The Economic Impact of Investment in Renewables in Croatia by 2030

Abstract

At the beginning of 2020, the Strategy of the Republic of Croatia until 2030 with an outlook to 2050 was adopted. The Strategy analyzes two energy transition scenarios, the accelerated energy transition and the moderate energy transition. The Strategy is guided and defined by goals set out by the European Union (EU), which primarily states to decrease greenhouse gas emissions and increase the share of renewable energy sources. In order to reach these goals, it is necessary to substitute fossil fuel capacities with new capacities for the production of electricity from renewable sources. In order to do so, a new wave of investments is needed. The Strategy does not detail the macroeconomic effects of investments in renewable sources on the Croatian economy, generally quantified through GDP growth and employment. This paper analyzes the macroeconomic effects of announced investments in renewable energy sources for electricity production. The analysis encompasses the time period 2021–2030. The effects are quantified using the input–output tables for Croatia. The analysis exhibits relatively modest macroeconomic effects of investments into renewable energy on the Croatian economy. The paper concludes that it is necessary to change the structure and dynamics of investment in renewable energy. First, the investment should go into sources with the highest domestic component in investments and at the same time develop production capacities in technologies and equipment production for wind and solar capacities.