Croatia to take loan to pay incentives for renewable energy producers

Croatian energy market operator HROTE will take a EUR 13.3 million loan to pay renewable energy power plants subsidies.

HROTE’s revenue this year will be EUR 45.3 million lower than planned. By the end of the year, it will need EUR 22.6 million to meet all obligations under the contracts with privileged power producers, the Government of Croatia said.

HROTE is the state-owned company in charge of the system of incentives for producing electricity from renewable sources. It offtakes all the electricity from privileged power producers, which produce it in renewable power plants and highly efficient cogeneration.

One of the main reasons for the drop in turnover is the impact of the COVID-19 pandemic on the electricity market, the government said.

Croatian media reported HROTE’s financial woes to demonstrate serious issues in the system’s functioning for incentivizing green energy. Of note, Croatia has introduced auctions for the allocation of incentives. The first was held in January, and a new auction was announced for autumn.

Green energy subsidies are based on a fee paid by consumers

The system of incentives for renewable energy sources in Croatia is primarily based on the fee for renewable energy sources and highly efficient cogeneration that is collected from all electricity consumers. The fee currently amounts to EUR 0.014 per kWh, but it has been reduced as a form of state aid for certain categories of consumers from the business sector.

HROTE sells 60% of electricity received from privileged power producers on the electricity exchange and 40% at a guaranteed purchase price of about EUR 0.056 per kWh to suppliers.

Energy consumption reduced by 6%

According to the government’s decision on the HROTE loan, due to the consequences of the pandemic year 2020 on electricity markets, HROTE is seen with a EUR 45.4 million lower revenue than planned.

The drop in revenues was mostly caused by the drop in electricity consumption in Croatia of about 6% compared to 2019. According to the decision, it was also the result of the 30% decrease in electricity prices on the market.

An additional aggravating circumstance is that in 2020, the implementation of the regulation on reducing the fee for the “energy-intensive economy” began, which reduced HROTE’s revenues by EUR 8 million.