In the context of accelerated decarbonization, the Croatian electricity system is facing an increasingly significant challenge: how to align the growth of generation from variable renewable energy sources with the limitations of the existing grid. In practice, this is reflected in difficulties connecting new facilities due to limited grid capacity, the need for additional investments in the grid, and the growing need for system flexibility.
In this context, energy storage is no longer just a supplement to renewable energy sources, but an increasingly important element of the electricity system. Its role is twofold: on one hand, it enables the storage of energy during periods of surplus production and its delivery when demand is higher or prices are more favorable; on the other hand, it contributes to ancillary services and system balancing.
This is why support models and financial mechanisms for energy storage should be designed to recognize their value not only in absorbing surpluses from renewable energy sources, but also in their role as active market participants and providers of ancillary services.
The Croatian framework for encouraging the construction of energy storage facilities currently relies primarily on investment support. Among the most important instruments are the Modernisation Fund, the National Recovery and Resilience Plan 2021–2026 (NRRP), and programs of the Environmental Protection and Energy Efficiency Fund.
Within the Modernisation Fund, projects related to energy storage, grid modernization, and demand management have been supported. One notable example is the battery energy storage project in Šibenik, with a capacity of 60 MW and 120 MWh, representing a total investment of approximately EUR 60 million, of which around EUR 19.8 million was secured through grants.
The NRRP has also encouraged investments in energy storage. Particularly relevant was the call for facilities for storing self-produced electricity for delayed delivery to the grid, which closed on 27 February 2026, with an allocation of EUR 50 million.
The Environmental Protection and Energy Efficiency Fund also participates in supporting investments in storage systems, primarily through programs related to renewable energy sources and energy renovation.
In addition to grants, an important role is played by credit and investment instruments offered by HBOR, EBRD, and commercial banks. In this way, the financial framework for the development of storage projects is gradually expanding, although it remains predominantly focused on the initial investment phase.
Despite the very active renewable energy market (RES) and frequent amendments to the regulations governing it, Croatian legislation still does not provide a specific operational support mechanism for standalone storage facilities, for example in the form of market premium contracts or similar long-term models.
The existing support system through market premiums, as regulated by the Act on Renewable Energy Sources and High-Efficiency Cogeneration, is primarily intended for renewable generation facilities.
Such a model is based on delivered electricity and premium calculations per MWh, and is therefore not adapted to standalone energy storage facilities. These facilities do not generate new energy; instead, they create value through delayed delivery, time-shifting, arbitrage, and the provision of system services.
As a result, energy storage projects in Croatia today generally rely on a combination of investment support and market revenues, without a long-term contractual mechanism that would ensure more stable and predictable income.
In EU Member States, support for energy storage is most commonly developed in two directions: through investment support, which reduces initial capital costs, and through operational support, which provides more stable and predictable income during operation.
Unlike traditional premium systems for renewable generation facilities, support for storage is linked to capacity availability, technical performance, and the ability to provide system services.
A particularly interesting example is Italy, where two different operational support mechanisms exist.
By Decision SA.104106 of 21 December 2023, the European Commission approved a state aid program for the development of a centralized electricity storage system, with an estimated total budget of EUR 17.7 billion and the goal of developing more than 9 GW / 71 GWh of storage capacity by 2030.
This program was introduced through MACSE (Meccanismo di Approvvigionamento di Capacità di Stoccaggio Elettrico), a storage capacity procurement mechanism intended for standalone storage facilities connected to the transmission or distribution network.
Terna (Terna S.p.A.), as the transmission system operator, conducts auctions, signs contracts with selected investors, manages supply, and optimizes the use of contracted storage capacity. Meanwhile, GME (Gestore dei Mercati Energetici S.p.A.) organizes and operates the market platform where these contracted storage capacities are sold to third parties as standardized time-shifting products.
Contracts with investors are concluded for predefined long-term periods depending on the storage technology.
Selected investors are required to build the facility, make storage capacity available to third-party market participants through the GME platform, and offer remaining capacity on the ancillary services market, balancing market, and European balancing energy exchange platforms. In return, they are entitled to a fixed annual premium paid by Terna.
The first auction under MACSE was held on 30 September 2025, contracting a total of 10 GWh of storage capacity (lithium-ion battery systems) in southern Italy and on the islands. According to public announcements, contracts for selected projects were concluded for 15 years, and the projects are expected to enter operation in 2028.
However, MACSE is not the only mechanism through which Italy addresses growing flexibility and security needs in the electricity system.
In parallel, Terna also implements the Capacity Market, open to various technologies including generation facilities and storage systems. Its purpose is to ensure sufficient and available capacity to preserve security of supply, especially during periods of insufficient generation.
For contracted capacity, Terna pays a fixed annual availability fee, in addition to market revenues that facilities may earn on electricity and services markets, subject to clawback mechanisms under certain circumstances.
Selected participants sign contracts with Terna that may last one year, or in certain auction phases three years, for existing capacity, while for new capacity they may last up to 15 years.
