Croatia is not swayed by European recommendations

Global players, energy giants, are currently fearing a new European directive being prepared by the European Commission aimed at reducing consumption and energy loss in the heating sector, particularly in households and business premises.

The Commission plans to develop recommendations for heating and cooling, with the intention of renewing EU legislation and drafting new directives as necessary, with a new strategy expected to be published in February. The first documents reviewed by Reuters indicate that options for heating and cooling using renewable energy sources and district heating systems that deliver hot water to households through underground pipelines will be favored. European studies have shown that in less populated areas, where heating is supplied via air or underground pipes, the greatest energy savings for individual households are achieved.

A textbook example of fairy tales

To implement this strategy, EU member states will provide tax incentives to renewable energy producers in public procurement and public investments to stimulate market development, which could further jeopardize the position of global players like EDF, E.ON, and Enel, who are already struggling with the trends of transitioning to renewable energy sources. This would reduce energy demand and consequently their sales. The choice between gas and electricity, better insulation, and more efficient generators, collective and individual heating will significantly impact the current business models of European energy companies.
According to current data from the EC, heating and to a lesser extent cooling consume 40 percent of energy in the EU, and are only indirectly covered by existing EU energy policies. Renewable energy already accounts for 26 percent of total energy production in the EU, however, only 16 percent relates to heating and cooling.

Mario Popović, director of Eko-puls, a company engaged in the trade of heat pumps, states that Croatia is a modest market for the distribution of products that use renewable energy sources, but it is potentially interesting as it is a ‘textbook example’ where energy and commercial effects can be quickly seen when this technology is applied in practice. Regarding any possibilities that Croatian producers might profit from the new EU directive, Popović dismisses this, explaining that there are no indigenous producers of heat pumps in Croatia, except for a few smaller companies that produce them in small quantities at home.

– All other companies import and assemble components that come from the Middle East and China because they are the cheapest on the world market, and in terms of quality, they no longer lag behind those produced in the EU – says Popović, concluding that energy efficiency in Croatia is still a fairy tale ‘that flies out of the first bend when it encounters the first obstacle called the standard of living’.

HEP states that, given that the new Strategy for the EU heating sector is in the drafting phase, they cannot comment on its provisions in advance; however, they support measures that encourage the rationalization of thermal energy consumption and energy efficiency, which is also the focus of their business and development plans for the future.

– The fundamental goals of HEP-Toplinarstva are to reduce losses in the distribution network, increase the energy efficiency of production facilities, and increase the share of renewable energy sources. Our task is to minimize thermal energy losses as much as possible, so every year, in accordance with financial capabilities, we revitalize part of the thermal network outside the heating season. This year, we revitalized approximately 6.8 km of the existing distribution thermal network and built about 3.2 km of new network, and over the last 10 years, more than 30 km of thermal network has been revitalized. To expedite the process of renewing the thermal network, we plan to apply for funding from EU funds for revitalization projects – they say at HEP.

Potential for savings

The Reuters article also states that one of the main goals of the new strategy is to reduce losses in thermal systems, but Croatia has its specifics, which were outlined by Krešimir Štih, head of the Energy and Environmental Protection Sector at HGK:

– Regarding this issue, there are specifics in Croatia, such as the billing of actually consumed thermal energy, significant difficulties in the technological execution of heating, which is why in older buildings more than 50 percent of energy goes to losses, so it could be concluded that the potential for savings primarily exists by addressing these technical and technological issues, better thermal insulation. No matter how efficient energy preparation facilities are, without energy-efficient solutions at the point of consumption, the acceptability of using district heating cannot be resolved – concludes Štih.

It is difficult to predict what the new EU directive will encompass, and even harder to determine how these changes will affect the Croatian market, but Croatia will certainly not be an exception in the application of new rules. Croatian producers of renewable energy sources, not only pumps but also pellets, have their chance that will materialize in accordance with the standard of living, but also Croatian legislation.

– Croatian pellet producers, of which there are 12, produce between 250 and 300 thousand tons of pellets per year, which satisfies one percent of global consumption. Given the size of our country, these are satisfactory quantities – says Raoul Cvečić Bole, director of Energy Pellets and president of the Association of Biomass Pellet Producers and Related Technologies.

Locally for locals

Croatian pellet producers are net exporters, exporting about 90 percent of the final product to global markets. Thus, the ecological effects of pellets as a renewable energy source are achieved by their customers abroad, not by Croatians.

– This situation should be reversed and legislation for solid biofuels should be created so that all pellets remain ‘at home’. As an association, we have been advocating for this for over five years. A large part of public institutions in Croatia still heats with fossil fuels that we import, and almost 50 percent of Croatia’s area is covered by forests. We must persist in the strategy that local raw materials remain in the local market and that the final product is for local use. This way, we will more easily meet EU directives for greenhouse gases and other ecological elements – concludes Cvečić Bole.

All EU directives and legislation favor renewable energy sources as the EU is a global leader in this sector. In the heating sector, more favorable conditions are expected than before, as it has not had the same treatment as, for example, electricity production, even though it is much more prevalent. The problem is that a large part of EU legislation is not binding but rather advisory, which means that much depends on national legislation. Adapting to European rules is inevitable. The only question is how many issues that are current in Europe will also be relevant to Croatian politics, which is currently ‘focused’ on quite different topics.

WORD OF NUMBERS
Reasons for changing business sentiment

• 40 percent of total energy in the EU is consumed for heating and cooling
• 26 percent of energy in the EU is produced from renewable energy sources
• 16 percent relates to heating and cooling
• 50 percent of energy loss in Croatia is caused by poor thermal insulation
• 12 pellet producers in Croatia export 90 percent of final products abroad
• 50 percent of Croatia is covered by forests, and most institutions still heat with imported fossil fuels