The paper starts with a brief overview of the technical and natural conditions of using renewable energy sources in the Czech Republic. Biomass, solar energy, water energy, wind energy and geothermal energy are introduced. Not all renewable sources mentioned above have the same potential for cost-effective exploitation in the Czech Republic.
Brief information is provided on strategies, conceptual documents and other explicitly formulated Czech policies in the area of alternative energy sources. It is possible to find these issues mentioned in several official documents. In the State Environmental Policy of the Czech Republic, the agenda of renewable energy sources is treated in the chapter on utilization of renewable resources. The State Energy Policy of the Czech Republic till 2030 defines the objectives and sub-objectives of the state energy policy. One sub-objective is focused on support of production of electricity and thermal energy from renewable energy sources. The Czech Republic’s Strategy of Sustainable Development includes the principle of preferring renewable sources to non-renewable sources. Special focus is put on the Czech legislation in the field of renewable sources, namely Act No 180/2005 on the Promotion of the Production of Electricity from Renewable Energy Sources.
Renewable sources of energy are a subject of research interest in the Czech Republic. Several studies on the technical side were developed. The report on the potential of renewable energy sources in the territory of the Czech Republic and on the possibilities for its utilization till 2050 (published in 2003) seems to be a significant document.
There are several economic incentives used to support renewable sources of energy in the Czech Republic. The paper first focuses on two support systems – minimum purchase price and green bonuses – according to Act. No 180/2005. Supports provided under the State Program for the Promotion of Energy-Saving and the Use of Renewable Energy Sources is described. Supports from the structural funds of the European Union (namely the two operational programs developed at the Czech Ministry of Industry and Trade and at the Czech Ministry of the Environment) are mentioned. The support for non-food use of agricultural products (managed by the Czech Ministry of Agriculture) is presented. There is a discussion on the role of markets and the role of state regulation in the field of the renewable sources use development.
Renewable energy has been an important technical, economic and political issue in the Czech Republic since the 1970s. It has received a new dimension after joining the European Union. The Czech Republic committed itself to produce 8 % of the total electricity gross national consumption from renewable energy sources in 2010.
Renewable sources of energy have been a subject of research interest in the Czech Republic. Biomass, solar, water, wind and geothermal energy are subjects of interest. Not all renewable sources mentioned above have the same potential for cost effective exploitation in the Czech Republic. The research results were utilized in the report on the potential of renewable energy sources in the territory of the Czech Republic and on the possibilities for their utilization till 2050 (2004). The paper brings a brief overview of conditions of using renewable energy sources in the Czech Republic.
Brief information is provided on strategies, conceptual documents and other explicitly formulated Czech policies in the area of the renewable energy sources. Special focus is put on the Czech legislation in the field of renewable sources, namely the Act No 180/2005 on the Promotion of the Production of Electricity from Renewable Energy Sources.
There are several economic incentives used for a support of the renewable sources of energy in the Czech Republic. The paper focuses on support systems according to the Act. No 180/2005, supports provided under the State Programme for the Promotion of Energy-Saving and the Use of Renewable Energy Sources, supports from EU structural funds and the support for non-food use of agricultural products are presented. There is also a discussion on the role of markets and the role of state regulation in the field of the renewable sources use development.
Conditions for renewable energy sources utilization in the Czech Republic
In the Czech Republic, all of the important renewable energy sources – biomass energy (including bio-fuels), the energy of direct solar radiation, the energy of water, energy of the environment (thermal energy of rocks, ground and surface waters and the air, utilized through heat pumps), wind energy – have been objects of investigations.
Concerning biomass, it generally contributes to substitution of fossil fuels and contributes to the energy independence of the country and region, mostly produces a significantly lower amount of emissions and declines greenhouse effect, creates new working opportunities (especially in rural areas) and thus contributes to decreasing unemployment. The fact that biomass is not always available at the place of its consumption can be seen as a general disadvantage of biomass use. The further a resource of biomass is located from the place of its consumption the higher operational costs are. Another negative feature of biomass is that it contains a lot of water, which decreases calorific capacity of biomass. The studies performed show that wood, straw, various biological wastes, shaped and treated bio fuels – briquettes, pellets are the most significant sources of biomass energy source in the Czech Republic. For biomass in the Czech Republic see, for instance, Slejška, Honzík, Huleš (2006), Abrham, Kovářová, Kuncová (2004), Szomolányiová (2005), Mužík, Hutla (2005).
Concerning solar energy – solar energy is an inconstant source with a variable energy power output. As prices of fuels and energies grow, an exploitation of solar energy starts to be interesting both from the technological and economic perspectives. In the Czech Republic, as the quality of housing improves, one can witness a relatively large increase in the quantity of solar installations, in the first place of active solar systems used for both seasonal and year-round preparation of hot water. For solar energy see, for instance, Bařinka et al (2003), Libra, Poulek (2006).
Concerning wind energy, in conditions of the Czech Republic only small wind power stations can be utilized (with power output up to 5 kW). These small power stations produce low voltage electricity for recreational buildings, family houses, mountain cottages etc. The reality is that good conditions to utilize wind energy can be found mostly in protected areas. This fact represents a major obstacle and disadvantage of wind energy utilization.
