Croatia exclusive report: Electricity Market in Croatia, Active Traders

3. November 2014. / SEE Energy News

The opening of electricity market in Croatia began 10 years ago, and since 2008, all consumers have had the legal right to choose their electricity supplier. However, an increased market competition emerged in the mid-2013, when the wholesale prices dropped. For now, the most prominent players in the market competition, besides the HEP, are the companies GEN-i and RWE Energy.

By the adoption of the Energy Law, the Electricity Market Law and the Law on Regulation of Energy Activities, the conditions have been created for a complete opening of the electricity market in the Republic of Croatia. In accordance with the prescribed laws, the electricity supply can be offered by the companies performing the energy activity of electricity supply (the Suppliers). There is only one electricity market in Croatia. In the initial phase of its opening, the bilateral market model was chosen, in which the electricity trading is carried out through bilateral contracts. The entrance of new electricity suppliers into Croatia – for now, these are the above mentioned companies RWE Energy and GEN-i – has created a competition to the HEP and opened the possibility for the consumers to choose the supplier according to the offered terms.

The “Croatian Electric Power Industry“ (the HEP group) is the national electric power company, engaged in the electricity generation, transmission and distribution, and also in gas supply for the customers within the last few decades. After the restructuring and the separation of activities, the “Croatian Electric Power Industry“ was organized in the form of a concern as a group of affiliated companies (subsidiaries).

At the beginning of July 2013, the status changes of the HEP Transmission System Operator were carried out, now this is the Croatian transmission system operator, abbreviated as the HOPS, for the purpose of separation according to the ITO model (Independent Transmission Operator), and in accordance with the Electricity Market Law and the decision of the HEP’s Assembly on choosing the “independent transmission operator” model.

The separation of the transmission system operator (TSO) is the obligation of Croatia according to the third package of the EU energy regulations, and it is regulated by the new Electricity Market Law adopted in February last year.

In Croatia, there are more than 2.3 million consumers, i.e. metering points for delivered electricity. The Croatian transmission system operator llc is in charge of supplying the tariff buyers, whereas, with regard to the supply of privileged buyers, the HEP Supply is exposed to the competition of other electric power industry entities on the market.

One year after a major entry of alternative suppliers into the segment of households and small entrepreneurs and six years after the electricity market liberalization, the market share of the HEP Supply did not decrease much – from 2008 to July 2014, only 4.75% of buyers changed their supplier. Today, the HEP Supply supplies a total of 33.787 buyers within the entrepreneurship segment and 15.000 buyers less in the households segment.

In July this year, GEN-i Zagreb llc celebrated the anniversary of entering the market of electricity supply for households and small entrepreneurs in Croatia. During this extremely dynamic period, the company achieved positive results and, ending with the first quarter, they won 5.9 % of the total Croatian electricity supply market.

From July 2013, when cheaper electricity for households and small entrepreneurs was offered, to 1st July 2014, 19.513 Contracts were signed (16.975 households and 2.538 small entrepreneurs), whereas others are in the transition process.

Despite the challenges, the operating income of the company GEN-i Zagreb for the year 2013 amounted to more than 92 million euros, and in the first quarter of 2014, an operating income of 30.9 million euros was achieved. Whereas in 2012, the sale to end users amounted to 94.1 gigawatt-hours GWh, in 2013, this figure rose to 354.5 GWh, only for the sale to end users to reach the figure of 216.5 GWh in the first quarter of 2014 alone.

The RWE is one of the five leading companies in Europe within the field of electricity and gas supply. Along with the successful business operations of many years in the Western Europe, within the last 15 years, the RWE has also gained experience in the field of electricity market liberalization in the east of the continent.

A year after the beginning of the RWE business operations within the segment of offering electricity to households, the company took about five percent of the entire market in Croatia, and they are planning to double this percentage by the end of 2016.

More than 75.000 households and 2.500 business entities have chosen the RWE as their new supplier. On the electricity market, three out of four households, who have changed the supplier, have chosen the RWE. According to the mapped out business plans, the RWE is planning to reach 10 percent of the entire electricity market in Croatia by the end of 2016. In 2013, the RWE achieved the income of 70 million kunas, whereas, in the first 6 months of 2014, the income of 110 million kunas i.e. about 15 million euros was achieved.

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