Panel discussion marking World Renewable Energy Days

Croatia is increasingly investing in renewable energy sources and electric mobility and the World Renewable Energy Day seemed as an appropriate occasion  for yesterday’s  panel discussion in which experts from the following fields participated: Ivo Milatić, State Secretary in the Ministry of the Economy and Sustainable Development, Maja Jurišić, Head of the Island Movement Project, Ugo Toić, Head of the Island Development Agency OTRA, Hrvoje Prpić, chairman of the  electric mobility association Strujni krug (Electric Circuit)

At the panel, held in the organization of the Renewable Energy Sources of Croatia (RESC) and moderated by its director, Maja Pokrovac, discussions were held on the Renewable Energy Sources Law, Electric Energy Market Law, energy transition on the islands, energy cooperatives and their participation in RES projects, decarbonisation of transport and electric mobility.

The following is a detailed overview of the panel discussion

Energy transition of the islands

The European Commission, together with 14 EU member states, signed a Memorandum of Understanding for the implementation of the Declaration on Clean Energy of EU islands (Memorandum of Split), drawn up by the Republic of Croatia during its chairmanship of the EU Council. The plan was to have the relevant ministries participating in the “Memorandum of Split” establish working groups with all the stakeholders. However, it is questionable whether and when can the interested working organizations active on the islands expect their establishment and be invited to partake in the activities of these groups.

“The main initiative in the process should be taken by the Ministry of Regional Development and EU Funds because the islands, as well as the Law on Islands, are under its competence. In the next to the last amendments to the Law, the Ministry introduced the appointment of island coordinators and it would be logical that these coordinators initiate this process and then us from the other ministries to join it. However, this does not mean that we cannot work outside of that group. All that is needed and is advantageous for the energy transition of islands will take place regardless of the working group and the Ministry will engage in the process”, State Secretary Milatić underlined.

Jurišić followed up by emphasizing that the Secretariat for Islands in the European Commission supported 20 European islands, of which five island communities are in Croatia – Hvar, Brač, Korčula, the Cres-Lošinj archipelago and which have developed in this two-year process strategies of transiting to clean energy as well as action plans through which they will fulfill the goals of transiting to clean energy. “It’s beneficial that the Secretariat for Islands will proceed with its work after the first two years of its activities, and at the beginning of this year, the Island Movement became a regional partner of the Secretariat for Islands with a view to continuing for the next two years and encouraging another island to join us in the development of a strategy or in initiating the first projects geared at transiting to clean energy.  The entire process included all the stakeholders in the island area but also in areas at the regional and national levels, and what is most important – brought citizens in the focus of energy transition, namely, emphasized the fact that all stakeholders, including entrepreneurs and units of local self-government and representatives of academic institutions, but particular civic initiatives should be included as equal participants in the energy transition”, Jurišić reiterated.

She emphasized the significant problem of the islands the numbers we base all our strategies and programming of funds on. Namely, the actual number of inhabitants is much larger than the real number just as the number of tourists is much smaller than the real number. “In this way, we have a paradox of the system in which we don’t know who the users are, namely, potential households as users of the electric energy grid. When we ourselves embarked on a particular form of mapping potential RES projects on the islands we encountered another absurdity – we became aware that enterprises and trades registered on the islands actually did not exist there, namely, that they were registered there for some other reasons – lower taxes or land purchases. Due to the great difference between the official and real numerical status, the official numbers are not an appropriate starting position for defining the state and status on islands. We embarked on the mapping alone, on a voluntary basis, and are currently expecting a financial incentive of the institutions in order to develop a more precise mapping of projects, namely, population. It is very important that we established the number of households that are ready to become both producers and consumers of their own electric power”. Jurišić added.

The second segment applies to entrepreneurs, hotels tourist capacities. Everything that we have been dreaming of for years is happening. The energy transition, green sustainable development are happening, all political instruments and financial means are moving in that direction, but we are currently in a situation in which we cannot define where to begin, namely, what is ready for RES projects. We know which problems are linked to property legal relations as well as of problems relating to the financial assets of islanders for further development. There will be financial incentives but the question is for whom and in which way. For that reason, it is of crucial importance to initiate detailed mapping as soon as possible. Accordingly, as a start, the most important projects are those that already have property-legal issues resolved and possess the know-how on project development. They could serve as examples of how things are done to all the others”, the Island Movement president underscored.

She pointed out that it was of key importance not to leave the strategies lying in office drawers. Cres and Lošinj have shown through their examples that the two key segments for action plans and the initiation of projects are the political will and the trust of the local community in the individual in charge of the development of projects. Korčula is currently on the trail of the Cres example. “In the forthcoming year, they will develop joint projects and initiate a crowd-investing platform for RES investments in Korčula, Cres, and Lošinj. As far as Hvar and Brač are concerned, we are still waiting for the strengthening of local initiatives. Our next steps are to initiate, through the Secretariat, additional energy transitions on our islands as well as to initiate networking. It is important to be aware that the islands will not be able to develop large European projects on their own but will network with other islands in order to attract investors and thereby develop more concrete projects”, the president of the Island Movement underlined.

Energy cooperatives and their participation in RES projects

Toić, speaking of the Cres-Lošinj archipelago, pointed out it joined the initiative of the Secretariat for clean energy of European islands in 2019 and it was a turning point for the Cres-Lošinj islands because until that time we did not systematically deal with the energy transition topic. “We prepared a program of energy transition and fortunately the local self-government units recognized the value of the document. It did not end in an office drawer and in the Island Development Agency we employed a transition manager, and one of the main projects we are implementing currently is the establishment of an energy cooperative. We became aware that the energy transition of the islands, with a vision of reaching carbon neutrality, will take place only if every entity on the island goes through its own transition and that is why we wanted to include all sectors in that energy community. We are establishing the cooperative on Friday in which we succeeded in including all sectors – it will include members of the local self-government unit of the city of Cres, the city of Mali Lošinj, a sizable number of institutions, and a large number of citizens as well as holiday house owners. The idea behind establishing the cooperative is for it to become a catalyst, a point where most of the energy projects will be implemented in the area of our islands”, the head of OTPA reiterated.

