OIEH: Can the Croatian Parliament Unblock the Development of Renewable Energy in Croatia?

The Renewable Energy Sources of Croatia (OIEH) have sent a request to the Croatian Parliament demanding the urgent adoption of a decision on the amount of the unit fee for connection to the grid, which they claim the Croatian Energy Regulatory Agency (HERA) was supposed to adopt 19 months ago.

As this decision has not been made, the development of renewable energy projects (OIE) has been blocked, making Croatia the only country in the European Union that directly prevents the green transition, according to OIEH.

They emphasize in their statement that despite the enormous potential for the development of OIE, Croatia will ultimately pay penalties for failing to meet European and its own targets, which obligate it to ensure that the share of energy from renewable sources in final gross consumption reaches at least 42.5 percent by 2030.

OIEH wonders whether the Croatian Parliament can unblock the development of renewable energy sources in Croatia, asserting that HERA’s illegal actions have caused a complete blockade of the renewable energy sector.

– As an independent regulatory body, HERA has not made a decision on the amount of the unit fee for connection to the grid for more than a year and a half after the deadline, jeopardizing the fulfillment of Croatia’s and the EU’s strategic goals in the energy transition and preventing an investment of more than two billion euros in OIE projects – the association warns.

HERA is accountable to the Croatian Parliament, and representatives, especially the chairman of the Economic Committee, must oversee HERA’s work and can request the adoption of the disputed decision; therefore, we have also directed our request for resolving this urgent issue to him, OIEH explained, adding that HERA should be required to make a decision no later than June 30 of this year.

They also propose convening a meeting of the Economic Committee to discuss this strategic energy issue.

Entry of new OIE projects into the market is hindered

They explain that the failure to make a decision prevents the entry of new OIE projects into the market, as Croatia still does not have a known price for connection to the electricity grid.

– Without a known connection price, the development of new OIE projects has been halted because without knowing the connection costs, investors cannot plan investments or secure project financing – they note.

Without this decision, projects are being conducted according to the old methodology from 2017, which imposes costs for the construction of key infrastructure on investors, leading to high connection costs and withdrawal from investments.

– In the case of a solar power plant with a connection capacity of 20 MW and a total justified capital expenditure (CAPEX) of around 20 million euros, according to the 2017 methodology, investors were imposed a connection fee of 100 million euros, which directly results in investors withdrawing from investments in Croatia – they cite an example from OIEH.

The new methodology adopted by HERA in 2022 was supposed to exclude investors from financing grid reinforcement, but due to a legal oversight and the absence of a decision, HERA maintains the old methodology in force, OIEH claims.

– The direct consequence of this is that the 3000 MW of interest in OIE projects that we currently have will result in million-euro connection fees, which will cause Croatia to face an outflow of strategic investments worth several billion euros – the statement concludes.