClimateChange Fund2.
In Slovenia, several incentive programmes aimed at increasing energy efficiency and greater use ofrenewable energy resources have been carried out over the years. Moreover, a number of regulationshave been issued which relate primarily to energy efficiency in buildings, as well as household appliancesand 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 investmentsfor companies and individuals;
-providing favourable purchase prices for electricity produced from renewable energy sources orcogeneration of electricity and heat from fossil fuels with high efficiency; and
-exemption from fees for pollution from CO2 for companies that implement certain energy efficiencymeasures.
-Programme for free energy advice for citizens
Eco Fund3 (together with interested local communities and municipalities) has organised the networkENSVET, which offers individual, free, independent energy consulting, education and awareness activitiesfor the promotion of energy efficiency measures and renewable energy sources for citizens in the localenvironment.
The offices of the ENSVET network are spread across Slovenia, and employ qualified independent energyadvisors. Advisors assist with advice and interviews in the selection, design and implementation ofinvestment 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 emissionsand 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 fordifferent target groups with regard to efficient energy use and renewable sources of energy are offered bythe Centre for Support of Green Energy Production (Center za podpore proizvodnji zelene energije).
Through AN URE 2020, Slovenia has pledged to achieve the one point five percent (1.5%) annual energysavings target mandated by EU Directive 2012/27/EU. It reduced the target in line with Article 7 Paragraph 2Item a of the Directive by the maximum allowed twenty five percent (25%). In line with Article 7(9) ofDirective 2012/27/EU, Slovenia chose to combine alternative policy measures (through Eco Fund) and anenergy efficiency obligation scheme to meet the national target. The two measures will thus be the basis forachieving the one point five percent (1.5%) annual target in order for Slovenia to comply with the energysavings requirements of the Directive.
1Contribution for the efficient use of energy efficiency is paid by final consumers of electricity, gas andheat 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 SlovenianEnvironmental Public Fund, which promotes sustainable development by financing investments toprevent, eliminate or reduce pollution of the environment.
In accordance with Directive 2012/27/EU, Slovenia has established a target to improve energy efficiencyby 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 aredefined in AN URE 2020. According to the permitted scope of reduction of target under Directive2012/27/EU, the Slovenian Government decided to reduce the target of one point five percent (1.5%) bytwenty five percent (25%). Thus the target percentage of yearly energy reduction will rise gradually (onepercent (1%) in 2014 to one point five percent (1.5%) in 2020, one percent (1%) in 2014 and 2015, onepoint 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 tocombine alternative policy measures and an energy efficiency obligation scheme ("EEO") to meet thenational target. The Slovenian legislator decided to opt out of providing those alternatives established inaccordance 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 withregard to the thresholds set out in AN URE 2020. In comparison to the old scheme for the mandatoryachievement 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 efficiencyand therefore the burden of expenses of prescribed energy reductions is placed upon the suppliers. In thisregard, the energy suppliers may ensure energy reductions by encouraging their customers to use energyefficient products (e.g. change of household appliances, use of energy saving light bulbs, etc.). Althoughthe new scheme might be more costly for energy providers, it grants them more flexibility in the choice ofspecific 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 publicand 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 liquidand solid fuels to end customers. The alternative to the achievement of targets through customers is forthe suppliers to fulfil their energy efficiency obligation by remitting funds to the Eco Fund in an amountequal to the total savings that should have been achieved by final customers and Eco Fund's special costsfor energy savings. The target savings are determined on the basis of the amount of energy sold in theprevious year.
The achievements of suppliers concerning the targets of energy efficiency are monitored by the EnergyAgency. 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, theAgency will then publish the achieved energy savings for each supplier. Upon the Agency's request, thesuppliers are obliged to provide the Agency with the aggregated statistical data on their end-customersand 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 forimproving energy efficiency and from charges levied on district heating, electricity and solid, liquid andgaseous fuels, which are paid by final consumers in addition to the price of energy or fuel paid to theoperator or supplier of the energy or fuels. These operators or suppliers then pay the levied charges thathave been collected to the Eco Fund. The Eco Fund provides various measures to encourage energyefficiency, especially loans for investments in the field of protection of the environment. It also grantscollected 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, andfavourable loans for the use of renewable energy sources and greater energy efficiency in residentialbuildings. The Eco Fund also provides favourable loans for various measures in the field of waterprotection and water efficiency and waste management. The Eco Fund co-finances the followingmeasures relating to efficient use of energy for natural persons:
-outer builder's joinery;
-insulation of facades;
-insulation of ground and basement;
-ventilation system with heat recovery;
-hybrid or electric passenger vehicles (car, motorcycle, moped and bicycle);
-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 investmentsin all areas of environmental protection. There are also non-refundable financial incentives for electricvehicles.
Legal entities that are financed by the Eco Fund may use these funds in the following areas:
-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;
-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 environmentalprotection are also available for the local authorities, namely for investments in:
-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 energysource;
-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 energyrenovation of buildings in the public sector.
Slovenia implemented legislation to define the scope of energy audits and to ensure that relevant subjectscomply with the Energy Efficiency Obligation. To comply with Article 7, Slovenia has opted to implement aset of other policy measures in accordance with Article 7(9) of the Directive 2012/27/EU, namely the EcoFund, which provides for various measures to encourage energy efficiency.
The obligation of energy distributors to achieve energy savings has already existed in Slovenia since 2010under the Decree on energy savings of final customers. However, the obligations have been increasedwith the adoption of the new Decree on energy savings requirements in the process of transposition ofDirective 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 areobliged 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 salesrevenues over EUR 35 million; and (iii) have assets totalling over EUR 17.5 million. The methodology forperformance of the audit and its mandatory content is specified in more detail in the Regulation on EnergyAudits.
