Croatia (2012)

Degree of reliance on imported energy:

Croatia is highly dependent on energy imports, and during recent years imports have continuously shown an upward trend. In 2005, total energy imports increased by 2.9% with respect to 2004. 
Imports of electrical energy, petroleum products and natural gas rose, while the imports of coal, coke and crude oil fell. Electricity imports saw the greatest increase of 65%, while petroleum products and natural gas rose less than 10%. During the six year period (1999-2005) the total energy import in Croatia grew at an average annual rate of 5.6%, with a high average increase rate of 36% in petroleum products. Electricity imports also grew rapidly at an average annual rate of 14.8 percent. 
 
In 2008, the import/export balance by energy source was as follows (all units ktoe, source: IEA): 
Crude Oil: 3758.0 / 0.0 
Oil Products: 1816.0 / 1772.0 
Natural Gas: 986.0 / 559.0 
Coal and Peat: 796.0 / 0.0 
Electricity: 702.0 / 136.0 
Combustible Renewables and Waste: 3.0 / 81.0

Main sources of Energy:

Total installed electricity capacity (2010, source: HEP Proizvodnja): 3,654 MW 
- Hydroelectric: 58% 
- Thermal (including cogeneration: 42% 
 
In addition, 50% of the capacity of the Slovenian Krsko nuclear power plant is available to Croatia as joint partners in the project, totalling 338 MW. 210 MW is also available from the privately-owned Plomin 2 thermal power plant. 
 
Share of Total Primary Energy Supply* (2009, IEA): 8702ktoe
<ul>
<li>
Oil: 52%</li>
<li>
Natural Gas: 29.3%</li>
<li>
Hydro: 7.0%</li>
<li>
Biofuels and Waste: 4.4%</li>
<li>
Geothermal/ solar/ wind: 0.2%</li>
<li>
Coal/ peat: 6.2%</li>
</ul>

 
*Share of TPES excludes electricity trade 
 
The electricity production by fuel source type was in 2009 as follows (source: Enerdata): 
Hydroelectric: 54.7% 
Coal: 17.1% 
Natural Gas: 13.05 
Oil and Products: 13.1% 
Wind: 0.29% 
Biomass: 0.07% 
 
The total primary energy supply in Croatia was 409.08 PJ in 2006.  RES other than fuel-wood and hydropower represented 0.06% of the total supply. 
 
Total electricity generation in 2010 was 13,272 GWh, 74% of the total domestic demand.

Country:

Croatia

Extent of the network:

National electrification rate (2000):  99% 
 
Although the Republic of Croatia is almost completely electrified, there are still regions which do not have access to the electricity network or where the network capacity is insufficient. For the most part such areas are under special care of the state (i.e. underdeveloped, devastated by war, depopulated), on islands or in mountainous regions. 
 
Electricity in the country is transmitted and distributed on a network of 400 kV, 220 kV and 110 kV lines, connected via 5 400 kV substations, 6 220 kV substations, and 114 110 kV substations. The grid is also connected to the Slovenian and Bosnian networks, as well as being part of the UCTE synchronous grid system.

Capacity concerns:

There is an increasing dependency on electricity import in Croatia as the result of growing consumption and lack of new investment in power generation capacities. In recent years Croatia has imported more than 20% of its electricity consumption. 
 
A 4.1% increase in electricity imports compared to the previous year was observed in 2004. The losses in transmission and distribution of energy consumption increased in the total primary energy supply for 2004. Coal consumption also increased dramatically in this period, by 107.8%. Electricity imports fell by approximately 18% in 2010 compared to 2009, with a net electricity import to the country of 26.1%. 
 
Whilst increases in GDP were observed corollary to the increase in energy demand, the energy intensity of Croatia is 24% higher than the EU average, meaning the continued rise in GDP is not sustainable.

Potential for Renewable Energy:

Hydropower 
Renewable energy sources cover a large share of electricity generation in Croatia, driven by the significant number of hydroelectric power plants in the country.  Total hydropower installed capacity was 2,058 MW in 2006, dominated by large HPPs, with hydropower generation accounting for 6,070 GWh in 2006. Total installed capacity for small-hydro power in 2004 was 26.7 MW, with new large hydroelectric plants also being planned for the country. 
 
Wind power 
The Croatian wind sector has seen a large expansion in recent years, reaching 17.2 MW of total installed capacity in 2006, coupled with a generation level of 20 GWh. 
 
There is a relatively high potential for wind power in Croatia, with peak wind speeds of 7.3 m/s measured at 25m.  Currently research is being carried out on the potential construction of wind farms of a total installed capacity of about 1,500 MW, however in order to maintain the secure operation of the electricity system it is very probable that only some of these projects will be realized. 
 
