What Solar Panels Used to Be, Now They Are Batteries

It is expensive to operate green, align business with European directives, invest in renewable energy sources, report on sustainability, sort waste, but in the end – it pays off. Initially, investments are large, but the returns are multiple, aided by the application of technological innovations. Companies that operate green, regardless of size, are more competitive, and investors and creditors trust them because they demonstrate responsibility and good governance practices, making it easier for them to access funds for new investments, especially in renewable energy sources.

– Although ESG activities have currently slowed in some parts of the world and are no longer a strict condition for financing, favorable loans and incentives are still available, especially for solar energy investment projects and the construction of infrastructure for electric vehicle charging stations. In the automotive industry, Chinese investments in electrification are strongly shaping the market, driving a trend of decreasing prices. New vehicles will become more affordable than before, often offering rich, almost full equipment even in basic packages. This scenario reminds me of the situation with tariffs on solar equipment, which Europe ultimately abolished because even with protective measures, it could not compete with Chinese efficiency and prices – emphasizes Luka Vetma, director of Forte Solar.

When the Chinese Enter…

According to him, experience shows that where Chinese companies enter the market, their competitiveness leaves almost no room for others.

– The prices of solar panels have fallen by about 90 percent in the last decade, and the same trend is now seen with battery systems and electric vehicles. Progress in the field of renewable energy and electrification cannot be stopped – notes Vetma.

He believes in the mass electrification of the vehicle fleet and the increasingly widespread application of battery storage systems, especially at times when the price of electricity on the exchange is low or even negative.

– In Germany, more than 85 percent of investors installing solar panels also install battery systems. Given the abolition of net metering in Croatia, where HEP’s network has so far functioned as a free battery, we can say that batteries from January 1 become must-have, just like solar panels did before – explains Vetma.

Why Electricity Prices Are Rising

According to HEP’s experience, the application of mechanisms aimed at regulating the price of CO₂ (EU-ETS, CBAM…) for energy companies that have fossil sources in their portfolio or procure that type of energy and fuels, including HEP, increases operational costs.

– This is supported by the historical movement of CO₂ prices, from about ten euros per ton in 2010 to a record 105 euros in the period 2022/2023. The current price is around 80 euros. A favorable circumstance for HEP is that on average about 70 percent of its annual electricity production comes from sources that do not emit CO₂. With the continued realization of our renewable development scenario, this share will increase in the future. However, it should also be noted that the broader application of renewables, especially intermittent sources like solar and wind, also carries financial challenges at the system level, and thus a burden on the final price of electricity – they state from HEP.

Regarding waste management, HEP has been systematically collecting and disposing of waste separately in accordance with legal regulations and good practices for years. Recently, prices for services in this sector have also increased, which affects costs.

– An additional problem for us recently has been the reduction in the capacity of storage and waste processing facilities for various reasons, which again leads to an increase in service prices – they emphasize at HEP.

Complications Due to New Regulations

HEP has a decade of experience in sustainability reporting, which has positively contributed to the company’s status in capital markets. However, they claim that the new legal framework in Croatia, based on the CSRD directive and ESRS, imposes much greater reporting requirements as well as adjustments to the overall business model, which is a long-term and complex process and will require staffing and financial engagement in the initial phase, increasing costs.

– The actual effects on reducing or increasing business costs and on the competitiveness of European companies will only be visible after a longer period of applying the EU taxonomy and the CSRD directive – they assert at HEP.

According to HEP, the green energy transition and the shift to renewable energy sources is a very complex and demanding process in which not all stakeholders have the same role. There are high societal expectations from the HEP group in terms of building its own capacities powered by renewable sources, but on the other hand, also in terms of strengthening the ability to accept new sources from private investors, companies, and citizens. Although technological solutions, especially in the segment of solar energy use, have significantly decreased in price over the last decade, this is not the only factor influencing the dynamics of project development. It is primarily influenced by the processes of spatial planning, issuing energy permits, and assessing the acceptability of interventions for the environment and ecological network, as well as the possibility and cost of connecting to the grid, and resolving property law relations.

These are challenges faced by all companies and investors in the Croatian market, with HEP facing additional demands arising from its position as a state-owned company of strategic importance to Croatia.

– In today’s very complex geopolitical situation, the importance of our strategic commitment to building and strengthening a diverse production portfolio has been confirmed, which, along with network development and the application of new technologies such as battery storage, is a key factor for achieving the energy transition. It is also important that in the European Union, there is an increasing awareness not only of the benefits and opportunities but also of the risks that the implementation of the green energy transition brings, for example, that dependence on fossil fuels outside the European Union is replaced by dependence on other critical raw materials, equipment, and technologies (imports from China), as well as questioning the policies that have led to a decrease in the competitiveness of European companies in the global market – they state from Hrvatska elektroprivreda.

An Inevitable Alternative

The total production of solar power plants of the Solida Group, which has been working for fourteen years to increase the share of energy production from renewable sources, is about 30 million kilowatt-hours (kWh) per year, which is equivalent to ten thousand households. The Solida Group claims that alternatives such as solar power plants are inevitable and transcend particular interests such as financial ones in the energy transformation.

– State institutions dealing with environmental protection and energy should work significantly more on informing the public about the obligations that Croatia has undertaken by becoming a member of the European Union and about the positive long-term results of implementing those obligations. We have seen the impact that major power grid failures have on society and business, and the need for electricity will only grow. Many companies are turning to the use of artificial intelligence without considering how much energy such systems consume, and we are talking about enormous amounts. Therefore, turning to renewable energy sources is inevitable and should be part of smart business planning – they state from the Solida Group.

Avoiding Volatility

According to the response from Renewable Energy Sources of Croatia, long-term business costs decrease when companies apply renewable energy sources, sort and recycle waste, and actively manage greenhouse gas emissions. On the other hand, companies that do not implement such measures face rising costs, regulatory obligations, and loss of competitiveness. The application of renewable energy sources brings long-term savings as volatile fossil fuel prices and increasing CO₂ taxes arising from the European emissions trading system (EU ETS) are avoided.

Companies that have switched to green energy become more resilient to market shocks while simultaneously strengthening their sustainable reputation. Additional cost pressure for unsustainable companies comes from CBAM (Carbon Border Adjustment Mechanism), a new European mechanism that introduces customs adjustments for products from countries with lower environmental standards. Companies that do not follow the green transition thus lose price competitiveness in the European market.

– Although the introduction of ESG reporting requires initial investments in data collection and processing, such transparency increases the company’s value in the long run. Investors and financial institutions are increasingly seeking those entities that can demonstrate emission reductions, social responsibility, and good governance practices. Such companies find it easier to access capital and favorable credit conditions – they state from OIEH.

According to OIEH, companies that were among the first to invest in solar and wind power plants today reap the benefits of early transition, have stable revenues, long-term power purchase agreements (PPAs), and investor trust. On the other hand, administrative barriers, slow permit issuance, and unstable regulatory frameworks limit faster market growth. Despite this, the renewable energy sector has shown resilience and adaptability. Croatia has recorded accelerated growth in installed capacities in recent years, especially in solar power plants, and new technologies such as battery storage and virtual power plants have begun to change the way we think about energy.