Ministry drafts decree to reduce renewables incentive fee paid by companies

In line with the Guidelines on State Aid for Environmental Protection and Energy 2014-2020, Croatia’s Ministry of Environmental Protection and Energy has prepared a decree on the criteria for reducing the surcharge paid by consumers to fund renewable energy production and high-efficiency cogeneration, which envisages a reduction of this surcharge for companies.

Companies eligible for this reduction are those with annual electricity consumption of more than 1 GWh and an energy intensity greater than 5%, 10%, and 20%, the Croatian Employers’ Association (HUP) said on its website.

The intensity will be calculated based on the average three-year business operation and electricity consumption over the past 3 years.

The percentage of surcharge reduction will be higher for companies with higher energy intensity.

Given that the EU guidelines stipulate that the maximum allowed reduction of the surcharge is 80%, this fee will be increased for companies under the EU ETS because they now pay less than they are supposed to, HRK 0.007/kWh (EUR 0.00094/kWh) instead of at least HRK 0.021/kWh (EUR 0.0028/kWh).

The Ministry of Environmental Protection and Energy will notify this state aid to the European Commission for approval

The Croatian Employers’ Association said that the decree will remove a significant burden for some companies with high electricity consumption whose competitiveness is at risk due to costs arising from the triple increase of the surcharge for renewable energy producers in 2017.

According to the association, the electricity price for companies increased by 15% in 2017, while the surcharge tripled from 3.5 lipa/kWh (EUR 0.0047/kWh) to 10.5 lipa/kWh (EUR 0.014/kWh).

A similar model of surcharge reduction and/or state aid for companies exists in many EU members states, so this decision provides domestic entrepreneurs with equal treatment and secures their competitiveness, the association said.

The Ministry of Environmental Protection and Energy will notify this state aid to the European Commission for approval because it is an obligation under the guidelines. After that, the Croatian government can adopt the decree.