Energy Communities Blocked by Bureaucracy: the Croatian case

Energy communities hold great potential, particularly on islands and in smaller localities. So what’s stalling energy democracy in Croatia?

The recently held OGANJ 2025 Festival in Vukomerić, organised by ZMAG’s Recycled Estate, brought together citizens and experts united by a shared vision: a local, just energy transition driven by people. The event showcased inspiring examples of community-led renewable energy projects, but also highlighted several initiatives stuck in bureaucratic limbo. The panel discussion, moderated by Ivan Zoković Cola (representing ZMAG and Island Movement), tackled both success stories and systemic obstacles.

Bureaucratic Barriers in Croatia

In the face of accelerating climate change, energy independence is becoming a strategic priority. Energy communities offer a fair and sustainable solution, enabling citizens, associations, municipalities, and businesses to jointly produce and consume renewable energy. This decentralised model supports energy democratisation, lowers energy bills, and enhances resilience to crises.

While EU regulations strongly encourage the development of energy communities, Croatian bureaucracy and legal loopholes continue to significantly slow down citizen-led efforts.

The Case of Cres and Lošinj

The energy transition on the islands of Cres and Lošinj began back in 2019, in cooperation with the EU Clean Energy for EU Islands Secretariat, through the drafting of a local transition roadmap and a public declaration signed by key stakeholders. To boost local energy production, the Apsyrtides energy cooperative was founded in 2021, bringing together both island municipalities, local businesses, and citizens.

The cooperative is currently developing a 500 kW solar power plant in northern Cres. A suitable plot has been identified and the main design has been completed. Although navigating permitting procedures and technical requirements has proven challenging, progress is being made. Despite fluctuating market conditions and necessary budget adjustments, the project remains viable — driven by strong local partnerships and a focus on long-term community benefits.

A New Energy Community through the ISLET project

Alongside the cooperative model, a new citizen energy community initiative is underway as part of the EU-funded ISLET project. The goal is to create a formally recognised community including the City of Cres, the local kindergarten, and the museum. Initial registration followed best practices from other EU countries — but hit a snag when Croatia’s Office for Associations pointed out a legal barrier: under Croatian law, members of an association cannot have ownership links. Since the City is the founder of both the kindergarten and the museum, this rule could not be met.

An alternative approach is now being explored — creating a Renewable Energy Community (EZOI) instead, which would satisfy legal requirements while keeping local public entities involved.

Ugo Toić, Director of the Island Development Agency OTRA, explained how the cooperative is currently engaged in two EU projects: ISLET, in partnership with the City of Cres and Island Movement, focused on strengthening local governments’ capacities to participate in energy communities; and DECA, aimed at offering citizens training and support to launch their own energy initiatives.

Energy Communities Need Legal and Political Backing

Croatia’s current legal framework treats energy communities as non-profit organisations, which poses problems for cooperatives — even those operating for community benefit — that must comply with market rules. Moreover, the requirement to employ at least one full-time staff member from day one places a heavy financial strain on small initiatives that have yet to generate income.

In practice, this means that citizens eager to create energy communities must first navigate a legal maze and secure funds for bookkeeping, banking, and salaries — before producing a single kilowatt of electricity.

ZEZ and Legal Grey Zones

The Green Energy Cooperative (ZEZ), a long-standing promoter of community energy in Croatia, ran into multiple legal contradictions while founding its spin-off cooperative, ZEZ Sunce. As ZEZ’s Goran Čačić pointed out at the OGANJ Festival, Croatian law requires all cooperative members to be Croatian residents — a rule that contradicts EU directives, which define energy communities as open and cross-border entities.

At the same time, the lack of clear guidance from the Croatian Tax Authority and the Ministry of Finance regarding taxation further deters potential investors.

Northern Adriatic Ready for Transition – But Held Back

In the case of the Northern Adriatic Energy Community, the technical capacity is there — 37 members and a solar system of approximately 220 kWh. However, regulatory restrictions are holding back citizens: due to existing rules, their energy supplier doesn’t allow surplus energy to be shared among community members.

On top of that, the requirement to hire a staff member, even on a part-time basis, significantly increases project costs. This example clearly shows that the barriers aren’t technical — they’re purely administrative.

Legal Reform Is Essential for Progress

Cases from islands, the Northern Adriatic, and the ZEZ network demonstrate that community energy in Croatia holds tremendous promise. But bureaucracy remains a serious barrier. Croatia has yet to fully implement EU directives that define energy communities as key actors in the transition. Instead, they are often treated as legal anomalies without a clear place in the system.

If Croatia wants to meet its climate goals, it must reduce its dependence on imported energy and empower local actors. This will only be possible if energy communities are acknowledged, supported, and embedded in national policy — not sidelined by paperwork.