Biomass energy 
Croatia has significant potential for biomass, with a potential electricity production of 9.39 TWh per annum.  Forests cover more than 40 % of Croatian territory, which means that the total potential for biomass use is significant, estimated at 39 PJ. Within the national energy program BIOEN, it has been demonstrated that by 2030 at least 15% of the total energy consumed could be obtained from biomass, used for both the production of heat and electricity. In May 2006, the first biodiesel production plant in Croatia (Modibit, located near the city of Ozalj) started its operation. The plant's capacity amounts to 20,000 tonnes per year. 
 
Solar energy 
Solar power is expected to contribute mainly in thermal energy production; primarily in low temperature appliances. Passive solar architecture will reduce the need for thermal energy in buildings. Most of the installed solar capacity of Croatia (some 12,000-15,000m3) is off grid, with the 3 grid-connected systems in the north of the country contributing 48.8kW. A database of solar radiation in the country was published by the Hrjove Pozar Energy Institute, in conjunction with the University of Split, in 2006. According to this survey, the total solar energy potential of Croatia is 100PJ. 
 
Geothermal energy 
Croatia has some geothermal reservoirs in the north of the country, many of which have high value temperature gradients. According to studies conducted under the National Energy Program GEOEN, the total energy potential is 839 MWt, with the potential for power generation from geothermal sources being 48MW.

Potential for Energy Efficiency:

There are overall saving potentials in industrial and residential sectors. Energy efficiency measures include the use of low-energy bulbs and refrigerators in households. The First National Communication from the United Nations Framework Convention on Climate Change expects these measures to save up to 600GWh by 2030. Increases in efficiency can also be made in industrial electric motors (up to 7.5%, or a saving of 254 GWh in 2010) as well as increased uptake of low-temperature heat generation, and implementing demand-side management techniques in non-heat electricity use. Transport is another sector with the potential to improve energy efficiency, contributing 28% to final energy consumption in 2008. LPG as an alternative fuel source to petrol/diesel for road transport has seen some uptake in the country, with 3.3% of the nation’s vehicle fleet powered by LPG in 2007, an estimated 50,000 vehicles.

Ownership:

Electricity: 
The Electricity Market Act prescribes dynamics of electricity market liberalization. There are two groups of customers in Croatia: eligible and tariff customers. Since July 2008, all customers are deemed eligible customers and can choose a supplier on a free market and negotiate the electricity price. The Electricity Market Act also introduces the concept of a privileged producer, a status that can be obtained by a producer which simultaneously produces electricity and heat in an individual generation facility or utilises waste or renewable energy sources in an economical way while taking into account measures of environmental protection. 
 
However, the Croatian energy sector is characterized by being owned in its majority by the state, except for natural gas distribution and retail sale of petroleum products, which, together with the distribution of LPGT, are partially in private hands. 
 
In accordance with the energy legislation, Hrvatska Elektroprivreda d.d. (HEP) was transformed in 2002 into the HEP Group, a system of affiliated companies performing core electric activities and auxiliary activities. The HEP Group is a holding consisting of the parent company (HEP) and its subsidiary companies over which HEP exercises prevailing control: HEP Production, HEP Transmission, HEP Distribution, HEP Supply, HEP Gas, HEP District Heating, Sisak District Heating. The privatization of HEP will be performed in accordance with the HEP Privatization Act. 
 
T.E. Plomin d.o.o. is a joint venture between RWE Power AG and HEP, and is a privately-owned and financed company, responsible for generation electricity at the Plomin 1 & 2 thermal power plants. 
 
Oil & Gas 
The INA Group is the state-owned holding company that controls Croatia's oil and gas exploration, production, transportation, trading, refining, and retailing. INA d.d. is the sole company producing and importing gas (and oil) in Croatia. INA owns 38% of the oil pipeline systems. INA was partially privatized in 2003 when Hungarian oil company MOL bought 25% plus one share which offered the best tender within the shortlisted candidates.

Structure / extent of competition:

The competition in power generation was introduced by the Law on Electricity Market (Official Gazette No. 68/01, 177/04). The Electricity Market Act defines the role of the distributions system operator, the transmission system operator, the market operator and the provider. The energy activities are performed as market activities (generation of electricity for privileged buyers, supply of electricity to privileged buyers, and marketing, intermediation and representation on the electricity market) and as regulated activities which are performed as public services (generation of electricity for tariff buyers, transmission of electricity, distribution of electricity, management of the electricity market, and supply of electricity for tariff buyers). 
 
Currently, three companies have been granted permits to generate electricity: HEP Proizvodnja (member of the HEP Group), TE Plomin d.o.o (member of the HEP Group), and INA Industrija nafte dd.  However, the HEP Group still has a factual monopoly in transmission, distribution and sale of electricity, as only members of the HEP Group have been granted permits for the performance of activities of transmission of electricity, distribution of electricity, managing of electro-energetic systems, and organisation of electricity market.

