Greening Energy in the Czech Republic

I spent last week in the Czech Republic and had an opportunity to visit the site of a conventional coal-fired power plant, which at peak capacity,  of about a GW, consumes 1000 tonnes of coal and over 2000 tonnes of water per hour. 

But I was also able to get a feel for the impact of the Czech feed-in-tariff program on the deployment of photovoltaic (PV) panels and the cost of electricity. I have blogged previously about the Ontario feed-in-tariff program that also offers a highly subsidized rate for new sources of renewable energy, especially for PV.

Solar Power in the Czech Republic

 As directed by the European Commission, a 15-16% share of renewable energy in total primary energy consumption by 2030 has been set as a target by the Czech Government.  Toward that goal in 2005 the Government introduced a feed-in tariff for a range of renewable sources including small hydropower, biomass, biogas, wind and photovoltaic (PV).  The tariffs were to be guaranteed for between 15–30 years depending on the type of power.  The cost of PV power to the power company is expensive. In 2010 the highest tariff is 12.25 Czech Crowns (€ 0.50) per kWh for small photovoltaic power.  For comparison, the average rate that a Czech household paid in Nov 2009 for power is in the range € 0.087 to 0.116 per kWh.

The favourable fixed tariffs and the decreasing cost of PV panels has made installing solar energy a very attractive business to the point where the Czech Republic was the third largest developer of solar power in the EU last year.  It has been reported that a combination of a drop in the price of PV panels and high tariffs brought the return on the investment (ROI) down to as little as three years making it so attractive that Czech farmers have been installing PV panels rather than growing crops. Last month the largest solar power station in the Czech Republic and one of the largest in Europe, covering an area about the size of a hundred soccer fields and with a capacity to 35 MW, was opened in Veprek.

In response last year the Czech legislature passed a law which allows the energy regulator to significantly lower the solar-power tariff (feed-in-tariff)  for new PV installations beginning January 1, 2011.  Earlier this year the Czech Government started putting caps on renewable energy subsidies which means that there are limits for various renewable energy sources which when exceeded will terminate the subsidy program.  The Government also plans to completely cancel subsidies starting in March 1, 2011 for PV installations built on farm land.

Just this week the Czech government announced plans to tax solar power producers that installed PV panels in the last two years with the objective of using the money raised to subsidize power rates paid by consumers. In addition between 2013 and 2020, it plans to auction CO₂ credits to raise money to reduce power rates.  The Government says that with these measures households' and companies' electricity bills shouild not increase by more than 5.5 % next year.