This report provides information on the Czech Republic’s market for renewable energy and alternative fuels, and identifies opportunities for U.S. exporters of technologies used in biomass, biogas, hydro power, wind power, solar energy, and bio fuels. It begins with a look at renewable energy, analyzes in detail current and future demand, and discusses ways to enter the market. In general, biomass and household wind turbines represent good market potential for US companies.
In March 2006, the European Union (EU) pledged to establish a 2020 overall binding target of a 20% share of renewable energy sources in energy consumption and a 10% binding minimum target for biofuels in transport. Individual member states must comply with EU directives, but the manner by which this is done and the domestic regulation that is applied is a national responsibility. As such, the various regulations affecting the renewable energy sector is different in each country. The Czech Republic’s goal is to increase the share of renewable sources in its overall energy consumption to 13% by 2020. In 2010, the share of renewable sources reached 8.3%; in absolute numbers, this represents production of 5.9 TWh of electric energy.
Market Highlights and Best Prospects
Hydropower still plays the most important role in the Czech renewable energy mix. In 2010, 2.8 TWh of energy was generated by hydro power plants, both small ones (installed output up to 10 MW) and large ones (installed output above 10 MW). The Czech major generator of electric energy, CEZ (Czech Energy Works), operates and owns all large hydropower plants, with total installed output of 1,983 MW. Hydropower plants are mainly located on the upper part of the Vltava River. However, there is still room for small hydropower units to be built in some mountain regions. The hydropower potential amounts to 3,980 GWh/year, depending on different sources, with the potential from small hydropower stations at around 1,570 GWh/year.
From 2006 to 2010, the wind energy sector was experiencing strong growth. As there is no limit set by transmission operators, the growth largely depends on the willingness of municipalities and the Environment Impact Assessment (EIA), which is examined by the Ministry of Environment. The installed capacity increased from 54 MW in 2006 to 215 MW in 2010 and production was 330 GWh in 2010, 6.5 times greater than in 2006. Investors who install wind power plants between January 1, 2011 and December 31, 2011 will either be paid 2,230 CZK/MWh or can get a green bonus 1,830 CZK/MWh. These two offers cannot be combined. A substantial market potential for U.S. suppliers exists in the segment of small wind turbines, which can be installed on supermarkets, hotels, hospitals, e-toll gates, etc. – wherever energy is consumed and the installation does not have to undergo a complicated approval procedure, as in case of large wind farms.
Out of all renewable energy sources, biomass has the largest potential. The country’s total agricultural land that is not used for producing food is estimated to be more than 1.3 million hectares, about 800,000 hectares of which were not used in 2006. Of this at least 500,000 hectares could be used for biomass production. If the total 500,000 hectares is used for biomass, this source could amount to 18% of all energy generated in the country. The country’s total timber harvesting is over 9 million metric tons. Of this amount wood waste represents over 1 million metric tons, which is not sufficient. Targeted growing of wood and non-wood biomass is inevitable.
Another opportunity for biomass is for district heating plants, mainly those fueled with coal (about 50% of all houses are heated by district heat). Only about one third of these district heating plants are equipped with cogeneration, theoretically leaving some 10,000 MW of district heat to be switched from coal to biomass. This trend is reflected in a June 2011 decree approved by the government on subsidies for cogeneration units only.
The Association of Biomass is the best source of information on projects, and provides consultation services and participates in preparation of legislation. It is this report’s opinion that the biomass segment offers the best U.S. export potential in the renewable energy sector.
According to data provided by the Czech Biogas Association (CzBA) there were 253 biogas power plants in the Czech Republic in April 2011. The total biogas installed power reached 138.4 MW, of which 23 MW were generated by biogas from 60 wastewater treatment plants. In 2010, these plants produced 112 GWh, thus representing a 9.6% share of renewable energy.
The total estimated agricultural biogas potential in the Czech Republic is 500 MW, or about 2 billion standard cubic meters of biogas per year. CzBA estimates that there is potential for 789 biogas production plants by 2020. Considerable potential is seen for biomethane (cleaned biogas) that can be mixed into the gas grid with natural gas. Biomethane is expected to reach 20% of the total estimated biogas production.
With 1,953 MW of cumulative installed solar capacity, the country is the leader in the CEE region and the third country in Europe regarding PV installed capacity in 2010. The Czech solar market owes this staggering increase to favorable feed-in tariffs with small yearly digression, combined with a stronger national currency and a decline in the price of PV panels. As a result of this favorable environment, the Czech market has become overheated. There were some 6,000 MW of registered systems on distribution operators’ lists, mostly speculative. The sector developed to the extent that growth restriction had to be considered. The Czech government reacted by introducing a 26% tax on energy from solar power plants, higher fees for the use of farmland for building PV plants, as well as cuts to its generous feed-in tariffs. A moratorium exists on all new PV grid connection applications.
The feed-in-tariff for electricity from PV plants with output higher than 100 kW and connected after January 2011 has been cut by over a half, from $682 per MWh in 2010 to $308 in 2011. Plants with a capacity of 30-100 kW will now receive $331.
Currently PV energy producers can choose between a feed-in-tariff (FiT) and a green bonus. Both are paid by the grid operator. FiT tariffs have been available in the Czech market since 2002. The green bonus is a more risky choice that can, however, bring higher potential revenues.
The Czech Photovoltaic Association and Czech Photovoltaic Industrial Association can provide additional consultation and legal services.