h i g h l i g h t s" The most widespread storage in power systems is the pumped/reversible hydro storage. " The electricity market does not adequately rewarded all services that PHS provide to the electricity system. " The FIT-GO varies in the range of 42-265 €/MW h for an average capacity factor of 20%. a r t i c l e i n f o t r a c tThis paper analyses potential supporting schemes for pumped hydro storage (PHS) facilities in Croatia, which would guarantee recovery of the investment cost, with feed-in tariffs -for instance -which would guarantee payment for discharging wind-originated power as a reward for boosting the integration of renewable energy sources (RESs). The payment level acts as a floor basis for the PHS operator during the decision-making process to contract fixed payments for wind support or to act market-free on other market segments, through price arbitrage and reserve provision. The market share required for the efficient operation of a PHS facility and the levels of feed-in tariff (FIT) are set mathematically. Main findings put the level of FIT for an applied project in Croatia in the range 42-265 €/MW h for an average load factor of 20%, depending on particular local conditions, such as the level of wind power curtailment in the system, the power price for charging the storage and the number of pumps and penstocks, which could lower the capital cost. It is claimed that not all services that PHS provides to the electricity system are adequately rewarded by the electricity market, and thus there is a serious uncertainty as to how investment costs in energy storage would be recovered. Other elements, outside the market, are likely to influence the operation of PHS, such as the regulated level of a desirable rate of curtailment of RES power excess, the adequate level of energy security and the reserve margins which PHS could help to ensure.

Although the countries of the Western Balkans are mostly electrified, there are still regions which do not have access to the electricity network or where the network capacity is insufficient. For the most part such areas are under special care of the state (i. e. underdeveloped, devastated by war, depopulated), on islands or in mountainous regions. Since the decentralized energy generation covers a broad range of technologies, including many renewable energy technologies that provide small-scale power at sites close to the users, such concept could be of interest for these locations. This paper identifies the areas in Western Balkans where such systems could be applied. Consideration is given to geographical locations as well as possible applications. Wind, hydro, solar photovoltaic, and biomass conversion systems were taken into consideration. Since the renewable energy sources data for Western Balkans region are rather scarce, the intention was to give a survey of the present situation and an estimate of future potential for decentralized energy generation based on renewable energy sources. The decentralized energy generation based on renewable energy sources in Western Balkans will find its niche easier for the users that will produce electricity for their own needs and for the users located in remote rural areas (off-grid applications).

The energy sector reform in the Republic of Croatia (started 2001), which comprises restructuring, liberalization, privatization, and changes in the overall energy sector, has a significant effect on the possibilities of introducing and increasing the share of renewable energy sources (RES). The adoption of a new legislative framework within the context of reforming Croatia?s energy sector is of key importance for further development and for the future or RES utilization. The Electricity Market Act sets out the le- gal obligation to purchase electricity produced from RES in the manner that a quota or a minimum obligatory share of RES in electricity production is determined by a Government ordinance combined with Tariff system for the production of electricity from renewable energy sources and co-generation. Consequently, on the one hand, incentive funds needed to cover increased costs of production from RES will be collected from customers through the supplier and distributed to privileged producers (feed-in-tariffs, purchase is guaranteed to RES producers on known terms) through the Market Opera- tor. On the other hand, RES investment projects will be encouraged by pur- pose-specific government subsidy and by the Environmental Protection and Energy Efficiency Fund (out of public budget). By applying new energy legislation and associated by-laws (coming into force in 2007), RES projects in Croatia will be provided with a complete and stable legal framework as well as support through incentive measures which will equitably value environmental, social and other benefits of RES use.

This paper is considering set up a longer-term perspective and plan of actions for the development of renewable energy infrastructure in Croatia in accordance with the new Croatian Energy Sector Development Strategy. Overall target till the year 2020 has been calculated in accordance with effort sharing methodology used for Directive 2009/28/EC. The paper presents some main existing policies and measures for achieving this ambitious target, including feed-in tariffs, guarantees of origin, and greenhouse gas emissions taxation. It is addressed the necessity for creating enabling environment for promotion of renewable energy sources and gradually remove barriers for its stronger penetration on the energy market.