According to the minimal requirements of the Regulation on Energy Audits, the basis for the performanceof energy audits are up to date, measured, traceable operational data on energy consumption in abuilding, 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 orgroup of buildings, technological processes or industrial installations, including transport. In an energyaudit, the costs for the entire life cycle of a building, process and transport are considered (if possible), inorder to take into account the long-term savings, residual value of long-term investments and discountrates.
A report on the energy audit has to be drawn up. The report provides a complete overview of the overallenergy performance of the building process and transport, as well as an indication of possible measures toimprove the energy efficiency of the end-user. Based upon detailed calculations made within an energyaudit, 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 withthe SIST EN 16247-5 standard. The system of certification of the providers of energy audit services is notyet established.
Due to extensive implementation of the energy audit requirement, large companies are obliged to performtheir 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 accordancewith the Regulation on Energy Audits;
-if the company administers the energy or environmental management system, which has been certifiedby an independent body in accordance with the EU and international standards, provided that theenergy or environment management system includes audit of energy usage which fulfils the criteria ofthe Regulation on Energy Audits; or
-if an extensive environmental assessment is performed, which includes the audit of energy usage inaccordance with the Regulation on Energy Audits.
If a large company can demonstrate that it meets one of the above conditions, it may request from theSlovenian Energy Agency to be exempt from the energy audit obligation. Noncompliance with the energyaudit obligation under EZ-1 may be penalised with a fine ranging from EUR 5,000 up to EUR 125,000. Theresponsible person at the company may also be individually fined from EUR 2,000 up to EUR 10,000.
Slovenia has implemented legislation for methodology and mandatory content of the energy audit ofbuildings, 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 yetestablished.
Under the adopted Rules on Energy Audit, large companies in Slovenia are obliged to perform their firstenergy audit no later than 31 December 2017.
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 EnergyRenovation of Buildings. The starting points of the strategy have been determined in two other strategicdocuments: the Operational Programme of measures to reduce greenhouse gas emissions by 2020 andthe 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 inthe energy efficiency of its building stock. The targets are set for the years 2020 and 2023 (final year ofimplementation of OP EKP) and 2030 where the expected energy savings, required public funds and jobshave 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 thepublic 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 aspecial Project Office for Building Energy Renovation. The Project Office is a coordinating bodyconcentrating knowledge and experience for the implementation of investments in the energy renovationof State-owned buildings, with special emphasis on the energy performance contracting model. It providesan expert team to assist in designing invitations to tender, conducting Public Private Partnershipprocedures, evaluating tenders, overseeing the implementation of measures, overseeing theimplementation of the contract on the provision of energy savings and transferring knowledge and goodpractice to the entire public and other sectors.
Additionally, the Ministry of Infrastructure plans to publish a call on a yearly basis to all interested investorswho plan comprehensive energy renovation of their public buildings, helping them with grants from theCohesion Fund.
Most of the strategies relating to energy efficiency have been introduced in the National Energy EfficiencyAction Plans:
-Measures on energy efficiency of buildings and facilities
-measures for efficient use of electricity in households – promoting the purchase of energy efficienthousehold 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 buildingswith regard to design and selection of measures, and in general consideration of architectural aspectof the energy rehabilitation (pilot projects, development and deployment of technologies, financialsupport 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 energyefficient public lighting;
-the implementation of projects for the energy rehabilitation of buildings of the central Governmentwith 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 ofrenewable 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 inprocessing-intensive industries (pulp and paper, chemical, rubber, etc.) to natural gas andrenewable energy sources (biomass, biogas, sewage from treatment plants, etc.) and an increase inproduction of hydroelectric power, wind power and solar power; and
-development and production of new sustainable products and services: energy and material efficienttechnological solutions, technologies for the exploitation of renewable energy sources, IT-support(smart measurements and networks, energy management, etc.), in accordance with the industrialpolicy 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 thiscontext, define the objectives and measures to increase energy efficiency and use of renewable energysources. In 2016, the Slovenian Government adopted the Decree on energy management in the publicsector as an implementation of these provisions.
The Decree introduces the requirement that all public bodies perform energy bookkeeping and achieveenergy 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 performancerequirements 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 ofbuildings which are owned by the Government or local authorities or used by State authorities, localcommunities, public institutions, public commercial institutions, public funds, public agencies andinstitutions whose founder is the Republic of Slovenia or a local authority, and the area of which is morethan 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 andimplementation of measures to improve energy efficiency, increase in the use of renewable energysources and reporting to the responsible person on energy consumption, the associated costs andimplementing measures.
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 therequirements 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 preparedGuidelines for the implementation of measures to improve the energy efficiency of buildings in the publicsector according to the principle of energy performance contracting.
As a Member State of the European Union, Slovenia has an obligation to transpose EU Directives intonational 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 theCouncil on energy end-use and energy services and repealing Council Directive 93/76/EEC the firstSlovenian 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 Directive2012/27/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 January2008 concerning integrated pollution prevention and control.
Several Governmental decrees and regulations have been adopted for the implementation of the efficientenergy 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 energysources;
-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).
In its third national action plan AN URE 2020, Slovenia stressed the national objective to improve theefficiency of energy use by twenty percent (20%) by 2020 in accordance with the minimal indicative targetof 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 tothe increased energy efficiency. In terms of such energy transformations, efficiency improvements areplanned 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).