Croatia reforms grid access after connection delays

Croatia’s Ministry of Economy is advancing amendments to the Electricity Market Act covering grid connections, delayed renewable projects, electricity sharing, retail contracts, and longer-term power market arrangements.

The government adopted the draft legislation on 20 August. The package is intended to align Croatian electricity rules more closely with EU market legislation while addressing domestic problems that have left renewable developments waiting for connection procedures to be completed.

One of those problems concerns the national unit grid connection charge. Croatian regulator HERA adopted the long-awaited charge on 27 April, with the decision taking effect from 1 May, after a prolonged period in which some developers were unable to complete the connection process.

The draft law would recognise delays caused by the absence of that regulatory decision when calculating project deadlines. Where an energy approval could not progress because the connection charge had not been set, relevant time limits would be restarted from the date HERA adopted its decision.

Developers whose approvals had already expired for the same reason would be given a route to apply again, while delays in spatial planning or construction procedures could also support extensions in defined circumstances.

The Croatian Renewable Energy Sources Association said 16 energy approvals representing 711MW were due to expire by the end of August. The transitional provisions are intended to prevent projects from losing their position where the delay arose from regulatory circumstances rather than inactivity by the developer.

Connection capacity faces tighter management

The reforms also address older producer connection agreements without a final completion deadline. Under the proposal, those projects would have four years after the amended legislation enters into force to complete the relevant connection process.

Introducing a defined timetable is intended to reduce the amount of grid capacity tied up by projects that remain contractually alive but make little progress towards construction. Connection rights are increasingly valuable where substations and transmission corridors have more proposed generation than available capacity.

Network operators cannot offer the same physical capacity repeatedly on the assumption that earlier projects will eventually disappear. Equally, withdrawing an existing connection from a viable development because network works or regulatory decisions are late can penalise the party that has least control over the delay.

The draft attempts to distinguish those situations. Transitional protection addresses projects held back by the connection-charge problem, while the four-year provision places a future time limit around agreements that otherwise lack a final delivery date.

Distribution operators would also face stronger requirements around publication of available connection capacity and application of transparent, non-discriminatory connection procedures. Better visibility should allow developers to assess network constraints earlier rather than discovering them only after substantial planning and development expenditure.

Published capacity information will still have limits. A figure showing available megawatts at a substation cannot capture every future network condition, because generation profiles, fault levels, planned reinforcement, demand changes, and other connection applications affect what can be accommodated safely.

It can nevertheless reduce uncertainty around the first stages of development. A solar or wind project built in a location with no credible export route has little value, regardless of the quality of its generation resource or equipment procurement.

HERA’s April decision removed one major uncertainty by establishing the unit connection-charge framework. The regulator said the measure was intended to improve transparency and predictability for new electricity network connections throughout Croatia.

The legislative changes now deal with the consequences of the years before that framework was settled. Developers whose permits continued to age while connection terms remained unresolved otherwise risk reaching expiry without ever having had a complete route to execute their grid agreements.

The reforms extend beyond renewable connection queues. The government also wants to expand electricity sharing, introduce more flexible contractual models for consumers, support longer-term price arrangements, and accelerate administrative procedures for new energy projects.

Sector analysis of the draft also identifies wider use of power purchase agreements and two-way contracts for difference among the proposed market measures. Those instruments address revenue and price exposure rather than the physical limits of the grid, but both sides of the problem influence whether a new generating project can obtain finance.

A project with a strong connection but no bankable revenue arrangement can struggle to reach construction; a project with a long-term power contract but no usable connection faces the same outcome from the opposite direction.

Connection discipline therefore remains central to the package. New renewable projects have to know what capacity is available, how much connecting will cost, when network works can be completed, and how long a contractual position can be retained without physical progress.

For network operators, firmer deadlines can release capacity from developments that no longer have a credible delivery route. For active developers, the transitional protections are designed to avoid losing approvals because a state or regulatory process consumed part of the permitted development period.

The 711MW approaching expiry gives the legislation an immediate test case. That figure comes from the renewable energy association rather than the government itself, but it illustrates the scale of capacity potentially affected by the transition from the old connection regime to the new one.

The amendments remain proposed legislation rather than enacted law. Their final effect will depend on the wording approved through the legislative process and the procedures subsequently applied by HERA, the transmission system operator, distribution companies, and permitting authorities.

Croatia has now settled the unit connection charge and proposed a mechanism for dealing with projects delayed while it was absent. The next measure of progress will be whether connection capacity, costs, and deadlines become predictable enough for approved megawatts to translate into substations, lines, and commissioned generation.