Under the conditions in the Czech Republic, the most important and significant renewable energy sources are primarily the following: biomass energy and the energy of direct solar radiation – thermo solar systems and photovoltaic panels.
Alternative energy sources in Czech strategic documents
The agenda of renewable sources of energy has been developed in several strategic Czech documents. The Czech Republic’s Strategy for Sustainable Development (OGOV, 2005) was the first governmental document containing the issue explicitly. It introduces the principle of preferring renewable sources to non-renewable sources as one of the principles of the strategy of sustainable development, since the dependence on non-renewable sources of energy is unsustainable in the long run due to their negative impact on the environment. In the economic pillar the government should ensure the share of renewable sources in the generation of energy (together with energy saving efforts). A similar request is formulated in the environmental pillar, where there is the requirement to ‘minimize inputs of non-renewable sources, and to maximise the use of renewable sources’ (OGOV, 2005, p. 48). The consumption of renewable sources of energy in relation to the overall consumption of primary energy sources and to overall consumption of electricity expressed in % are suggested as one of the sustainability indicators.
In The State Environmental Policy of the Czech Republic (MoE, 2004), the agenda of renewable energy sources is treated in the chapter on utilization of renewable resources. This document introduces individual targets – achieving a 6% fraction of renewable energy sources in total consumption of primary energy sources, achieving at least an 8% fraction of electricity from renewable energy sources in gross electricity consumption by 2010 and utilization of biomass and especially wood as an extensively used raw material rather than nonrenewable sources. For fulfilment of these targets, it is necessary to implement the EU Directive on taxation of energy (96/2003/EC), to approve and implement a conception of environmental tax reform and undertake several other measures (promote investments into the use of thermal energy produced from renewable sources, ensure approval and subsequent implementation of the Act on Promotion of Production Electricity and Thermal Energy from renewable Energy Sources, simplify the permit-issuing procedure in construction of installations for the use of renewable energy sources, create clear rules for relationships between the use of renewable energy sources, nature conservation and protection the landscape). It is stated that the financial support of the renewable energy sources from public budgets should be at least 0.1 % of GDP (MoE, 2004, p. 17‑18). The State Environmental Policy also puts special attention on utilization of biomass with the main concern on wood and on reduction of energy and material intensity.
The State Energy Policy of the Czech Republic till 2030 (MI&T, 2004) defines the objectives and sub-objectives of the state energy policy. One sub-objective is focused on the support of production of electricity and thermal energy from renewable energy sources. It suggests to create conditions for achieving the above-mentioned target of 8% production of electricity from renewable sources until 2010 and to create conditions for gradual increase the fraction of the renewable sources on the domestic consumption of primary power sources to 15‑16% in 2030.
Czech legislation in the field of renewable energy sources
The Czech legislation in this field does not have a long history. Act No. 180/2005 on the promotion of the production of electricity from renewable energy sources entered into force on 1st August 2005. With effect since 1st January 2006, this Act introduces a new support system, the main features of which are as follows (MI&T-ERO, 2005, p. 18):
- entitlement to connect energy production facilities from renewable energy sources to the electricity system,
- guaranteed return on each unit of electricity produced for a period of 15 years from the date of putting it into service,
- the investor has a choice between the two following support systems:
- minimum purchase price, under which all electricity produced can be sold to the operator of the relevant distribution system
- green bonuses (= supplements to the market price for electricity), under which electricity produced from renewable sources can be placed on the single market for electricity,
- provide the support also for electricity used to meet its own needs (not supplied to the electricity system),
- maintenance of the level of purchase prices for already operating facilities/installations for a period of 15 years,
- maximum 5% year-on-year reduction in purchase prices for new facilities/installations.
On the one side, the Act provides previously missing guarantees for the long-term stability and business risk reduction of the support needed for commercial decision-making. On the other side, this Act does not solve what will happen after the period of 15 years.
Other economic incentives for support of renewable energy sources in the Czech Republic
State Programme for the Promotion of Energy-Saving and the Use of Renewable Energy Sources
Those who would like to invest in the production of electricity from renewable energy sources can obtain support under the State Programme for the Promotion of Energy-Saving and the Use of Renewable Energy Sources (MI&T-ERO, 2005, p. 18‑19).
Subsidies could be provided under Part A or Part B of the Programme. Part A is administered by the Ministry of Industry and Trade. The subsidy may amount to as much as 30 % of the investment costs, maximally CZK 3 million. Subsidies under Part B are administered by the Ministry of the Environment. The subsidy may, in the case of municipalities and the not-for-profit sector, amount to as much as 90 % of the basis for the calculation of aid. In the case of businesses, it may amount to as much as 40 % of the basis. Credits equivalent to 35 % of costs (interest-free) may be granted to non-business entities, and credits equivalent to 90 % of costs may be granted to businesses, generally at an interest rate of 4 % p.a. over period of 12 years. Contributions may also be granted to partly cover the interest on the loan (reduction of the 4% interest rate).
