Tender for Closed‑Loop Geothermal Well Drilling at Four Locations in Croati

Croatia’s Geothermal Breakthrough: €30 Million EU Call Launched for Four New Wells in Velika Gorica, Osijek, Vinkovci, and Zaprešić (Croatia)

By Robert Buluma 

ZAGREB, June 12, 2026 – Just days after the official opening of a landmark €30 million tender for geothermal well drilling, Croatia is cementing its position as a regional powerhouse in renewable heating. The Ministry of Economy announced on June 2, 2026, the launch of the call for project proposals under reference PK.3.2.01 – Investment in Geothermal Energy, a move that transforms years of exploratory research into tangible, shovel-ready infrastructure.

The call, which opened on June 3, 2026, at 12:00 CET and will close on June 30, 2026, at 16:00 CET, designates a single eligible applicant: the Hydrocarbons Agency of Croatia (Agencija za ugljikovodike). With a total non-repayable grant of €30,000,000 from the European Regional Development Fund (ERDF), the project will finance the drilling of four additional geothermal wells in the towns of Velika Gorica, Osijek, Vinkovci, and Zaprešić.

These are not speculative wells. They are located in areas where previous exploration boreholes – financed under Croatia’s National Recovery and Resilience Plan (NRRP) – have already confirmed viable geothermal reservoirs. This article examines the technical, economic, and environmental stakes of this historic investment, the EU policy framework behind it, and what it means for Croatia’s quest to slash fossil fuel dependence.

1. The Call at a Glance: Details of PK.3.2.01

The formal announcement, published on the official EU funds portal (eufondovi.gov.hr), outlines a highly focused, rapid-execution investment. Unlike broad renewable energy tenders open to municipalities or private consortia, this call is restricted to the Hydrocarbons Agency – the state body with the legal mandate and technical expertise to manage deep subsurface exploration and extraction.

Key parameters of the call:

· Programme: Competitiveness and Cohesion 2021-2027

· Priority axis: 3 – Promoting energy efficiency and renewable energy, climate adaptation, risk prevention, environmental protection, and resource sustainability.

· Specific objective (RSO2.2): Promoting renewable energy in accordance with Directive (EU) 2018/2001 (the Renewable Energy Directive – RED II), including sustainability criteria.

· Total funding: €30,000,000 (100% ERDF)

· Activity: Drilling of four geothermal wells – two production wells and two reinjection wells (or a combination depending on reservoir characteristics) across the four named locations.

· Timeline: Extremely tight submission window (27 days), signaling urgency and the pre-existence of technical documentation.

The Ministry emphasized that the investment will enable “sustainable, closed-loop, and environmentally friendly use of geothermal energy.” This closed-loop approach is critical: water or working fluid is extracted from the deep reservoir, its heat is utilized (typically for district heating), and then the cooled fluid is reinjected into the same geological formation. This prevents depletion of the resource and avoids any contamination of groundwater aquifers.

2. From NRRP Exploration to ERDF Implementation: A Two-Phase Strategy

To understand why this call exists, one must look back at 2024-2025, when Croatia deployed significant resources from its National Recovery and Resilience Plan (NRRP). Under a previous investment (often referred to as “Preparation and exploration of geothermal potential”), the Hydrocarbons Agency drilled a series of deep exploration boreholes in continental Croatia.

Those boreholes were not small pilot projects. They were professional, deep stratigraphic wells designed to confirm temperature, permeability, and flow rates of deep aquifers. The results, according to internal ministry reports, exceeded expectations. Multiple locations showed geothermal gradients above 5°C per 100 meters, and reservoir temperatures ranging from 80°C to over 160°C at depths of 2,500 to 3,500 meters.

The new €30 million call is the second phase: transitioning from exploration to production. Instead of starting from scratch, the Hydrocarbons Agency will now drill full-diameter production wells at precisely the coordinates where exploration proved successful.

Which locations and why?

The four targeted towns – Velika Gorica (just south of Zagreb), Osijek (eastern Slavonia), Vinkovci (further east), and Zaprešić (northwest of Zagreb) – each represent a distinct geothermal play type:

· Velika Gorica: Part of the Zagreb-Sava depression. Exploration wells here encountered warm water-bearing sandstones at relatively shallow depths (1,800-2,200 m) with temperatures around 75-85°C. Ideal for connecting to the Zagreb metropolitan district heating network.

· Osijek & Vinkovci: Located in the Panonian Basin, the hottest geothermal region in Croatia. Exploration wells in Osijek reportedly encountered temperatures exceeding 130°C at 2,800 m. Vinkovci similarly showed excellent permeability. These have potential not only for heating but also for possible binary-cycle electricity generation.

· Zaprešić: A smaller, structurally complex field northwest of Zagreb, with high temperatures (around 95-110°C) but requiring careful reinjection management.

By focusing on these four, the Ministry ensures geographical diversity and risk reduction: if one reservoir proves less productive than expected, three others will still deliver.

