Czech Republic

Czech Republic

Czech Republic - Policy uncertainty could thwart wind power growth

CZECH REPUBLIC: The general climate for wind energy in the Czech Republic is not encouraging.

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czech capacity pieAlthough six projects with a total of nearly 44MW capacity were installed in 2012 and a few may follow in 2013, wind developments could then grind to a halt if the support framework for renewables is dismantled, as the government plans.

A big change to the renewables support system took effect at the beginning of 2013 when the feed in tariff (FIT) was abolished for all renewable projects over 100kW, and for hydro power projects exceeding 10MW.

Under the old system, the obligation to buy electricity generated from renewable sources lay with the high voltage or distribution network operators, but they have no licence to trade in electricity and so could only use the power to balance the electricity system. Change was needed to bring renewables generation into the market, says Martin Bursik, former Czech environment minister and chairman of the Czech Renewable Energy Council.

All new renewables projects that do not qualify for the FIT must now use the "hourly bonus" mechanism. There are two payments under this system. Firstly, the renewables generator sells electricity to the obligatory buyer - divisions of dominant Czech energy company CEZ in six regions of the country and the Czech subsidiary of energy giant E.on in two regions - for a price calculated from the difference between the FIT and the hourly green bonus. Then Czech electricity and gas market operator OTE pays the hourly green bonus on top.

Multiple criteria

One problem lies in the Czech industry ministry's right to authorise each project above 100kW according to 14 criteria, such as whether it is in line with state energy policy and whether network capacity is sufficient. "There is a danger of subjective decision making with the aim of preventing renewables development," Bursik says. There is evidence that state-owned energy company CEZ, which has strong coal and nuclear interests, was closely involved in drafting the law, hoping to stop development of renewables and eliminate competition in the electricity market, he says.

But even worse could be to come. Only three months after the law took effect, the Energy Regulatory Office says it had started preparations to stop subsidies for renewable energy sources from 2014, arguing that subsidies currently provided are beyond the financial limits of the Czech Republic. Variations of the plan propose that it is discontinued in 2020, but 2014 appears to be the favoured date. If support is eliminated, wind development will stop, the Czech wind energy association warns.

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