In 2005, the Ministry of Industry and Trade and the Ministry of the Environment granted subsidies to support the production of electricity from RES amounting to CZK 39.6 million, and credits amounting to CZK 5 million. 1.7 MW of installed electrical capacity was established and the annual production of electricity was quantified at 5.1 GWh/year. Currently, the fraction of the renewable energy sources is less then 5 % of gross electricity consumption.
EU structural funds
Those investing in the production of electricity from RES have been able, since 1st May 2004, to obtain support from the structural funds of the European Union. Such support can be obtained through two operational programmes (MI&T-ERO, 2005, p. 19‑20):
- The first one is called ‘Industry and business’ and it is managed by the Ministry of Industry and Trade. This operational programme for 2004‑2006 includes a subsidy scheme entitled ‘Renewable energy sources’, designed for small and medium-sized businesses. The programme intends to assist the construction, renovation or rebuilding of facilities for the use of renewable energy sources, the introduction of production technologies and production installations which have a low energy demand, and minimum impact on the environment and use facilities for the production of electricity from renewable energy sources, and the combined production of electricity and heat using renewable energy sources. Subsidies may amount to as much as 46 % of the investment costs.
- The second one is called ‘Infrastructure’ and it is managed by Ministry of the Environment. This operational programme includes a subsidy scheme entitled ‘Using renewable energy sources’, which is designed for legal persons established for non-business purposes. The programme intends to assist the reconstruction and building of power plants using biomass or other renewable energy sources for the production of electricity, the conversion of existing systems to use renewable energy sources (e.g. heat pumps etc.), the use of renewable energy sources for supplying heat from municipal boiler-houses, and the construction of combined sources of electrical and thermal energy using biomass and biogas. Subsidies from the European Regional Development Fund may amount to as much as 75 % of the basis for the calculation of aid subject to a ceiling equivalent to EUR 10 million. A measure may additionally be co-financed by the State Environmental Fund up to an overall level of 90 %. Funding equivalent to up to 50 % of eligible costs may be obtained from the State Environmental Fund for design documentation, subject to a limit of 3 % of the basis for the calculation of aid and a ceiling of CZK 3 million. For the period 2004‑2006, all ERDF resources are for Priority 3. There is a total of EUR 142 million available for the improvement of environmental infrastructure, of which EUR 44.1 million has been allocated from public sources.
Support for the cultivation of energy crops in the agricultural sector
Aid amounting to CZK 5500 per ha was granted by the Ministry of Agriculture to growers for the cultivation of energy crops on arable land, on the basis of Government Regulation No 86/2001 Coll., since and including 2003.
In 2004, such aid was paid at the rate of CZK 2000 per ha from the Agricultural and Forestry Support and Guarantee Fund and this was also notified to the European Commission as existing State aid. A total of about CZK 1 988 000 was paid out.
In 2005, programme – Aid for the cultivation of crops for energy production purposes – was classified under a national programme of aid known as the Rules governing the conditions for the award of subsidies for 2005 pursuant to Section 2 and Section 2d of Act No 252/1997 Coll. on agriculture. The aim of this programme is to support the establishment and maintenance of crops for energy production purposes at the rate of CZK 2000 per ha. The energy crops specified in the programme must be grown on arable land specifically for energy production purposes. On the basis of the applications submitted, it was stated that about 1020 ha of land has been sown with energy crops and that about CZK 2 040 000 was paid out.
Not all renewable energy sources mentioned above have the same potential for cost-effective exploitation in the Czech Republic. Research results show that biomass and solar energy seems to be the most significant for the future development. The efficient potential for development of the other renewable sources is already almost utilized in the Czech Republic.
In the Czech Republic the energy industry has been substantially regulated. In other words, current prices do not reflect real market prices of various kinds of energy. Prices of energy produced from fossil fuel are still low (partly because the price does not include negative externalities caused by production of the energy from fossil fuels). As a result prices of energy produced from renewable energy sources are not competitive. This can be supposed to be a major reason for the fact that any supportive strategy has not been efficient. The current system of promotion (financial aids) has not given rise to expected results. The Czech Republic will probably not achieve the required share of renewable energy sources on the total amount of energy sources as expected by EU in 2010. The truth is that the EU is not fulfilling its goal in this area either. There is an ongoing discussion if the Czech Republic would not be better off if it would focus particularly on reduction of energy consumption, as the Czech economy, in comparison with developed member states of EU, still consumes a lot of energy per unit of production. Another ongoing discussion focuses on issues related to the draft of the green tax reform. The reform is supposed to reduce a share of fossil fuels (particularly coal). Another important discussion goes on the rules for various supports. Under current circumstances some investment projects to the production of energy from renewable sources cannot carry out all required conditions of the supports.
Under the current natural, technological and economic conditions, the renewable energy resources would always represent only an additional source of energy in the Czech Republic. To increase energy production from renewable resources would require a continuous increase of prices of energy produced from fossil fuels. There is a difficult to answer question – would this be happening by development of free markets in the field of energy or should this target necessarily be a subject of massive support from public financial sources.
There is also another question – it is with regard to the future of atomic energy use and its technological development from the point of view of the current ambitious EU goals in the utilization of renewable energy sources as a source of both sustainable and environmentally friendly energy.
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