How Croatia became one of the cheapest for electricity in the EU

Dubrovnik

Croatian households are currently paying among the lowest electricity prices in the European Union, with a kilowatt hour costing just 14 euro cents – almost half the EU average of 28 cents.

According to the latest data from Eurostat, only Bulgaria, Malta and Hungary have cheaper household electricity in the EU, while Germany tops the scale at 39 cents per kilowatt hour.

So what is Croatia’s secret?

Energy expert Ivica Jakić tells daily Jutarnji list that the key lies in the country’s energy mix.

Croatia benefits from a strong reliance on hydroelectric power, alongside a stable supply from the Krško nuclear plant in Slovenia.

This has resulted in a base electricity price of just 11 cents per kilowatt hour – one of the lowest in the EU. Only Hungary, Bulgaria and Poland report lower base rates.

While changes may come with the increasing number of solar installations being added to the grid, Jakić notes that Croatia’s advantageous mix should keep prices relatively low in the near term.

However, with Croatia still importing around 40% of its electricity, global market trends will remain a significant factor.

Taxation also plays a major role. Croatian households enjoy relatively low VAT on electricity – just 13%, compared to rates as high as 27% in countries like Hungary.

In wealthier EU nations, taxes and levies can make up over 30% of the electricity bill. In Croatia, 78% of the total cost goes to production, transmission, and supply, with the remainder allocated to taxes and subsidies.

Much of this affordability is maintained through government intervention. The state-owned utility HEP has kept prices stable under government direction, acting as a lever of social policy.

While the Institute of Public Finance warns this approach may not be sustainable long-term, Jakić believes the government is likely to continue shielding consumers from market shocks as long as necessary.

Although market prices have stabilised since the 2022 energy crisis, several EU countries saw significant price hikes in early 2024. Ireland recorded the highest increase (36.6%), followed by France (20.7%) and Portugal (17.1%).

In contrast, Croatia saw a 2% year-on-year decrease.

As Jakić puts it, “Prices are one thing, but supply security is just as important. The government must always consider the broader picture when shaping energy policy.”