Evaluation of renewable energy subsidy programs in Croatia during a 5-year period based on a LCoH analysis

An analysis of renewable energy subsidy programs in Croatia during the period from 2017 to 2022 is given through the lens of levelized cost of heating (LCoH), to determine the effect of the subsidy on the real cost of heating. The levelized cost of energy for a heat pump and solar thermal collector system was analyzed for all subsidy programs and compared to an unsubsidized new gas-fired boiler installation and an existing gas-fired boiler installation. The analysis was performed separately for single-family homes, service buildings and manufacturing industry buildings. The results of the study found that an 80% subsidy for heat pumps led to between 19.2 and 21.9% reduction in LCoH with heat pumps for private residences. In the service industry, an 80% subsidy for heat pumps reduced the LCoH by between 16.8 and 15.2% depending on the year. In the manufacturing industry, an 80% subsidy led to between 12.1 and 15.3% decrease in the LCoH. For private residences, the same subsidy level led to an 11.2 to 13.4% reduction in LCoH for solar thermal collectors, while in both the manufacturing and service industries the percentage was much lower. It was also found that heat pumps were cost-effective even without subsidies in terms of LCoH in some cases compared to fossil fuel dependent solutions.