The Fiasco of Renewable Energy Development: Only Four Energy Approvals in 10 Months

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In ten months, only four renewable energy projects have received energy approval, a key document for the development of RES projects under the new Electricity Market Act. In January of this year, according to Article 133 of the mentioned Act, 216 projects expressed interest in energy approval, but due to the sluggishness of the Ministry of Economy, only 21 tenders have been announced so far.

The data on completed tenders is even more disappointing – at the time of writing this text, only six have been completed. To make matters worse, two out of six investors did not pay the mandatory fee of 50 kuna per kW of project power within the prescribed time, so in more than a year since the adoption of the new Act, only four projects, with a total capacity of 32 MW of solar power plants in Međimurje County and one battery storage in Šibenik County, have received the ‘green’ light for further development.

At the same time, investors in 15,000 MW projects have been idly waiting for a year, twiddling their thumbs, for the officials of the Ministry of Economy to do their job. Or perhaps to express it in a language that is more understandable to everyone – 15 billion euros in investments are on hold. 

Along with the incredible slowness in announcing tenders, which are more or less a formality as they are announced under the transitional provisions of the Act, the Ministry of Economy has not been any more diligent in adopting subordinate legislation. The regulation that was supposed to be adopted 10 months ago, which would define the conditions for tenders for projects that could not apply under the transitional provisions of the Act, has yet to see the light of day. As late as the end of last year, the Ministry communicated that the Regulation was in a high stage of readiness, but even after a year, it has not appeared in e-consultation.

 

Before the adoption of the mentioned Act, State Secretary Ivo Milatić repeatedly emphasized that the goal of the new legislative framework was to accelerate procedures and remove unserious investors from the game, but a year later it is more than clear that this goal has not been achieved. At numerous conferences, he has criticized other market participants, accusing them of not doing their jobs, but today the ‘bottleneck’ has become the Ministry of Economy itself. And HERA, which has not yet adopted the price list for connecting projects to the electricity grid. How can one invest in a project for which they do not even know the costs in advance?

 

Procedures have been further slowed down by the adoption of the Act that was supposed to speed them up, so comparing their speed to that of a snail would be insulting to that animal. Unscrupulous investors (and there are some) have also not been removed from the game. The payment of energy approval at the beginning of development was supposed to be an eliminatory step for ‘charlatans’, but for unknown reasons, the Ministry of Economy decided in January to interpret a fairly clear sentence from Article 133 in such a way that the payment of 50 kuna per kW is not required when submitting documentation and expressing interest for energy approval.

 

The result of this is evident today: in the first ten tenders, four investors withdrew from applying for the tenders for which they themselves expressed interest, and two did not pay the required amount after being granted energy approval. Had the Ministry adhered to the letter of the law, it could have collected 300 million kuna from investors in 6 GW projects for the energy approval fee as early as January. Or less, if some investors had withdrawn, but then at least serious investors would have been separated from the unserious ones.

 

The Ministry is equally diligent in responding to journalistic inquiries. Our questions about the reasons for the slow issuance of energy approvals and the logic guiding the Ministry in selecting the lucky ones who have been honored with a tender to ultimately invest money in a project remain unanswered. By what criteria does the Ministry decide who will be announced for the tender? Were the projects for which the tender was announced randomly selected?

 

Indeed, even for this few tenders that have been announced, it is evident that they were not in the order of expressing requests nor by which of them could be completed earlier. Not by the size of the project, nor by the announced county model. Along with the state-owned HEP, which received a construction permit and built its project even before the energy approval, which is contrary to the provisions of the Act, a tender was announced, for example, for the Municipality of Sućuraj on Hvar, from where the State Secretary originates, for several scattered projects in Međimurje, Šibenik, and Split-Dalmatia counties, as well as some projects that are very far from realization. Many other projects ready for completion are still waiting.

 

 

In times of energy crisis, when the whole world is turning to renewable energy sources to reduce dependence on gas, it would be logical to expect that investors would be allowed to invest in projects that could contribute to the energy independence of the country. Instead of producing electricity from renewable sources, we are focusing on importing fossil fuels and expanding LNG, so it is hard not to ask whose interest that serves.

 

And just to remind, when Lider wrote in early June that the new Electricity Market Act had caused chaos and further slowed the development of new RES projects, State Secretary Milatić criticized Lider and the market participants, emphasizing that the state is trying to organize the entire ‘chaos’.

 

– We do not want to import expensive electricity only to be mocked. After all, we are not a government for just one term; what we are doing will not be inherited by just this government. We have energy goals for multiple generations – he said at the time, but given the speed at which the Ministry of Economy resolves energy approvals and introduces order into the ‘chaos’ in the renewable energy market, we will indeed achieve energy goals and independence in this segment during some other generations.

For now, we can only hope that the new Minister of Economy, after assembling a team and getting acquainted with the sector, will manage to bring order to this market and accelerate the procedures for the development of renewable energy sources.