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Wednesday, December 7, 2022

Big Solar Plants in Croatia Are not Just Needed, They Are Crucial

In recent times questions were raised in some media outlets whether large and centralized photo-voltage solar power plants of greater capacity were the wrong choice for our country. However, with a view to understanding the integral electric power scene of the Republic of Croatia, particularly in the context of the Strategy of Energy Development, we will clarify why large   solar power plants are not only important but necessary.

In order for Croatia to achieve its goal set in the Energy Development Strategy to the year 2030 and beyond to 2050, it is necessary to build more than 1000MW solar power plants in the course of the next ten years. As has been demonstrated up to now, small capacity solar plants are developing very slowly so the need to accelerate the process of development is only logical and it includes the larger capacity plants in order for us to attain the goals Croatia has set. When speaking of small capacity solar power plants, we have in Croatia about 1200 incentive-generated power plants with a capacity below 1MW and up to now incentives were provided mainly for such plants, almost exclusively those of rooftops. However, this is way below Croatia’s needs. The mere fact that there are only in the area of Maribor, in neighbouring Slovenia, more solar plants than in the whole of Croatia speaks for itself of how much we are lagging behind and how much we have to make up for in a short period of time.

In order to meet our needs we must increase investment activities multi-fold and in the process they should not burden our citizens and  should be achieved on the basis of an incentive system for investors. This is possible by way of tenders based on the recently adopted premium model whereby the premiums paid would be smaller the bigger the power plants to be built – it is the law of the market. The future tenders which are expected to be invited soon will clearly show the number of projects that are already prepared and relate to large solar plants with a capacity greater than 10MW as well as the offered production price in the tender which would ultimately define the amount of the premium.  

Premium models for large-scale solar power plants are also invited in Denmark, The Netherlands and Germany as well as in many other countries. The premium would enable the investor to cover the costs of production with guaranteed returns on the investment in a period of 12 years making the investments safe and ‘bankable’.  There is no place here for extra large profits which some individuals are arbitrarily publicly suggesting. In effect it is completely logical that the investor will put money in the project if he is certain in the acceptability of the risk and the realization of his investment along with the achievement of planned returns and profit.

In addition, banks will approve loans to investors for such  projects only on conditions that ensure  safe investments. For that reason the premium model is important.

Through the previous feed-in tariff system approximately 80 power plants with  capacities between 50 kW and 500 kW and around 15 power plants with capacities from 500kW to 10MW received incentives The new directive, owing to the already mentioned reason of achieving the goal set in the Strategy, defines a tenfold greater number of power plants in these capacity ranges. The premium model will define the upper limit for solar power plants of greater capacity to a maximum of 60Є/MWh and all will compete to ensure a premium which is actually the spread between production and market prices. Incentives for electric power from solar power plants will no longer be supported as was the case in the guaranteed high redemption price, but rather the model will be applied of encouraging investors with minimum premiums to invest with 12 year investments returns which is the period in which they will receive the premiums. 

That there is no reason for negative comments regarding large solar plants lies in  the fact that along with such solar power plants, small ones which have a different incentive system still have their place which  will in no way discriminate the former. Namely, there are no quota limitations for small solar plants with capacities under 50kW and all consumers in line with the Law on RES can invest in micro plants up to 50kW through two guaranteed incentive models One is net-metering, meaning production for one one’s needs on  house rooftops (a calculated guaranteed price greater than 100Є/MWh, which is a much higher price than for large solar power plants), whereby surpluses are put back into the grid and pulled out of it when solar roof plants do not produce sufficient electric power.

The second model is the surplus sale system in the amount of 90% of the price we purchase power from a chosen distributor. Therefore, no quota has been set for incentive measures which apply to small power plants up to 50kW and whoever wants can invest in a power plant on the roof of his house. Citizens, tradesmen, micro and small entrepreneurs, family farms, tourist renters – can all invest in the production of electric power for their own needs. This is made possible by the Law on RES, and interest in this model was shown by numerous implemented examples. As early as 2004 the Croatian expert association for solar energy was founded by its long standing president, professor Ljubomir Majdandžić and it is a pity that the realization of Croatia’s great potential in solar energy was not initiated more ardently at the time. Perhaps  awareness did not exist then of the importance of utilizing renewable energy sources, but more should have been done on raising it. It cannot be raised without continually informing and educating the public. This is also an area in which the cooperation of all in the sector is important rather than rivalry and exclusion of individuals or organizations. Energy self-sufficiency of a country is a strategic question. Renewable sources as its part are economically and ecologically relevant and as such deserve an appropriate place in public space and public policies.

To conclude, it is superfluous and senseless to ask whether we need small and large scale solar power plants, especially the promotion of one type at the expense of the other. Equally, criticism of investing in and need of developing wind farms at the expense of solar plants, particularly with   presenting costs as an argument does not stand. Because if we compare solar power plants with the price of 2.6 HRK/kWh and wind farms with the price of 0.71HRK/kWh it is clear that energy from wind farms is four times cheaper than energy from solar power plants and that  incentives for wind farms are seven times lower than those for solar power plants (the incentive for solar plants is 2.1HRK/kWh and for wind farms 0.3HRK/kWh since the market price is 0.4HRK/kWh. which does not count as an incentive).

It is likewise inappropriate to bring into question any other form of renewable energy sources as Croatia needs all of them – solar, wind, biomass, bio gas, geothermal. Precisely due to its geographic diversity our country has quite considerable potentials in all mentioned sources. The only appropriate and constructive view is – which power plants are cost effective, who wants and can invest in them and how to provide as many as possible investments in renewable energy sources. Only in this way can Croatia reach the goals established in the Strategy but also initiate investments in renewable sources. As much as 12 billion HRK patiently waited for Croatia to adopt a European standard system of investing in renewable sources. It is high time to finally open the door to these investments. 

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