Croatia Can Meet Green Goals With Less Subsidies, Officials Say

Croatia can achieve its climate-change goals by the end of the decade even as it plans to cut subsidies by as much as two-thirds, officials said.

New quotas for clean energy to be released next month will be sufficient to meet the country’s commitment to the European Union to get 20 percent of its energy from renewable sources, said Barbara Doric, executive director at the Zagreb-based Center for Monitoring of Energy Business and Investments, a government agency.

“We will only come out with numbers which are enough for Croatia to obtain the goal of 20 percent by 2020 and for these numbers we will provide feed-in tariffs,” Doric said yesterday by phone. Developers with plans surplus to those amounts could seek other sources of finance, such as EU funds, she said.

Croatia, which was admitted to the EU this year, outlined an energy strategy in 2009 that includes plans to subsidize as much as 1,200 megawatts of wind power by 2020 with a feed-in tariff. In draft documents published in July, this was scaled back to 400 megawatts. The country installed 229 megawatts of wind power by the end of August.

Tomislav Cerovec, a spokesman at the Ministry of Economy, confirmed a new tariff model is “in the works, and should be completed by end of October,” without giving further details.

Forty-seven megawatts of projects that won’t be eligible for subsidies already have grid connection contracts, said Kresimir Stih, head of the energy unit within the industry and technology department of the Croatian Chamber of Economy.

‘Not Bankable’

“These projects won’t be bankable as I don’t know any bank willing to finance such projects with such a high risk level,” he said by e-mail. “I expect that there will be a strong disagreement between government and developers.”

The nation is likely to reach its EU goals with about 400 megawatts of wind, 50 megawatts of solar and 200 megawatts of small hydro, biomass and biogas, he said.

Croatia’s transmission system, designed for baseload or round-the-clock power, may not be able to accommodate more than 400 megawatts of wind power, he said.

Investors with plants surplus to the limit could seek to trade renewable energy at a European level, such as through so-called green certificates awarded for producing clean power. This will depend on EU regulation and how the market is organized, he said.

Dario Traum, an analyst at Bloomberg New Energy Finance, said Croatia announced it would review its feed-in tariff each year when it introduced the subsidy and therefore the new quotas are unsurprising.

“The scaling back of the support this year should not be interpreted as a sign of an unstable policy environment for developers of renewable energy in the country,” he said. “There are no signs of the government considering retroactive cuts.”

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Jasmina Kuzmanovic at jkuzmanovic@bloomberg.net

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