Marohnic, Tomek & Gjoic Attorney at Law Ivona Zagajski talks about energy in Croatia in 2025.
CEELM: What is in the pipeline in terms of legislation that you believe will have the most impact on the energy sector in Croatia?
Zagajski: The government has adopted a plan to align Croatian legislation with the EU acquis, including amendments to the Energy Electricity Market Act and the Renewables Act, as well as the adoption of the Act on Alternative Fuels. Since the plan is newly adopted and no draft texts are publicly available yet, it remains unclear what specific changes will be introduced. It also remains to be seen whether the amendments will address broader market challenges, such as the expiration of certain permits due to legislative delays that impact the timely issuance of other required permits. Additionally, we are still awaiting the adoption of the Rules on the Organization of Wholesale Electricity Markets and the unit connection fee that would trigger the implementation of a long-awaited “new” methodology for calculating grid connection costs. This methodology, which shifts the Croatian market from a deep to a shallow cost approach, has been delayed for over two and a half years.
CEELM: Of the above, which ones are you/your clients most excited about and why?
Zagajski: The market is eagerly awaiting the adoption of the mentioned long-overdue legislation that has been in the pipeline for over two years. The first draft of the Rules on the Organization of Wholesale Electricity Markets was published in March 2023, but no further progress has been made since. This regulation is critical for several reasons. We have seen a number of rooftop solar power plants being constructed in the past year on commercial properties. Without the concept of active customers, owners or tenants of such rooftop plants must register as producers to sell excess electricity on the wholesale market, which creates an unnecessary regulatory burden. Additionally, the absence of this regulation is stalling the development of the PPA market, as final customers cannot enter into direct agreements with producers without the involvement of a supplier.
Equally urgent is the adoption of the unit connection fee, whose absence has halted the development and construction of renewable energy projects in recent years. Without it, projects cannot obtain grid connection agreements, a prerequisite for location and construction permits, and further project development. The primary obstacle has been the long-pending appointment of the President and other members of the Management Board of the Croatian Energy Regulatory Agency, which is responsible for making this decision. However, after two years, the government has finally conducted a public tender, and we hope the unit connection fee will follow shortly under the new management of the agency as its first task.
CEELM: On the flip side, which ones are you/your clients dreading the most and why?
Zagajski: Croatia underwent a significant legislative change a few years ago regarding the development of renewable energy projects, reshaping the permitting process. This introduced the requirement for energy approval – a document that now grants legal interest for obtaining other permits – aiming to coordinate projects being developed on public land. However, the introduction of this document further contributed to already cumbersome development red tape. Given these changes and the prolonged delays in adopting key legislation, any amendments or new regulations that help move projects forward and support their effective development would be a positive step.
CEELM: What are the main/largest energy projects you expect to be finalized in Croatia in 2025?
Zagajski: Given the challenges mentioned earlier, it is difficult to estimate the timeline for project completion or how many will be able to start producing and selling electricity by the end of this year. However, if the necessary legislation is adopted, a significant number of projects may become operational in 2026 and 2027.
CEELM: What is the biggest challenge for the energy sector in Croatia at the moment, in your view, and what is the likelihood you’ll see it overcome in 2025?
Zagajski: The biggest challenge at the moment is transmission electricity grid development – specifically the construction of new grid capacity. Beyond the ongoing issues with calculating grid connection costs, transmission and distribution system operators indicate that the grid is already at maximum capacity, meaning that connecting additional projects will depend on necessary upgrades and expansions. These upgrades require significant capital investment, time, and additional resources – both financial and human. Given these factors, it is unlikely that these challenges will be resolved in 2025. Until then, project holders will likely face curtailment in their feed-in capacity.
This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