Existence of an energy framework and programmes to promote sustainable energy:

The Energy Strategy of Croatia was adopted by the Croatian Parliament on March 2002, for a period of 10 years. The principal objectives of the energy policy of the Republic of Croatia are stated in the Energy Sector Development Strategy (Official Gazette 38/2002 – summary). Some of the main objectives of the Energy Strategy are:
<ul>
<li>
Improvement of energy efficiency from the production, transformation, transmission and transport to distribution and consumption of energy;</li>
<li>
Utilization of renewable sources of energy which will be in accordance with sources, technological development and economic policy as a whole;</li>
<li>
Environmental protection, which in the energy sector implies the primary action in connection with energy efficiency, renewable sources, choice of energy-generating products and application of state-of-the-art protection technologies, quality legislation and supervision, the public opinion and education and promotion of best practices.</li>
</ul>

 
Support to RES 
In accordance with EU Directive on the promotion of the electricity produced from renewable energy source 2001/77/EC Croatia was obliged to set its share of RES in total energy consumption in 2010. In alliance with business indicators the recommended targets were 1100 GWh of electricity from RES, or 5.8% of total energy consumption in Croatia in 2010 (excluding large scale hydro power plants). 
 
However, Croatia has not met its 2010 target for electricity production from renewable energy sources covered by incentives. Increasing investment in renewable energy sources is hampered by a lengthy administrative process, which is acting as a disincentive to prospective investors. Alignment of legislation is advanced, but substantial efforts are required if Croatia is to meet its target of 20 % of final energy demand from renewable sources by 2020. 
 
In June 2010 the government adopted the National Renewable Energy Action Plan, as foreseen under the new EU Renewable Energy Directive. A new system started in 2007 when Croatia introduced the Tariff system for the production of electricity from renewable energy sources and cogeneration (OG 33/07). Feed-in tariffs for electricity produced from RES and cogeneration have been amended in the 2010 law, and implementing legislation on incentives for use of biofuels in transport has been enacted. The feed-in tariff system in Croatia is comprehensive, with different tariff structures existing for plants smaller and larger than 1 MW. A wide range of renewable resources are covered, including solar, wind, solid biomass, biogas and biofuels, and hydroelectric, including wave and tidal power. CHP installations can also claim a feed-in tariff, based on the size of the installation. 
 
Energy Efficiency Programmes 
Croatia ratified the Kyoto Protocol in 27 April 2007. Croatia is now obliged to reduce its emissions 5% in relation to the base year over the commitment period 2008-2012 and energy efficiency measures are expected to play a crucial role in fulfilment of these obligations. 
 
The first National Energy Efficiency Action Plan was adopted in April 2010, and included implementing legislation on the improvement of building energy efficiency, and the method for calculating energy savings in final consumption. 
 
Programmes dealing with energy efficiency are: KOGEN (cogeneration), MIEE (industrial energy efficiency networking), KUENcts (district heating), TRANCO (transport) and KUENzgrada (building construction efficiency).

Current energy debates or legislation:

No debates are currently in progress on Croatian energy legislation. 
 
The Croation island of Hvar is to receive EUR1.9 million in grants to develop an energy efficiency program, focusing on exploiting the island’s high potential for solar energy uptake, as well as a public building energy efficiency program. The grant is to be awarded through the EU’s Solution program.

Major energy studies:

In 2003, the Ministry of the Economy and the Ministry of Environmental Protection and Physical Planning of the Republic of Croatia, consulted by the Energy Institute Hrvoje Poaar, established the Environmental Protection and Energy Efficiency Fund. 
 
It is a structured extra budgetary fund which finances projects and activities in three areas:
<ul>
<li>
Environmental protection</li>
<li>
Energy efficiency</li>
<li>
Renewable energy sources</li>
</ul>

 
On the 4th February 2005 the Environmental Protection and Energy Efficiency Fund and the Croatian Bank for Reconstruction and Development (HBOR) signed an Interest Rate Subsidy Agreement for loans intended for environmental protection, energy efficiency and renewable energy resources projects. 
 
ODYSEE-MURE, the monitoring program for energy efficiency in the EU27, Norway and Croatia, publishes a review of energy efficiency policies and measures in the country, last updated in 2009. Detailed in the study are current energy efficiency trends by sector in the country, as well as energy efficiency policies and programs.

Role of government:

The Croatian Parliament determines and passes the legal framework for the energy sector, receives reports directly from the Croatian Energy Regulatory Council, reviews and approves financial proposals and global energy policy stated in Energy Sector Development Strategy. 
 
