The EC approved the Croatian subsidy program for renewable energy sources

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In line with the EU regulations on state subsidies, the European Commission approved the Croatian subsidy programme for the production of electric power from renewable energy sources in the amount of 783 million EUR. The measure will help Croatia to attain its goals related to energy from renewable sources, including the goals in its Recovery and Resistance Plan as well as contribute to the European goal of reaching climate neutrality by the year 2040 without the unjustified disruption of market competition on the unified market, as reported by the European Commission.

“This program worth 783 million EUR will enable Croatia to subsidize the production of electric power from renewable sources with the application of numerous technologies. This measure will contribute to the reduction of CO2 emissions and other greenhouse gases in line with the EU Green Plan objectives and goals for environmental protection from the Croatian Recovery and Resilience Plan without the unjustified disruption of market competition on the unified market”, Margrethe Vestager, the executive vice-chairman responsible for the market competition policy, pointed out.

Croatia informed the Commission of its intention of introducing a new electric power subsidy programme from renewable sources, namely, wind farms, solar plants, hydroelectric power plants, biomass plants as well as biogas and geothermal power plants. Within the programme, subsidies will be provided in the form of premiums above the electric power market price. The premium will be determined according to application procedures and won’t be higher than the spread between the average costs of production for each energy production technology from renewable sources and the price on the electric power market. The users will be selected in biddings to be announced in the 2021-2023 period. The measure will be open till 2023 and the subsidies paid to selected users for a period of 12 years.

The programme will help Croatia to increase its share of electric power produced from renewable sources and reduce emissions of CO2 and other greenhouse gases. It will support Croatia’s dedication to attaining European climate and environmental goals, as also noted in its National Energy Climate Plan (NECP) and Recovery and Resilience Plan – the EC reported.

The Commission assessed that the programme was in line with EU regulations on state subsidies, and particularly with the 2014 Guidelines on state subsidies for environmental protection and energy. It established that the subsidy was required for the further development of energy production from renewable sources and for assisting Croatia in the implementation of European and national goals related to environmental protection. The subsidy also has a stimulating effect since the electric power costs do not fully cover the costs of electric power production from renewable sources, meaning that without the subsidies there would be no investments on the part of the selected users.

In addition, The Commission assessed that the subsidy was proportionate and limited to the required minimum as the subsidy levels will be determined on the basis of an application and cannot exceed the spread between the market price of electricity and production costs. The Commission also established that the positive effects of the measures, particularly the effects on the environment will supersede the possible negative effects in the sense of disrupting market competition.