Recent amendments to Croatia’s Regulation on Eliminating Disturbances in the Domestic Energy Market have drawn criticism from the Croatian Employers’ Association (HUP), which argues that the changes have worsened the financial difficulties faced by independent electricity suppliers, particularly those not part of the state-owned HEP group.
The changes, which took effect at the beginning of October, reduce the maximum recognized contract price that electricity suppliers can apply for reimbursement from the Ministry of Economy, from 180 euros/MWh to 120 euros/MWh. This cap will remain in place until the end of March next year. HUP explains that the reduction forces suppliers to cover the difference between the capped price and the higher market prices, which are often volatile and typically above 120 euros/MWh. The current market price for electricity is around 156 euros/MWh. As a result, many suppliers face significant financial losses.
HUP points out that the regulation is harmful for competition in the energy market, where the HEP group already holds a dominant market share of over 95%. Independent suppliers, who are unable to compete with HEP’s market position, are also forced to absorb the financial burden of government-imposed price caps. In addition, the association argues that artificially low electricity prices for households create little incentive for both citizens and businesses to invest in renewable energy solutions.
To address these challenges, HUP is calling for full reimbursement to suppliers for the difference between the capped retail electricity price and the contract price eligible for compensation. The association also urges the government to urgently finalize the decision on the unit fee for connection to the electricity network, a measure that has been delayed for two years. According to HUP, this delay has blocked investments worth 2.5 billion euros. Investors cannot begin the technical requirements for network connection (EOTRP) or secure a connection agreement—key steps for obtaining permits for renewable energy projects.
HUP also highlights that Croatia is among the four EU countries with the longest permitting processes for renewable energy projects. The association stresses the need to streamline the approval process and accelerate the pace of energy project tenders and approvals. They suggest that energy approvals, which are currently valid for seven years for facility construction, should be tied to a valid building permit, as this is often insufficient for more complex projects.
Additionally, HUP advocates for changes in the legal framework to reduce administrative and financial burdens on investments in hydrogen technology from renewable energy sources (RES). Specifically, they propose aligning Croatia’s Electricity Market Act with the European Commission’s Delegated Commission Regulation to allow direct connections between electricity generation facilities and hydrogen production facilities, without excessive red tape or additional costs. They also suggest that energy approval requirements for such hydrogen facilities should be eliminated.
In summary, HUP’s proposals aim to address barriers to renewable energy development and improve the competitiveness of the Croatian energy market by removing administrative bottlenecks and providing financial relief to independent suppliers.
