With the accelerating push for decarbonization and the growing focus on energy security and sustainability, RRH Legal Managing Partner Indir Osmic and CMS Romania Partner Varinia Radu discuss national and regional developments, investor sentiment, and the key trends shaping the CEE energy sector.
CEELM: What are the main trends shaping the energy sector in your country or the wider CEE region today?
Osmic: Let me start with Bosnia and Herzegovina. The country’s energy sector is still in a transitional phase. Historically, Bosnia was considered a regional powerhouse, one of the main electricity exporters in the region. But today, due to the underdevelopment of its vast energy potential and the continued reliance on outdated coal-based facilities, the country is struggling even to meet its own energy demands. As energy needs grow, driven by infrastructure and industrial development, we’re relying on plants that are decades old.
Efforts are underway to accelerate the energy transition, especially toward renewables. The country’s complex constitutional structure, with two entities with separate energy regulatory markets, means that progress varies. In the Federation of Bosnia and Herzegovina, there’s a push for wind and solar power development, though small hydropower plants have been largely prohibited due to environmental concerns. In Republika Srpska, hydropower is still being pursued, alongside solar projects. The country has two separate energy regulators and legislative frameworks, which create major hurdles for cross-entity projects.
Bosnia is officially committed to decarbonization by 2050, as an EU candidate, and has adopted a Framework Energy Strategy aligned with EU standards. A new draft energy law has recently introduced the concept of an energy exchange, which had been missing, and this new law is expected to improve energy trading and help Bosnia prepare for mechanisms like the EU’s Carbon Border Adjustment Mechanism. There are also several World Bank-supported projects aimed at phasing out coal mines. Some older coal mines are expected to be repurposed into renewable energy sites, with retraining programs to transition coal workers into green energy roles.
At a regional level, the war in Ukraine has pushed for a reduction in dependence on Russian energy. As a part of this trend, currently, Bosnia aims to facilitate the construction of a southern gas interconnector linking Bosnia with Croatia and eventually to Western gas sources.
Radu: Across the region, including in Romania, energy companies remain committed to both the energy transition and the need to diversify energy sources in order to enhance the security of supply in the region. As a result, they are investing in renewable energy, diversifying fuel sources, for example, by increasing LNG imports, and exploring new technologies such as hydrogen and carbon capture to reduce their own carbon footprint and pursue sustainability goals.
As already mentioned, the region continues to deliberately and decisively reduce its dependence on Russian gas through projects like the Baltic Pipe and by investing in LNG terminals. To diversify gas sources, especially in those countries traditionally dependent on Russian gas, the EU has established three regional task forces under the EU Energy Platform: one for CEE, one for Ukraine and the Republic of Moldova, and one for the SEE regional group.
CEELM: How would you describe investor sentiment in the energy sector both in your home markets and across the CEE?
Osmic: Investor sentiment tells a slightly more optimistic story. Despite political complications, we’ve seen a surge of interest in renewables, especially in the southern part of the country. We’re currently advising several investors, both from Western Europe and Asia, who are looking to develop solar and wind projects. In the Federation alone, there are over 200 megawatts’ worth of solar and wind projects in development, which, while ambitious, signals a strong interest in the market.
Radu: Investor sentiment in Romania and the broader CEE region reflects the challenge of balancing traditional energy models with decarbonization and diversification. Oil & gas companies are balancing their traditional business model with the need for decarbonization and diversification. Major players like PKN Orlen, MOL Group, and OMV all have strategies to reduce emissions, explore renewable energy, and diversify their energy sources.
A major oil refiner in the region, Poland’s Orlen, has set itself a goal of net zero emissions by 2050. To that end, it is implementing green technologies, renewable energy sources, and exploring new business models to reduce its climate impact. Hungary’s MOL is focusing on renewable energy, hydrogen, and other low-carbon technologies, investing in projects to achieve net-zero targets. Austria’s OMV is also investing in hydrogen production and exploring other renewable energy sources.
Elsewhere in the region, in 2024, Romania’s OMV Petrom closed two renewable power deals with Renovatio. These projects have a combined capacity of approximately 1 gigawatt. The company also invests in hydrogen, wind, e-mobility, and sustainable aviation fuel. And Greece’s HelleniQ Energy plans to significantly invest in renewable energy, aiming for a total installed capacity of 1 gigawatt by 2026 and 2 gigawatts by 2030. This includes diversifying its portfolio through investments in photovoltaic parks, wind farms, and self-generation/consumption solutions, both in Greece and abroad. Recently, Helleniq made its entrance into the Romanian and Bulgarian markets with the acquisition of several wind, solar PV, and storage projects.
Other notable companies in the region include Naftogaz Group from Ukraine, which is diversifying its gas supply and investing in new exploration projects; PGE Group in Poland, which is similarly diversifying its energy mix and investing in renewable energy; and Slovnaft in Slovakia, which is investing in upgrading its infrastructure and diversifying its supply sources.
CEELM: Are you seeing increased cross-border or regional cooperation on energy projects?
Osmic: In terms of regional cooperation, Bosnia recognizes it cannot develop in isolation. Grid connectivity is one area where cross-border projects show promise. There’s a major infrastructure project aiming to connect Bosnia’s grid to the Trans-Balkan Electricity Corridor, established to connect the electricity transmission systems from Serbia, Montenegro, Bosnia and Herzegovina to Croatia, Hungary, Romania, and Italy – which would open new opportunities and increase stability and capacity for energy trade. Still, other cross-border projects, such as shared hydropower plants, have stalled due to political disagreements.
Radu: Romania actively participates in cross-border energy cooperation, particularly within the Central and South-Eastern Europe Energy Connectivity framework and Interreg programs. Key initiatives focus on streamlining infrastructure projects, increasing regional energy capacity, developing green energy communities, and implementing joint solutions for renewable energy projects, often with EU funding and technical support, such as Connecting Europe Facility and several interconnection projects with Moldova. One of the most notable initiatives that has gained traction is the Green Energy Corridor, which involves connecting Azerbaijan, Georgia, Romania, and Hungary to export green electricity and gases to Europe, leveraging the renewable potential of the Caspian Sea and Black Sea via a submarine cable.
CEELM: What’s on the horizon for the energy sector in CEE?
Osmic: Looking ahead, we expect to see further development of renewable energy projects, but also growing pressure to create stability in the system. Previously, there were plans for a large-scale coal plant co-financed by Chinese partners, but that project has now been abandoned. Instead, we’ll likely see an increase in energy storage facilities and other solutions that can support the transition from coal to clean energy. Ultimately, however, progress will depend on whether political will can align with investor interest and market needs – and on how swiftly the state-owned electricity company can adapt to modern energy business standards.
Radu: In terms of the power market, the theme of interconnectivity is of increased importance. Grid enhancements become paramount to be able to adapt to the new energy mix that is shaping up as a result of an accelerated transition, bringing new capacities the need to accommodate more prosumers. Grid access rules are about to change drastically as the RES market matures, and we will probably start seeing higher barriers to enter these markets. Policies concerning support schemes are still needed to achieve the Green Deal and are likely to continue to rely on competitive market-based mechanisms like Contracts for Difference, which have proven to be effective in reducing energy prices and minimizing market distortion, alongside power purchase agreements, with a more focus on emerging technologies and an increased interest in new nuclear facilities.
This article was originally published in Issue 12.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
