With right legal framework, Croatia could see surge in geothermal development

With right legal framework, Croatia could see surge in geothermal development Velika Ciglena geothermal plant during construction (source:
Alexander Richter 12 Feb 2020

With its great geothermal potential, the right legal framework could help push geothermal development in Croatia, so Dragutin Domitrovic, General Manager of MB Geothermal, developer of the first geothermal plant in the country.

According to the estimates of the Croatian Hydrocarbon Agency, based on available data on several thousand drilling, exploration and development wells in Croatia in the last decades, Croatia could build geothermal power plants with a total capacity of up to 500 MW. Considering that these estimates were made under conservative assumptions, the real potential is even greater, so Dragutin Domitrovic, project manager of the Velika Ciglena 1 geothermal power plant near Bjelovar, the first geothermal power plant of Turkish MB Holding in Croatia.

In an interview with local publication he highlights the benefits and potentials of using geothermal energy, the Velika Ciglena 1 results so far, commenting on energy strategy as well as administration as a perpetual pain in investing.

Talking about the potential, he says that the greatest for the exploitation of geothermal energy exists in the continental part, in the Pannonian Basin, where the average geothermal gradient, ie the degree of temperature rise with a depth of as much as 60 percent higher than in the rest of Europe:

“Translated into concrete figures, this means that by drilling to a depth of two thousand meters, it will be common to find bedrock temperatures of about 100 degrees Celsius, and at a depth of three thousand meters the temperature is already around 150 degrees Celsius, which is already a pretty decent temperature for electricity production. Comparing this with, for example, the Netherlands, which has to drill as much as five thousand meters deep at a temperature of 150 degrees Celsius, it is clear that Croatia is very attractive on a European scale. Because of all of the above, especially since Ciglena opened the Velika Ciglena 1 geothermal power plant, the interest of investors in the construction of geothermal power plants, but also in the application of geothermal energy in heating, has been increasing, so MB Holding is no longer the only potential investor, ” he said.

However, it warns that a more constructive approach to investors, a more efficient and faster legal system, clearer and simpler administrative procedures and implementing acts are lacking:

“In particular, in the area of ??construction of energy facilities using renewable energy sources, from the beginning of 2016 to the end of 2018 there were no by-laws that would, in accordance with the Law on Renewable Energy Sources and High-Efficiency Cogeneration, define the procedures for investors to compete for approval of such projects, which further slowed the realization of great domestic potential. At the moment, it appears that the Ministry of Environment and Energy is well on the way to completing the necessary acts that would allow HROTE to start tendering for RES projects, ” he said.

He notes that investors here, as in other countries, are looking for a stable legal framework that will allow continuity of development and realization of the project. It therefore considers that the administrative procedures should be clear, and given the specific nature of the geothermal energy sector, it may be advisable to try to simplify them. Namely, as he explains, in the construction of geothermal power plants, an investor in Croatia must run two processes in parallel: one related to the construction of a power plant or a power plant in the narrow sense, and the other to the construction of an oil and mining plant: wells, surface installations, impression pipelines…

“It would be really good if these two processes were combined into one. To the best of my knowledge, colleagues from the Hydrocarbon Agency have been working on an analysis of the current state of affairs and proposals for a long time to speed up and simplify the whole procedure, ” he said.

He also made reference to a recent e-consultation which outlined the Proposal for a Rulebook on Criteria for the Issue of Energy Authorization for Manufacturing Plants:

“According to the provisions of the proposed ordinance, a contract for the exploitation of geothermal waters must be enclosed with the application for the issue of an energy permit for a geothermal power plant. For an investor starting from the very beginning, or from exploring a specific research area, this means that he or she can obtain the energy approval, which is necessary for entry into the RES Registry of the Croatian Energy Regulatory Agency and for submission to the HROTE tender for obtaining a contract for the purchase of electricity, it must spend EUR 5 to 8 million – which is the expected price of an exploratory well whose drilling is one of the necessary conditions for confirming geothermal reserves and obtaining a contract for the exploitation of geothermal water. This is in large proportion to investors in other RES technologies, warns.

It can be expected, he goes on, that such a request will discourage potential investors because after such a large initial investment, they have yet to compete for a power purchase agreement, with the possibility that they may not even receive it:

“In the e-consultation, as a member of OIEH, we made comments and suggested that the threshold for joining geothermal power plant projects should be harmonized with other RES technologies and that the applicant for an energy permit should be submitted as an alternative to the contract for the exploitation of geothermal water oil and mining project for exploration well. Depending on the agreed research program and conditions in the surveyed geothermal area, it may be expected that the investor will have to spend the aforementioned EUR 250-500,000 on preparatory tests and drafting of the project documentation, which seems to me a sufficient filter to separate serious investors from speculators. Unfortunately, our proposal was rejected on the grounds that the practice so far has proven to be good. According to my knowledge, states.

Despite everything, Domitrovic believes that geothermal energy can become a winning map for Croatia:

“It is likely that the number of solar projects will be large in the coming period. The construction of a solar power plant is, however, much simpler, less expensive and much less risky compared to the construction of a geothermal power plant. In addition, despite its great natural potential, Croatia is unfortunately at the back of the EU in terms of installed megawatts of solar, and it is time to launch that part. However, the great potential for electricity and heat from geothermal energy in continental Croatia should not only be viewed from the perspective of installed megawatts of electric or thermal power, but also through the possibility of developing new and improving existing technologies, a possible revitalization of turbine production, which has had a long standing in Croatia and respectable tradition and other parts of geothermal power plants ” emphasizes the project manager for the Velika Ciglena 2 project.

He reminds us that we have experts who apply their knowledge of geothermal in other countries and who will, surely, be ready to accept work on projects of extremely rich domestic geothermal potential.

You can read the entire interview on the website