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Fighting the Power Proves Tough in Croatia

Dalibor Dobric Zagreb, Osijek and Berlin

The Croatian state may have embraced energy conservation as part of its EU accession - but when individual consumers try to save energy, it’s far from easy.

Katica Volic represents the tenants in a block of apartments in the eastern Croatian city of Osijek. On the front line in Croatia’s war for independence in the 1990s, Osijek suffered terrible damage. Once the fighting ended, the city hall offered financial encouragement to locals to renew their building facades on their own.

Pensioner Volic succeeded in persuading 43 of her 44 fellow tenants to take a loan for 80,000 euros from a commercial bank to renew and insulate the damaged facade. “They chased me out of one apartment when I said ‘loan’,” she recalls, adding that the same tenant now kisses her every time they meet.

This is because average heating bills in the building have since fallen by 15 per cent. Now she hopes that Croatia’s energy company will allow individual metres, so people can save more on their bills.

Volic is an ideal citizen, not only of Croatia but the world, who is concerned with lowering her energy bills, and saving the planet. Yet the Croatian state is unhelpful. While she got her way in Osijek, most Croats confront serious bureaucratic obstacles when trying to be more energy efficient. The housing infrastructure system does not support such people.

For example, in most buildings, energy and water bills are not costed in accordance with a family’s actual consumption but on the basis of the apartment’s size, or on the number of residents per flat. This provides little incentive to save energy.

Good only on paper

Outwardly, Croatia is a model pupil in the field of energy conservation. As part of its EU accession process, Zagreb is rapidly adopting European directives, including those on lowering carbon emissions. Energy and building laws and construction codes are changing in harmony with EU standards. By mid 2009, all new buildings, as well as old flats on the market, will have to have energy certificates, detailing the power they consume.

But on the ground it’s a different affair. The water utility and Hrvatska Elektroprivreda, the energy company, are, of course, familiar with individual calorimetres and hydrometres. But they usually say installation of such metres “is not yet possible” for technical reasons since, in most buildings, water and heating lines do not lead into each individual apartment.

Instead, the overall quantity entering the building is measured at the ground floor and the bill divided up accordingly.

Heavy losses in national water and electricity consumption, mostly down to leakage from old pipes and the utility companies’ inefficiency in collecting bills, are more easily covered by collective bills than by a pay-as-you-go system. Meanwhile, government subsidies for more energy efficient buildings are meager, and provide little incentive to developers.
 
Try doing this at home

My own apartment block in Zagreb offers insight into the typical problems faced by environmentally-conscious consumers. The bloc houses 110 flats. But any large works to improve energy efficiency depend on the votes of the owners of at least 51 per cent of the building area and, if a loan is required, 80 per cent of tenants must vote in favour.
In my building, such improvements are almost impossible because 20 per cent of the tenants have not paid their deposit reserves. This is the monthly fee covering maintenance work, such as cleaning and running the elevators.

As a result, the building is in debt to the tune of €15,000 this year. The company in charge of the maintenance work, Zagrebacki Holding, is owned by City Hall, and the only way for it to collect the debts is through the inefficient judiciary.

A separate problem is that the apartment bloc was built in the 1990s, when energy efficiency was unchartered territory. If we were to follow Volic’s example in Osijek, we would install Styrofoam insulation to a depth of 5 to 8 cms on the exterior. At 35-45 euros per square metre, that would cost about 200,000 euros for the façade, or 300,000 euros, including roof repairs and a new water pump.

But Zagrebacki Holding insists we can forget it. They rarely receive requests to improve energy efficiency. “In any case, as long as your building is in debt, we have nothing to discuss”, they say.

Nor is it much easier to save energy - and money - on a personal level, in the home. When I decided on some energy saving investments to cut back on greenhouse gas emissions, I took a look at my various appliances, including an air conditioner, central heating, a computer, a television, a DVD player, refrigerator and freezer, a dishwasher, washing machine, and other, smaller, appliances. I already cook on a gas stove, which uses less energy than electricity. My yearly electricity bill amounts to some 390 euros, while heating runs at 450 euros.