In the zoning planning documentation of the Cres-Lošinj area, there are five non-integrated solar plants that will be built in the next 2-3 years. One is already under construction. “We in the energy cooperative would build a small plant of 500kW capacity on a smaller plot. However, until we change the zoning plan we are not in a position to build a number of solar plants but are left only with rooftops. However, we are faced with a specific situation. Forty percent of the roofs are on holiday homes, a large number of roofs are in protected urban and rural areas so we are left with a very small of rooftops for integrated plants if we do not find some business models according to which those who cannot place solar panels on their roofs can come to an agreement with those who can. We are faced with a great challenge of finding business models of investing and exchanging that energy. The Directive on which this Electric Energy Law leans on defines an energy community through four items, and we have 26 items in this article of the Law. I propose that we define an energy community in our law according to a basic framework and transfer all the technical details in a rulebook which will be easier to define”, Toić pointed out.

De-carbonization of transport and electric mobility

Prpić considers that islands are ideal for electric vehicles considering that the distances are small and perhaps only 30km is driven per day.  On the islands, EVs’ can be charged in one’s own yard in front of the house by plugging it in an ordinary power socket. It is not necessary to buy the latest EV model, it is sufficient to buy a second-hand car which is ideal for islands. “The frequent question posed is whether there will be enough electric energy for e-vehicles when all vehicles transfer to electricity. Even professionals frequently do not understand that there is no problem. Even when all vehicles transfer to electricity, the overall consumption of electric energy will be only 15 percent greater than it is today. Currently, Croatia consumes approximately 22 terra watt hours annually. If all vehicles switched to electric power the overall need for electricity for them would be 3 TWh annually. Croatia imports oil for about eight billion HRK net per year. The overall consumption of electricity for switching of all vehicles to electricity would be about two billion HRK. This means that Croatia would save six billion, which is actually quite a considerable amount”, Prpić pointed out. The generation of electric power and road transport makes up about 90 percent of CO2 emissions. It is very simple to find a solution to this problem and that is what RESC and Strujni Krug are working on. Considering the set goals of 55 percent less CO2 emissions by 2030, we as a state and as citizens will have to move toward having 50 percent of e-vehicles by the year 2030. Perhaps we will not be able to achieve that goal but in that case, we will probably have to pay penalties which will be quite expensive. However, according to the National Plan of Recovery most of the financial funds are intended for railways skipping electric mobility.

The RESC director followed up by emphasizing that RESC and Strujni Krug have submitted together with the Electro-mobility Strategy to five relevant ministries and offered a number of measures and projects in that document in order to reduce CO2 in road transportation.

“As a start, we envisaged about 50 million HRK from the National Plan for electric mobility and we will channel these funds to the utmost to charging stations on highways and state roads in order to meet the 2022 tourist season 2022 somewhat ready and have the roads in 2023  covered to a much greater degree with charging stations because an increasing number of tourists will be arriving at our country in e-vehicles”,  Milatić said.

Biogas and agriculture

The Croatian Association of biogas producers joined RESC and proposed the establishment of an inter-sector coordination body in order to connect energy and agriculture. Milatić emphasized that their wish is to include biogas in the incentives system because it is clear that nothing can be done without them. “We will continue with competitions for biogas, although we are clear that if we use financial assets for it, biogas must also solve some agricultural and climate problems. Through mutual interactions we will be in the position to reach favorable solutions”, the state secretary emphasized.

RES premium competition

Linked to the large premium competition, he pointed out that they plan, if all goes well,  to have the premium competition be announced in the second half of the year, in the autumn. In parallel, they are also preparing a small premium competition. Regarding quotas for geothermal energy, the current state in the field is such that there are no more projects and therefore no need for higher quotas. “However, in the future, we will certainly, depending on how the liquidity of HROTE will roll out and how we will lay it all out, move in the direction of increasing quotas. It is clear that no geothermal project can be implemented without a premium since CAPEX which is moving toward more than 40 million HRK per MW cannot withstand it without a premium model”, Milatić underlined.

Law on Renewable Energy Sources and Law on the Electric Power Market Linked to the Law on the Electric Power Market and laws on RES and VUK, which have the opportunity to address and solve numerous issues in the energy sector the question arises of how to reconcile the disproportion of expectations to develop RES project in the period of approximately five years when environmental protection requires a period of 3-5 years for elaborating environmental impact studies. In addition, the time required for the development, financing, and construction should also be taken into mind. “If we established that the precondition for energy approval has been fulfilled and the zoning plan of the county or municipality in which the potential thermal energy facility will be located is valid, five years is sufficient for acquiring a building permit. It is far from appropriate and goals will not be reached if we continue to stretch it out to six or seven years. With a five-year term, we will stimulate the initiation of the investment drive to those areas where these projects can actually be implemented. Familiar with the functioning of the nature protection department, prior to announcing the competition or prior to the issuance of an energy approval we will seek from that body information what can or cannot be developed in each of the areas from the zoning plan. Because if habitats exist there we will act in accordance with the issued energy approval. I believe that insisting on five years will result in more seriously elaborated zoning plans”, Milatić pointed out.