3. The Bigger Picture: Why Croatia Is Betting Big on Geothermal

Croatia has long been known for its hydroelectric power (50% of electricity) and, increasingly, solar and wind. However, heating – which accounts for roughly 40% of the country’s final energy consumption – remains dominated by natural gas and fuel oil. District heating systems in cities like Zagreb, Osijek, and Velika Gorica still rely heavily on gas-fired boilers.

Geothermal energy offers a unique solution: it is dispatchable, baseload, and invisible. Unlike solar or wind, a geothermal plant delivers heat (or power) 24/7, regardless of weather. Once drilled, the operational costs are extremely low, and the fuel (the Earth’s internal heat) is free and local.

According to the Croatian Geological Survey, the geothermal potential of the Panonian Basin – which covers Slavonia, Baranja, and parts of Central Croatia – is among the highest in continental Europe. Estimates suggest that by 2030, geothermal could provide:

· Up to 30% of district heating demand in the northern and eastern cities.

· Over 100 MW of baseload electricity through binary organic Rankine cycle (ORC) plants.

· Direct use in agriculture (greenhouse heating), fish farming, and industrial processes (drying, pasteurization).

However, the barrier has always been the high upfront cost of drilling. A single deep well (2,500–3,500 m) can cost between €6 million and €12 million, with no guarantee of success. The EU grant of €30 million effectively de-risks the entire project, allowing Croatia to drill four production wells at zero cost to local taxpayers.

4. Technical and Environmental Specifications: Closed-Loop Sustainability

The call document explicitly requires a “closed, sustainable, and environmentally friendly” system. This is not merely green rhetoric; it is a technical mandate that addresses past failures in geothermal development worldwide (e.g., subsidence, induced seismicity, or cooling of the reservoir).

How closed-loop works in these four wells:

1. Drilling – A production well (cased and cemented) is drilled into the hot aquifer, typically a porous sandstone or fractured carbonate rock at 2,500–3,500 m depth.

2. Production – Hot geothermal fluid (water or brine, with temperatures 80-160°C) rises naturally or via a downhole pump.

3. Heat exchange – The fluid passes through a plate heat exchanger at the surface, transferring its heat to a clean secondary loop (usually treated water) that feeds into the municipal district heating network.

4. Reinjection – The cooled geothermal fluid is pumped back into the same reservoir through a separate reinjection well, maintaining pressure and replenishing heat over time.

Environmental safeguards mandated by the call:

· Zero surface emissions: No CO₂, NOₓ, or particulates. Unlike burning gas, geothermal heating produces no local air pollution.

· Closed-loop brines: The geothermal fluid (often high in total dissolved solids) never contacts the environment or drinking water aquifers. It is piped directly from production to reinjection.

· Seismic monitoring: Drilling and reinjection can sometimes trigger microseismicity (typically below magnitude 1.5, imperceptible). The call requires a baseline seismic survey and continuous monitoring during operations.

· No water consumption: The same fluid is recirculated for decades; only minor top-ups may be needed if leaks occur.

Compared to natural gas, each geothermal well will reduce CO₂ emissions by approximately 10,000–20,000 tons per year, depending on the amount of fossil gas displaced. For four wells, that is a reduction of up to 80,000 tons of CO₂ annually – equivalent to taking 17,000 cars off the road.

5. EU Policy Framework: Alignment with RED II and REPowerEU

The call is explicitly linked to Specific Objective RSO2.2, which references Directive (EU) 2018/2001 – the Renewable Energy Directive (RED II). RED II sets a binding EU target of at least 32% renewable energy by 2030 (since raised to 42.5% under REPowerEU), and it places a special emphasis on heating and cooling.

Under RED II, Member States must increase the share of renewable energy in district heating by at least 1 percentage point per year. For Croatia, which currently relies on gas for 65% of district heating, geothermal is the most cost-effective path to compliance.

Moreover, the REPowerEU plan (adopted in 2022 following Russia’s invasion of Ukraine) explicitly called for a doubling of geothermal heat production by 2030. The €30 million for wells in Croatia is part of a broader EU commitment: on June 9, 2026 (just three days before this article), the European Union launched the T-MED initiative (Trans-Mediterranean Cooperation on Renewable Energy and Clean Technologies), mobilizing up to €25 billion by 2035 for renewables. While T-MED focuses on solar and wind, the Commission has also set aside dedicated cohesion funds for geothermal, recognizing it as a “strategic net-zero technology.”

6. Economic Impact: Jobs, Energy Independence, and Lower Bills

Beyond environmental benefits, the four wells will generate tangible economic returns. Based on similar projects in the region (e.g., the geothermal district heating in Velika Ciglena, Croatia’s first commercial geothermal plant for electricity, and the project in Ivanić-Grad), we can project:

Direct employment:

· Drilling phase (6-9 months per well): Each well requires a crew of 20-30 specialized workers (geologists, drillers, cementing engineers, safety officers). For four wells, this means 80-120 direct jobs during construction.

