Croatia: what does a biogas and biomass electricity generator receive? HROTE premium auctions

According to the European Commission, a Croatian generator of electricity from biogas or biomass under the auction system receives support in the form of a market premium awarded in an auction that the energy market operator HROTE organises at least once a year. The premium tops up the current market price, the contract lasts 12 years, and in the first auction in 2022 biogas won an average of HRK 1476.66 per MWh, i.e. about EUR 196.6 (at the July 2022 exchange rate).

Support mechanism

According to the European Commission, the Croatian premium system (FIP) operates as a one-sided sliding premium, similar to a contract for difference. This means that the generator sells electricity on the market and receives from HROTE a top-up to the current market price, so that its revenue approaches the reference price from the bid. The system has a floor price but no cap: when the market is high, the generator does not hand back the surplus above the reference price. A bid in the auction may not exceed the maximum reference price set for the given group of installations.

The technologies available include biogas and biomass. The auction volume is expressed in installed capacity, and detailed conditions, including minimum and maximum capacity, are set by each auction announcement. End consumers generating electricity for their own needs and users of self-supply installations may not take part in the auction. The legal basis is the Renewable Energy Sources Act, the ordinance on RES support and the ordinance on support quotas.

First auction: biogas 2022

In July 2022 seven bids won in the biogas category, for 8.7 MW from a pool of 16.7 MW. The reference price cap was HRK 1482.23/MWh, and the average winning bid HRK 1476.66/MWh. We give the details in the entry Croatia: first premium auction.

The average bid is 99.6% of the cap, so participants practically did not compete on price: the capacity awarded was smaller than the pool.

The 2024 auction

In April 2024 HROTE announced a market premium auction with a pool of about 607 MW covering photovoltaics, wind and small hydropower; biogas and biomass were not mentioned in it. According to Balkan Green Energy News, premiums were awarded to 92 projects with total capacity of 419.06 MW, mainly photovoltaics (wind received no premium because of too few bids).

Volume and quotas

The biogas pool in 2022 was 16.7 MW, of which 8.7 MW was awarded, i.e. 52%. The quotas are set by the ordinance on RES support quotas, and each auction announcement divides them between technologies. As a result biogas and biomass do not compete directly with photovoltaics, which dominated the results of the 2024 auction.

Who this is for

• Farms and processing plants with biogas — small and medium installations with a capacity of a few MW, for which the auction provides a 12-year contract.
• Biomass power plants — can also take part, although the available data from the 2022 auction concern only biogas.
• Consumers with their own generation — do not qualify for the premium auction.

Comparison

The rate of EUR 196.6/MWh (about 19.7 ct/kWh, at the 2022 exchange rate) is close to the German bid cap for new biomass installations in 2024, i.e. 19.43 ct/kWh (Germany: tender caps 2024), and lower than the Austrian applicable value for new biogas plants, 32.83 ct/kWh (Austria: EAG rates for 2024–2025). For consumers in zloty, EUR 196.6/MWh is about PLN 850/MWh at an exchange rate of about PLN 4.30 per euro (indicative, 2024). The Croatian figure is the reference price of the bid, to which the premium tops up market revenue, and not a payment above the market.

How to calculate revenue

For example: if the monthly market price of electricity were EUR 100/MWh (an illustrative value), the premium for a bid of EUR 196.6/MWh would be EUR 96.6/MWh, and the generator's total revenue EUR 196.6/MWh. At a market price of EUR 250/MWh the generator would keep the entire market price, because the system has no cap and the premium in this case is zero. The twelve-year contract term means that an installation of 1 MW operating about 7500 hours a year (an illustrative value) will produce about 90 thousand MWh over that time, so the scale of support is determined above all by the difference between the reference price and the market price in successive years.

What next

HROTE is obliged to publish an auction at least once a year. After the 2022 auction, in which 52% of the biogas pool was used, and the 2024 auction, dominated by photovoltaics, the key question for biogas is whether subsequent announcements will provide separate quotas for low-capacity installations.