On 23 August 2018 the government adopted a number of amendments to the Act on Renewable Energy Sources and High-Efficiency Cogeneration, which are now undergoing the legislative procedure.

Aims

According to the government, the amendments aim to:

  • harmonise national law with the EU legal framework;
  • introduce an integration process for eligible producers of renewable electricity and high-efficiency cogeneration on the electricity market; and
  • reduce the obligation on suppliers to purchase renewables at a regulated price that is higher than the market price.

Amendments

The amendments seek to meet these aims by introducing the following measures:

  • Electricity suppliers will have to buy a share expressed as a percentage of the net electricity delivered by eligible producers. The remaining share will be sold on the electricity market in a transparent and impartial manner.
  • There will be enhanced regulation of the Registry of Renewable Sources and Cogeneration and Eligible Producers and registration procedures.
  • A number of changes will be made regarding the eligible producer status. These aim to eliminate inconsistencies in the issuance, suspension and amendment of decisions on acquiring such status.
  • The Ministry of Environment and Energy must develop a state aid programme for the renewables incentive scheme.
  • Participants of a tender under the incentive scheme will have a right of appeal against decisions by HROTE (the Croatian energy market operator) regarding the selected bidder in order to provide legal protection to all participants.
  • The government will adopt respective bylaws to implement the above measures.

The Act on Renewable Energy Sources and High-Efficiency Cogeneration, which entered into force in 2016, required electricity producers to buy electricity that was produced from renewable sources under regulated purchase prices and conditions. Under the amendments, the proposal that electricity suppliers' take over the total net of electricity delivered by eligible producers at a regulated purchase price has been postponed until 2019.

HROTE concluded agreements with eligible producers on the takeover of electricity guaranteeing high-incentive prices (feed-in tariffs) for 14 years, while suppliers must take over the electricity under regulated prices and conditions.

This obligation on suppliers was initially imposed until 1 January 2017, but was postponed several times due to a lack of financial resources necessary for fulfilling contractual obligations under agreements concluded with eligible producers.

Consequently, the government is seeking a solution that balances the interests of electricity suppliers and market liberalisation with the continuation of the incentive scheme.

Although only a temporary solution, the amendments will require electricity suppliers to buy a share expressed as a percentage of the net electricity delivered by eligible producers, while the remaining share must be sold on the electricity market in a transparent and impartial manner. This should reduce the pressure on electricity suppliers – at least in part.

Comment

The amendments to the Act on Renewable Energy Sources and High-Efficiency Cogeneration are currently undergoing the legislative procedure. The changes are quite significant and focus on mitigating the financial burden imposed on suppliers and achieving the complete liberalisation of the electricity market. However, whether the changes will be successful remains to be seen.

For further information on this topic please contact Ivana Manovelo, Miran Macešic or Jelena Zjacic at Macešic & Partners by telephone (+385 51 215 010) or email (manovelo@macesic.hr, mmacesic@macesic.hr or zjacic@macesic.hr). The Macešic & Partners website can be accessed at www.macesic.hr.

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