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Offshore Wind Parks: A Glimpse into Montenegro's Future

Offshore Wind Parks: A Glimpse into Montenegro's Future

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The world has seen a significant shift towards sustainable energy sources in recent years. One of the most promising and rapidly growing sectors in the renewable energy industry is offshore wind parks. These structures that use the power of wind over the open seas are quickly gaining popularity as part of the global effort to combat climate change. This article will explore the global trend of offshore wind parks and shed light on Montenegro's potential in this eco-friendly energy source with a special focus on fixed-bottom wind parks.

A fixed-bottom offshore wind park consists of wind turbines that are attached to the seabed using steel or concrete foundations. There are three types of fixed-bottom offshore wind parks. The first are monopile foundations, which are designed for shallow depths (0-30 meters) and involve driving a single pile into the seabed. They are cost-effective and widely used. The second are tripod fixed bottom foundations, which are suitable for transitional depths (20-80 meters). These structures feature three legs connected to a central shaft, providing stable support for the turbine base and allowing shallower seabed placement compared to monopiles. The third type are jacked foundations, also suitable for transitional depths. They consist of a framework with three to four fixing points driven into the seafloor.

These innovative structures represent a significant shift towards sustainable energy sources globally. Countries across Europe have enthusiastically embraced offshore wind power as part of their combat against climate change. Pioneers in this field, such as the UK, Germany and Denmark, have made substantial investments in offshore wind infrastructure, showing impressive numbers of offshore wind park projects. The UK has 224 offshore wind park projects, Germany has 190 and Denmark has 123. According to data collected by WindEurope, wind energy generation in Europe has shown steady growth, increasing from 370 TWh in 2018 to 489 TWh in 2022, while electricity demand has concurrently decreased from 2,960 TWh in 2018 to 2,830 TWh in 2022, a remarkable trend that highlights the increasing utilisation of offshore wind parks throughout Europe. Montenegro has positioned itself to align with this recently emerging trend.

Following the European trend, offshore wind parks must be located either in territorial waters (14 nautical miles) or in exclusive economic zones (200 nautical miles) of their host country. The Montenegrin Water Act specifies, among other things, that the exclusive economic zones are regulated through agreements with neighbouring countries. As Montenegro currently lacks such agreements, offshore wind parks can only be constructed within its territorial waters. This situation has proven advantageous, considering the main challenge for neighbouring European countries is constructing stable foundations in deeper waters.

In each case, the location of an offshore wind park must be chosen so as not to pose a threat to the environment, marine habitats or migrating birds. It also should not intersect with other human infrastructure, such as electrical and telecommunications cables or major maritime routes. This is of particular significance given that a complex approval process precedes the construction phase.

Another key question is the property rights framework for the land on which the offshore wind park is to be constructed. Territorial waters in Montenegro, classified as natural resources, are state-owned under the State Property Act. Consequently, for the use of state property, specifically the seabed and subsoil in this case, the Concessions Act is applicable. To utilise the seabed and subsoil, a concession agreement must be signed with the relevant state authority. In general, a concession is granted to the investor based on the annual government or local self-government plan through a public bidding procedure. The competent body for deciding on the concession grant depends on the duration of the concession period. If a concession is granted for up to 30 years, the decision is made by the Government of Montenegro. However, the National Assembly of Montenegro is competent to decide on the granting of concessions with a duration longer than 30 years but not exceeding 60 years. Therefore, once the concession agreement is signed in accordance with the relevant provisions of the Concessions Act, property rights are resolved.

Once property rights have been resolved, the construction process can begin. The Act on Spatial Planning and Construction of Structures does not specifically recognise offshore wind parks as construction projects, but recognises wind parks under the category of complex engineering structures. Consequently, offshore wind parks are likely to be classified as complex engineering structures, subjecting their construction phase to procedures outlined for complex engineering projects.

As an offshore wind park yet to be built in Montenegro, there are various legal uncertainties that need to be addressed. All matters must be precisely regulated within the contractual framework. In this regard, the International Federation of Consulting Engineers (FIDIC) is currently developing a contract tailored for offshore wind park projects, addressing their unique characteristics. While the 1999 FIDIC Yellow Book has traditionally been used, due to the complexity of offshore wind park projects, the FIDIC has initiated work on a new standard contract form expected to be ready by the end of 2025.

With Montenegro working on its first RES Act and three new construction-related acts, combined with its geographical location, the recent launch of a day-ahead energy market (the third in the Balkans) and the Montenegro-Italy submarine power cable installation, the country presents an exceptional opportunity for constructing the first offshore wind park in this part of Europe. Given these developments, Montenegro has demonstrated its readiness and commitment to energy development and its significant untapped potential for offshore wind parks along its coastline.

By Ivana Panic, Partner, and Luka Veljovic, Attorney at Law, Schoenherr

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