Organization of the electricity market and renewable energy sources in the Republic of Croatia"

1. Organization of the electricity market and renewable energy sources in the Republic of Croatia" 5th Dubrovnik Conference on Sustainable Development of Energy, Water and Environment Systems STORIES Project workshop Dubrovnik, 2nd October 2009

2. Contents • Basic company data • Electricity market model • Incentives scheme for electricity production from renewable energy sources and CHP in Croatia • Integration of RES in electricity market model Dubrovnik, 2nd October 2009 STORIES Project Workshop

3. Scope of activities • Electricity market organization • Natural gas market organization • Incentivizing electricity production from renewables and cogenerations • Incentivizing production of biofuels Dubrovnik, 2nd October 2009 STORIES Project Workshop

4. General Manager Assistant General Manager Information and Communication Technology Department Secretariat Electricity Market Department Gas Market Department Renewables and Cogeneration Department Economic, Legal and Personnel Department Basic organizational scheme Dubrovnik, 2nd October 2009 STORIES Project Workshop

5. Legislative framework • The Energy Act (Official Gazette 68/01, 177/04 & 152/08) • The Act on the Regulation of Energy Activities (Official Gazette 177/04 & 76/07) • The Electricity Market Act (Official Gazette 177/04, 76/07 & 152/08) • Secondary legislation Dubrovnik, 2nd October 2009 STORIES Project Workshop

6. Croatian Power System-Basic Data Gross consumption 18 TWh Maximum load 3098 MW Source: www.hep.hr/ops (50%) Source: Energy in Croatia, MinistryAnnual Energy Report, 2007 Dubrovnik, 2nd October 2009 STORIES Project Workshop

7. Market model • Based on electricity trading via bilateral contracts • Contractual parties in the bilateral contract for electricity supply are an eligible customer and a supplier • Bilateral electricity trade contracts are concluded between a supplier, a trader or a producer • Settlement and charging the difference between contracted and delivered energy according to Rules on balancing the electric power system and Methodology on providing balancing energy services in the electric power system Dubrovnik, 2nd October 2009 STORIES Project Workshop

8. Traders Producers Suppliers Eligible customers Tariff customers electricity trade contract network contract supply contract contract and schedule submission plans Croatian electricity market Incentivized RESCO MARKET PLAN TSO HROTE DSO Tariff customers supplier POWER SYSTEM OPERATION PLAN Dubrovnik, 2nd October 2009 STORIES Project Workshop

9. Legal obligations – RES&CHP • Entering into contracts with all suppliers to comply with the decree on the minimum share of electricity produced from renewable energy sources and cogeneration, • Collecting funds from the charge for incentivizing renewable energy sources and cogeneration from the suppliers, • Entering into contracts with eligible producers entitled to incentive price, • Settlement, collection and allocation of funds from the charge for incentivizing renewable energy sources and cogeneration onto producers of electricity from renewable energy sources and cogeneration based on the contracts entered into Dubrovnik, 2nd October 2009 STORIES Project Workshop

10. Current situation... There are 16 contracts that have been signed in HROTE so far: ...and future projects production construction Planned projects ( approx. 5 102 GW): Dubrovnik, 2nd October 2009 STORIES Project Workshop

11. incentive fee payment Consumer SUPPLIER Data of electricity consumed TSO/DSO payment Produced RESCO-E fed into the grid The bill for RESCO produced electricity The bill for incentive fee Data of electricity consumed Data of measured RESCO-E Measured RESCO-E Incentive price ELIGIBLE PRODUCER Power purchase contract Colection and allocation of incentive fee Dubrovnik, 2nd October 2009 STORIES Project Workshop

12. The example of distribution RES-E (WPP) WindPowerPlant CUSTOMERS 96 €/MWh 1MWh 1MWh 36€ 60€ + HEP-TSO (balancing in real time) HROTE 6 € 1MWh 1 MWh 42€ 60€ SUPPLIERS 42 € (the incentive fee) 60 € (the price of RES & CHP electricity )

13. Balancing of RES electricity Power load hours Electricity based on contracted schedule Produced RES electricity Balancing energy Dubrovnik, 2nd October 2009 STORIES Project Workshop

14. sending measurement data TSO/DSO HROTE (“competent body”) Guarantee of Origin (= 1MWh) The Register of GoOs Produced RES-E fed into the grid Project -Implementation of the GoO System in Croatia RES PRODUCER Dubrovnik, 2nd October 2009 STORIES Project Workshop

15. Conclusion • Feed-in tariffs model is the best solution for early phase of development of RES market because it creates“safe” environment for investors • Regulated mechanism for RES is suitable for current status of electricity market development (lack of competition) • Complex administrative procedures should be simplified especially for small and micro generation • Precise determination of costs caused by intermittent generation and covering expenses to balancing energy providers are necessary for integration of large scale WPP Dubrovnik, 2nd October 2009 STORIES Project Workshop

16. Thank you for your attention Presenter: Leo Prelec, B.Sc.E.E. General Manager Croatian Energy Market Operator leo.prelec@hrote.hr  +385 1 63 06 700  +385 1 63 06 777  hrote@hrote.hr  www.hrote.hr STORIES Project Workshop