CMS outlines energy project development rules in Croatia for investors

Aiming to resolve the main dilemmas for investors and other participants in the energy market in Croatia, CMS Reich-Rohrwig Hainz answered several frequently asked questions. Lawyers in Croatia in cooperation with CMS Reich-Rohrwig Hainz based in Austria have extensive legal expertise in the sector.

Any other queries about the regulatory framework in Croatia can be addressed to zagreb@cms-rrh.com.

What are the expected grid connection costs for PV plants in EUR per MW under the draft regulations to be adopted soon?

Currently there is no publicly available draft for the decision on costs for connection to the grid. Unofficially a wide range of prices has been proposed by the government institutions, industry participants and grid system operators ranging up to 100 EUR/kW. For example, Croatian Chamber of Economy proposes increase of maximum 10-15% which would effectively mean that the price would be lower than 20 EUR/kW.

What are the legal and regulatory requirements to implement a large scale (above 1 MW) behind the meter PV plant in Croatia, including land permits, environment approvals, conections with grid, power limitations (if any), tariffs etc?

Since 2021 revamp of Croatian electric energy legislation the steps are as follows:

1. Obtaining preliminary opinion of the competent grid operator. In case of TSO the investor submits request for elaborate on connection feasibility (“EMP”). After EMP is created the investor requests issuance of preliminary opinion of the TSO.
2. Obtaining documentation for submission of request for the issuance of Energy Approval (Croatian: Energetsko odobrenje). The documentation is submitted to the ministry in charge of energy as an attachment to the declaration of interest. The documentation is extensive and includes at least feasibility study, concept design, proof that the proposal is in line with the spatial plans, statement of the authorized designer that the concept design is in line with the spatial plans, preliminary opinion of the competent grid operator, graphic attachment showing the location marked on the topographic map, proof of payment of bid guarantee (or bank guarantee). The ministry may request additional information.
3. Obtaining Energy Approval. Energy Approval is issued either directly if the investor declaring interest has the ownership or right to use land plots where the proposed PV plant is located. Energy Approval is issued in public tender if the investor does not have the right to use land plots where the proposed PV plant is located. Energy Approval is stepping stone for further project development.
4. Obtaining environmental licenses. The PV project should undergo preliminary environmental impact assessment which will determine if the PV project requires environmental impact assessment study or not. If not the decision on acceptability and terms for construction and operation are issued immediately by the competent ministry. If yes, the study must be conducted after which the competent ministry reaches a decision on acceptability of the project. Simultaneously the PV project undergoes similar but separate process in relation to ecological grid. If the project is acceptable to the ecological grid or does not impact it at all the competent ministry issues a decision on acceptability and terms for construction and operation of PV project.
5. Simultaneously with no. 3. the investor must request an elaborate on optimal technical solution for grid connection (“EOTRP”) from the competent grid operator. After acquiring EOTRP, the investor requests decision on acceptability of EOTRP. Once the decision on acceptability is obtained, the investor request signing of grid connection agreement with the competent grid operator. After signing grid connection agreement with the competent grid operator the investor requests Electro-Energy Approval (“EES”) which is necessary for obtaining location permit.
6. Obtaining location permit. The investor must obtain location permit. This includes obtaining terms from different competent authorities (e.g., fire department, municipality, county).
7. Obtaining construction permit.
8. Obtaining usage permit. This includes obtaining grid usage agreement, confirmation on the start of grid usage and permanent operation certificate from the competent grid operator.
9. Obtain electric energy production permit. After obtaining usage permit for PV plant the investor must request electric energy production permit from the Croatian Energy Regulatory Agency (Hrvatska energetska regulatorna agencija – HERA).

“Power limitation” can mean two things:

1. a) Connecting power limitation – although there is no specific limit to connecting power in Croatian legislation there are limits on connecting power of defined locations due to the limitations on grid capacity. The limits to the connecting power of the defined location is de facto defined in EMP, preliminary opinion of competent grid operator, and EOTRP.
2. b) Power output limitation – power output limitation refers to the cases when the grid is under high load, and the competent grid operator reserves the right to temporarily disconnect production facilities for the safety of the grid.

Grid usage tariff is defined by the methodology for calculating tariffs of the competent grid operator. Producers pay the tariff for the output of electric energy into the grid.

In PV projects the right to use land plots is covered with different legal models ranging from direct ownership to easement rights. Generally, the most common way to resolve the use of land issues is through easement rights (for the PV plant and cables) and building rights (for substations if one is necessary according to the EOTRP). Direct ownership is not as usual model because most of the land plots large enough for PV facilities are owned by the state, which is not keen to sell the land plot.

Can large prosumers develop remote PV plants (above 1 MW) in Croatia? What are the legal, regulatory and tariff requirements?

Prosumers can develop large remote PV plants in Croatia. However the prosumers should be careful not to lose prosumer status in the process. The status is lost if the production of own renewable energy becomes the main business activity of the prosumer. Although there is no case law yet, it is reasonable to expect that the activity of production of own renewable energy becomes “main business activity” if it becomes main source of revenue for the prosumer.

The requirements are the same as detailed in question above, although prosumers may be exempt from certain regulatory burdens imposed by the usual project development cycle. There is currently no practice on exemptions.