Croatia appears to be the only country in the European Union that is directly hindering the green transition, and despite its enormous potential for the development of renewable energy sources, it will ultimately face penalties for failing to meet both European and its own goals.
All because of one decision.
Through numerous official letters and media appearances, Renewable Energy Sources Croatia (OIEH) has continuously pointed out that the Croatian Energy Regulatory Agency (HERA), through its unlawful actions, has caused a complete blockade of the renewable energy sector in Croatia. As an independent regulatory body, HERA has failed, for over a year and a half past the deadline, to issue a Decision on the amount of the unit fee for connecting to the grid, jeopardizing the achievement of Croatia’s and the EU’s strategic energy transition goals and preventing over 2 billion euros of investment in renewable energy projects.
HERA is accountable to the Croatian Parliament, and MPs, especially the Chairman of the Economic Committee, must oversee HERA’s work and can request the issuance of this disputed Decision. Therefore, we have submitted a request to address this urgent issue to them as well. The development of renewable energy sources is crucial for Croatia’s progress, for improving the standard of living of its citizens, and for enhancing the country’s competitiveness.
We once again call on all relevant institutions, primarily the Croatian Parliament, to urgently demand that HERA issue the Decision, no later than June 30, 2024, and to convene a session of the Economic Committee without delay to discuss this strategic energy issue.
Why is this decision so important?
Croatia must increase its share of energy from renewable sources to meet the targets of the European Parliament and Council Directive (RED III) and the Integrated National Energy and Climate Plan (NECP), which oblige us to ensure that by 2030, at least 42.5% of final gross energy consumption comes from renewable sources. Croatia will not reach this target unless HERA promptly issues the Decision on the unit fee for connection.
How does this decision impact the “renewables” sector?
It prevents new RES projects from entering the market.
To recap, HERA was required to issue the Decision on the amount of the unit fee no later than December 15, 2022. However, nineteen months later, Croatia still does not have a known connection fee to the electricity grid. Without knowing the connection fee, the development of new RES projects is halted because, without knowing the connection costs, investors cannot plan investments or secure project financing.
It directly influences the abandonment of investments and the failure to meet targets.
HERA is required to issue the Decision on the amount of the unit fee each year, and the Methodology that prescribes the formulas for determining the amount was adopted in 2022. However, this Methodology has not come into effect because its application depends on the issuance of this Decision. What is the problem? Without this Decision, projects are guided by the old 2017 Methodology, which imposed the costs of building key infrastructure on investors, leading to high connection costs and the abandonment of investments. For example, in the case of a solar power plant with a connection capacity of 20 MW and a total justified capital cost (CAPEX) of approximately 20 million euros, under the 2017 Methodology, investors were imposed with a connection fee of 100 million euros, which directly led to investors abandoning already initiated investments in Croatia. The new Methodology adopted by HERA in 2022 should exclude investors from financing network reinforcements, but due to legal oversight and the absence of the Decision, HERA is keeping the old Methodology in effect. The direct consequence is that the 3,000 MW of interest in RES projects that we currently have will result in millions in connection fees, leading to the loss of strategic investments worth billions of euros in Croatia and thus failing to meet both national and EU targets, resulting in inevitable penalties.
Therefore, we call on the Croatian Parliament to urgently task HERA with issuing the Decision on the amount of the unit fee to prevent further blocking of RES development and to ensure Croatia’s energy self-sufficiency.
