Changes in Prices Endanger Investments in Solar Energy

Total Croatia News

Financial problems for those who invested in renewable energy resources.

While renewable energy sources were still in their infancy, many countries throughout Europe supported such projects with generous subsidies, especially with a high guaranteed purchase price of electricity. However, eventually there were more and more of these projects and the countries have decreased their subsidies, causing many investors to face financial problems, reports on March 24, 2016.

A typical example is a situation in Croatia where quotas for solar energy production were distributed, but then there was a change in the tariff system halving the purchase price of electricity generated by non-integrated solar power sources, which are those sources located at the ground level. Therefore, a group of a dozen investors has been fighting for several years against the discrimination of the project of the so-called non-integrated solar energy sources, in comparison with the sources located on houses and other buildings which are considered to be “integrated”.

These investors have entered into an agreement for the 2014 quotas for solar power plants. It was a supplementary quota of 5 MW since the primary quota was distributed by 1 August 2013. However, in October 2013 there was a change in prices, so the purchase price for new investors fell from 1.1 kuna per kilowatt-hour to 0.53 kuna. “Given that we were grossly damaged, we can only demand and appeal to the relevant ministry to give us a chance to continue operating under the same conditions which were valid at the time when we launched the investment. It is a shame for the state that it has in this way deceived investors and led them to a state of financial damage due to an unsustainable, inconsistent and discriminatory policy”, say investors.

The Hrvoje Požar Energy Institute made an assessment which shows that the profitability of 1 MW power plants under these conditions is not possible. “Unfortunately, there is no bank in Croatia which can find a financial interest to invest in our projects. Some of our colleagues have contracts with foreign partners and are now exposed to their demands for compensation. At the same time, we are not able to compete for the EU funds or for grants by the Ministry of Environmental Protection, since the prices are still considered to be subsidised, and on this basis we do not have a right to two incentives at the same time”, complained the investors.

As an example of unprofitability, they point out that a 1 MW solar power plant with an average production of 1.3 million kWh cannot return the investment during the entire duration of the 14-year contract for the purchase of electricity.


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