Needs-Challenges-Barriers-Opportunities

Needs/challenges, barriers, opportunities

Country

Croatia

#

Name and reference of measure

Type of measure

Responsible organ

Existing or planned?

Urgent Needs/Challenges

The legal framework for the district heating sector has undergone major changes in the last decade.

The major challenge remains to affirm the district heating activity (through its activities of production, distribution and supply of heat) in the Republic of Croatia. This may be done by use of existing legislation, its redesign and adoption of new legislation with emphasis on the Amendments of the Heat Tariff System as was stressed by the majority of the stakeholders. This would, primarily, create conditions for district heating activity to become profitable (i.e. heat price to reach a level that enables development: maintenance, replacement, reconstruction, expansion and investments into new technologies).

The other key challenge certainly represents the implementation of Energy Development Strategy of Croatia, adopted in October 2009, through Energy Strategy Action Plan that is expected in the future. It will determine measures, carriers of activities and implementation dynamics of the energy policy for the period of the next four years. District heating is set as one of the priorities of the Energy Strategy and this, inter alia, should provide clear guidelines on planning, as well as encourage the use of renewable sources and energy diversification of all energy forms. It will also encourage construction of DH systems in urban areas through the commitment to satisfy the heat demand in residential facilities larger than 1000 m² either from single building boiler plant or from district heating systems.

The majority of stakeholders interviewed agree that the base of knowledge and skills to achieve a successful expansion of district heating in Croatia exists. The founding of the Group for DH Activities within Croatian Chamber of Economy was the first step and their work should be further encouraged, in particular a closer cooperation with government at local, regional and national levels.

The image of the district heating needs to be improved on all levels. From the data gathered through the interviews, all stakeholders agreed that the policy makers view district heating as a neutral activity. It was also the case with the general public (with a slightly more positive feedback). Only the existing customers see district heating generally more positive than negative, mostly due to the low current prices of heat. This shows that there is a need for information and education campaigns on the benefits of the DHS and general improvement of the perception of district heating at all levels.

Main Driving Forces

Since there has been no expansion of district heating in the last fifteen years in the Republic of Croatia it is difficult to identify the main driving forces. However, the majority of interviewed stakeholders consider the main forces of district heating in general to be the district heating companies, namely their individual efforts and capabilities to maintain or improve the current district heating systems. The Group for District Heating Activities within Croatian Chamber of Economy provides a stronger voice for the interests of district heating to be heard and their efforts and lobbying should be intensified and further supported.

Main Barriers

The main barriers holding back the development of DH in the Republic of Croatia are:

· The majority of interviewed stakeholders see the barrier of the DH development in the existing Heat Tariff System. The current system of tariff determination is complicated; it involves long administrative procedures and the tariff amounts are changed approximately once a year i.e. it does not allow a fast response to the changes in prices of input fuel. Consequently, it can be said that there is still place for significant improvement within the Heat Tariff System. Changes in the Heat Tariff System, in this sense, may favourably influence the future investments and developments in district heating in the Republic of Croatia.

• Natural gas, as the main competitor to district heating, is, by the majority of district heating stakeholders, seen in the favoured position in comparison to district heating whether from the political, local community or price perspective. The price of gas is closer to the market price, enables profitability and gas network development. Generally the development of gas pipelines is seen as a priority and gas lobby is very influential. The most of the stakeholders agree on this issue.

• The technical condition of the existing district heating systems in the Republic of Croatia which require considerable investments into revitalisation and modernisation in order to increase the reliability and security of heat supply. By application of modern technology for heat production and distribution, the possibilities for energy and financial savings certainly exist.

• Absence of energy planning. Recent completion of Phase 2/3 of the DH development Strategy in the Republic of Croatia provided two examples (pilot projects) of application of DH planning in cities of Karlovac and Slavonski Brod. The final phase 3/3 of DH Strategy, currently postponed, is anticipated to provide the final guidelines that should facilitate cooperation between the state administration offices in the Counties responsible for energy affairs and representative bodies of local governments when developing physical planning documents.

Main Opportunities

The main opportunity for district heating development in the Republic of Croatia is seen through improved energy efficiency and increase in reliability and security of supply of district heating systems by application of new technologies. These may include options like cogeneration, biomass and incineration plants, replacement of old networks with preinsulated pipes, improved regulation of DH systems at all levels including demand side management etc.

Given the present situation and forecasts of economic and demographic growth, and the planned accession to the European Union, by 2020 the Republic of Croatia is expected to create the basic preconditions for the development of district heating, such as improving the technical and technological conditions of the existing systems, the completion of the related legislative framework and the commencement of energy planning as well as general energy management (as a result of increasing energy prices and environmental costs). It may still be too early for development of large district cooling schemes in Croatia, but this will certainly depend on new technologies and their mass application, with acceptable investments and operating costs competitive to the current traditional methods of cooling. The potential for cooling unquestionably exists, but how it will take off remains to be seen in the years to come.