The Government of the Republic of Croatia submits to the Parliament proposals for financing energy needs, establishes the energy policy including principles of environmental protection, which also includes energy efficiency and energy production from renewables sources.

Government agencies in sustainable energy:

The Ministry of Economy, Labor and Entrepreneurship, through its Energy and Mining Directorate, is the governmental body responsible for energy. This Ministry gives the Preliminary Energy Approval and Energy Approval and leads the register of projects and plants for the use of Renewable Energy Sources and Cogeneration and Eligible Producers. This Ministry is also responsible for renewable energy sources that cover thermal energy, energy efficiency and biofuels in the part of energy politics, as well as the implementation of EU energy legislation at the national level. 
 
The Ministry of Environmental Protection, Physical Planning and Construction is the governmental body responsible for environmental protection and construction. This Ministry, in cooperation with its local offices accepts Environment impact studies and gives Location permits, Building permits, and Operating licences for every kind of construction, including renewable energy sources. The Ministry is also responsible for the improved energy performance of buildings through the use of efficient materials. 
 
The Environmental Protection and Energy Efficiency Fund was established by virtue of the Act on the Environmental Protection and Energy Efficiency Fund (OG 107/03). The Fund co-finances programmes, projects and activities in the field of environmental protection, renewable energy sources and energy efficiency. The Act stipulates the conditions for its operations. 
 
The Croatian Energy Market Operator (HROTE) was established in 2005 after restructuring of the energy sector. The company collects fees for RES support and co-generation incentives from suppliers and then passes these fees to eligible RE producers with adequate certifications of origin.

Energy planning procedures:

A number of programs are in place in Croatia, including the new Strategy for Energy Development, the Act On Efficient Use Of Energy, the Act On Biofuels, Energy Efficiency Master Plan 2008-2016, First Energy Efficiency National Action Plan 2008-2010, legislation on renewable energy sources for production of thermal energy, legislation regarding energy savings in buildings and revision of current legislation on renewable energy sources for production of electrical energy.

Energy regulator Date of creation:

The Croatian Energy Regulatory Agency (HERA) was established in 2004 and replaced the former Council for Regulation of Energy Activities (VRED) established in 2001.

Degree of independence:

The Croatian Energy Regulatory Agency (HERA) was formally established by the law as an independent non-profit institution. Financing for the Agency comes from its activities within the sector, as well as a 0.06% levy on all energy operators’ incomes for the previous financial year. 
 
The five members of HERA Management Board are proposed by the Croatian Government and appointed by the Parliament, with the mandate of 5 years. The Agency is responsible for its work to the Croatian Parliament.

Regulatory framework for sustainable energy:

The legislative framework in the electricity supply sector in the Republic of Croatia is to a great extent aligned with the EU legislation. It includes the Energy Act (OG 68/01, 177/04 and 76/07), the Electricity Market Act (OG 177/04 and 76/07), the Act on the Regulation of Energy Activities (OG 177/04 and 76/07) and a series of subordinate regulations.

Regulatory roles:

The main regulator's roles and tasks are: 
 
- issuing licences for carrying out energy activities, 
 
- activities aimed at ensuring transparent and non-discriminatory functioning of the energy market, 
 
- activities aimed at ensuring transparent and non-discriminatory performance of energy activities subject to public service obligation, 
 
- carrying out activities related to regulation of energy prices to be set on the basis of tariff systems

Role of government department in energy regulation:

The Ministry of Economy, Labour and Entrepreneurship has to enact the Regulation on Utilization of Renewable Energy Sources and Cogeneration. 
 
The Ministry of Economy, Labour and Entrepreneurship determines licensing procedure and requirements. 
 
The Government determines the tariffs for regulated energy activities. Tariffs are proposed by the Ministry of Economy, Labour and Entrepreneurship, upon the opinion of the Regulator. 
 
The Croatian Energy Market Operator (HROTE) has a responsibility to oversee the organisation of the electricity market as a public service. The organisation is overseen by the HERA.

Regulatory barriers:

Only limited progress can be reported in the area of renewable energy sources (RES). The 2008 target of biofuels for 2008 has been set at 1.21% of the overall fuel consumption on the domestic market. 
 
The administrative capacity in energy efficiency and RES is in need of significant strengthening. 
 
Limited progress has been made in the field of energy efficiency. Implementing legislation related to energy labelling of household appliances has been enacted. Croatia still needs to ensure compliance related to high-efficiency cogeneration (CHP), energy end-use efficiency and energy services. No progress has been made in transposition of the acquis related to the energy performance of buildings. With the advent of the 2010 Action Plans on renewable energy and energy efficiency, it is hoped that progress can be made in these regards.

References:

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