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Reforming Energy in Croatia – Electrifying Times Ahead

Reforming Energy in Croatia – Electrifying Times Ahead

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These are dynamic times for the Croatian energy sector, as the legislative framework is expected to undergo major changes very soon.

Among others, Croatia is preparing a new energy reform by making amendments to the current Electricity Market Act.  The version currently in force was a part of the third package of energy laws of the European Union and has made significant contributions to the development of the internal electricity market, the growth of new business opportunities, more competitive prices, and sending clear and effective signals to attract investment and apply higher standards of service on the sustainability and security of electricity supply.

The new regulatory provisions are to more clearly define the overall framework related to consumer protection and strengthen the customer’s position, as well as better define supplier-consumer terms of contract. Namely, electricity bills would include additional information, enabling the customers to compare their current contract with the other offers available on the energy market. The suppliers will also be expected to prepare a free tool for comparing the pricing of services available on the market, allowing customers to make better-informed decisions.

Other important updates include electromobility, an important element of energy transition not only in Croatia but worldwide, and the introduction of an advanced metering system providing accurate feedback on energy consumption in real-time, resulting in improved energy management. All these changes are intended to cause significant reductions in electricity bills for the customer.

Additionally, there is an obvious need to adjust the existing electricity trading rules and market roles, to better reflect the reality of energy production shifting from large, centralized generation plants to decentralized, renewable sources and decarbonized markets. Investments and modernization of distribution networks and the introduction of advanced network systems will make this possible. The introduction of an advanced metering system will empower consumers to have a better insight into the consumption and production of electricity. With this in mind, special emphasis is to be placed on new unified provisions for all types of market participants, which would create a more flexible organization of the electricity market, with full integration of all market participants – including renewable energy producers, new energy service providers, energy storage – and support flexible demand. Sufficient physical connectivity within the national territory and with neighboring countries is also important to enable a higher level of security and offer increased market stability.

The biggest news is likely to be Croatian households being able to buy electricity from suppliers in other EU Member States, as well as Croatian suppliers offering Croatian-produced electricity to other EU households. This would enable cross-border access to new electricity suppliers, different energy sources, as well as new generation, energy storage, and demand service providers. It goes without saying that public service providers will be available to the customers as well.

Another convenient change will be allowing customers to enter into just one contract for several metering points with the same supplier: the customer will be able to have only one contract serving several of their properties.

To conclude, the ultimate goal of energy reform is to introduce new business opportunities and increase cross-border trade, in order to achieve greater efficiency, more competitive prices, and higher service standards, as well as contribute to the security of supply and sustainability. Although the current internal electricity market has already resulted in increased competition, especially at the wholesale level and cross-season trade, this is an area that will need to be further developed by the new legislation.

The final version of the new legislative framework is yet to be published, however, and one should not ignore the possibility that its practical implementation may be less ambitious than the letter of the law itself.

By Marina Kovac Krka, Partner, and Tea Misbrener, Trainee, Divjak, Topic, Bahtijarevic & Krka

This Article was originally published in Issue 8.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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Čipčić-Bragadin Mesić & Associates is one of the leading law firms in Croatia that serve companies, credit & financial institutions and public entities. We have been recommended and recognized as the legal experts and service leaders by many leading international legal guides for more than 15 consecutive years. With roots dating from 1928. we now probably have more tradition, experience and market presence than almost any other law firm in Croatia. We work closely with the leading international law firms and consultants so we’re able to manage complex, cross-border projects and deals seamlessly and successfully. Around 85% of our clients are international enterprises doing business in Croatia. List of our clients include some of the world-renowned companies such as Amazon Europe Core, China Machinery Engineering Corporation, Tate & Lyle, Nafta a.s., Unilever Croatia, Unilever Hungary, Lenovo, Innoenergy CE, Flixmobility, Flixbus CEE South, Okoenergie Group, CTC Holding, Bunge Limited, Chipita, Rolls-Royce, Canvas Holidays, Vacalianselect, Redgate Software, Red gate Investment, Yahoo!, Aston Martin Lagonda, Domino Printing UK, Domino Printing Sciences, Goldman Sachs, Deutsche Bank, Barclays Bank, HSBC, State Street Bank, Citigroup Global Markets, Credit Suisse, Bank of America Merill Lynch, Standard Chartered, Och-Ziff Capital Management, Amundi Asset Management, Altima International, Red Arc Global Investments, SMBC Nikko Capital Partners, Royal Bank of Scotland, Morgan Stanley International, J.P. Morgan group, Allianz Global Investors, Schroders, Macquarie Bank, Digital Finance International, Winton Capital Management, Citibank, Invesco Asset Management Österreich, Croatian Pension Investment Company, Unicredit Bank AG etc. We enjoy learning about our clients’ businesses and want to understand them completely so we can provide the best possible and complete service.

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