I divided efficient saving measures into various categories, starting with those that cost little but still have some effect, including swapping light bulbs with energy saving bulbs, sealing windows and making small changes in behaviour – turning lights off when leaving a room and turning down the heat by a degree or two in winter.

Showers save up to 60 per cent of the water used in a bath. Instead of changing a toilet tank, I installed a plastic bottle filled with water in the tank, reducing the flush. One can also buy water-saving shower heads and faucets.

I bought energy saving bulbs. The 20 in my apartment, mostly 75 watts (W), are turned on for an average of three hours daily, which is 110 kWh each a year, or 2200 kWh yearly, costing 230 euros. For the 120 euros I spent on the bulbs, I was able to cut my annual consumption to 438 kWh, reducing the amount I have to pay to 60 euros.

But unlike some other countries, Croatia provides no incentive to consumers to swap ordinary bulbs for the energy saving variety. The latter contain mercury. It is one reason why energy saving bulbs are more expensive than regular bulbs – the producer or importer has to pay a so-called eco tax.

This is a tax levied on all products deemed harmful to the environment. In other words, instead of stimulating the use of energy saving bulbs, the government’s tax policy makes them far more expensive than the ordinary variety.

Energy saving measures still pay off, of course. A so-called ‘stand-by killer’ that cuts television or DVD player stand-by consumption by 90 per cent costs about 70 euros. Otherwise, these appliances eat up 200 kWh per year when not in use, costing consumers more than 20 euros.

In the kitchen, energy efficiency is easier. All appliances are marked in the store with a coloured table, showing their energy and water usage. My fridge consumes 346 kWh of energy each year and cost 85 euros more than its 140 kWh hungrier colleague of the same size.

So, I save 140 kWh a year, or about 16 euros, equivalent to a return on the original investment within five to six years. A dishwasher not only frees you from washing dishes but saves water.  

But without an individual hydrometre to monitor consumption, even an AAA dishwasher will save only fractions of pennies if the water bill is then shared between 200 tenants.

Again, installation of individual hydrometres to monitor consumption would encourage energy efficiency far more than promotional campaigns. It would be logical to encourage their introduction or even make it obligatory. But the government hasn’t felt the heat on this issue yet.
 
Much advice, little help

Mate Rebic, an energy advisor with UNDP for a programme on energy efficiency in Croatia, says people want to save energy. Rebic says there are a million pieces of advice available but proper insulation is the most important action, because 60 to 70 per cent of average household energy consumption goes on heating in winter or cooling in summer.

Changing windows, renewing facades, and adding Styrofoam and other forms of thermal insulation can cut consumption in half. But Rebic returns to the same point: when energy costs are not charged individually and in accordance with consumption – and when the cost for the entire building is shared, based on an apartment’s size or the number of residents per flat – consumers simply lack a motive to conserve energy.

For example, a colleague residing in a 90m2 apartment with gas heating invested 1,400 euros in 2007 to seal his doors and windows, and install regulators on his radiators. Over a year, his heating bill fell by 450 euros, which means he will recover his investment in four years. But he lives in a building in which apartments are billed for heating individually, encouraging them to save gas.

As mentioned earlier, the water utilities and Hrvatska Elektroprivreda are reluctant to install individual calorimetres and hydrometres, citing the heavy expense of remodeling the current housing stock in which the water and heating lines run into each individual apartment in verticals, while the quantity of energy and water going in to the building is monitored only at the ground floor.

However, experts point out that the water companies waste vast amounts of water. “They lose about one-third of the total national water consumption due to their own inefficiency and old pipelines,” one expert disclosed.

“Elektroprivreda loses an even bigger percentage of electricity as a result of old infrastructure, and because it tolerates illegally connected buildings,” he added. It is an open secret that payment of bribes to the right people can get a household connected to the water supply and electricity grid.

There are other examples of illogical inflexibility in the Croatian energy framework. Take solar energy. Using photocells to produce electricity does not pay in Croatia, despite the introduction of a feed-in system that notionally encourages small producers to sell their surplus energy to the national grid. Small producers receive 0.45 euros per kWh of energy that they sell.

