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

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, 2 nd October 2009STORIES 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, 2 nd October 2009STORIES Project Workshop

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

5. 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 Legislative framework Dubrovnik, 2 nd October 2009STORIES Project Workshop

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

7. 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 Market model Dubrovnik, 2 nd October 2009STORIES Project Workshop

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

9. 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 Legal obligations – RES&CHP Dubrovnik, 2 nd October 2009STORIES Project Workshop

10. Current situation... There are 16 contracts that have been signed in HROTE so far: Wind Power Plant17 150 kW PV Plants16,14 kW SHPP30 kW Biogas1 000 kW Wind Power Plant52 654 kW PV Plants28,9 kW production construction Planned projects ( approx. 5 102 GW):...and future projects Wind Power Plant4 830 850 kW PV Plants9 114 kW SHPP158 382 kW Geothermal4 710 kW Biomass61 669 kW Biogas25 745 kW CHP40 183 kW Dubrovnik, 2 nd October 2009STORIES Project Workshop

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

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

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

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

15. 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 Conclusion Dubrovnik, 2 nd October 2009STORIES Project Workshop

16. Dubrovnik, 2 nd October 2009STORIES Project Workshop 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