· Operation phase: Once operational, each geothermal well-head and heat exchanger station needs 3-5 permanent technicians. Total: 12-20 permanent jobs. Modest, but highly skilled and local.

Indirect employment:

· Manufacturing of heat exchangers, pumps, and district heating connections will create work for Croatian metalworking and engineering SMEs.

· Maintenance contracts will support local service companies.

Energy savings for consumers:

District heating costs are sensitive to gas prices. In 2025, Croatian gas prices for district heating ranged from €60-90 per MWh, depending on imports. Geothermal heat, once the wells are drilled, has a marginal cost of approximately €5-10 per MWh (electricity for pumps, maintenance). Even accounting for capital amortization (which is covered by the EU grant), the operating cost is far lower than gas.

The City of Osijek, which operates one of the largest district heating systems in the country, estimates that switching from gas to geothermal could reduce heating bills for households by 25-30% by 2028.

7. Challenges and Risk Mitigation

No deep drilling project is without risk. The Ministry and the Hydrocarbons Agency have acknowledged four primary challenges:

1. Drilling uncertainty

Even with successful exploration wells, a full-diameter production well may encounter unexpected faults, lost circulation, or lower permeability. Mitigation: The €30 million includes a contingency for one well to be re-drilled or sidetracked. Additionally, the four wells are geographically independent – a failure in Zaprešić does not affect Osijek.

2. Reinjection management

Reinjecting cooled fluids can sometimes cause clogging (scaling) due to mineral precipitation, especially carbonates and silica. Mitigation: The call requires a chemical monitoring program and the installation of injection filters and acidization capabilities to maintain permeability.

3. Public acceptance

Some residents may fear induced seismicity or groundwater contamination. Mitigation: The Hydrocarbons Agency will launch a public information campaign in each town, including open houses, site visits to existing geothermal plants (e.g., Ivanić-Grad), and real-time seismic data online.

4. Tight timeline

The call opens June 3 and closes June 30, 2026 – just 27 days. This is unusually short. Mitigation: Because the applicant is exclusively the Hydrocarbons Agency (not a competitive call with multiple bidders), the short window is administrative. The Agency has already prepared the full project application in the months prior.

8. What Comes After the Wells? The Long-Term Vision

Drilling the four wells is not the endpoint; it is the beginning of a broader transition. Once the wells are completed (expected by late 2027 or early 2028), the geothermal fluid will be fed into existing or newly constructed district heating networks.

· Velika Gorica: The well is located near the city’s existing gas-fired heating plant. A new heat exchanger station will allow the plant to switch to geothermal as primary source, with gas as backup during peak winter demand.

· Osijek and Vinkovci: These two eastern cities may collaborate on a shared pipeline, creating a “geothermal heating corridor” along the Drava and Sava valleys. Osijek also has ambitions for a 5-10 MW binary geothermal power plant to generate electricity in summer when heating demand is low.

· Zaprešić: A smaller system, but strategically important to demonstrate geothermal in a peri-urban setting with limited district heating infrastructure. It may pioneer direct use for industrial drying or greenhouse agriculture.

The Ministry of Economy has already signaled that if the four wells succeed, a third phase (2028-2030) could see up to 20 additional wells across ten other towns (Slavonski Brod, Požega, Bjelovar, Koprivnica, etc.), funded by a combination of ERDF, the Modernisation Fund, and private investment.

9. Conclusion: A Model for European Geothermal Deployment

The opening of call PK.3.2.01 – Investment in Geothermal Energy is a quiet revolution. While solar panels and wind turbines grab headlines, Croatia is methodically building the underground backbone of a fossil-free heating system. By targeting four proven locations with €30 million of non-repayable EU funds, the country is demonstrating a replicable model:

1. Use NRRP for exploration – high-risk, public-funded.

2. Use ERDF for production wells – medium-risk, EU-supported.

3. Use private or municipal funds for district heating connections – low-risk, commercially viable.

For the citizens of Velika Gorica, Osijek, Vinkovci, and Zaprešić, this means cleaner air, lower heating bills, and energy security independent of global gas markets. For Croatia, it is a critical step toward meeting its 2030 climate goals (at least 36% renewables in final energy consumption) and ultimately carbon neutrality by 2050.

The call closes on June 30, 2026. With the Hydrocarbons Agency as the sole applicant, the signing of the grant agreement is a formality. By 2028, the first geothermally heated homes in these four cities will turn on their radiators – and the water flowing through them will have been warmed not by Russian gas or coal, but by the ancient heat of the Earth, 3,000 meters below the Croatian soil.

For further information: Full tender documentation is available at eufondovi.gov.hr (Reference: PK.3.2.01). Inquiries can be directed to the Ministry of Economy’s Directorate for EU Funds and International Agency.  

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Source:  Eufondovi