Introduction
New initiative
Comment


Introduction

Croatian state-owned electricity company HEP Group is seeking partners for renewable energy projects. To this end, the company has launched an open call for expressions of interest for the development and sale of renewable energy source (RES) projects. Interested parties have until the end of 2019 to apply.

HEP's latest initiative relates to the development and construction of different RES projects in Croatia, as well as the integration of completed projects and those in an advanced stage of development into its power generation portfolio. The open call targets local self-government units and potential partners (ie, legal or natural entities) interested in the sale of:

  • non-integrated solar power plants under development;
  • wind farms under development or in operation; or
  • hydropower plants under development and in operation.

All interested partners are invited to submit a letter of intent to HEP by 31 December 2019.

New initiative

HEP's initiative is in line with its long-term strategy to increase its proportion of RES from 35% to over 50% by 2030 and over 70% by 2050. Convinced that the natural resources required for producing renewable energy and the sites required for building solar plants, wind farms and hydropower plants are abundant in Croatia, HEP expects to receive a significant number of applications.

The call is directed at two kinds of potential partner:

  • local self-government units such as towns and municipalities that are interested in constructing solar power plants and have appropriate land surfaces larger than 100,000m2 with high sunshine duration. Local self-government units will contribute to the project through the joint preparation of spatial planning documents for the desired locations. The terms of cooperation and preferable selection criteria are defined separately in cooperation agreements; and
  • legal or natural entities seeking to sell their RES projects, including:
    • non-integrated solar power plants under development with a minimum capacity of 2MW. Candidates with a valid building permit and whose site has high sunshine duration and optimal micro-location conditions will have an advantage in the selection process. A valid location permit is required;
    • wind farms under development. Candidates with a valid building permit and a site which operate more than 2,500 hours a year will have an advantage. A valid location permit is required;
    • operating wind farms. Candidates with a site which operates more than 2,500 hours a year will have an advantage;
    • hydropower plants under development with a minimum capacity of 1MW. Candidates with a valid building permit will have an advantage. A valid location permit is required; and
    • hydropower plants in operation with a minimum capacity of 1MW.

According to an HEP statement:

HEP will strive to select the best projects considering their energy, economic and environmental acceptability and their compatibility with HEP's renewable development scenario, which will reduce the need for importing electricity. The received expressions of interest will be analyzed to determine the best projects and those will be financed, in accordance with HEP's investment plans, in the next investment cycle. HEP is prepared to finance all projects which fulfill the stated conditions and the criteria of cost-effectiveness.

The Croatian Renewable Energy Association expects many of its members to apply because there are many projects in different stages of development on the market which were never finalised but meet HEP's criteria. A significant number were forced to suspend their progress in 2017 when all commercial banks, including the Croatian Bank for Reconstruction and Development, stopped financing RES projects, while many others await the bylaws necessary for completion.

Comment

Croatia's renewable energy market remained stagnant for several years, partially owing to a lack of any legal framework and incentives for renewable energy production (for further details please see "Amendments to Act on Renewable Energy Sources and High-Efficiency Cogeneration"). However, in 2019 the market reactivated and foreign investors are recognising Croatia's high natural potential for developing renewable energy sources, especially wind and solar energy. Thus, HEP's latest open call could be a reaction to intensifying competition in the renewables sector and the growth of investors' interest in Croatia.

For further information on this topic please contact Ivana Manovelo or Miran Macešic at Maćešić & Partners by telephone (+385 51 215 010) or email ([email protected] or [email protected]). The Maćešić & Partners website can be accessed at www.macesic.hr.