Premium tariff (Sustav poticanja tržišnom premijom)

Updated: 31.01.2017

Author: Stefan Ćetković

Since 1 January 2016, renewable energy in Croatia is mainly promoted through a premium tariff ("tržišna premija"). 

Until 31.12.2015 renewable energies were supported through a feed-in tariff pursuant to the (now obsolete) Tariff System for Electricity Production from Renewable Energy Sources and Combined Heat Power (Tarifni sustav za proizvodnju električne energije iz obnovljivih izvora energije i kogeneracije). On 1 January 2016, the new Act on Renewable Energies and high-efficiency and combined heat and power (RES Act)came into force and introduced a premium tariff support scheme.

Privileged producers ("povlašteni proizvođač", Art. 9 Privileged Producer Rulebook and Art. 20 RES Act) of electricity from renewable energy sources can receive a premium on top of the price of the electricity, which they have sold on the market pursuant to the Electricity Market Act (Art. 30 § 4 RES Act), if the Croatian Energy Market Operator (HROTE) has selected them as lowest bidder in a public tender. The Market Operator issues a call for tenders at least once a year, provided quotas for the support of certain technologies of renewable energies are available (Art. 31 § 1 and 2 RES Act).

A Rulebook on Renewable Energy Sources will determine the specific conditions for public tendering, the eligible technologies, details on the Register of renewable energy producers, the conditions of acquiring the status of privileged producer and the support scheme of premium tariffs as such. As of May 2016, this Rulebook was not adopted yet. The Ministry for Economy will adopt it within six months following the entry into force of the RES Act (Art. 53 § 2 RES Act). A public discussion on the first draft with experts in the field of energy and the interested public is ongoing.

Eligible technologies

The classification of power plants by technology, source of energy and capacity, for which public tenders will be carried out, shall be governed by a special Rulebook on RES (Art. 6 § 3 and Art. 25 RES Act).
This Rulebook has not been adopted yet (as of December 2016), although the legal deadline of six months following the entry into force of the RES Act has passed (Art. 53 § 2 RES Act).

Amount

The amount of the premium tariff (Tržišna premija - TPi), which is expressed in HRK/kWh, results from subtracting the reference market price (referentna tržišna cijena - TCi) in the accounting period from the reference value of electric energy (referentna vrijednost električne energije- RV), which was defined in the contract between HROTE and the privileged producer, who was selected by public tender.
Therefore, the formula for the calculation of the amount can be shown as follows:
TPi = RV - TCi
In case the calculated value of the premium tariff is negative, the amount of the premium tariff equals zero.
The reference value of electric energy will be adjusted every year in relation to the established corrected reference value of electric energy from the previous year by applying the average annual consumer price index.
The amount of the maximum reference value of electric energy will be determined by HROTE based on the methodology of reference values of electricity, which will be governed by a special Rulebook on RES (Art. 32 § 4 and Art. 25 RES Act).
This Rulebook was not adopted yet (as of May 2016). The Ministry for Economy will adopt it within six months following the entry into force of the RES Act (Art. 53 § 2 RES Act).

Addressees

Eligible party: Producers of electricity from renewable energy sources, who gained the status of privileged producer (Art. 20 RES Act) and won as lowest bidder on the public tender.

Obligated party: The Croatian Energy Market Operator (HROTE) issues the call for public tenders, selects the lowest bidder through a decision (Art. 31 § 3 RES Act) and concludes the contract with the privileged producer.

Procedure

Process flow

As a precondition for being eligible for this support scheme, the plant operator as natural or legal person needs to acquire the status of a privileged producer ("povlašteni proizvožač"; Art. 19 § 8 RES Act).

In order to be eligible to the premium tariff, the power plant shall meet several requirements listed in Art. 20 § 1 of the RES Act, including the following:

  • The production of electricity of the power plant is only from RES or waste 
  • The plant received a building permit
  • The grid connection point is built

Once all criteria have been fulfilled, the Croatian Energy Regulatory Agency (Hrvatska energetska regulatorna agencija - HERA) will issue a favourable decision on the application for the grant of the status of a privileged producer (Art. 21 RES Act). If the construction of the power plant is realised in stages, pursuant to Art. 21 § 3 RES Act in connection with conditions, which will be specified in the Rulebook on RES, HERA can also issue a partial decision on the grant of the status of a privileged producer. This allows the investor in certain cases to bid for tenders, although the installation of the power plant is not finished yet. 

After granting the status of privileged producer, HERA will include the applicant into the Register of Renewable Energy Sources, Combined Heat and Power and Privileged Producers ("Registar obnovljivih izvora energije i kogeneracije te povlaštenih proizvođača") and note therein every future change of the status (Art. 21 § 6 RES Act).

In order to conclude a contract with the Croatian Energy Market Operator (HROTE) the privileged producer needs to take part in a public tender, which HROTE will carry out, if the quota for the respective technology is available (cf. Art. 31 RES Act). The lowest bidding applicants will be selected by HROTE through a decision and this project holder thereby acquires the right to enter into a contract with the Market Operator.

A Rulebook on Renewable Energy Sources will determine the specific conditions for the acquisition of the status of privileged producer and for public tendering, such as deadlines, the tender procedure and the content of public calls (Art. 31 § 6 and Art. 25 RES Act).

This Rulebook has not been adopted yet (As of December 2016). 

Competent authority

The Croatian Energy Market Operator (Hrvatski Operator Tržišta Energije - HROTE) and the Croatian Energy Regulatory Agency (Hrvatska energetska regulatorna agencija - HERA) are the competent authorities.

Degression

The tariff system does not include a degression system.

Cap

Pursuant to Art. 28 of the RES Act the government will issue a special decree on the determination of quotas for the promotion of electricity production from renewable energy sources for the period from 2016 to 2020. As of December 2016, this Decree has not yet been adopted.

Eligibility period

The duration of the contract will be determined by the Rulebook on RES.

Distribution of costs

Consumers

The support scheme is funded by a fee that is charged on each kWh purchased by the final consumers. The amount of the fee is determined by the government through a decision (Art. 41 § 3 RES Act).

This decision has not been issued yet (As of December 2016). However, Art. 54 § 2 RES Act provides that the existing RES Fee Decree (Official Gazette, 128/13) is valid until a decree pursuant to Art. 41 § 3 is in force.

The fee currently (2016) amounts to HRK 0.035 (€ct 0.46) per kWh (Art. 5 § 1 RES Fee Decree).

Croatia

Further information