A story I heard in a store that sells solar equipment was revealing. An affordable solar panel system of 10 kW cost some 75,000 euros. After attaining permits to install 80m2 of panels on the roof, receiving energy approval and registering with the state as a producer, the tenant purchasers discovered that with the amount of sun Zagreb gets, the panels would pay off only in 15 to 16 years.

The feed-in system also guarantees the said price for only 12 years, after which the price drops to 0.11 euros per kWh. The annual production of such a power plant would reach 13,500 kWh yearly, yielding a meager 1,500 euros. In other words, the investment would never really pay off.
 
Not so smart after all

The state in Croatia has only recently started an energy efficiency policy. In addition to the UNDP, the Fund for Environmental Protection and Energy Efficiency and the Ministry of Environmental Protection, Physical Planning and Construction are active in this field. But there is little coordination between the various agents, says Marija Sculac Domac, of the Fund.

The Fund for Environmental Protection has considerable means at its disposal, but has yet to cooperate with individual consumers. It works instead with local authorities to improve energy efficiency for public lighting and in public buildings, such as schools and hospitals. But Andrija Bogunovic has no kind words for the Fund.

Agria, the Osijek-based firm for which he works, last year decided to build a smart apartment building that consumed only 46 kWh of energy per square metre a year, instead of the standard 250 kWh.

He said they needed to obtain vast quantities of documents to access a government subsidy, which amounted to a miserly 2 per cent of the interest on the bank loan.

Agria experimented with innovative technologies, installing heating pumps, a heat-recycling ventilation system, special insulation, and an energy consumption monitoring system for every apartment in the bloc.

But despite the lure of low energy consumption and a favourable location, the sale prices for the apartments were little more than average. Bogunovic admits the company has barely covered its costs.

Although the heating bills of purchasers will be one-third of those in other buildings, buyers have remained wary. “Had we kept a realistic price, we wouldn’t have sold a single apartment,” Bogunovic says.

The lesson is that while mortgages remain expensive, buyers will continue to seek the cheapest option, even when it threatens to cost them more over the years. As for government incentives for energy efficient buildings, they are too small to make much difference.
 
It’s different in Germany

A colourful energy certificate, similar to those on household appliances in stores, stands at the entrance to a large building on the Schultze Boysen Strasse in ex-East Berlin, a building transformed from a Socialist monster into an energy efficient, comfortable, living space.

DENA, the German Energy Agency, took pride in its work, giving the 20-story building new rock wool insulation that was 12 cms thick. New windows, a heat-recycling ventilation system that keeps fresh warm air circulating, an insulated roof and a furnace in the basement were also installed.

Germany is serious about curbing CO2 emissions, sharply cutting the level of household energy consumption that accounts for a third of all usage. The state-owned Kreditanstalt für Wiederaufbau, KfW, offers especially affordable loans for energy efficient renovations.

Loans to developers depend on the amount of energy potentially saved, which encourages investors to substantially cut energy use, as this results in lower interest rates and a partial refund. In 2007 alone, KfW issued 30 billion euros in loans for such projects.

In Croatia, the Bank for Reconstruction and Development, HBOR, also offers loans for energy saving projects. But in contrast to Germany – and to what its web site says – HBOR does not grant loans to individuals in practice.

Closer to home, Slovenia’s action plan for increasing energy efficiency has also included measures to encourage savings in households and businesses. Window and thermal insulation replacement are already subsidised by up to 20 per cent of the cost, while the figure is 30 per cent for heating regulators and, more importantly, calorimetres. Slovenia is also working on a new energy law, obliging distributors to charge consumers for individual consumption.

It shouldn't be so difficult after all to spread a “save the planet, save the money” formula. Being energy efficient makes people feel good. It combines a feeling of global responsibility with a rational approach to the family budget.

But in the current Croatian framework, it is hard to achieve much, even though many would like to do more. Systemic inertia prevents change. And for those who care about energy efficiency, the formula, for the most part, usually stops with "save the planet."

Fellow Bio

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Dalibor Dobric

Dalibor Dobric was born in 1977 in Osijek, Croatia. He is currently working as a journalist for financial monthly magazine Banka

Topic

Topic 2008: Energy

Energy is a topic that preoccupies officials, politicians and citizens across Europe - and arguably one of the biggest challenges facing this continent and the international community.