Croatia risks losing billions in investments and falling short of its renewable energy targets unless urgent government action is taken, industry groups warned in a joint letter to the European Commission on September 16.

The Renewable Energy Sources of Croatia (OIEH), together with European associations SolarPower Europe and WindEurope, said the country’s renewable energy development has effectively halted while the government gradually removes electricity subsidies for households and businesses. 

The industry associations warned that without rapid intervention, Croatia risks increasing fossil fuel imports, losing market confidence, and undermining both European and national climate and energy objectives.

They called on Brussels to demand immediate measures from Zagreb, including adopting a zero-euro per kilowatt connection fee, opening the balancing market for renewable energy sources (RES), and integrating electrification and energy storage into national plans.

Currently, 60 projects totalling 3.5 gigawatts (GW) of solar, wind, geothermal, and battery capacity, worth more than €3bn, are blocked. About €25mn has already been paid through energy permits for these projects, which risk expiring by year-end if no action is taken. The letter warned that local communities stand to lose significant revenues and domestic industry could miss opportunities to secure long-term energy purchase contracts.

A key bottleneck is the connection fee for projects larger than 10 MW, which has not been set since 2022. Instead, the Croatian transmission operator HOPS has sought to shift modernisation costs to new projects, raising their cost by 30-40% and making them economically unviable. Although the government pledged in March to introduce a zero-euro connection fee and flexible contracts for battery storage, the measure has yet to be implemented. If delays continue, up to 2.5 GW of projects could be abandoned next week.

The letter also highlighted a dysfunctional balancing market, where HEP Proizvodnja, a state-owned subsidiary, is effectively the sole provider of balancing services, preventing solar and wind plants from participating. This inflates costs for balancing services and distorts competition, the groups said.

Croatia’s electrification and renewable energy targets are also lagging. In 2022, renewable energy accounted for just 2.4% of transport energy consumption, with electricity from RES at only 0.2%, far below the EU average. By 2030, the target is a modest 5.8%, while the national goal for overall energy consumption from renewables is at least 42.5%.