Croatia, particularly the Podravina basin, is situated above a vast geothermal reservoir with significant potential for renewable energy production. However, challenges persist for investors in the geothermal energy sector, including the absence of tenders for awarding premiums and the limited planned installed capacity of future power plants.
On 28 March, INA began exploratory drilling at the Lescan GT-1 geothermal well near Djurdjevac. If the results prove promising, this could lead to the construction of a power plant with a minimum capacity of 20 MW. Meanwhile, Terra Energy Generation Company, owned by the Turkish firm Soyak, has confirmed the feasibility of underground water exploitation for electricity generation in the basin. The company has applied for an energy permit, which is expected to be granted soon. Terra also plans to submit a request to HERA in May for approval to connect its future geothermal power plant to the network, while simultaneously applying for permits to construct the plant, drill wells, and build necessary pipeline infrastructure.
A significant issue is that the energy permit is valid for just four years, making it unlikely that Terra will be able to drill all the wells and complete the full-capacity 98 MW power plant, which could potentially expand by an additional 40 MW. Therefore, the initial phase of the project will focus on a 49 MW plant.
Further complicating the situation is the stalled feasibility study, as the Ministry of Economy has not issued a tender for premium allocation since 2021. This absence makes it difficult for investors to assess the return on investment, as the unpredictable return period makes such projects high-risk. As a result, many investors, including Terra, argue that geothermal power plant construction in Croatia is unfeasible without the announcement of a premium tender.
In response to inquiries about the delay, the Ministry of Economy explains that disruptions in the energy market have required prioritizing price stabilization and supply security. Additionally, the Ministry is working on new support models, including funding from the National Recovery and Resilience Plan, particularly for heating projects and electricity generation. New financing mechanisms are being developed to enhance the competitiveness and attractiveness of geothermal projects for investors.
Another hurdle is that Croatia’s National Energy and Climate Plan for 2021–2030 allocates only 68 MW of installed capacity from geothermal sources, a figure some experts deem insufficient for the sector’s long-term development.